FORM 10-K-ANNUAL REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITES EXCHANGE ACT OF 1934

(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, 2000
                                               -----------------

                                       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.)


     1114 Avenue of the Americas, 41st Floor, New York, New York    10036-7790
     -----------------------------------------------------------    ----------
               (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:

                  6.80% Series B Senior Secured Notes Due 2001
                  --------------------------------------------
                                (Title of class)

                  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. [ x ] Yes [ ] 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 registrants 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 Registrants 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: None


<PAGE>


                          CAITHNESS COSO FUNDING CORP.
                           ANNUAL REPORT ON FORM 10-K
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


                                   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 Registrants Common Equity and
                   related Stockholder Matters (Not applicable)          9

Item 6.         Selected Financial Data                                  9

Item 7.         Managements 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             23

Item 9.         Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure                  24


                                   Part III

Item 10.        Directors and Executive Officers of the Registrants     24

Item 11.        Executive Compensation                                  26

Item 12.        Security Ownership of Certain Beneficial Owners and
                   Management (Not applicable)                          26

Item 13.        Certain Relationships and Related Transactions          28


                                     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, their 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 exceeded 100% for each
of the last six years.

     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

AB1890 Energy Subsidy Payments

     In addition to receiving payments under the power purchase agreements,  the
Coso partnerships qualify for subsidy payments from a special purpose state fund
established under California  Legislature AB1890 (AB1890). The California Energy
Commission  administers the fund. AB1890 provides, in part, for subsidy payments
from 1998 through 2001 to power  generators  using renewable  sources of energy,
including geothermal energy, and who are being paid based on the avoided cost of
energy. The funds are distributed in the form of a production  incentive payment
that  subsidizes   renewable   energy  producers  when  prices  paid  for  their
electricity are below certain  pre-determined  target prices.  Under AB1890, the
Navy I  partnership,  the BLM  partnership  and the  Navy II  partnership  would
receive future subsidy payments for energy delivered to Edison by the respective
Coso partnership, if Edison's avoided cost of energy falls below three cents per
kWh. This subsidy payment is capped at one 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.'s
(CalEnergy),  which is now known as MidAmerican  Energy  Holdings  Company.  The
purchase  price  consisted  of $205.0  million  in cash,  plus $5.0  million  in
contingent  payments,  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 the  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   to  COC  for  such   maintenance   has  been  reduced
significantly.  Payments of operator fees were 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 all 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 we expect that they will continue to do so.

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.

                                       2

     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 seven geothermal  plants,  including the Coso
projects,  totaling  414 MW of  generating  capacity.  Caithness  Energy is also
seeking  to develop  two  additional  natural  gas power  projects  with a total
potential electrical  generating capacity of over 1,580 MW, 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, Denver 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 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  2000,  the Navy I  partnership  and the  Navy II  partnership  incurred
aggregate  royalties  to the U.S Navy of  approximately  $2.0  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  $1.0 million.  The BLM partnership
reimbursed the Navy II partnership  approximately  $0.4 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 for steam transferred from U.S. Navy
property and sold to Edison.

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

     Under the U.S. Navy contract, as a royalty for Unit 1 at Navy I, the Navy I
partnership  is obligated to partially  reimburse the U.S. Navy for  electricity
supplied to it by Edison from  electricity  generated  at the Navy I plant.  The
reimbursement  payment is based on a pricing  formula  included in the U.S. Navy
contract. The percentage rate of reimbursement changes semiannually,  but cannot
exceed 95% of the price paid by the U.S. Navy to Edison,  in  accordance  with a
weighted  index based on the Consumer  Price Index and price indices for the oil
industry, the electric power plant industry and the construction industry.

     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 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 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,  in connection with the assignment of the BLM lease to the BLM
partnership.  The  royalty  is  subordinated  to  the  payment  of all  the  BLM
partnership's other royalties,  all debt service and all operating costs of BLM.
No portion of the royalty accrued to Coso Land Company to date has been paid.

                                       4

BLM North

     Coso Land Company had applied as a tenant-in-common,  to the Bureau of Land
Management  for  assignment  to each of the Coso  partnerships  of an  undivided
one-third  interest  in leases they had  previously  bought from the Los Angeles
Department  of Water and Power  (LADWP).  The  assignment  became  effective  in
December 2000 and now each Coso partnership is required 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  commercially  demineralized
water. The Bureau of Land Management may establish minimum production levels and
reduce the foregoing royalties if necessary to encourage the greater recovery of
leased resources, or as otherwise justified.


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 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 Coso projects.  The plants
are insured up to their  replacement  cost for general  property damage and over
$166 million in the  aggregate for business  interruption,  subject to a $25,000
deductible  for  property  damage  (and a $250,000  deductible  for the  turbine
generator sets), with a 15-day deductible for business interruption and a 25-day
deductible  for  machinery  breakdown  and  earthquake.  Catastrophic  insurance
(including  earthquake  and  flood) is capped at  $200.0  million  for  property
damage,  subject to a deductible of $2.5 million or 5.0% of the loss,  whichever
is greater.  Liability  insurance coverage is $51.0 million  (occurrence based).
Operators  extra  expense  (control  of well)  insurance  is $10.0  million per
occurrence with a $25,000 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,
purchasing and payroll services. As of December 31, 2000, COC employed 94 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 or curtail 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.



<TABLE>
<CAPTION>

Financial Information
   (in thousands)

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

                                                  1998              1999(c)       2000
Navy I Partnership                                ----              ----          ----
<S>                                               <C>               <C>           <C>
Total Operating Revenue                        $  53,153         $  55,666     $  67,653
Operating Income                                  21,259            23,537        23,295
Total Assets                                     202,266           218,192       198,409


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

                                                  1998              1999(c)       2000
BLM Partnership                                   ----              ----          ----

Total Operating Revenue                        $ 107,199         $  49,877     $  57,453
Operating Income                                  62,512            11,343        10,760
Total Assets                                     228,381           216,391       201,312


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

                                                  1998              1999(c)       2000
Navy II Partnership                               ----              ----          ----

Total operating Revenue                        $ 119,564         $ 113,746     $  58,366
Operating Income                                  78,444            70,169         8,471
Total Assets                                     220,867           273,269       195,693


                             (c) See Footnotes to Summary Selected Historical Financial and Operating Data
</TABLE>

                                       6

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 40  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 111.8% in 2000,  95.4% in 1999,  and 94.6% in 1998,  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 35 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
109.4% in 2000,  105.0% in 1999, and 104.4% in 1998,  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
111.1% in 2000,  112.0% in 1999, and 108.6% in 1998,  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.


Settlement of Litigation

     In December  1999,  the BLM  partnership  and Dow  Chemical  Company  (Dow)
entered into a confidential  settlement agreement which was effective January 1,
2000, to resolve BLM partnership's  claim to recover damages incurred related to
the installation in 1992 by Dow of a hydrogen sulfide abatement system.

     In  February  2000,  Navy I, Navy II,  and BLM  reached a  settlement  with
Edison,  subject to the approval of the California Public Utilities  Commission,
which was received in December 2000. The case has not yet been dismissed pending
completion of certain  obligations under the settlement  agreement.  The cost of
the settlement was allocated among the Coso partnerships.

     Except as otherwise  described above,  the Coso  partnerships are currently
parties to various items of litigation,  none of which, if determined adversely,
would 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

                                       8

                                     Part II


Item 5.  Market for Registrants Common Equity and Related Stockholder Matters.

      Not applicable.


Item 6. Selected Financial Data.

     The selected  fiscal year end  historical  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.




<PAGE>
<TABLE>
<CAPTION>

                                                          Navy I Partnership
                                                           (Stand-alone)(a)
                                                   (In thousands, except ratio data)


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

                                                          1996           1997          1998      1999 (c)       2000
                                                          ----           ----          ----      ----           ----
<S>                                                    <C>            <C>            <C>         <C>          <C>
Statement of Operations Data:

    Operating Revenues(b)................             $ 118,206      $ 100,431     $  53,153   $  55,666    $  67,653
    Operating expenses...................               (36,147)       (33,992)      (31,894)    (32,129)     (44,358)
                                                      ---------      ---------     ---------   ---------    ---------

    Operating income.....................                82,059         66,439        21,259      23,537       23,295

Non-Operating income and (expense):

    Interest expense.....................                (8,868)        (6,260)       (4,210)    (11,573)     (12,493)
    Other expenses.......................                   --             --         (1,046)     (4,377)        (520)
    Interest and other income, net.......                 3,286          1,980           585       2,234        2,506
                                                      ---------      ---------     ---------   ---------    ---------

    Net income...........................             $  76,477      $  62,159     $  16,588   $   9,821    $  12,788
                                                      =========      =========     =========   =========    =========


Operating Data:

    Operating capacity factor (d)(e).....                112.1%         103.2%         94.6%       95.4%       111.8%
    kWh produced.........................               787,688        723,116       662,560     668,388      785,624



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

<TABLE>
<CAPTION>

                                                                9

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


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


                                                          1996           1997          1998      1999 (c)       2000
                                                          ----           ----          ----      ----           ----
<S>                                                     <C>            <C>           <C>          <C>          <C>

Statement of Operations Data:

    Operating Revenues (b)...............             $ 101,923      $ 102,868     $ 107,199   $  49,877    $  57,453
    Operating expenses...................               (40,017)       (43,193)      (44,687)    (38,534)     (46,693)
                                                      ---------      ---------     ---------   ---------    ---------

    Operating income.....................                61,906         59,675        62,512      11,343       10,760

Non-Operating income and (expense):

    Interest expense.....................               (13,162)        (9,105)       (6,107)     (8,725)      (9,174)
    Other expenses.......................                   --             --         (1,113)     (3,332)        (318)
    Interest and other income, net.......                 2,520          1,712         1,181       1,066        8,125
                                                      ---------      ---------     ---------   ---------    ---------

       Net income........................             $  51,264      $  52,282     $  56,473   $     352    $   9,393
                                                      =========      =========     =========   =========    =========

Operating Data:

    Operating capacity factor (d)(e).....                107.9%          99.6%        104.4%      105.0%       109.4%
    kWh produced.........................               758,115        697,794       731,767     735,840      769,098



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


<PAGE>
<TABLE>
<CAPTION>


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


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

                                                         1996           1997          1998      1999 (c)       2000
                                                         ----           ----          ----      ----           ----
<S>                                                     <C>            <C>           <C>        <C>          <C>
Statement of Operations Data:

    Operating Revenues (b)...............            $ 115,126      $ 112,796     $ 119,564   $ 113,746     $ 58,366
    Operating expenses...................              (37,911)       (37,749)      (41,120)    (43,577)     (49,895)
                                                     ---------      ---------     ---------   ---------     ---------

    Operating income.....................               77,215         75,047        78,444      70,169        8,471

Non-Operating income and (expense):

    Interest expense.....................              (12,149)       (10,532)       (7,918)    (11,947)      (9,130)
    Other expenses.......................                  --             --         (1,868)     (4,191)        (769)
    Interest and other income, net.......                3,174          2,187         1,799       2,174        2,868
                                                     ---------      ---------     ---------   ---------     ---------

       Net income........................            $  68,240      $  66,702     $  70,457   $  56,205     $   1,440
                                                     =========      =========     =========   =========     =========

Operating Data:

    Operating capacity factor (d)(e).....               110.6%         108.9%        108.6%      112.0%       111.1%
    kWh produced.........................              777,243        762,821       760,659     785,772      780,709



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

                                                             10
<PAGE>

<TABLE>
<CAPTION>

                                                                          As of December 31,
                                                                          ------------------


                                                         1996           1997          1998        1999         2000
                                                         ----           ----          ----        ----         ----
Balance Sheet Data (in thousands):
----------------------------------
<S>                                                    <C>            <C>           <C>         <C>          <C>
Navy I Partnership (stand-alone)(a)

     Cash......................................      $  15,724      $   2,888     $     --    $   7,821    $   3,506
     Restricted cash and investments...........         29,016          6,479         7,524      25,001       22,996
     Property, plant and equipment, net........        195,146        186,399       180,189     153,879      149,076
     Power purchase agreement, net.............            --             --            --       13,388       12,240
     Total assets..............................        264,250        209,390       202,266     218,192      198,409
     Project loans:
       Existing project debt, payable to
         Coso Funding Corp.....................         76,056         45,666        40,566         --           --
     Project notes (f).........................            --             --            --      151,550      134,984
     Partners' capital.........................        167,834        155,568       149,933      49,362       46,871

BLM Partnership (stand-alone)

     Cash......................................      $  13,166      $     873     $     --    $   6,423    $   5,862
     Restricted cash and investments...........         23,298            290           290       9,806       14,502
     Property, plant and equipment, net........        208,867        198,296       202,270     165,650      153,618
     Power purchase agreement, net.............            --             --            --       20,549       19,510
     Total assets..............................        269,637        225,172       228,381     216,391      201,312
     Project loans:
       Existing project debt, payable to
         Coso Funding Corp. ...................        105,990         76,654        37,958         --           --
     Project notes (f).........................            --             --            --      107,900      100,907
     Partners' capital.........................        112,666        124,113       163,191      79,350       69,245

Navy II Partnership (stand-alone)

     Cash......................................      $  18,133      $   1,148     $     818   $   6,020    $   7,741
     Restricted cash and investments...........         22,391            --            --       54,338       10,214
     Property, plant and equipment, net........        203,454        199,134       188,840     147,522      136,947
     Power purchase agreement, net.............            --             --            --       28,409       25,614
     Total assets..............................        272,549        228,653       220,867     273,269      195,693
     Project loans:
       Existing project debt, payable to
          Coso Funding Corp..... ..............        124,361         97,267        61,323         --           --
     Project notes (f).........................            --             --            --      153,550       94,176
     Partners' capital.........................        126,092        125,413       153,661     104,331       87,423


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

                                       11

      Footnotes to Summary Selected Historical 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.  During 1999,
     the closing of the Series A notes offering, 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  CACs  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 partnership's
    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.

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

     Except for historical 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   partnerships")
,collectively,  (the "Coso partnerships") and their respective  management.  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 are: (i) risks relating to
the uncertainties in the California energy market,  (ii) the financial viability
of Southern  California Edison,  ("Edison"),  (iii) that 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,  (vi)
general operating risks,(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 and (xii) seasonality.

                                       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 $5.0  million in  contingent
payments,  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 6.8%
Series B Senior Secured Notes and 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 Ediso'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.

     For the year ended December 31, 2000,  Edison's annual average avoided cost
of energy paid to the Navy I, the BLM and the Navy II Partnerships was 5.8 cents
per kWh,  which is  substantially  below the fixed energy  prices  earned by the
partnerships  prior to the expiration of the fixed energy price periods of their
respective power purchase agreements.  Estimates of Edison's future avoided cost
of energy vary significantly, and no one can predict the likely level of avoided
cost of energy prices.

                                       13

     The Coso  Partnerships  implemented  a  steam-sharing  program,  which they
established  under the Coso Geothermal  Exchange  Agreement they entered into in
1994. 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.

     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 due in 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.

     Under the depositary agreement,  the Coso partnerships established accounts
with a depositary  and pledged those accounts as security for the benefit of the
holders of the senior secured notes.  All amounts  deposited with the depositary
are, at the direction of the Coso  partnerships,  invested by the  depositary 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 depositary of a certificate from the relevant Coso partnerships detailing
the amounts to be paid from funds in its respective revenue account.

     Increases in natural gas prices and an imbalance between supply and demand,
among other factors, has lead to significant  increases in wholesale electricity
prices in California.  Edison had previously  agreed to fixed tariffs with their
retail customers that were significantly  below the wholesale prices they pay in
California.  This resulted in  significant  under-recoveries  by Edison of their
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.  Edison  has not  made  payments  to the  Coso  partnerships  for  power
generated  in November  and  December of 2000,  which were  $13,284 and $32,540,
respectively.  The Coso partnerships have also billed Edison for energy provided
in January  and  February  of 2001.  The cost to Edison for this power  would be
approximately $33,813 and $24,421, respectively.


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.


                                       14


     The following  data includes the operating  capacity  factor,  capacity and
electricity  production  (in kWh) for each  Coso  partnership  on a  stand-alone
basis:

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

     Navy I Partnership (stand alone)        2000           1999           1998
                                             ----           ----           ----
     Operating capacity factor             111.8%          95.4%          94.6%
     Capacity (MW) (average)                89.44          76.34          75.63
     kWh produced (000s)                  785,624        668,388        662,560

     BLM Partnership (stand alone)

     Operating capacity factor             109.4%         105.0%         104.4%
     Capacity (MW) (average)                87.56          84.00          83.54
     kWh produced (000s)                  769,098        735,840        731,767

     Navy II Partnership (stand alone)

     Operating capacity factor             111.1%         112.1%         108.6%
     Capacity (MW) (average)                88.88          89.70          86.83
     kWh produced (000s)                  780,709        785,772        760,659


     Total energy  production  for the Navy I partnership  was 785.6 million kWh
for 2000, as compared to 668.4  million kWh for 1999, an increase of 17.5%.  The
increase in Navy I partnership's  energy production is attributable to increased
production  resulting  from  decreased  steam  transfers  and the  outage of one
turbine generator unit during a portion of 1999. Total energy production for the
BLM partnership was 769.1 million kWh for 2000, as compared to 735.8 million kWh
in  1999,  an  increase  of  4.5%.  Total  energy  production  for  the  Navy II
partnership  was 780.7 million kWh for 2000, as compared to 785.8 million kWh in
1999, a decrease of 0.6%.

     Total energy  production  for the Navy I partnership  was 668.4 million kWh
for 1999, as compared to 662.6 million kWh for 1998, an increase of 0.9%.  Total
energy  production  for the BLM  partnership  was 735.8 million kWh for 1999, as
compared  to 731.8  million  kWh in 1998,  an  increase  of 0.5%.  Total  energy
production  for the Navy II  partnership  was 785.8  million  kWh for  1999,  as
compared to 760.7 million kWh in 1998, an increase of 3.3%.


Results of Operations for the years ended December 31, 2000, 1999, and 1998.
----------------------------------------------------------------------------

     The following  discusses the results of operations of the Coso partnerships
for the years ended December 31, 2000,  1999 and 1998 (dollar  amounts in tables
in thousands, except per kWh data):

<TABLE>
<CAPTION>

Revenue

                                       2000                          1999                          1998
                                       ----                          ----                          ----
                                  $          cents/kWh           $        cents/kWh           $         cents/kWh
                                  -          ---------           -         ---------           -         ---------
<S>                            <C>              <C>          <C>             <C>           <C>             <C>
Total Operating Revenues

Navy I partnership             67,653           8.6           55,666          8.3           53,153          8.0
BLM partnership                57,453           7.5           49,877          6.8          107,199         14.6
Navy II partnership            58,366           7.5          113,746         14.5          119,564         15.7

Capacity & Bonus Revenues

Navy I partnership             14,266           1.8           13,372          2.0           13,573          2.0
BLM partnership                13,940           1.8           13,938          1.9           13,847          1.9
Navy II partnership            14,018           1.8           14,018          1.8           14,018          1.8

Energy Revenues

Navy I partnership             53,387           6.8           42,294          6.3           39,580          6.0
BLM partnership                43,513           5.7           35,939          4.9           93,352         12.8
Navy II partnership            44,348           5.7           99,728         12.7          105,546         13.9

</TABLE>

                                    15

     Total  operating  revenues  for the Navy I  partnership,  which  consist of
capacity  payments,  capacity  bonus  payments and energy  payments,  were $67.7
million for 2000,  as compared to $55.7  million in 1999,  an increase of 21.5%.
The  increase  in total  operating  revenues  and energy  revenues  for 2000 was
primarily  due to the  increase in the average  avoided  cost of energy from 3.1
cents per kWh in 1999 to 5.8 cents per kWh in 2000.  Capacity and bonus revenues
were $14.3  million for 2000,  as compared to $13.4 million in 1999, an increase
of 6.7%. The increase was due to increased  production  resulting from decreased
steam  transfers  and the outage of one of the Navy I units  during a portion of
1999.

     Total operating revenues for the BLM partnership, which consist of capacity
payments,  capacity bonus payments and energy  payments,  were $57.5 million for
2000, as compared to $49.9  million in 1999, an increase of 15.2%.  The increase
in total  operating  revenues and energy  revenues for 2000 was primarily due to
the increase in average avoided cost of energy from 3.1 cents per kWh in 1999 to
5.8 cents per kWh in 2000.

     Total  operating  revenues for the Navy II  partnership,  which  consist of
capacity  payments,  capacity  bonus  payments and energy  payments,  were $58.4
million for 2000,  as compared to $113.7  million in 1999,  a decrease of 48.6%.
The Navy II partnerships  energy revenues  decreased by $55.3 million due to the
expiration  of the fixed energy  price  period  under the Navy II  partnership's
power  purchase  agreement  in January  2000 and the receipt of energy  payments
based on Edison's  avoided cost of energy since that time.  Until  January 2000,
and during 1999, the Navy II partnership  received  approximately 14.5 cents per
kWh for energy delivered.  Under the avoided cost of energy formula, the Navy II
partnership  received an average of  approximately  6.0 cents per kWh for energy
delivered for the period February 2000 to December 2000.

     Total  operating  revenues  for the Navy I  partnership,  which  consist of
capacity  payments,  capacity  bonus  payments and energy  payments,  were $55.7
million for 1999, as compared to $53.2 million in 1998, an increase of 4.7%. The
increase in total operating  revenues and energy revenues for 1999 was primarily
due to the Navy I partnership's  ability to transfer geothermal steam to the BLM
partnership  and the Navy II  partnership,  both of which were receiving  higher
fixed energy prices under their  respective  power purchase  agreements (the BLM
partnership  stopped  receiving  higher  fixed  energy  prices  during the first
quarter of 1999) and slightly higher energy prices received from Edison.

     Total operating revenues for the BLM partnership, which consist of capacity
payments,  capacity  bonus payments and energy  payments,  were $49.9 million in
1999,  as  compared  to $107.2  million in 1998,  a decrease  of 53.5%.  The BLM
partnership's  energy  revenues  decreased by $57.3 million in 1999,  due to the
expiration  of the fixed energy price period under the BLM  partnership's  power
purchase  agreement  in March 1999 and the receipt of energy  payments  based on
Edison's  avoided cost of energy since that time.  Until March 1999,  and during
1998, the BLM partnership  received  approximately 14.6 cents per kWh for energy
delivered.  Under  the  avoided  cost of  energy  formula,  the BLM  partnership
received an average of approximately  3.2 cents per kWh for energy delivered for
the period April 1999 to December 1999.

     Total  operating  revenues for the Navy II  partnership,  which  consist of
capacity  payments,  capacity  bonus payments and energy  payments,  were $113.7
million in 1999, as compared to $119.6  million in 1998, a decrease of 4.9%. The
decrease  in  revenues  was due to  increased  steam  transfers  from the Navy I
partnership.

                                       16

<TABLE>
<CAPTION>

Interest and Other Income
                                 2000                      1999                    1998
                                 ----                      ----                    ----
                              $     cents/kWh           $     cents/kWh         $     cents/kWh
                              -     ---------           -     ---------         -     ---------
<S>                        <C>          <C>          <C>          <C>        <C>          <C>

Navy I partnership         2,506        0.3          2,234        0.3          585        0.1
BLM partnership            8,125        1.1          1,066        0.1        1,181        0.2
Navy II partnership        2,868        0.4          2,174        0.3        1,799        0.2
</TABLE>


     The Navy I  partnership's  interest  and other  income was $2.5  million in
2000,  as compared to $2.2 million in 1999,  an increase of 13.6%.  The increase
was  primarily  due to a  settlement  of $600,000  for legal fees related to the
Edison  litigation  and  increased  interest  income from  higher cash  reserves
balances  required by the senior  secured notes issued on May 28, 1999.  The BLM
partnership's interest and other income was $8.1 million in 2000, as compared to
$1.1 million in 1999, an increase of $7.0  million.  This increase was primarily
due to a legal settlement of $6.1 million with Dow Chemical Company,  settlement
of  $600,000  for legal fees  related to the Edison  litigation,  and  increased
interest  income  from  higher  cash  reserves  balances  required by the senior
secured  notes issued on May 28, 1999.  The Navy II  partnership's  interest and
other income was $2.9 million in 2000,  as compared to $2.2 million in 1999,  an
increase of 31.8%.  The increase was  primarily  due to a settlement of $600,000
for legal fees related to the Edison litigation and increased in interest income
from higher cash reserves  balances  required by the senior secured notes issued
on May 28, 1999.

     The Navy I  partnership's  interest  and other  income was $2.2  million in
1999,  as compared to $0.6  million in 1998,  an increase of $1.6  million.  The
increase  was  primarily  due to the  accrual of a $1.6  million  business  loss
insurance  recovery  in  connection  with  the  shutdown  of one  of the  Navy I
partnership's turbine generator units during the first quarter of 1999. The shut
down unit was returned to service in May of 1999. The  partnership has recovered
$500,000  with respect to the  insurance  and has reserved  the  remaining  $1.1
million pending resolution of the insurance claim. The remainder of the increase
in interest and other income for the Navy I  partnership  resulted from interest
income on cash revenues required by the senior notes issued on May 28, 1999. The
BLM  partnership's  interest  and other  income  was $1.1  million  in 1999,  as
compared to $1.2  million in 1998,  a decrease of 8.3%.  The decrease was due to
the  decreased  level of cash  balances  resulting  from the reduction in energy
revenues subsequent to the expiration of the fixed energy price period under the
BLM  partnerships  power  purchase  agreements in March 1999. The decreases were
partially  mitigated by interest income resulting from cash reserves required by
the senior  secured  notes  issued on May 29,  1999.  The Navy II  partnership's
interest and other income was $2.2 million in 1999,  as compared to $1.8 million
in 1998,  an increase of 22.2%.  The increase was  primarily  due to interest on
increased  cash reserves  required by the senior secured notes issued on May 28,
1999.


<TABLE>
<CAPTION>

Edison Legal Expenses and Settlement Costs

                                 2000                      1999                    1998
                                 ----                      ----                    ----
                            $       cents/kWh           $     cents/kWh         $     cents/kWh
                            -       ---------           -     ---------         -     ---------
<S>                        <C>          <C>          <C>          <C>        <C>          <C>

Navy I partnership         --           0.0          2,373        0.4        2,969        0.4
BLM partnership            --           0.0          4,169        0.6        2,968        0.4
Navy II partnership        --           0.0          5,819        0.7        2,956        0.4
</TABLE>


     Edison legal expenses and settlement  costs  decreased in 2000 for the Navy
I, BLM and Navy II partnerships by $2.4 million,  $4.2 million and $5.8 million,
respectively.   Legal  expenses   including   monies  allocated  for  litigation
settlements  increased  in 1999  for the BLM and  Navy II  partnerships  by $1.2
million  and $2.9  million,  respectively.  The  change  for both  2000 and 1999
resulted from,  among other  expenses,  an accrued  settlement  obligation  with
Edison.

                                       17

<TABLE>
<CAPTION>

Plant Operations
                                2000                      1999                    1998
                                ----                      ----                    ----
                              $       cents/kWh        $       cents/kWh      $        cents/kWh
                              -       ---------        -       ---------      -        ---------
<S>                       <C>           <C>         <C>           <C>       <C>           <C>

Navy I partnership         8,609        1.1         10,017        1.5       10,020        1.5
BLM partnership           12,008        1.6         15,568        2.1       16,418        2.2
Navy II partnership        9,409        1.2         10,873        1.4       12,271        1.6
</TABLE>



     The  Navy I  partnership's  operating  expenses,  including  operating  and
general and  administrative  expenses  were $8.6 million in 2000, as compared to
$10.0  million in 1999,  a decrease of 14.0%.  The BLM  partnership's  operating
expenses, including operating and general and administrative expenses were $12.0
million in 2000, as compared to $15.6 million in 1999, a decrease of 23.1%.  The
Navy II partnership's  operating  expenses  including  operating and general and
administrative  expenses were $9.4 million in 2000, as compared to $10.9 million
in 1999, a decrease of 13.8%.  The decreases  for each of the Coso  partnerships
for 2000 as compared to 1999, was primarily due to the continued  implementation
of  management's  plan to reduce the work force and other operating  costs.  The
replacement  of the Coso  project's  prior  operator and  managing  partner also
contributed to the overall reduction in plant operating costs.

     The decrease in operating expenses for the BLM and Navy II partnerships for
1999,  as compared to 1998,  was due  primarily  to  reductions  in operator and
management  fees,  insurance and other  operating  costs,  somewhat offset by an
increase in property taxes.


<TABLE>
<CAPTION>

Royalty Expenses
                                 2000                      1999                    1998
                                 ----                      ----                    ----
                              $     cents/kWh           $     cents/kWh         $    cents/kWh
                              -     ---------           -     ---------         -    ---------
<S>                       <C>           <C>         <C>           <C>       <C>          <C>

Navy I partnership        10,921        1.4         10,157        1.5        6,824       1.0
BLM partnership            4,045        0.5          3,148        0.4       10,492       1.4
Navy II partnership       10,104        1.3         12,077        1.5       11,868       1.6
</TABLE>


     The Navy I partnership's  royalty  expenses were $10.9 million for 2000, as
compared to $10.2 million in 1999, an increase of 6.9%.  The increase was due to
an increase in energy  revenues  caused by the  increase in the average  avoided
cost of energy from 3.1 cents per kWh in 1999 to 5.8 cents per kWh in 2000.  The
BLM  partnership's  royalty  expenses were $4.0 million for 2000, as compared to
$3.1 million in 1999, an increase of 29.0%. This increase was due to an increase
in energy  revenues caused by the increase in the average avoided cost of energy
from  3.1  cents  per kWh in 1999 to 5.8  cents  per kWh in  2000.  The  Navy II
partnership's royalty expenses were $10.1 million for 2000, as compared to $12.1
million in 1999,  a decrease  of 16.5%.  The  decrease  was  primarily  due to a
reduction in the Navy II partnerships energy revenues,  caused by the expiration
of the fixed energy price period under the Navy II partnership's  power purchase
agreement in January 2000, and the receipt of energy  payments based on Edison's
average avoided cost of energy since that time.  Under the average avoided costs
of energy formula,  the Navy II partnership received an average of approximately
6.0 cents per kWh for energy  delivered for the period February 2000 to December
2000. The decrease in the Navy II partnerships  royalty  expenses were partially
offset by an increase in royalty rate from 10% to 18% as of January 2000.

     The Navy I partnership's  royalty  expenses were $10.2 million for 1999, as
compared to $6.8 million in 1998, an increase of 50.0%.  The increase was due to
a scheduled  increase in the royalty  rate paid to the U.S.  Navy  beginning  in
November 1998 from 10% to 15%. The BLM partnership's  royalty expenses were $3.1
million for 1999,  as compared to $10.5  million in 1998,  a decreased of 70.5%.
This decrease was due to a reduction in BLM  partnership  revenues caused by the
expiration  of the fixed energy price period under the BLM  partnership's  power
purchase  agreement  in March  1999,  and the receipt of energy  payments  under
Edison's   average  avoided  cost  of  energy  since  that  time.  The  Navy  II
partnership's royalty expenses were $12.1 million for 1999, as compared to $11.9
million in 1998,  an increase of 1.7%.  The  increase  was due to an increase in
production.

                                       18

<TABLE>
<CAPTION>

Depreciation and Amortization
                                 2000                      1999                    1998
                                 ----                      ----                    ----
                              $     cents/kWh           $     cents/kWh         $    cents/kWh
                              -     ---------           -     ---------         -    ---------
<S>                       <C>           <C>         <C>           <C>       <C>          <C>

Navy I partnership         9,594        1.2          9,582        1.4       12,081       1.8
BLM partnership           15,361        2.0         15,649        2.1       14,809       2.0
Navy II partnership       15,070        1.9         14,808        1.9       14,025       1.8
</TABLE>


     The Navy I partnership's  depreciation  and  amortization  expense was $9.6
million for 1999, as compared to $12.1 million in 1998, a decrease of 20.7%. The
decrease  was  primarily  due to purchase  accounting  adjustments.  The overall
effect was a reduction  in  depreciation  expense that was  partially  offset by
depreciation  on  1999  additions.   The  BLM  partnership's   depreciation  and
amortization  expense was $15.6  million for 1999,  as compared to $14.8 million
for 1998, an increase of 5.4%. The increase was due to substantial  increases in
1999 asset  additions,  partially  offset by the effect of  purchase  accounting
adjustments. The Navy II partnership's depreciation and amortization expense was
$14.8  million for 1999,  as compared to $14.0  million in 1998,  an increase of
5.7%. The increase was due to purchase  accounting  adjustments and depreciation
expense on 1999 asset additions.


<TABLE>
<CAPTION>

Interest Expense
                                 2000                      1999                    1998
                                 ----                      ----                    ----
                              $     cents/kWh           $     cents/kWh         $    cents/kWh
                              -     ---------           -     ---------         -    ---------
<S>                       <C>           <C>          <C>          <C>        <C>         <C>

Navy I partnership        12,493        1.6          9,611        1.4        4,210       0.6
BLM partnership            9,174        1.2          7,310        1.0        6,107       0.8
Navy II partnership        9,130        1.2          9,937        1.3        7,918       1.0
</TABLE>


     The Navy I  partnership's  interest  expense was $12.5  million in 2000, as
compared to $9.6 million in 1999,  an increase of 30.2%.  The BLM  partnership's
interest  expense was $9.2 million in 2000, as compared to $7.3 million in 1999,
an  increase  of 26.0%.  The Navy II  partnership's  interest  expense  was $9.1
million in 2000, as compared to $9.9  million in 1999, a decrease of 8.1%.  The
increases in interest expense for the Navy I partnership and the BLM partnership
and the decrease in interest  expense for the Navy II  partnership  for the year
2000, as compared to 1999, were the result of higher  outstanding  debt balances
under the $413 million senior secured notes issued on May 28, 1999.

     The Navy I  partnership's  interest  expense was $9.6  million in 1999,  as
compared to $4.2 million in 1998, an increase of 128.6%.  The BLM  partnership's
interest  expense was $7.3 million in 1999, as compared to $6.1 million in 1998,
an  increase  of 19.7%.  The Navy II  partnership's  interest  expense was $9.9
million in 1999,  as  compared  to $7.9  million in 1998,  an increase of 25.3%.
These increases were due to higher  outstanding debt balances resulting from the
$413 million senior secured financing which closed on May 28, 1999.


Provision for Doubtful Accounts

     In recent  months,  Edison  has  experienced  significant  undercollections
resulting  from the  difference  between  revenues  received  from its customers
through  currently  frozen  rates  and the  cost  of  producing  service  to its
customers,  including  procurement costs. Those  undercollections have adversely
affected Edison's liquidity and in turn they have not paid the Coso partnerships
for  November  and  December   revenues.   Despite   extensive  and   continuing
negotiations with Edison,  the Coso partnerships have been unable to secure from
Edison a firm  indication of the time frame during which they can expect payment
of their November and December receivables,  nor the amount, if any, that Edison
is  prepared  to pay.  Therefore,  an  allowance  for  uncollectible  amounts of
$15,234, $15,279 and $15,312 for Navy I, BLM and Navy II, respectively, has been
established for revenues earned but not yet paid as of December 31, 2000.

                                       19

Interest Expense - Acquisition Debt

     The  Navy I, BLM and  Navy II  partnerships  incurred  interest  expense -
acquisition debt of $2.0 million,  $1.4 million, and $2.0 million,  respectively
in 1999.  This interest  expense  related to  acquisition  debt in the amount of
$211.5 million and was incurred on February 25, 1999 to acquire the interests of
CalEnergy in the Coso  partnerships.  This  acquisition debt was repaid with the
proceeds of the $413.0 million senior secured notes issued on May 28, 1999.


Costs Related to Acquisition Debt

     The Navy I, BLM and Navy II  Partnerships  incurred  other expenses of $1.6
million,  $1.3 million and $1.5  million,  respectively,  for the twelve  months
ended  December 31,  1999.  These other  expenses,  which  consist  primarily of
lending,  legal and other fees, related to the acquisition debt in the amount of
$211.5 million incurred on February 25, 1999 to acquire Cal Energy's interest in
the Coso Partnerships. This acquisition debt was repaid with the proceeds of the
$413.0 million senior secured notes issued on May 28, 1999.


Loss on early extinguishment of debt

     The Navy I,  BLM and  Navy II  partnerships  recorded  a loss on the  early
extinguishment  of their  previous  debt in the  amounts of $2.4  million,  $1.8
million and $2.1 million, respectively, for the twelve months ended December 31,
1999.  This  loss was due to  premium  and  other  costs  incurred  to repay the
existing  project debt of the Coso  partnerships  before its scheduled  maturity
date.  These costs included  tender premiums paid to the holders of the previous
debt and the write off of the  remaining  balance of  deferred  financing  costs
related to the issuance of the previous  debt. The previous debt was repaid with
the proceeds of the $413.0 million senior secured notes issued on May 28, 1999.


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 the
power purchase  agreements and from interest  income earned on funds on deposit.
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  Partnership's  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.  Edison's  increasing
under-collections,   coupled  with  its  near  term  capital   requirements  has
materially  and adversely  affected its  liquidity.  Unless actions are taken to
restore  Edison's  financial  condition,  there is  uncertainty of collection of
receivables  owed to the Coso  partnership for revenues  generated from November
2000  forward.  Edison's failure  to pay its  obligations  will have a  material
adverse effect on the Coso  Partnership's  ability to make debt service payments
as the come due under the Funding Corp. notes.

                                       20


     The following  table sets forth a summary of each Coso  partnership's  cash
flows for the years ended December 31, 2000, December 31, 1999, and December 31,
1998.
<TABLE>
<CAPTION>
                                                               2000           1999           1998
                                                               ----           ----           ----
<S>                                                            <C>            <C>            <C>
Navy I partnership (stand alone)
 Net cash provided by operating activities                  $  29,168      $  24,388      $  31,928
 Net cash used in investing activities                         (1,638)       (24,094)        (7,493)
 Net cash provided (used) by financing activities             (31,845)         7,527        (27,323)
                                                            ---------      ---------      ---------
      Net change in cash and cash equivalents               $  (4,315)     $   7,821      $  (2,888)
                                                            =========      =========      =========

BLM partnership (stand alone)
 Net cash provided by operating activities                  $  32,916      $  29,806      $  75,855
 Net cash used in investing activities                         (6,986)       (16,699)       (20,637)
 Net cash used by financing activities                        (26,491)        (6,684)       (56,091)
                                                            ---------      ---------      ---------
      Net change in cash and cash equivalents               $    (561)     $   6,423      $    (873)
                                                            =========      =========      =========

Navy II partnership (stand alone)
 Net cash provided by operating activities                  $  37,019      $  74,802      $  84,833
 Net cash provided (used) in investing activities              42,124        (58,752)        (7,010)
 Net cash used by financing activities                        (77,722)       (10,848)       (78,153)
                                                            ---------      ---------      ---------
      Net change in cash and cash equivalents               $   1,721      $   5,202      $    (330)
                                                            =========      =========      =========
</TABLE>


     The Navy I partnership's cash flows from operating  activities increased by
$4.8  million in 2000 as compared to 1999,  primarily  due to an increase in net
income,  decreases  in both  accounts  receivable  and amounts due from  related
parties, partially offset by decreases in trade payables.

     Cash used in investing  activities at the Navy I  partnership  decreased by
$22.5  million  in 2000 as  compared  to 1999,  primarily  due to  decreases  in
restricted cash requirements associated with the project loan from Funding Corp.

     The Navy I partnership's cash flows from financing  activities decreased by
$39.4  million in 2000 as compared to 1999,  primarily  due to the project  loan
from Funding Corp in 1999,  partially offset by both lower repayments of project
financing loans and decreased distributions to partners in 2000.

     The BLM  partnership's  cash flows from operating  activities  increased by
$3.1 million in 2000 as compared 1999,  primarily due to increases in net income
and amounts due to related parties, and a decrease in accounts receivable.

     Cash used in investing activities at the BLM partnership  decreased by $9.7
million  in 2000  as  compared  to  1999,  due to a  reduction  in 2000  capital
expenditures.

     The BLM partnership's cash used in financing  activities increased by $19.8
million in 2000 as compared  to 1999,  primarily  due to the  project  loan from
Funding  Corp in 1999,  partially  offset by both  lower  repayments  of project
financing loans and decreased distributions to partners in 2000.

     The Navy II partnership's cash flows from operating activities decreased by
$37.8  million in 2000 as compared to 1999,  primarily  due to a decrease in net
income caused by the  expiration of the fixed energy price period under the Navy
II  Partnership's  power  purchase  agreement in January 2000 and the receipt of
energy payments based on Edison's  avoided cost of energy since that time. Under
the avoided costs of energy formula, the Navy II partnership received an average
of approximately  6.0 cents per kWh for energy delivered for the period February
2000 to  December  2000.  The  decrease  in net income was  partially  offset by
decreases in accounts receivable and amounts due from related parties.

                                       21

     Cash flows from investing  activities at the Navy II partnership  increased
by $100.9  million in 2000 as compared to 1999,  primarily  due to a decrease in
restricted cash requirements associated with the project loan from Funding Corp.

     The Navy II partnership's  cash used in financing  activities  increased by
$66.9  million in 2000 as compared to 1999,  primarily  due to the project  loan
from Funding Corp in 1999,  partially offset by both lower repayments of project
financing loans and decreased distributions to partners in 2000.

     The Navy I partnership's cash flows from operating  activities decreased by
$7.5  million in 1999 as  compared to 1998,  primarily  due to  financing  costs
associated  with the short  term debt  obtained  to  complete  the  purchase  of
CalEnergy's interest in the Navy I partnership and also due to the interest cost
relating to the $413.0 million senior secured notes issued on May 28, 1999.

     Cash used in investing  activities at the Navy I  partnership  increased by
$16.6 million in 1999 as compared to 1998,  primarily as a result of an increase
in restricted  cash  requirements  associated with the project loan from Funding
Corp.

     The Navy I partnership's cash flows from financing  activities increased by
$34.9  million in 1999 as compared to 1998, as a result of the project loan from
Funding Corp. offset by increased distributions to partners.

     The BLM  partnership's  cash flows from operating  activities  decreased by
$46.0  million in 1999 as compared  1998,  primarily due to a decrease in energy
revenues as a result of the switch to avoided cost in March 1999,  and increased
financing  costs  associated  with the short term debt  obtained to complete the
purchase of CalEnergy's interest in the BLM partnership.

     Cash used in investing activities at the BLM partnership  decreased by $3.9
million in 1999 as  compared  to 1998,  primarily  due to a decrease  in capital
expenditures  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 decreased by $49.4
million  in 1999 as  compared  to 1998,  as a result  of the  project  loan from
Funding Corp. offset by increased distributions to partners.

     The Navy II partnership's cash flows from operating activities decreased by
$10.0  million  in 1999 as  compared  1998,  primarily  due to  financing  costs
associated  with the short  term debt  obtained  to  complete  the  purchase  of
CalEnergy's  interest  in the Navy II  partnership  as well as  increased  steam
transfers.

     Cash used in investing  activities at the Navy II partnership  increased by
$51.7  million in 1999 as compared  to 1998,  primarily  due to the  increase in
restricted cash requirements associated with the project loan from Funding Corp.

     The Navy II partnership's  cash used by financing  activities  decreased by
$67.3  million in 1999 as compared to 1998, as a result of the project loan from
Funding Corp. offset by increased distributions to partners.


                                       22


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 our 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
our 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 California  energy market,  Edison's
     financial  viability is uncertain.  If Edison were to enter into bankruptcy
     procedures,  the power purchase contracts could be amended and any accounts
     receivable from Edison could be reduced or eliminated.

   * The Coso geothermal resource could be interrupted or unavailable;

   * Operating costs could increase;

   * 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;

   * 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,  could affect one or more of the Coso
     projects 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.


                                       23


<PAGE>

                        CAITHNESS COSO FUNDING CORP. AND
                          COSO OPERATING PARTNERSHIPS

                                      Index


Caithness Coso Funding Corp:
----------------------------
KPMG LLP Independent Auditors Report                           F-1
Balance Sheet as of December 31, 2000 and 1999                 F-2
Statement of Income for the years ended
     December 31, 2000 and 1999                                F-3
Statement of Cash Flows for the years
     ended December 31, 2000 and 1999                          F-4
Notes to Financial Statements                                  F-5

Coso Finance Partners:
----------------------
KPMG LLP Independent Auditors Report                           F-6
PricewaterhouseCoopers LLP Report of
     Independent Accountant                                    F-7
Balance Sheets as of December 31, 2000 and 1999                F-8
Statements of Operations for the twelve-months
    ended December 31, 2000, two-months ended
    February 28, 1999, ten-months ended December 31,
    1999, twelve-months ended December 31, 1999 and
    twelve-months ended December 31, 1998                      F-9
Statements of Partners  Capital for the years
    ended December 31, 2000, 1999, and 1998                    F-10
Statements of Cash Flows for the twelve-months
    ended December 31, 2000, two-months ended
    February 28, 1999, ten-months ended December
    31, 1999, twelve-months ended December 31, 1999
    and twelve-months ended December 31, 1998                  F-11
Notes to Financial Statements                                  F-12

Coso Energy Developers:
-----------------------
KPMG LLP Independent Auditors Report                           F-13
PricewaterhouseCoopers LLP Report of Independent
    Accountants                                                F-14
Balance Sheets as of December 31, 2000 and 1999                F-15
Statements of Operations for the twelve-months ended
    December 31, 2000, two-months ended February 28,
    1999, ten-months ended December 31, 1999, twelve-
    months ended December 31, 1999 and twelve-months
    ended December 31, 1998                                    F-16
Statements of Partners Capital for the years
    ended December 31, 2000, 1999 and 1998                     F-17
Statements of Cash Flows for the twelve-months
    ended December 31, 2000, two-months ended
    February 28, 1999 ten-months ended December
    31, 1999, twelve-months ended December 31, 1999
    and twelve-months ended December 31, 1998                  F-18
Notes to Financial Statements                                  F-19

Coso Power Developers:
----------------------
KPMG LLP Independent Auditors Report                           F-20
PricewaterhouseCoopers LLP Report of
    Independent Accountants                                    F-21
Balance Sheets as of December 31, 2000 and 1999                F-22
Statements of Operations of the twelve-months
    ended December 31, 2000, two-months ended
    February 28, 1999, ten months ended December
    31, 1999, twelve-months ended December 31,
    1999 and twelve-months ended December 31, 1998             F-23
Statements of Partners Capital for the years
    ended December 31, 2000, 1999 and 1998                     F-24
Statements of Cash Flows for the twelve-months
    ended December 31, 2000, two-months
    ended February 28, 1999, ten-months ended
    December 31, 1999, twelve-months ended
    December 31, 1999 and twelve-months ended
    December 31, 1998                                          F-25
Notes to Financial Statements                                  F-26

Supplemental Unaudited Condensed quarterly
    Financial information for 2000 and 1999                    F-27

Coso Partnerships:
------------------
Supplemental Condensed Combined Financial
     Information for Coso Partnerships
Unaudited Condensed Combined Balance Sheets as
    of December 31, 2000 and 1999                              F-28
Unaudited Condensed Combined Statements of
    Operations for the  twelve-months ended
    December 31, 2000, two-months ended
    February 28, 1999, ten-months ended
    December 31, 1999, twelve months ended
    December 31, 1999 and twelve-months ended
    December 31, 1998                                          F-29
Unaudited Condensed Combined Statements of
    Cash Flows for the twelve-months ended
    December 31, 2000, two months ended
    February 28, 1999, ten-months ended December 31,
    1999, twelve-months ended December 31, 1999
    and twelve-months ended December 31 ,1998                  F-30
Notes to the Unaudited Condensed Combined
    Financial Statements                                       F-31

<PAGE>

                          Independent Auditors Report




The Partners
Coso Funding Corp.:

We have audited the accompanying  balance sheets of Caithness Coso Funding Corp.
as of December 31, 2000 and 1999, and the related  statements of income and cash
flows  for  the  years  then  ended.   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, 2000 and 1999,  and the results of its  operations  and its cash
flows  for the  years  then  ended  in  conformity  with  accounting  principles
generally accepted in the United States of America.



March 16, 2001


/s/ KMPG LLP
------------
    KPMG LLP




                                       F-1
<PAGE>




                                             CAITHNESS COSO FUNDING CORP.

                                                    Balance Sheets

                                              December 31, 2000 and 1999

                                                (Dollars in thousands)

<TABLE>
<CAPTION>


                   Assets                                                                 2000                1999
                                                                                   ----------------    ----------------
<S>                                                                                      <C>                 <C>

Accrued interest receivable                                                     $          1,286               1,392
Project loan to Coso Finance Partners                                                    134,984             151,550
Project loan to Coso Energy Developers                                                   100,907             107,900
Project loan to Coso Power Developers                                                     94,176             153,550
                                                                                   ----------------    ----------------

                   Total assets                                                 $        331,353             414,392
                                                                                   ================    ================
                   Liabilities and Stockholders Equity

Senior secured notes:
Accrued interest payable                                                        $          1,286               1,392
    6.8% notes due December 15, 2001                                                      27,067             110,000
    9.05% notes due December 15, 2009                                                    303,000             303,000
                                                                                   ----------------    ----------------

                   Total liabilities                                                     331,353             414,392

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

                   Total liabilities and stockholders equity                   $        331,353             414,392
                                                                                   ================    ================

</TABLE>

See accompanying notes to financial statements.




                                      F-2
<PAGE>




                                             CAITHNESS COSO FUNDING CORP.

                                                 Statements of Income

                                        Years ended December 31, 2000 and 1999

                                                 (Dollars in thousands)

<TABLE>
<CAPTION>


                                                                                          2000                 1999
                                                                                      -------------        -------------
<S>                                                                                        <C>                 <C>

Revenue:
    Interest income                                                              $        30,799              20,491

Expense:
    Interest expense                                                                     (30,799)            (20,491)
                                                                                      -------------        -------------

Net income                                                                       $          --                  --
                                                                                      =============        =============
See accompanying notes to financial statements.
</TABLE>



                                      F-3


<PAGE>

<TABLE>
<CAPTION>

                                             CAITHNESS COSO FUNDING CORP.

                                               Statements of Cash Flows

                                        Years ended December 31, 2000 and 1999

                                                (Dollars in thousands)



                                                                                          2000                1999
                                                                                      ------------        ------------
<S>                                                                                       <C>               <C>

Cash flows from investing activities                                             $        83,039            (414,392)
                                                                                      ------------        ------------
Cash flows from financing activities                                                     (83,039)            414,392
                                                                                      ------------        ------------

                     Net change in cash                                                     --                  --

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

Cash at end of year                                                              $          --                  --
                                                                                      ============        ============
Supplemental cash flow disclosures:
    Interest paid                                                                $        30,905              20,491
                                                                                      ============        ============


See accompanying notes to financial statements.
</TABLE>




                                      F-4
<PAGE>
                          CAITHNESS COSO FUNDING CORP.

                           Notes to Financial Statements

                           December 31, 2000 and 1999

                             (Dollars in thousands)


(1)  Organization of the Corporation  Caithness Coso Funding Corp.  (Funding
     Corp.),  which was  incorporated  on April 22,  2000,  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 senior secured 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

     Use of Estimates

     The  preparation of financial  statements in conformity with generally
     accepted  accounting  principles  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.

     Fair Value of Financial Instruments

     Basedon quoted market rates of the senior secured notes,  the fair value of
     the project loans and underlying Notes as of December 31, 2000 and 1999 are
     $26,796 and $108,900,  respectively,  for the Notes  maturing in 2001,  and
     $322,979 and $301,485, respectively, for the Notes maturing in 2009.

     New Accounting Pronouncements

     In June 1998,  the  Financial  Accounting  Standards  Board  (FASB)  issued
     Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
     Derivative  Instruments and Hedging Activities.  " In June 2000,FASB issued
     SFAS No. 138,  "Accounting For Certain  Derivative  Instruments and Certain
     Hedging  Activities,"  which  amended  SFAS No. 133 and  addressed  certain
     implementation  issues.  SFAS No.  133,  as  amended,  requires  that every
     derivative instrument (including certain derivative instruments embedded in
     other  contracts)  be recorded  in the balance  sheet as either an asset or
     liability  measured at its fair value.  The  Statement  also  requires that
     changes in the derivative's fair value be recognized  currently in earnings
     unless  specific  hedge  accounting  criteria are met. The Company does not
     have any derivative instruments and therefore the adoption of SFAS No. 133,
     as  amended,  in the  first  quarter  of 2001, will not have any  effect on
     Funding Corp's financial statements.


(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% senior secured notes due 2001 and
     $303,000  9.05% senior  secured 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.  As of
     December 15, 2000 and 1999, the principal payments of $30,268 were made and
     $52,665 was  available  for payment by the  trustee.  The trustee  paid the
     $52,665 to the  noteholders  on  January 19,  2000. The failure to make the
     principal  payment  on  December  15,  1999  did not  result  from  lack of
     performance on the part of Funding Corp. or the  Partnerships,  and Funding
     Corps. management believes this is not an event of default.

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

           Year ending December 31                         Amount
     -------------------------------------             -------------

                   2001                           $       27,067
                   2002                                   21,771
                   2003                                   27,618
                   2004                                   31,332
                   2005                                   35,480
                Thereafter                               186,799
                                                      -------------
                                                  $      330,067
                                                      =============

     The Note indentures contain certain restrictive covenants that, among other
     things, limit the ability to incur additional  indebtedness,  release funds
     from reserve 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, $.01 par
     value per share.  Upon  incorporating  in 1999,  Funding  Corp.  issued 100
     common shares each to CFP, CED, and CPD.

(6)  Risks and Uncertainties

     The Partnerships  future result of operations involve a number of risks and
     uncertainties.  Increases in natural gas prices and an  imbalance  betweeen
     supply and demand, among other factors,  has lead to significant  increases
     in wholesale  electricity prices in California.  Southern California Edison
     (Edison)is  the only customer of the  Partnerships.  Edison had  previously
     agreed to fixed tariffs with their retail customers that were significantly
     below  the  wholesale  prices  they pay in  California.  This  resulted  in
     significant under-recoveries by Edison of their electricity purchase costs.
     On January 16, 2001,  Edison  announced that it was temporarily  suspending
     payments  for  energy  provided,  including  the  energy  provided  by  the
     Partnerships, pending a permanent solution to its liquidity crisis.

     In 2001, the Partnerships  have continued to sell  electricity  under their
     existing Power Purchase  Contracts with Edison.  The State of California is
     expected  to  enact a law  that  will,  among  other  things,  provide  for
     long-term  price stability and payments to qualifying  facilities,  such as
     the Partnerships. Under the draft legislation currently being considered by
     the  California  legislature,  the  Partnerships  believe  that  they will
     ultimately  collect a sufficient  amount of revenue from their  electricity
     sales to fund their operations.


                                       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, 2000 and 1999, and the related  statements of operations,  partners
capital, and cash flows for the years then ended. These financial statements are
the  responsibility of the Partnerships'  management.  Our  responsibility is to
express  an opinion  on these  financial  statements  based on our  audits.  The
combined financial statements of Coso Finance Partners and Coso Finance Partners
II as of and for the year ended December 31, 1998 were audited by other auditors
whose report,  dated February 12, 1999 expressed an unqualified opinion on those
statements.

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 2000 and 1999 financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of Coso  Finance
Partners as of December 31, 2000 and 1999,  and the results of their  operations
and their  cash flows for the years then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.

As discussed in note 3 to the financial statements, effective February 25, 1999,
Caithness  Acquisition Company, LLC acquired all of the partnership interest not
already owned by its affiliates,  ESCA LLC and ESCA II Limited Partnership, in a
business  combination   accounted  for  as  a  purchase.  As  a  result  of  the
acquisition,  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.


March 16, 2001




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


                                       F-6
<PAGE>


                        Report of Independent Accountants



To the Partners of Coso Finance Partners
and Coso Finance Partners II

In our opinion,  the combined  financial  statements  listed in the accompanying
index  present  fairly,  in all  material  respects,  the  combined  results  of
operations and cash flows of Coso Finance  Partners and Coso Finance Partners II
for the year ended December 31, 1998, in conformity with  accounting  principles
generally accepted in the United States of America.  These financial  statements
are the responsibility of the Partnerships' management; our responsibility is to
express  an  opinion  on these  financial  statements  based on our  audits.  We
conducted our audits of these  statements in accordance with auditing  standards
generally  accepted in the United States of America,  which 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,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion  expressed
above.  We have not audited the combined  financial  statements  of Coso Finance
Partners and Coso Finance Partners II for any period  subsequent to December 31,
1998.

As discussed in Note 2 to the combined  financial  statements,  the Partnerships
adopted in 1998  Statement  of Position  No.  98-5,  "Reporting  on the Costs of
Start-Up Activities."


/s/ PRICEWATERHOUSECOOPERS LLP
------------------------------
    PricewaterhouseCoopers LLP



San Francisco, California
February 12, 1999



                                      F-7
<PAGE>

<TABLE>
<CAPTION>

                                                 COSO FINANCE PARTNERS

                                                    Balance Sheets

                                          December 31, 2000 and 1999 (note 3)

                                                (Dollars in thousands)



                   Assets                                                                 2000                1999
                                                                                    ----------------    ----------------
<S>                                                                                       <C>                 <C>

Cash and cash equivalents                                                       $          3,506               7,821
Restricted cash and investments (note 2)                                                  22,996              25,001
Accounts receivable, net (note 2)                                                            521               5,634
Prepaid expenses and other assets                                                            809                 --
Amounts due from related parties  (note 8)                                                 1,960               4,508
Property, plant, and equipment,  net (notes 3 and 5)                                     149,076             153,879
Investment in China Lake Plant Services, Inc. (note 4)                                     4,072               4,212
Power purchase contract, net (note 3)                                                     12,240              13,388
Deferred financing costs, net (note 2)                                                     3,229               3,749
                                                                                    ----------------    ----------------

                   Total assets                                                 $        198,409             218,192
                                                                                    ================    ================

                   Liabilities and Partners' Capital

Accounts payable and accrued liabilities (note 6)                               $         15,857              16,716
Amounts due to related parties (note 8)                                                      697                 564
Project loans (note 7)                                                                   134,984             151,550
                                                                                    ----------------    ----------------

                   Total liabilities                                                     151,538             168,830


Commitments and contingencies (notes 6, 7, and 9)

Partners' capital                                                                          46,871              49,362
                                                                                    ----------------    ----------------

                   Total liabilities and partners' capital                      $         198,409             218,192
                                                                                    ================    ================


See accompanying notes to financial statements.
</TABLE>




                                      F-8


<PAGE>

<TABLE>
<CAPTION>


                                                 COSO FINANCE PARTNERS

                                               Statements of Operations

                                Years ended December 31, 2000, 1999, and 1998 (note 3)

                                                (Dollars in thousands)


                                                                                                           Combined
                                                                                                        CFP and CFP II
                                                                                                           (note 3)
                                                                                                       -----------------
                                        Twelve months     Two months     Ten months   Twelve months     Twelve months
                                            ended           ended           ended         ended              ended
                                         December 31,    February 28,    December 31,  December 31,      December 31,
                                             2000            1999           1999           1999              1998
                                         --------------  -------------  -------------  --------------  -----------------
                                                         (old basis)    (new basis)                      (old basis)
<S>                                            <C>             <C>          <C>             <C>                <C>
Revenue:
    Energy revenues                   $      53,387           8,098         34,196         42,294            39,580
    Capacity payments                        14,266             474         12,898         13,372            13,573
    Interest and other income                 2,506             824          1,410          2,234               585
                                         --------------  -------------  -------------  --------------  -----------------

           Total revenue                     70,159           9,396         48,504         57,900            53,738
                                         --------------  -------------  -------------  --------------  -----------------

Operating expenses:
    Plant operating expenses                  8,609           2,556          7,461         10,017            10,020
    Royalty expense(note 6)                  10,921             987          9,170         10,157             6,824
    Depreciation and amortization             9,594           1,604          7,978          9,582            12,081
    Provision for doubtful accounts
      (note 2)                               15,234             --             --             --                --
    Edison legal expenses and
      settlement costs (note 9)                --               569          1,804          2,373             2,969
                                         --------------  -------------  -------------  --------------  -----------------

           Total operating expenses          44,358           5,716         26,413         32,129            31,894
                                         --------------  -------------  -------------  --------------  -----------------

           Operating income                  25,801           3,680         22,091         25,771            21,844
                                         --------------  -------------  -------------  --------------  -----------------

Other expenses:
    Interest expense                         12,493             645          8,966          9,611             4,210
    Interest expense - acquisition debt         --              --           1,962          1,962               --
    Costs related to acquisition debt           --              --           1,611          1,611               --
    Amortization on deferred financing          520              18            373            391               123
                                         --------------  -------------  -------------  --------------  -----------------

           Total other expenses              13,013             663         12,912         13,575             4,333
                                         --------------  -------------  -------------  --------------  -----------------

           Income before extraordinary
             item and cumulative effect
             of change in accounting
             principle                       12,788           3,017          9,179         12,196            17,511

Extraordinary item - loss on
    extinguishment of debt (note 7)             --              --           2,375          2,375               --
Cumulative effect of change in
    accounting principle:
    start-up activities (note 2)                --              --             --             --                923
                                         --------------  -------------  -------------  --------------  -----------------

           Net income                 $      12,788           3,017          6,804          9,821            16,588
                                         ==============  =============  =============  ==============  =================


See accompanying notes to financial statements.
</TABLE>

                                                                  F-9
<PAGE>

<TABLE>
<CAPTION>


                                                             COSO FINANCE PARTNERS

                                                         Statements of Partners' Capital

                                            Years ended December 31, 2000, 1999, and 1998 (note 3)

                                                             (Dollars in thousands)



                                      Cost Finance Partners                    Coso Finance Partners II
                                -------------------------------------      ------------------------------------

                                                                                      China Lake
                                               China Lake     New        ESCA II      Geothermal
                                    ESCA       Operating      CLOC,      Limited      Management       New
                                    LLC      Company, Inc.    LLC      Partnership    Company, Inc.    CLGMC       Total
                                ----------   -------------  ---------  -----------    -------------  ----------  --------
<S>                                 <C>          <C>         <C>          <C>             <C>          <C>        <C>

Balance at December 31, 1997    $  69,856        64,814        --         11,297         9,601           --       155,568

Net income (loss)                   8,974         7,769        --           (83)          (72)           --        16,588

Distributions to partners         (11,912)      (10,311)       --           --            --             --       (22,223)
                                ----------    ----------    ---------- ----------     ----------    ---------- ----------

Balance at December 31, 1998       66,918        62,272        --         11,214         9,529           --       149,933

Transfer of capital                  --         (62,272)     62,272         --          (9,529)         9,529        --

Combination reclassifications      11,214          --         9,529      (11,214)         --           (9,529)       --

Net income                          5,264          --         4,557         --            --             --         9,821

Effect of purchase accounting        --            --        (6,935)        --            --             --        (6,935)

Distribution to partners          (55,453)         --       (48,004)        --            --             --      (103,457)
                                ----------    ----------    ---------- ----------     ----------    ---------- ----------

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
                                ==========    ==========    ========== ==========     ==========    ========== ==========


See accompanying notes to financial statements.
</TABLE>



                                      F-10
<PAGE>
<TABLE>
<CAPTION>
                                                 COSO FINANCE PARTNERS

                                               Statements of Cash Flows

                                Years ended December 31, 2000, 1999, and 1998 (note 3)

                                                (Dollars in thousands)
                                                                                                                         Combined
                                                                                                                      CFP and CFP II
                                                                                                                         (note 3)
                                                                                                                      -------------
                                                            Twelve months   Two months    Ten months   Twelve months  Twelve months
                                                                ended         ended         ended          ended          ended
                                                             December 31,   February 28,  December 31,   December 31,  December 31,
                                                                2000          1999           1999           1999           1998
                                                            -------------  ------------  -------------  -------------  ------------
                                                                           (old basis)    (new basis)                   (old basis)
<S>                                                          <C>             <C>           <C>            <C>            <C>

Cash flows from operating activities:
   Net income                                           $    12,788          3,017         6,804          9,821          16,588
   Adjustments to reconcile net income to net
     cash provided by operating activities:
        Depreciation and amortization                         9,594          1,604         7,978          9,582          12,081
        Amortization of deferred financing costs                520             18           373            391             123
        Provision for doubtful accounts                      15,234            --            --             --              --
        Write-off of deferred financing costs                   --             --            177            177             --
        Cumulative effect of accounting change                  --             --            --             --              923
        Changes in operating assets and liabilities:
          Accounts receivable, prepaid
            expenses, and other assets                      (10,930)         1,015          (994)            21          (1,277)
          Investment in China Lake Plant Services, Inc.         140             19           (92)           (73)           (172)
          Accounts payable and accrued liabilities             (859)           378         4,253          4,631           3,233
          Amounts due from related parties                    2,548         (1,751)        1,025           (726)             51
          Amounts due to related parties                        133            594           (30)           564             378
                                                         -------------  ------------  -------------  -------------  ---------------
                 Net cash provided by
                    operating activities                     29,168          4,894        19,494         24,388          31,928
                                                         -------------  ------------  -------------  -------------  ---------------

Cash flows from investing activities:
   Capital expenditures                                      (3,643)          (571)       (5,904)        (6,475)         (6,448)
   Decrease (increase) in restricted cash                     2,005           (194)      (17,425)       (17,619)         (1,045)
                                                         -------------  ------------  -------------  -------------  ---------------
                 Net cash used in
                 investing activities                        (1,638)          (765)      (23,329)       (24,094)         (7,493)
                                                         -------------  ------------  -------------  -------------  ---------------

Cash flows from financing activities:
   Distributions to partners                                (15,279)           --       (103,457)      (103,457)        (22,223)
   Increase in project financing debt                           --             --        151,550        151,550             --
   Repayment of project financing loans                     (16,566)           --        (40,566)       (40,566)         (5,100)
                                                         -------------  ------------  -------------  -------------  ---------------
                 Net cash (used in) provided by
                  financing activities                      (31,845)           --          7,527          7,527         (27,323)
                                                         -------------  ------------  -------------  -------------  ---------------

                 Net change in cash and
                 cash equivalents                            (4,315)         4,129         3,692          7,821          (2,888)

Cash and cash equivalents at beginning of period              7,821            --          4,129            --            2,888
                                                         -------------  ------------  -------------  -------------  ---------------

Cash and cash equivalents at end of period              $     3,506          4,129         7,821          7,821             --
                                                          =============  ============  =============  =============  ==============

Supplemental cash flow disclosure:
   Cash paid for interest                               $    12,532            --         10,694         10,694           4,210
                                                          =============  ============  =============  =============  ==============

Schedule of noncash investing activities
   as a result of purchase:
        Fair value of power purchase contract           $      --              --         14,344         14,344             --
        Reduction in property, plant, and equipment            --              --        (24,316)       (24,316)            --
        Net increase in other assets                           --              --          3,733          3,733             --
        Liabilities assumed                                    --              --           (696)          (696)            --
                                                         -------------  ------------  ------------   -------------  ----------------
                 Reduction in partners capital          $      --              --         (6,935)        (6,935)            --
                                                         =============  ============  =============  =============  ================

See accompanying notes to financial statements.

</TABLE>
                                       F-11
<PAGE>


                              COSO FINANCE PARTNERS

                          Notes to Financial Statements

                        December 31, 2000, 1999 and 1998



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

     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 assume 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.

     During  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  Delaware  limited  liability  companies.  CFP and CFP II were general
     partnerships  between  China  Lake  Operating  Company  (CLOC),  a Delaware
     corporation wholly owned by CalEnergy Company, Inc. (CalEnergy),  now known
     as MidAmerican  Energy Holding  Company and ESCA, and China Lake Geothermal
     Management  Company  (CLGMC),  a  Delaware   corporation  wholly  owned  by
     CalEnergy,  and ESCA II Limited Partnership (ESCA II),  respectively.  ESCA
     was a California  limited liability  company between  Caithness  Geothermal
     1980, Ltd.,  Caithness  Power,  L.L.C.,  and ESI Geothermal,  Inc. (ESI) (a
     subsidiary  of  FPL  Group,   Inc.).  ESCA  II  was  a  California  limited
     partnership between Caithness  Geothermal 1980, Ltd., Mojave Power II, Inc.
     and ESI Geothermal II, Inc. (a subsidiary of FPL Group, Inc.).

     On February 25, 1999,  Caithness  Acquisition  Company, LLC (CAC), a wholly
     owned subsidiary of Caithness Energy, LLC and an affiliate of ESCA and ESCA
     II,  purchased all of  CalEnergy's  interest in CLOC and CLGMC (see note 3)
     and formed two wholly  owned  subsidiaries,  New CLOC,  a Delaware  limited
     liability  company,  and New CLGMC Company (New CLGMC),  a Delaware limited
     liability  company.  In May of 1999, CFP II merged into CFP, ESCA II merged
     into  ESCA,  and New CLGMC  merged  into New CLOC.  In  October  1999,  CAC
     purchased  all of ESI's  interest  in ESCA and  ESCA II.  The new  managing
     partner of CFP became New CLOC.

     Since  CFP  and CFP II  operated  under  common  ownership  and  management
     control,  the statements of operations and cash flows of CFP and CFP II for
     the year ended  December 31, 1998 have been combined  after  elimination of
     intercompany amounts.

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

*    Contractual payments for energy delivered, which payments 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.  For the years ended December 31, 2000,  1999, and
     1998,  Edison's  average  avoided cost of energy was 5.80,  3.13,  and 2.95
     cents per kwh,  respectively.  Estimates of Edison's future avoided cost of
     energy vary substantially from year to year. The Partnership cannot predict
     the likely level of avoided cost of energy  prices under the 24-year  power
     purchase  contract  and,   accordingly,   the  revenues  generated  by  the
     Partnership could fluctuate significantly;

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

*    Bonus payments to the extent that actual energy delivered  exceeds 85% of
     the plant  capacity  stated in the contract.  In 2000,  1999, and 1998, the
     bonus payments aggregated $2,250, $1,345, and $1,510, respectively.

     CalEnergy  served  as the  operator  for CEP,  maintaining  the  accounting
     records and operating the plant day-to-day, until February 1, 1999 at which
     time Coso  Operating  Company  LLC  (COC),  a  Delaware  limited  liability
     company,  became  operator  pursuant to certain  operations and maintenance
     agreements with CLOC, the managing general partner.  COC was a wholly owned
     subsidiary of CalEnergy until February 25, 1999 when CalEnergy assigned all
     of its  interest and rights in COC to CAC,  which  became  manager and sole
     member.

     On  February 25,  1999,  CFP entered  into two  operating  and  maintenance
     agreements,  one with FPL Operating Services,  Inc. (FPL) and a second with
     COC. The initial term of the FPL  operating and  maintenance  agreement was
     for three  years,  to provide  for the  operation  and  maintenance  of the
     geothermal  power  facilities and the  interconnection  to the transmission
     line. The term of the COC agreement is through December 31, 2009 to provide
     field services and administrative services for the Partnership.  On October
     17, 1999,  the operating  agreement  with FPL was terminated and COC became
     the sole operator of all Partnership operations.

     At formation,  and as  subsequently  amended,  the terms of the partnership
     agreements  provided  that  distributable  cash flow  before  "payout"  was
     allocated  10% to CLOC as  managing  partner and 90% in  proportion  to the
     remaining  sums  necessary  to be  distributed  to each  partner to achieve
     payout. "Payout" occurred in June 1996 and is defined as the point at which
     each  partner  had  received  aggregate  cash  distributions  from  the 90%
     allocation in amounts equal to their  accumulated cash  contributions  plus
     amounts  equal  to 10%  simple  interest  on the  cash  contributions.  For
     purposes of allocating net income to partners  capital  accounts,  profits
     and losses  are  allocated  based on the  aforementioned  percentages.  For
     income tax purposes,  certain deductions and credits are subject to special
     allocations  as  defined  in the  partnership  agreements.  Cash flow after
     "payout"  is  allocated  53.6%  and  46.4% to ESCA  and New CLOC  (formerly
     CLOC/CLGMC), respectively.


(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 Power Purchase Contract (PPC). In
     addition, the U.S. Navy (Navy) reimburses CFP for electricity paid on their
     behalf (see note 6). As of December 31, 2000 and 1999, the balance due from
     the Navy was $477 and $480, 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. After
     August 1997, revenue is recognized based on Edison's avoided energy cost.

     In recent  months,  Edison  has  experienced  significant  undercollections
     resulting from the difference  between revenues received from its customers
     through  currently  frozen rates and the cost of  producing  service to its
     customers,   including  procurement  costs.  Those   undercollections  have
     adversely  affected  Edison's  liquidity and in turn they have not paid CFP
     for  November and  December  revenues.  Despite  extensive  and  continuing
     negotiations with Edison,  CFP has been unable to secure from Edison a firm
     indication of the time frame during which they can expect  payment of their
     November and December  receivables,  nor the amount, if any, that Edison is
     prepared to pay.  Therefore,  an allowance  for  uncollectible  amounts was
     established as of December 31, 2000, which totaled $15,234.

     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 currently.

     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.


     Recoverability of Long-Lived Assets

     In accordance  with  Statement of Financial  Accounting  Standards No. 121,
     "Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
     Assets  to Be  Disposed  Of"  ("SFAS  No.  121"),  an  impairment  loss  is
     recognized  whenever events or changes in  circumstances  indicate that the
     carrying  amounts  of  long-lived  tangible  and  intangible  assets is not
     recoverable.  The Partnership  considers historical  performance and future
     estimated  results  in its  evaluation  of  potential  impairment  and then
     compares  the  carrying  amount of the asset to the  estimated  future cash
     flows expected to result from the use of the asset.  If the carrying amount
     of the asset  exceeds  estimated  expected  undiscounted  future cash flows
     before  interest  charges,  the  Partnership  measures  the  amount  of the
     impairment by comparing the carrying amount of the asset to its fair value.
     The estimation of fair value is generally measured by discounting  expected
     future  cash  flows  at the  rate  the  Partnership  utilizes  to  evaluate
     potential  investments.  The Partnership  estimates fair value based on the
     best information available using estimates,  judgments,  and projections as
     considered necessary.

     Start-Up Activities

     In  April  1998,  the  Accounting   Standards  Executive  Committee  issued
     Statement of Position (SOP)  No. 98-5,  "Reporting on the Costs of Start-Up
     Activities." SOP No.98-5 requires that, at the effective date of adoption,
     costs  of  start-up  activities  previously  capitalized  be  expensed  and
     reported as a cumulative  effect of a change in accounting  principle,  and
     further  requires  that such costs  subsequent  to  adoption be expensed as
     incurred.  CFP  adopted  this  standard  in 1998  and  expensed  applicable
     unamortized costs previously capitalized in connection with the start-up of
     CFP. The cumulative effect of the change in accounting principle was $923.

     Wells and Resource Development Costs

     The  Partnership  follows  the  full-cost  method of  accounting  for 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 useful life of the  respective
     assets.  These  deferred  costs of $497 and $292 at  December 31,  2000 and
     1999,  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, 2000, 1999, and 1998, the costs were $42, $47, and
     $8, respectively.

     Reclassifications

     Certain  reclassifications have been made to the 1999 balance sheet and the
     1999 and 1998  statements  of  operations  and cash flows to conform to the
     2000 presentation.

     Deferred Financing Costs

     Deferred  financing  costs as of December 31, 2000 and 1999 consist of loan
     fees and other costs of financing  that are amortized  over the term of the
     related  financing.   In  1999  fees  of  $1,984  associated  with  certain
     short-term  financing  were fully expensed and included in costs related to
     acquisition  debt,  and a refinancing of this debt resulted in new deferred
     financing costs of $4,122. The $215 balance of the deferred financing costs
     at the date of  acquisition  related  to the  refinanced  project  debt was
     included in the extraordinary  loss recorded at the time of the refinancing
     (see note 7).  Accumulated  amortization  at December 31, 2000 and 1999 was
     $893 and $373, respectively.

     Income Taxes

     There  is  no  provision   for  income  taxes  since  such  taxes  are  the
     responsibility of the partners.

     Cash and Cash Equivalents

     For purposes of the statements of cash flows, the Partnership 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, 2000 and 1999, all of the Partnership's investments 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 6) totaling  $9,838 and $8,583 at December  31, 2000
     and 1999,  respectively.  This account  comprised  various  mortgage-backed
     securities with maturities ranging from 2000 through 2005.  Restricted cash
     and  investments  also includes a sinking fund for the project debt service
     required  by the  project  loans  (see  note 7).  The  carrying  amount  of
     restricted cash and investments at December 31, 2000 and 1999  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  generally
     accepted  accounting  principles  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, 2000 and 1999, because
     of the relatively short maturity of these instruments. The project loans as
     of December 31, 2000 and 1999 have an estimated  fair value of $132,103 and
     $150,647,  respectively,  based on the  quoted  market  price of the senior
     secured notes and the Coso Funding Corp. notes, respectively (see note 7).

     The investment in China Lake Plant  Services,  Inc.  approximates  the fair
     value.

     New Accounting Pronouncements

     In June 1998,  the  Financial  Accounting  Standards  Board  (FASB)  issued
     Statement of Financial  Accounting Standards (SFAS) No. 133 (SFAS No. 133),
     "Accounting  for Derivative  Instruments  and Hedging  Activities." In June
     2000,  FASB  issued  SFAS  No.  138,  "Accounting  for  Certain  Derivative
     Instruments and Certain Hedging Activities," which amended SFAS No. 133 and
     addressed certain  implementation issues. SFAS No. 133, as amended requires
     that every derivative instrument (including certain derivative  instruments
     embedded in other  contracts) be recorded in the balance sheet as either an
     asset or liability  measured at its fair value. The Statement also requires
     that  changes in the  derivative's  fair value be  recognized  currently in
     earnings unless specific hedge accounting criteria are met. The Partnership
     does not have any derivative instruments and therefore the adoption of SFAS
     No. 133, as amended, in the first quarter of 2001, will not have any effect
     on the Partnership's financial statements.


(3)  Acquisition Accounting

     On February 25, 1999, CAC purchased all of CalEnergy's  interest in CFP and
     CFP II, Coso Energy  Developers  (CED),  and Coso Power  Developers  (CPD),
     collectively known as the Coso Partnerships,  for approximately $205,500 in
     cash plus the assumption of debt of  approximately  $139,800.  The purchase
     price  allocated to CFP was  approximately  $62,000 plus the  assumption of
     debt of approximately  $40,600. The acquisition was accounted for under the
     purchase  method,  and no goodwill was  recorded.  After CAC's  purchase of
     CalEnergy's  interest in CFP, a new basis of  accounting  was adopted  and,
     therefore,  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 upon their fair value, 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.  These  adjustments
     resulted in a net decrease of $24,316 in the recorded  amounts of property,
     plant,  and equipment,  and an increase of $14,344 in the recorded  amounts
     for the power  purchase  contract.  The power  purchase  contract  is being
     amortized on a  straight-line  basis over the  remaining  term of the power
     purchase contract of 12.5 years as of the date of acquisition.  Accumulated
     amortization  on the power purchase  contract at December 31, 2000 and 1999
     was $2,104 and $956, respectively.


(4)  Investment in China Lake Plant Services, Inc.

     China Lake Plant  Services,  Inc.  (CLPSI) is a wholly owned  subsidiary of
     CAC. CLPSI purchases,  stores, and distributes spare parts to CFP, CED, and
     CPD. Also,  certain other facilities  utilized by the Coso Partnerships are
     held by CLPSI.  CFP's investment in CLPSI represents funds advanced for the
     purchase of spare parts  inventory and other assets.  Spare parts inventory
     held by CLPSI on behalf of CFP is valued at the lower of cost or market.


(5)  Property, Plant, and Equipment

     Property, plant, and equipment at December 31, 2000 and 1999 consist of the
     following:


                                                   2000              1999
                                                   ----              ----

     Power plant and gathering system        $    154,506           151,282
     Transmission line                              5,746             5,705
     Wells and resource development costs          68,466            68,170
                                                   ------            ------
                                                  228,718           225,157
     Less accumulated depreciation and
         amortization                             (79,642)          (71,278)
                                                  -------           -------
                                             $    149,076           153,879
                                                  =======           =======


     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)  Royalty Expense

     Royalty expense is summarized as follows:


                            2000                1999                1998
                           ------              ------               -----

     Unit 1              $  3,824               3,852               3,114
     Units 2 and 3          7,097               6,305               3,710
                           ------              ------               -----
     Total               $ 10,921              10,157               6,824
                           ======              ======               =====


     The power plant is located on land owned by the Navy and governed under the
     terms of a 30-year contract. To develop geothermal energy on its lands, CFP
     pays a royalty for the first turbine unit only by paying the Navy's monthly
     Edison bill for specified  quantities  of  electricity  and, in return,  is
     reimbursed at a set rate for such quantities of  electricity.  During 2000,
     1999, and 1998, CFP was reimbursed for  approximately  76% of the amount of
     the Nav's Edison bills paid by CFP. The royalties for the second and third
     turbines increased from 10% of related revenues to 15% in December 1998 and
     will increase to 20% in December 2003.

     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, 2000 and 1999 was $9,862 and $8,583, respectively.


(7)  Project Loans

     In order to complete  the purchase of  CalEnergy's  interest in CFP and CFP
     II, CAC  arranged for  short-term  debt  financing  of  $211,500,  of which
     approximately  $77,610 was  allocated  to CFP.  As a result of  "push-down"
     accounting, the short-term debt was reflected in the financial statement of
     CFP and was repaid on May 28,  1999 from a portion of the proceeds from the
     offering of senior  secured  notes.  Financing  costs  associated  with the
     short-term financing are included in interest expense - acquisition debt.

     On May 28,  1999,  Caithness  Coso Funding  Corp.  (Funding  Corp.)  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 consists of one note of $29,000 at 6.80% and
     another of $122,550 at 9.05% with  payments  due at various  dates  through
     December 15, 2001 and December 15, 2009,  respectively,  beginning December
     15,  1999.  As of December 15, 1999,  the  principal  payment of $5,556 was
     available  for payment by the trustee.  The trustee paid this amount to the
     noteholders  on  January  19,  2000.  The  trustee's  failure  to make  the
     principal  payment on  December  15,  1999 did not result  from the lack of
     performance  on the  part of  Funding  Corp.  or the  Partnership,  and the
     Partnership's  management  believes  this  is  not  an  event  of  default.
     Furthermore,  all related penalties will be assumed by the trustee. Through
     this  financing  the  existing  project  loan and  short-term  financing of
     approximately   $118,176   were  repaid  and  an   extraordinary   loss  of
     approximately  $2,375  from  the  early  extinguishment  of this  debt  was
     incurred.  The  extraordinary  loss was due to a premium  and  other  costs
     incurred to pay the existing project loan before its maturity date.

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


                Year ending December 31                  Amount
             -----------------------------          ----------------

                        2001                       $     12,434
                        2002                             11,597
                        2003                             13,408
                        2004                             10,694
                        2005                             15,100
                     Thereafter                          71,751
                                                    ----------------
                                                   $    134,984
                                                    ================


     The loans contain certain  restrictive  covenants that, among other things,
     limit the Partnershi'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:


                Year ending December 31                  Amount
             -----------------------------          ----------------

                        2001                       $     27,067
                        2002                             21,771
                        2003                             27,618
                        2004                             31,332
                        2005                             35,480
                     Thereafter                         186,799
                                                    ----------------
                                                   $    330,067
                                                    ================


(8)  Related Party Transactions

     The amounts due from and to related parties at  December 31,  2000 and 1999
     consist of the following:


                                                 2000            1999
                                                 ----            ----
     Amounts due from related parties:
         Coso Operating Company            $        --           1,663
         CPD for steam sharing                   1,357           2,807
         CED for steam sharing                     603              38
                                                -------         --------
                                           $     1,960           4,508
                                                =======         ========

     Amounts due to related parties:
         Caithness Coso Funding Corp.      $       525             564
         Coso Operating Company                     60              --
         Caithness Operating Company               112              --
                                                -------         -------
                                           $       697             564
                                                =======         ========


     COC is reimbursed monthly for non-third-party  costs incurred on behalf of
     CFP. These costs are comprised principally of direct operating costs of 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.

     Both  CalEnergy  and ESCA were  reimbursed  at  approved  amounts for their
     respective costs incurred in relation to the CFP Management Committee.  For
     the years ended December 31, 2000, 1999, and 1998, CalEnergy received $-0-,
     $25, and $147,  respectively,  while ESCA received  $-0-,  $129,  and $221,
     respectively.

     As of  May 28,  1999,  the  management  committee  fee was  eliminated  and
     replaced  by a  non-managing  fee  payable  to ESCA.  For the  years  ended
     December 31, 2000 and 1999, ESCA received $234 and $129, respectively.

     The amount due to Funding  Corp.  is accrued  interest  for fifteen days in
     December related to the project loans.

     The amount due to Caithness Operating Company relates to reimbursements for
     payments of operating expenses.

     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 2000, 1999,
     and 1998 were approximately $43, $65, and $532, 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 $5,962,
     $17,579, and $17,556 in 2000, 1999, and 1998, respectively.


(9)    Settlement of Litigation

     In February 2000, the  Partnership,  CED, and CPD reached a settlement with
     Edison,  subject  to  the  approval  of  the  California  Public  Utilities
     Commission  (CPUC),  which approval was received in December 2000. The case
     has not been dismissed pending completion of certain  obligations under the
     settlement  agreements.  The cost of the settlement will be allocated among
     the Coso Partnerships. A portion of that cost was reflected in the purchase
     accounting  applied  to the  acquisition  of  CalEnergy's  interest  in the
     Partnership  (see note 3). The  balance of the  settlement  was  charged to
     settlement of litigation and related expenses.

     In June 1999, the  Partnership,  CED, CPD, Fuji Electric Co., Ltd. and Fuji
     Electric  Corporation  of America  (Fuji)  reached a settlement  agreement.
     Fuji,  in  consideration  of the  settlement  agreement,  must send various
     equipment or spare parts to the Coso Partnerships.


(10)   Risks and Uncertainties

     The  Partnership's  future results of operations  involve a number of risks
     and uncertainties. Increases in natural gas prices and an imbalance between
     supply and demand, among other factors,  has lead to significant  increases
     in wholesale electricity prices in California. Edison had previously agreed
     to fixed tariffs with their retail customers that were significantly  below
     the wholesale  prices they pay in California.  This resulted in significant
     under-recoveries by Edison of their electricity  purchase costs. On January
     16, 2001, Edison announced that it was temporarily  suspending payments for
     energy provided,  including the energy provided by CFP, pending a permanent
     solution to its liquidity crisis (see note 2).

     In 2001,  the  Partnership  has  continued  to sell  electricity  under its
     existing PPC with Edison.  The State of  California  is expected to enact a
     law that will,  among other things,  provide for long-term  price stability
     and payments to qualifying facilities, such as the Partnership.  Under the
     draft legislation currently being considered by the California legislature,
     the  Partnership  believes  that it will  ultimately  collect a  sufficient
     amount of revenue from its electricity sales to fund its operations.


                                      F-12

<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, 2000 and 1999, and the related statements of operations,  partners'
capital, and cash flows for the years then ended. 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.  The
financial  statements  of Coso  Energy  Developers  as of and for the year ended
December 31, 1998 were audited by other  auditors,  whose report dated  February
12, 1999 expressed an unqualified opinion on those statements.

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 2000 and 1999 financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of  Coso  Energy
Developers as of December 31, 2000 and 1999,  and the results of its  operations
and its cash  flows for the  years  then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.

As discussed in note 3 to the financial statements, effective February 25, 1999,
Caithness  Acquisition Company, LLC acquired all of the partnership interest not
already  owned by its  affiliates,  Caithness  Coso  Holdings LLC, in a business
combination  accounted for as a purchase.  As a result of the  acquisition,  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.




March 16, 2001


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



                                      F-13
<PAGE>
                        Report of Independent Accountants



     To the Partners of Coso Energy Developers

In our  opinion,  the  financial  statements  listed in the  accompanying  index
present  fairly,  in all material  respects,  the results of operations and cash
flows of Coso  Energy  Developers  for the year  ended  December  31,  1998,  in
conformity with accounting principles generally accepted in the United States of
America.  These financial statements are the responsibility of the Partnerships'
management;  our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  We conducted our audits of these statements in
accordance with auditing  standards  generally  accepted in the United States of
America,  which 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,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable  basis for the opinion  expressed above. We have not
audited  the  financial  statements  of Coso  Energy  Developers  for any period
subsequent to December 31, 1998.


As discussed in Note 2 to the financial  statements,  the Partnership adopted in
1998  Statement  of  Position  No.  98-5,  "Reporting  on the Costs of  Start-Up
Activities."


/s/ PRICEWATERHOUSECOOPERS LLP
------------------------------
    PricewaterhouseCoopers LLP



San Francisco, California
February 12, 1999


                                      F14

<PAGE>


                                               COSO ENERGY DEVELOPERS

                                                   Balance Sheets

                                         December 31, 2000 and 1999 (note 3)

                                               (Dollars in thousands)
<TABLE>
<CAPTION>



                 Assets                                            2000                 1999
                                                              ----------------    ---------------
<S>                                                                <C>                 <C>

Cash and cash equivalents                                    $     5,862               6,423
Restricted cash and investments (note 2)                          14,502               9,806
Accounts receivable, net (note 2)                                     40               6,095
Prepaid expenses and other assets                                  1,013                 100
Amounts due from related parties (note 8)                            365                 761
Property, plant, and equipment (notes 3 and 6)                   153,618             165,650
Investment in China Lake Plant Services, Inc. (note 5)             1,051               1,228
Investments in Coso Transmission Line Partners (note 4)            2,871               2,981
Power purchase contract, net (note 3)                             19,510              20,549
Deferred financing costs, net (note 2)                             2,480               2,798
                                                              ----------------    ---------------

                 Total assets                                $   201,312             216,391
                                                              ================    ===============


                 Liabilities and Partners' Capital

Accounts payable and accrued liabilities                     $     6,839               6,681
Amounts due to related parties (note 8)                           24,321              22,460
Project loan (note 7)                                            100,907             107,900
                                                              ----------------    ---------------

                 Total liabilities                               132,067             137,041


Commitments and contingencies (notes 7 and 9)

Partners' capital                                                 69,245              79,350
                                                              ----------------    ---------------

                 Total liabilities and partners' capital     $   201,312             216,391
                                                              ================    ===============

</TABLE>

See accompanying notes to financial statements.




                                                          F-15
<PAGE>

<TABLE>
<CAPTION>



                                                COSO ENERGY DEVELOPERS

                                               Statements of Operations

                                Years ended December 31, 2000, 1999, and 1998 (note 3

                                                (Dollars in thousands)



                                             Twelve months   Two months     Ten months    Twelve months  Twelve months
                                                ended           ended         ended          ended           ended
                                              December 31,    February 28,   December 31,  December 31,    December 31,
                                                 2000            1999           1999          1999            1998
                                            --------------  -------------- ------------- --------------  --------------
                                                             (old basis)   (new basis)                    (old basis)
<S>                                              <C>              <C>          <C>            <C>             <C>
Revenues:
  Energy revenues                         $      43,513          16,716        19,223         35,939          93,352
  Capacity payments                              13,940             817        13,121         13,938          13,847
  Interest and other income                       8,125              78           988          1,066           1,181
                                            --------------  -------------- ------------- --------------  --------------

         Total revenues                          65,578          17,611        33,332         50,943         108,380
                                            --------------  -------------- ------------- --------------  --------------

Operating expenses:
  Plant operating expense                        12,008           3,470        12,098         15,568          16,418
  Royalty expense                                 4,045           1,592         1,556          3,148          10,492
  Depreciation and amortization                  15,361           2,550        13,099         15,649          14,809
  Provision for doubtfull accounts(note 2)       15,279             --            --             --              --
  Edison legal expenses and
     settlement costs (note 9)                      --              569         3,600          4,169           2,968
                                            --------------  -------------- ------------- --------------  --------------

           Total operating expenses              46,693           8,181        30,353         38,534          44,687
                                            --------------  -------------- ------------- --------------  --------------

           Operating income                      18,885           9,430         2,979         12,409          63,693
                                            --------------  -------------- ------------- --------------  --------------

Other expenses:
    Interest expense                              9,174             602         6,708          7,310           6,107
    Interest expense - acquisition debt             --              --          1,415          1,415             --
    Costs related to acquisition debt               --              --          1,262          1,262             --
    Amortization on deferred financing              318              14           234            248             160
                                            --------------  -------------- ------------- --------------  --------------

      Total other expenses                        9,492             616         9,619         10,235           6,267
                                            --------------  -------------- ------------- --------------  --------------

      Income (loss) before extraordinary
           item and cumulative effect of
           change in accounting principle         9,393           8,814        (6,640)         2,174          57,426


Extraordinary item - loss on
    extinguishment of debt (note 7)                 --              --          1,822          1,822             --
Cumulative effect of change
    in accounting principle:
    start-up activities (note 2)                    --              --            --             --              953
                                            --------------  -------------- ------------- --------------  --------------
           Net income (loss)              $       9,393           8,814        (8,462)           352          56,473
                                            ==============  ============== ============= ==============  ==============


See accompanying notes to financial statements.
</TABLE>



                                                          F-16

<PAGE>

<TABLE>
<CAPTION>
                                                COSO ENERGY DEVELOPERS

                                           Statements of Partners' Capital

                                Years ended December 31, 2000, 1999, and 1998 (note 3)

                                                (Dollars in thousands)



                                               Caithness             Coso
                                                 Coso             Hotsprings              New
                                               Holdings,         Intermountain            CHIP
                                                  LLC             Power, Inc.         Company, LLC           Total
                                            ----------------   ------------------   -----------------   ----------------
<S>                                             <C>                  <C>                 <C>                 <C>

Balance at December 31, 1997             $      67,576               56,537                 --               124,113

Distributions to partners                       (9,046)              (8,349)                --               (17,395)

Net income                                      29,366               27,107                 --                56,473
                                            ----------------   ------------------   -----------------   ----------------

Balance at December 31, 1998                    87,896               75,295                 --               163,191

Transfer of capital                                --               (75,295)             75,295                  --

Distributions to partners                      (39,846)                 --              (36,780)             (76,626)

Net income                                         183                  --                  169                  352

Effect of purchase accounting                      --                   --               (7,567)              (7,567)
                                            ----------------   ------------------   -----------------   ----------------

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
                                            ================   ==================   =================   ================


See accompanying notes to financial statements.
</TABLE>




                                                          F-17
<PAGE>
<TABLE>
<CAPTION>
                                                COSO ENERGY DEVELOPERS

                                               Statements of Cash Flows

                                Years ended December 31, 2000, 1999, and 1998 (note 3)

                                                (Dollars in thousands)


                                                        Twelve months   Two months    Ten months   Twelve months  Twelve months
                                                            ended         ended         ended         ended           ended
                                                        December 31,   February 28,  December 31,   December 31,  December 31,
                                                            2000           1999          1999          1999           1998
                                                        -------------- ------------- ------------  -------------  --------------
                                                                       (old basis)   (new basis)                   (old basis)
<S>                                                         <C>            <C>           <C>             <C>          <C>

Cash flows from operating activities:
  Net income (loss)                                    $    9,393          8,814        (8,462)          352         56,473
  Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
      Depreciation and amortization                        15,361          2,550        13,099        15,649         14,809
      Amortization of deferred financing costs                318             14           234           248            160
      Provision  for doubtful accounts                     15,279            --            --            --             --
      Write-off of deferred financing costs                   --             --            161           161            --
      Cumulative effect of accounting change                  --             --            --            --             953
      Changes in operating assets and liabilities:
         Accounts receivable, prepaid expenses,
            and other assets                              (10,137)          (944)       14,833        13,889         (1,246)
         Investment in Coso Transmission
           Line Partners                                      110           (823)          949           126            115
         Investment in China Lake Plant
           Services, Inc.                                     177            141           198           339            646
         Accounts payable and accrued liabilities             158         (1,248)        2,215           967            903
         Amounts due from related parties                     396             (6)         (461)         (467)           (34)
         Amounts due to related parties                     1,861          2,055        (3,513)       (1,458)         3,076
                                                        -------------- ------------- ------------  -------------  --------------
                Net cash provided by
                  operating activities                     32,916         10,553        19,253        29,806         75,855
                                                        -------------- ------------- ------------  -------------  --------------

Cash flows from investing activities:
    Capital reimbursements (expenditures)                  (2,290)           316        (7,252)       (6,936)       (20,637)
    Decrease (increase) in restricted cash                 (4,696)            43        (9,806)       (9,763)           --
                                                        -------------- ------------- ------------  -------------  --------------
                  Net cash provided by
                  (used in)investing activities            (6,986)           359       (17,058)      (16,699)       (20,637)
                                                        -------------- ------------- ------------  -------------  --------------

Cash flows from financing activities:
    Distributions to partners                             (19,498)           --        (76,626)      (76,626)       (17,395)
    Increase in project financing debt                         --            --        107,900       107,900            --
    Repayment of project financing loans                   (6,993)           --        (37,958)      (37,958)       (38,696)
                                                        -------------- ------------- ------------  -------------  --------------
                  Net cash used in
                     financing activities                 (26,491)           --         (6,684)       (6,684)       (56,091)
                                                        -------------- ------------- ------------  -------------  --------------
                  Net change in cash and
                    cash equivalents                         (561)        10,912        (4,489)        6,423           (873)

Cash and cash equivalents at beginning of year              6,423            --         10,912           --             873
                                                        -------------- ------------- ------------  -------------  --------------

Cash and cash equivalents at end of year               $    5,862         10,912         6,423         6,423            --
                                                        ============== ============= ============  =============  ==============
Supplemental cash flow disclosure:
    Cash paid for interest                             $    9,187            --          8,117         8,117          6,105
                                                        ============== ============= ============  =============  ==============

Schedule of noncash investing activities as a
result of purchase:
      Fair value of power purchase contract            $      --             --         21,443        21,443            --
      Reduction in property, plant, and equipment             --             --        (29,304)      (29,304)           --
      Net increase in other assets                            --             --          2,694         2,694            --
      Liabilities assumed                                     --             --         (2,400)       (2,400)           --
                                                        -------------- ------------- ------------  -------------  --------------

                  Reduction in partners' capital       $      --             --         (7,567)       (7,567)           --
                                                        ============== ============= ============  =============  ==============


See accompanying notes to financial statements.
</TABLE>

                                       F-18
<PAGE>
                          CAITHNESS ENERGY DEVELOPERS.

                          Notes to Financial Statements

                        December 31, 2000, 1999 and 1998

                             (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, until February 25,  1999, Coso Hotsprings  Intermountain  Powers, Inc.
     (CHIP),  a Delaware  corporation  wholly owned by CalEnergy  Company,  Inc.
     (CalEnergy),  now known as MidAmerican Energy Holding Company.  On February
     25,  1999,  Caithness  Acquisition  Company,  LLC  (CAC),  a  wholly  owned
     subsidiary of Caithness Energy,  LLC and an affiliate of CCH, purchased all
     of  CalEnergy's  interest  in CHIP (see note 3) and  formed a wholly  owned
     subsidiary,  New CHIP Company, LLC (New CHIP), a Delaware limited liability
     company, to become the new managing general partner 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 value of the steam produced.

     The primary BLM  geothermal  lease had an initial  term of ten years (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
     CalEnergy  and an  affiliate  of  CCH.  On  February  25,  1999,  CalEnergy
     transferred all its interest and rights in CLC to CAC.

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

*    Contractual payments for energy delivered, which payments 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 of 1999,  the  Partnership
     completed the ten-year  fixed price payment period and Edison ceased paying
     the scheduled  energy rates.  For the years ended December 31, 2000,  1999,
     and 1998,  Edison's average avoided cost of energy was 5.80, 3.13, and 2.95
     cents per kwh,  respectively.  Estimates of Edison's future avoided cost of
     energy vary substantially from year to year. The Partnership cannot predict
     the likely level of avoided cost of energy  prices under the 30-year  power
     purchase  contract  and,   accordingly,   the  revenues  generated  by  the
     Partnership could fluctuate significantly;

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

*    Bonus payments to the extent that actual energy  delivery  exceeds 85% of
     the plant  capacity  stated in the contract.  In 2000,  1999, and 1998, the
     bonus aggregated $2,230, $2,200, and $2,124, respectively.

     CalEnergy  served  as the  operator  for CED,  maintaining  the  accounting
     records and operating the plant day-to-day, until February 1, 1999 at which
     time when Coso Operating  Company LLC (COC), a Delaware  limited  liability
     company,  became  operator  pursuant to certain  operations and maintenance
     agreements with CHIP, the managing general partner.  COC was a wholly owned
     subsidiary of CalEnergy until February 25, 1999 when CalEnergy assigned all
     of its interest and right in COC to CAC,  which became its manager and sole
     member.

     On February  25,  1999,  CED entered  into two  operating  and  maintenance
     agreements,  one with FPL Operating Services,  Inc. (FPL) and a second with
     COC. The initial term of the FPL  operating and  maintenance  agreement was
     for three  years,  to provide  for the  operation  and  maintenance  of the
     geothermal  power  facilities and the  interconnection  to the transmission
     line. The term of the COC agreement is through December 31, 2009 to provide
     field services and administrative services for the Partnership.  On October
     17, 1999,  the operating  agreement  with FPL was terminated and COC became
     the sole operator of all Partnership operations.

     At  formation,  and as  subsequently  amended,  the  partnership  agreement
     provided that  distributable  cash flow before "payout" was allocated 3.81%
     to CHIP as  managing  partner and 96.19%  allocated  in  proportion  to the
     remaining  sums  necessary  to be  distributed  to each  partner to achieve
     payout. "Payout"  was  defined  as the  point at which  each  partner  had
     received aggregate cash distributions from the 96.19% allocation in amounts
     equal to their accumulated capital contributions. Cash flow after "payout,"
     which occurred in June 1994, is allocated 48% to New CHIP  (formerly  CHIP)
     and 52% to CCH. For purposes of allocating net income to partners  capital
     accounts,  profits  and losses are  allocated  based on the  aforementioned
     capital  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 Power  Purchase  Contract  (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.  After
     March 1999, revenue is recognized based on Edison's avoided energy cost.

     In recent  months,  Edison  has  experienced  significant  undercollections
     resulting from the difference  between revenues received from its customers
     through  currently  frozen rates and the cost of  producing  service to its
     customers,   including  procurement  costs.  Those   undercollections  have
     adversely  affected  Edison's  liquidity and in turn they have not paid CED
     for  November and  December  revenues.  Despite  extensive  and  continuing
     negotiations with Edison,  CED has been unable to secure from Edison a firm
     indication  of the time frame  during  which it can  expect  payment of its
     November and December  receivables,  nor the amount, if any, that Edison is
     prepared to pay.  Therefore,  an allowance  for  uncollectible  amounts was
     established as of December 31, 2000, which totaled $15,279.

     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 currently.

     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.

     Recoverability of Long-Lived Assets

     In accordance  with  Statement of Financial  Accounting  Standards No. 121,
     "Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
     Assets  to Be  Disposed  Of"  ("SFAS  No.  121"),  an  impairment  loss  is
     recognized  whenever events or changes in  circumstances  indicate that the
     carrying  amounts  of  long-lived  tangible  and  intangible  assets is not
     recoverable.  The Partnership  considers historical  performance and future
     estimated  results  in its  evaluation  of  potential  impairment  and then
     compares  the  carrying  amount of the asset to the  estimated  future cash
     flows expected to result from the use of the asset.  If the carrying amount
     of the asset  exceeds  estimated  expected  undiscounted  future cash flows
     before  interest  charges,  the  Partnership  measures  the  amount  of the
     impairment by comparing the carrying amount of the asset to its fair value.
     The estimation of fair value is generally measured by discounting  expected
     future  cash  flows  at the  rate  the  Partnership  utilizes  to  evaluate
     potential  investments.  The Partnership  estimates fair value based on the
     best information available using estimates,  judgments,  and projections as
     considered necessary.

     Start-Up Activities

     In  April  1998,  the  Accounting   Standards  Executive  Committee  issued
     Statement of Position (SOP)  No.98-5,  "Reporting on the Costs of Start-up
     Activities." SOP No. 98-5 requires that, at the effective date of adoption,
     costs  of  start-up  activities  previously  capitalized  be  expensed  and
     reported as a cumulative  effect of a change in accounting  principle,  and
     further  requires  that such costs  subsequent  to  adoption be expensed as
     incurred.  CED  adopted  this  standard  in 1998  and  expensed  applicable
     unamortized costs previously capitalized in connection with the start-up of
     CED. The cumulative effect of the change in accounting principle was $953.

     Wells and Resource Development Costs

     CED  follows  the  full-cost  method of  accounting  for 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 $100  and $271 at  December 31, 2000  and  1999,
     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, 2000, 1999, and 1998, the costs were
     $653, $676, and $669, respectively.

     Reclassifications

     Certain  reclassifications have been made to the 1999 balance sheet and the
     1999 and 1998  statements  of  operations  and cash flows to conform to the
     2000 presentation.

     Deferred Financing Costs

     Deferred  financing  costs as of December 31, 2000 and 1999 consist of loan
     fees and other costs of financing  that are amortized  over the term of the
     related financing. On February 25, 1999, the fees of $1,408 associated with
     certain  short-term  financing  were fully  expensed  and included in costs
     related to acquisition debt, and a refinancing of this debt resulted in new
     deferred  financing  costs of  $3,032.  The $148  balance  of the  deferred
     financing  costs  at the  date of  acquisition  related  to the  refinanced
     project debt was included in the extraordinary loss recorded at the time of
     the refinancing (see note 7). Accumulated amortization at December 31, 2000
     and 1999 was $552 and $234, respectively.

     Income Taxes

     There  is  no  provision   for  income  taxes  since  such  taxes  are  the
     responsibility of the partners.

     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, 2000 and 1999, 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
     projects  loan (see note 7). The  carrying  amount of  restricted  cash and
     investments at December 31, 2000 and 1999 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  generally
     accepted  accounting  principles  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, 2000 and 1999,  because
     of the relatively short maturity of these instruments. The project loans as
     of December 31, 2000 and 1999 have an  estimated  fair value of $98,694 and
     $107,302,  respectively,  based on the  quoted  market  price of the senior
     secured notes and the COSO Funding Corp. notes, respectively (see note 7).

     The  investments  in Coso  Transmission  Line Partners and China Lake Plant
     Services, Inc. approximate the fair value.

     New Accounting Pronouncements

     In June 1998,  the  Financial  Accounting  Standards  Board  (FASB)  issued
     Statement of Financial Accounting Standards No. 133 (SFAS 133), "Accounting
     for Derivative  Instruments  and Hedging  Activities."  In June 2000,  FASB
     issued SFAS 138, "Accounting for Certain Derivative Instruments and Certain
     Hedging   Activities,"   which  amended  SFAS  133  and  addressed  certain
     implementation issues. SFAS 133, as amended, requires that every derivative
     instrument  (including  certain  derivative  instruments  embedded in other
     contracts) be recorded in the balance sheet as either an asset or liability
     measured at its fair value. The Statement also requires that changes in the
     derivative's fair value be recognized currently in earnings unless specific
     hedge  accounting  criteria  are  met.  The  Partnership  does not have any
     derivative  instruments and therefore the adoption of SFAS 133, as amended,
     in the first quarter of 2001, will not have any effect on the Partnership's
     financial statements.

(3)  Acquisition Accounting

     On February 25, 1999,  CAC  purchased all of  CalEnergy's  interest in CED,
     Coso Power Developers  (CPD), Coso Finance Partners (CFP), and Coso Finance
     Partners  II (CFP II),  collectively  known as the Coso  partnerships,  for
     approximately $205,500 in cash plus the assumption of debt of approximately
     $139,800.  Allocated  to CED  from the  purchase  price  was  approximately
     $69,000  plus  the  assumption  of  debt  of  approximately   $37,900.  The
     acquisition  was accounted for under the purchase  method,  and no goodwill
     was recorded.  After CAC's purchase of  CalEnergy's  interest in CED, a new
     basis of accounting was adopted and, therefore,  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 upon 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.  These  adjustments
     resulted in a net decrease of $29,304 in the recorded  amounts of property,
     plant, and equipment and an increase of $21,443 in the recorded amounts for
     the power purchase contract. The power purchase contract is being amortized
     on a  straight-line  basis over the  remaining  term of the power  purchase
     contract  of  20  years  as  of  the  date  of   acquisition.   Accumulated
     amortization  on the power purchase  contract at December 31, 2000 and 1999
     was $1,933 and $894, respectively.


(4)  Investment in Coso Transmission Line Partners

     Coso  Transmission  Line Partners (CTLP) is a partnership,  between CED and
     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.


(5)  Investment in China Lake Plant Services, Inc.

     China Lake Plant  Services,  Inc.  (CLPSI) is a wholly owned  subsidiary of
     CAC. CLPSI purchases,  stores, and distributes spare parts to CED, CPD, and
     CFP. Also,  certain other facilities  utilized by the Coso Partnerships are
     held by CLPSI.  CED's investments in CLPSI represent funds advanced for the
     purchase of spare parts  inventory and other assets.  Spare parts inventory
     held by CLPSI on behalf of CED is valued at the lower of cost or market.


(6)  Property, Plant, and Equipment

     Property, plant, and equipment at December 31, 2000 and 1999 consist of the
     following:

                                                      2000         1999
                                                      ----         ----

     Power plant and gathering system           $   146,500      146,327
     Transmission line                                9,120        9,120
     Wells and resources development costs           82,624       81,736
                                                    --------     --------
                                                    238,244      237,183
     Less accumulated depreciation and
          amortization                              (84,626)     (71,533)
                                                    --------     --------
                                                $   153,618      165,650
                                                    ========     ========



     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.


(7)  Project Loan

     In order to complete  the  purchase  of  CalEnergy's  interest in CED,  CAC
     arranged for short-term  debt  financing of $211,500,  of which $55,256 was
     allocated to CED. As a result of  "push-down"  accounting,  the  short-term
     debt was  reflected  in the  financial  statement  of CED and was repaid on
     May 28,  1999 from a portion of the  proceeds  from the  offering of senior
     secured notes. Financing costs associated with the short-term financing are
     included in interest expense-acquisition debt.

     On May 28,  1999,  Caithness  Coso Funding  Corp.  (Funding  Corp.)  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 consists of one note of $11,650 at 6.80% and
     another of $96,250 at 9.05%,  with  payments due at various  dates  through
     December 15, 2001 and December 15, 2009,  respectively,  beginning December
     15,  1999.  As of December 15, 1999,  the  principal  payment of $4,105 was
     available  for payment by the trustee.  The trustee paid this amount to the
     noteholders on January 19, 2000. The failure to make the principal  payment
     on December  15, 1999 did not result  from the lack of  performance  on the
     part of Funding Corp. or the Partnership and the  Partnership's  management
     believes  this  is  not an  event  of  default.  Furthermore,  all  related
     penalties  will be assumed  by the  trustee.  Through  this  financing  the
     existing project loan and short-term financing loans of $93,214 were repaid
     and  an  extraordinary   loss  of  approximately   $1,822  from  the  early
     extinguishment of this debt was incurred. The extraordinary loss was due to
     a premium and other costs incurred to pay the existing  project loan before
     its maturity date.

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

         Year ending December 31                            Amount
         -----------------------                           -------

              2001                                       $   4,657
              2002                                           6,375
              2003                                           5,055
              2004                                           9,920
              2005                                           8,683
              Thereafter                                    66,217
                                                           -------
                                                         $ 100,907
                                                           =======

     The loans contain  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:

         Year ending December 31                            Amount
         -----------------------                           --------

              2001                                       $  27,067
              2002                                          21,771
              2003                                          27,618
              2004                                          31,332
              2005                                          35,480
              Thereafter                                   186,799
                                                           -------
                                                         $ 330,067
                                                           =======

(8)  Related Party Transactions

     The amounts due from and to related  parties at December  31, 2000 and 1999
     consist of the following:

                                              2000                1999
                                            --------            --------
     Amounts due from related parties:
      CLC:
       Principal                           $     141                 141
       Accrued interest                          224                 190
      Coso Operating Company, LLC                 --                 430
                                            --------            --------
                                           $     365                 761
                                            ========            ========

     Amounts due to related parties:
       CPD for steam sharing               $     127                 673
       CFP for steam sharing                     603                  38
       CLC                                    22,532              21,339
       Caithness Coso Funding Corp.              397                 410
       Coso Operating Company, LLC               564                  --
       Caithness Operating Company, Inc.          98                  --
                                            --------            --------
                                           $  24,321              22,460
                                            ========            ========


     COC is reimbursed monthly for  non-third-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 from COC relates to advances for payments of
     operating  expenses.  The amount due to COC relates to  reimbursements  for
     payments of operating expenses.

     Both CCH and  CalEnergy  were  reimbursed  at  approved  amounts  for their
     respective costs incurred in relation to the CED Management Committee.  For
     the years ended December 31, 2000, 1999, and 1998, CalEnergy received $-0-,
     $25, and $148,  respectively,  while CCH  received  $-0-,  $130,  and $223,
     respectively.

     As of May 28, 1999, the  management  committee  fees were  eliminated,  and
     replaced by a non-managing fee payable to CCH. For the years ended December
     31, 2000 and 1999, CCH received $234 and $129, 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, 2000,  1999, and 1998 was $1,195,
     $771,  and  $3,057,  respectively.  Payment  of  royalties  due  to  CLC is
     subordinated to payment of the project loans (see note 7).

     CED is charged  for its use of the  transmission  line  owned by CTLP.  The
     amount of such net  charges  was $110,  $115,  and $115 for the years ended
     December 31, 2000, 1999, and 1998, respectively.

     CED is charged by CLPSI for both its inventory usage and its portion of the
     expenses of operating  CLPSI. The 2000, 1999, and 1998 costs charged to CED
     from CLPSI were approximately $359, $143, and $1,350, respectively.

     The amount due to Caithness Coso Funding Corp.  represents accrued interest
     for fifteen days in December related to the project loans (see note 7).

     The amount due to Caithness Operating Company relates to reimbursements for
     payments of operating expenses.

     On December 16, 1992,  CED retired  CLC's  promissory  note due  CalEnergy,
     resulting in the loan from CED to CLC of $141. Interest was accrued on this
     loan for the years ended December 31, 2000, 1999, and 1998 at 10.0%, 12.5%,
     and 12.5%,  respectively.  Interest  on the note was $34,  $34,  and $34 in
     2000, 1999, and 1998, 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,  2000,  1999,  and 1998 of $2,712,  $6,103,  and
     $14,898, respectively.


(9)  Settlement of Litigation

     In February 2000, the  Partnership,  CFP, and CPD reached a settlement with
     Edison,  subject  to  the  approval  of  the  California  Public  Utilities
     Commission  (CPUC),  which approval was received in December 2000. The case
     has not yet been dismissed pending completion of certain  obligations under
     the settlement  agreements.  The cost of the settlement was allocated among
     the Coso Partnerships. A portion of that cost was reflected in the purchase
     accounting  applied  to the  acquisition  of  CalEnergy's  interest  in the
     Partnership  (see note 3). The  balance of the  settlement  was  charged to
     settlement of litigation and related expenses.

     In June 1999, the  Partnership,  CFP, CPD, Fuji Electric Co., Ltd. and Fuji
     Electric  Corporation  of America  (Fuji)  reached a settlement  agreement.
     Fuji,  in  consideration  of the  settlement  agreement,  must send various
     equipment or spare parts to the Coso Partnerships.

     In December 1999, the  Partnership  and Dow Chemical  Company (Dow) entered
     into a confidential  settlement  agreement  which was effective  January 1,
     2000,  to resolve  CED's claim to recover  damages  incurred  related to an
     installation in 1992 by Dow of a hydrogen sulfide abatement system.


(10) Risk and Uncertainties

     The  Partnership's  future results of operations  involve a number of risks
     and uncertainties. Increases in natural gas prices and an imbalance between
     supply and demand, among other factors,  has lead to significant  increases
     in wholesale electricity prices in California. Edison had previously agreed
     to fixed tariffs with its retail  customers that were  significantly  below
     the wholesale  prices they pay 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 CED, pending a permanent
     solution to its liquidity crisis (see note 2).

     In 2001,  the  Partnership  has  continued  to sell  electricity  under its
     existing PPC with Edison.  The State of  California  is expected to enact a
     law that will among other things,  provide for long-term  price  stability,
     and payments to qualifying facilities, such as, the Partnership.  Under the
     draft legislation currently being considered by the California Legislature,
     the  Partnership  believes  that it will  ultimately  collect a  sufficient
     amount of revenue from its electricity sales to fund its operations.


                                      F-19
<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, 2000 and 1999, and the related statements of operations,  partners'
capital, and cash flows for the years then ended. 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.  The
financial  statements  of Coso  Power  Developers  as of and for the year  ended
December 31, 1998 were audited by other  auditors,  whose report dated  February
12, 1999 expressed an unqualified opinion on those statements.

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 2000 and 1999 financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  Coso  Power
Developers as of December 31, 2000 and 1999,  and the results of its  operations
and its cash  flows for the  years  then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.

As discussed in note 3 to the financial statements, effective February 25, 1999,
Caithness  Acquisition Company, LLC acquired all of the partnership interest not
already owned by its  affiliates,  Navy II Group LLC, in a business  combination
accounted  for as a  purchase.  As a result of the  acquisition,  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.


March 16, 2001




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



                                       F-20

<PAGE>
                        Report of Independent Accountants



To the Partners of Coso Power Developers

In our  opinion,  the  financial  statements  listed in the  accompanying  index
present  fairly,  in all material  respects,  the results of operations and cash
flows of Coso  Power  Developers  for the  year  ended  December  31,  1998,  in
conformity with accounting principles generally accepted in the United States of
America.  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 of these statements in
accordance with auditing  standards  generally  accepted in the United States of
America,  which 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,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable  basis for the opinion  expressed above. We have not
audited  the  financial  statements  of Coso  Power  Developers  for any  period
subsequent to December 31, 1998.


As discussed in Note 2 to the financial statements, the Partnership adopted
in 1998  Statement  of Position No.  98-5,  "Reporting  on the Costs of Start-Up
Activities."


/s/ PRICEWATERHOUSECOOPERS LLP
------------------------------
    PricewaterhouseCoopers LLP




San Francisco, California
February 12, 1999




                                      F-21
<PAGE>

                                                COSO POWER DEVELOPERS

                                                    Balance Sheets

                                         December 31, 2000 and 1999 (note 3)

                                                (Dollars in thousands)

<TABLE>
<CAPTION>


                   Assets                                                 2000                1999
                                                                   -----------------   -----------------
<S>                                                                       <C>                 <C>

Cash and cash equivalents                                         $       7,741               6,020
Restricted cash and investments (note 2)                                 10,214              54,338
Accounts receivable, net (note 2)                                            29              20,540
Prepaid expenses and other assets                                           849                 --
Amounts due from related parties (note 8)                                 5,953               7,058
Property, plant, and equipment, net (notes 3 and 6)                     136,947             147,522
Investment in China Lake Plant Services, Inc. (note 5)                    1,963               2,098
Investment in Coso Transmission Line Partners (note 4)                    3,528               3,660
Power purchase contract, net (note 3)                                    25,614              28,409
Deferred financing costs, net (note 2)                                    2,855               3,624
                                                                   -----------------   -----------------

                   Total assets                                   $     195,693             273,269
                                                                   =================   =================

                   Liabilities and Partners' Capital

Accounts payable and accrued liabilities                          $      12,278              12,163
Amounts due to related parties (note 8)                                   1,816               3,225
Project loans (note 7)                                                   94,176             153,550
                                                                   -----------------   -----------------
                   Total liabilities                                    108,270             168,938


Commitments and contingencies (notes 7 and 9)

Partners' capital                                                        87,423             104,331
                                                                   -----------------   -----------------

                   Total liabilities and partners' capital        $     195,693             273,269
                                                                   =================   =================


See accompanying notes to financial statements.
</TABLE>




                                                          F-22
<PAGE>

<TABLE>
<CAPTION>


                                                COSO POWER DEVELOPERS

                                               Statements of Operations

                                Years ended December 31, 2000, 1999, and 1998 (note 3)

                                                (Dollars in thousands)



                                               Twelve months    Two months    Ten months   Twelve months   Twelve months
                                                   ended           ended        ended         ended            ended
                                                December 31,    February 28,  December 31,  December 31,    December 31,
                                                    2000            1999         1999          1999             1998
                                               --------------  -------------- ------------- -------------   -------------
                                                               (old basis)     (new basis)                   (old basis)
<S>                                            <C>           <C>             <C>              <C>           <C>
Revenues:
  Energy revenues                             $  44,348         16,687          83,041         99,728         105,546
  Capacity payments                              14,018            822          13,196         14,018          14,018
  Interest and other income                       2,868            150           2,024          2,174           1,799
                                              --------------  -------------- ------------- -------------   --------------

          Total revenues                         61,234         17,659          98,261        115,920         121,363
                                              --------------  -------------- ------------- -------------   --------------

Operating expenses:
  Plant operating expense                         9,409          2,626           8,247         10,873          12,271
  Royalty expense                                10,104          1,806          10,271         12,077          11,868
  Depreciation and amortization                  15,070          2,339          12,469         14,808          14,025
  Provision for doubtful accounts (note 2)       15,312            --              --             --              --
  Edison legal expenses and
       settlement costs (note 9)                    --             569           5,250          5,819           2,956
                                              --------------  -------------- ------------- -------------   --------------

          Total operating expenses               49,895          7,340          36,237         43,577          41,120
                                              --------------  -------------- ------------- -------------   --------------

          Operating income                       11,339         10,319          62,024         72,343          80,243
                                              --------------  -------------- ------------- -------------   --------------

Other expenses:
  Interest expense                                9,130            933           9,004          9,937           7,918
  Interest expense - acquisition debt               --             --            2,010          2,010             --
  Costs related to acquisition debt                 --             --            1,473          1,473             --
  Amortization on deferred financing                769             20             551            571             204
                                              --------------  -------------- ------------- -------------   --------------

          Total other expenses                    9,899            953          13,038         13,991           8,122
                                              --------------  -------------- ------------- -------------   --------------

          Income before extraordinary item
          and cumulative effect of change
          in accounting  principle                1,440          9,366          48,986         58,352          72,121

Extraordinary item - loss on
  extinguishment of debt (note 7)                   --             --            2,147          2,147            --
Cumulative effect of change in
  accounting principle:
  start-up activities (note 2)                      --             --              --             --            1,664
                                              --------------  -------------- ------------- -------------   --------------

          Net income                          $   1,440          9,366          46,839         56,205          70,457
                                              ==============  ============== ============= =============   ==============


See accompanying notes to financial statements.
</TABLE>




                                                          F-23
<PAGE>
<TABLE>
<CAPTION>



                                                COSO POWER DEVELOPERS

                                           Statements of Partners' Capital

                               Years ended December 31, 2000, 1999, and 1998 (note 3)

                                               (Dollars in thousands)



                                              Caithness
                                               Navy II               Coso                New
                                                Group,            Technology             CTC
                                                 LLC             Corporation         Company, LLC           Total
                                           -----------------   -----------------   -----------------   -----------------
<S>                                            <C>                 <C>                 <C>                <C>

Balance at December 31, 1997          $        62,706.5            62,706.5               --              125,413.0

Distributions to partners                     (21,104.5)          (21,104.5)              --              (42,209.0)

Net income                                     35,228.5            35,228.5               --               70,457.0
                                           -----------------   -----------------   -----------------   -----------------

Balance at December 31, 1998                   76,830.5            76,830.5               --              153,661.0

Transfer of capital                               --              (76,830.5)           76,830.5               --

Distributions to partners                     (51,537.5)              --              (51,537.5)         (103,075.0)

Net income                                     28,102.5               --               28,102.5            56,205.0

Effect of purchase accounting                     --                  --               (2,460.0)           (2,460.0)
                                           -----------------   -----------------   -----------------   -----------------

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
                                           =================   =================   =================   =================


See accompanying notes to financial statements.
</TABLE>




                                                             F-24

<PAGE>

<TABLE>
<CAPTION>

                                                 COSO POWER DEVELOPERS

                                               Statements of Cash Flow

                                Years ended December 31, 2000, 1999, and 1998 (note 3)

                                                (Dollars in thousands)


                                                    Twelve months    Two months    Ten months    Twelve months  Twelve months
                                                        ended          ended         ended           ended          ended
                                                      December 31,  February 28,  December 31,    December 31,   December 31,
                                                         2000           1999          1999            1999           1998
                                                    ------------    -----------   -----------    ------------  --------------
                                                                    (old basis)   (new basis)                  (old basis)
<S>                                                       <C>          <C>          <C>             <C>            <C>

Cash flows from operating activities:
   Net income                                        $    1,440        9,366        46,839          56,205         70,457
   Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization                     15,070        2,339        12,469          14,808         14,025
       Amortization of deferred financing costs             769           20           551             571            204
       Provision for doubtful accounts                   15,312          --            --              --             --
       Write-off of deferred financing costs                --           --            217             217            --
       Cumulative effect of accounting change               --           --            --              --           1,664
       Changes in operating assets and liabilities:
         Accounts receivable, prepaid
           expenses, and other assets                     4,350         (909)          329            (580)        (1,095)
         Investment in Coso Transmission Line Partners      132         (989)        1,131             142            127
         Investment in China Lake Plant Services, Inc.      135           52           (64)            (12)          (343)
         Accounts payable and accrued liabilities           115          439         3,997           4,436            864
         Amounts due from related parties                 1,105        1,432        (3,740)         (2,308)        (1,268)
         Amounts due to related parties                  (1,409)       2,088          (765)          1,323            198
                                                    ------------  -----------    ----------      ------------  ------------
             Net cash provided by operating
               activities                                37,019       13,838        60,964          74,802         84,833
                                                    ------------  -----------    ----------      ------------  ------------

Cash flows from investing activities:
   Capital expenditures                                  (1,700)      (1,182)       (3,232)         (4,414)        (7,010)
   (Increase) decrease in restricted cash                44,124          --        (54,338)        (54,338)           --
                                                    ------------  -----------    ----------      ------------  ------------
             Net cash (used in) provided by
               investing activities                      42,424       (1,182)      (57,570)        (58,752)        (7,010)
                                                    -----------   -----------    ----------      ------------  ------------

Cash flows from financing activities:
   Distributions to partners                            (18,348)         --       (103,075)       (103,075)       (42,209)
   Increase in project financing debt                       --           --        153,550         153,550            --
   Repayment of project financing loan                  (59,374)         --        (61,323)        (61,323)       (35,944)
                                                    ------------  -----------    ----------      ------------  ------------

             Net cash used in financing activities      (77,722)         --       (10,848)         (10,848)       (78,153)

             Net change in cash and cash
               equivalents                                1,721       12,656        (7,454)          5,202           (330)

Cash and cash equivalents at beginning of year            6,020          818        13,474             818          1,148
                                                    ------------  -----------    ----------      ------------  ------------

Cash and cash equivalents at end of year             $    7,741       13,474         6,020           6,020            818
                                                    ============  ===========    ==========      ============  ============

Supplemental cash flow disclosure:
   Cash paid for interest                            $    9,183          --         11,060          11,060          7,918
                                                    ============  ===========    ==========      ============  ============

Schedule of noncash investing activities as
   a result of purchase :
     Fair value of power purchase contract           $      --           --         30,738          30,738            --
     Reduction in property, plant, and equipment            --           --        (33,536)        (33,536)           --
     Net increase in other assets                           --           --          4,084           4,084            --
     Liabilities assumed                                    --           --         (3,746)         (3,746)           --
                                                    ------------  -----------    ----------      ------------  ------------
             Reduction in partners' capital          $      --           --         (2,460)         (2,460)           --
                                                    ============  ===========    ==========      ============  ============
See accompanying notes to financial statements.
</TABLE>

                                                             F-25
<PAGE>

                          CAITHNESS POWER DEVELOPERS

                          Notes to Financial Statement

                        December 31, 2000, 1999 and 1998

                             (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), a New Jersey limited liability company,  and, until
     February  25,  1999,   Coso  Technology   Corporation   (CTC),  a  Delaware
     corporation  wholly  owned by  CalEnergy,  Inc.  (CalEnergy),  now known as
     MidAmerica  Energy  Holdings  Company.  On  February  25,  1999,  Caithness
     Acquisition  Company,  LLC (CAC),  a wholly owned  subsidiary  of Caithness
     Energy,  LLC and an  affiliate  of Navy II,  purchased  all of  CalEnergy's
     interest in CTC (see note 3) and formed a wholly owned subsidiary,  New CTC
     Company, LLC (New CTC), a Delaware limited liability company, to become the
     new managing general partner of CPD.

     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  expiring in 2010.
     Under the terms of this contract, Edison makes payments to CPD as follows:

*    Contractual payments for energy delivered,  which 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.  For the years ended  December 31, 2000,  1999, and
     1998,  Edison's  average  avoided cost of energy was 5.80,  3.13,  and 2.95
     cents per kwh,  respectively.  Estimates of Edison's future avoided cost of
     energy vary substantially from year to year. The Partnership cannot predict
     the likely level of avoided cost of energy  prices under the 20-year  power
     purchase  contract  and,   accordingly,   the  revenues  generated  by  the
     Partnership could fluctuate significantly;

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

 *   Bonus payments to the extent that actual energy delivered  exceeds 85% of
     the plant  capacity  stated in the contract.  In 2000,  1999, and 1998, the
     bonus payments aggregated $2,248, $2,248, and $2,242, respectively.

     CalEnergy  served  as the  operator  for CPD,  maintaining  the  accounting
     records and  operating  the plant day to day,  until  February 1, 1999,  at
     which time Coso Operating  Company LLC (COC), a Delaware limited  liability
     company,  became  operator  pursuant to certain  operations and maintenance
     agreements with CTC, the managing general  partner.  COC was a wholly owned
     subsidiary of CalEnergy until February 25, 1999 when CalEnergy assigned all
     of its  interest  and right in COC to CAC,  which  became  manager and sole
     member.

     On February  25,  1999,  CPD entered  into two  operating  and  maintenance
     agreements,  one with FPL Operating Services,  Inc. (FPL) and a second with
     COC. The initial terms of the FPL operating and  maintenance  agreement was
     for three  years,  to provide  for the  operation  and  maintenance  of the
     geothermal  power  facilities and the  interconnection  to the transmission
     line. The term of the COC Agreement is through December 31, 2009 to provide
     field services and administrative services for the Partnership.  On October
     17, 1999,  the operating  agreement  with FPL was terminated and COC became
     the sole operator of all Partnership operations.

     At  formation,  and as  subsequently  amended,  the  partnership  agreement
     provides that cash flows before and after  "payout," are allocated 50% each
     to New CTC (formerly  CTC) and Navy II. "Payout,"  which has occurred,  is
     defined  as the  point  at  which  each  partner  received  aggregate  cash
     distributions   in  an   amount   equal   to  their   accumulated   capital
     contributions.  For purposes of allocating net income to partners  capital
     accounts  and for income tax  purposes,  profits  and losses are  allocated
     based on the aforementioned capital 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 Power Purchase Contract (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.
     After January 2000,  revenue is recognized based on Edison's avoided energy
     cost.

     In recent  months,  Edison  has  experienced  significant  undercollections
     resulting from the difference  between revenues received from its customers
     through  currently  frozen rates and the cost of  producing  service to its
     customers,   including  procurement  costs.  Those   undercollections  have
     adversely  affected  Edison's  liquidity and in turn they have not paid CPD
     for  November and  December  revenues.  Despite  extensive  and  continuing
     negotiations with Edison,  CPD has been unable to secure from Edison a firm
     indication of the time frame during which they can expect  payment of their
     November and December  receivables,  nor the amount, if any, that Edison is
     prepared to pay.  Therefore,  an allowance  for  uncollectible  amounts was
     established as of December 31, 2000, which totaled $15,312.

     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 currently.

     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.

     Recoverability of Long-Lived Assets

     In accordance  with  Statement of Financial  Accounting  Standards No. 121,
     "Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
     Assets to Be Disposed Of" (SFAS No. 121), an impairment  loss is recognized
     whenever  events or changes in  circumstances  indicate  that the  carrying
     amounts of long-lived  tangible and intangible  assets is not  recoverable.
     The  Partnership  considers  historical  performance  and future  estimated
     results in its  evaluation  of potential  impairment  and then compares the
     carrying amount of the asset to the estimated future cash flows expected to
     result  from the use of the  asset.  If the  carrying  amount  of the asset
     exceeds estimated expected  undiscounted  future cash flows before interest
     charges, the Partnership measures the amount of the impairment by comparing
     the carrying amount of the asset to its fair value.  The estimation of fair
     value is generally  measured by discounting  expected  future cash flows at
     the rate the Partnership  utilizes to evaluate potential  investments.  The
     Partnership  estimates fair value based on the best  information  available
     using estimates, judgments, and projections as considered necessary.

     Start-Up Activities

     In  April  1998,  the  Accounting   Standards  Executive  Committee  issued
     Statement of Position (SOP)  No.98-5,  "Reporting on the Costs of Start-Up
     Activities." SOP No.98-5 requires that, at the effective date of adoption,
     costs  of  start-up  activities  previously  capitalized  be  expensed  and
     reported as a  cumulative  effect of change in  accounting  principle,  and
     further  requires  that such costs  subsequent  to  adoption be expensed as
     incurred.  CPD  adopted  this  standard  in 1998  and  expensed  applicable
     unamortized costs previously capitalized in connection with the start-up of
     CPD.  The  cumulative  effect of the  change in  accounting  principle  was
     $1,664.

     Wells and Resource Development Costs

     CPD  follows  the  full-cost  method of  accounting  for 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 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 useful life of the  respective
     assets. These deferred costs of $333 and $97 at December 31, 2000 and 1999,
     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, 2000,  1999,  and 1998, the costs were $32, $101,
     and $83, respectively.

     Reclassifications

     Certain reclassifications have been made to the 1999 and 1998 statements of
     operations and cash flows to conform to the 2000 presentation.

     Deferred Financing Costs

     Deferred  financing  costs as of December 31, 2000 and 1999 consist of loan
     fees and other costs of financing  that are amortized  over the term of the
     related  financing.  In  1999,  fees  of  $1,473  associated  with  certain
     short-term  financing  were fully expensed and included in costs related to
     acquisition  debt,  and a refinancing of this debt resulted in new deferred
     financing costs of $4,175. The $179 balance of the deferred financing costs
     at the date of  acquisition  related  to the  refinanced  project  debt was
     included in the extraordinary  loss recorded at the time of the refinancing
     (see note 7).  Accumulated  amortization  at December 31, 2000 and 1999 was
     $1,320 and $551, respectively.

     Income Taxes

     There  is  no  provision   for  income  taxes  since  such  taxes  are  the
     responsibility of the partners.

     Cash and Cash Equivalents

     For  purposes of the  statements  of cash flows,  CPD  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, 2000 and 1999, 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 7). The  carrying  amount of  restricted  cash and
     investments at December 31, 2000 and 1999 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  generally
     accepted  accounting  principles  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,  2000 and 1999, because
     of the relatively short maturity of these instruments. The project loans as
     of December 31, 2000 and 1999 have an  estimated  fair value of $93,866 and
     $152,435,  respectively,  based on the  quoted  market  price of the senior
     secured notes and the Coso Funding Corp. notes, respectively (see note 7).

     The  investments  in Coso  Transmission  Line Partners and China Lake Plant
     Services, Inc. approximate fair value.

     New Accounting Pronouncements

     In June 1998,  the  Financial  Accounting  Standards  Board  (FASB)  issued
     Statement of Financial Accounting Standards (SFAS) No.  133,"Accounting for
     Derivative  Instruments and Hedging  Activities." In June 2000, FASB issued
     SFAS No. 138,  "Accounting for Certain  Derivative  Instruments and Certain
     Hedging  Activities,"  which  amended  SFAS No. 133 and  addressed  certain
     implementation  issues.  SFAS No.  133,  as  amended,  requires  that every
     derivative instrument (including certain derivative instruments embedded in
     other  contracts)  be recorded  in the balance  sheet as either an asset or
     liability  measured at its fair value.  The  Statement  also  requires that
     changes in the derivative's fair value be recognized  currently in earnings
     unless specific hedge accounting criteria are met. The Partnership does not
     have any derivative  instruments  and  therefore,  the adoption of SFAS No.
     133, as amended,  in the first quarter of 2001, will not have any effect on
     the Partnership's financial statements.


(3)  Acquisition Accounting

     On  February 25,  1999, CAC purchased all of  CalEnergy's  interest in CPD,
     Coso Energy Developers (CED), Coso Finance Partners (CFP), and Coso Finance
     Partners  II (CFP II),  collectively  known as the Coso  Partnerships,  for
     approximately $205,500 in cash plus the assumption of debt of approximately
     $139,800.  The purchase price  allocated to CPD was  approximately  $74,500
     plus the assumption of debt of approximately  $61,300.  The acquisition was
     accounted  for under the purchase  method,  and no goodwill  was  recorded.
     After  CAC's  purchase  of  CalEnergy's  interest  in CPD,  a new  basis of
     accounting was adopted and,  therefore,  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 upon 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.  These  adjustments
     resulted in a net decrease of $33,536 in the recorded amounts for the value
     of  property,  plant,  and  equipment  and an  increase  of  $30,738 in the
     recorded  amounts  for the power  purchase  contract.  The  power  purchase
     contract is being  amortized on a  straight-line  basis over the  remaining
     term  of  the  power  purchase  contract  of 11  years  as of the  date  of
     acquisition.  Accumulated  amortization  on the power purchase  contract at
     December 31, 2000 and 1999 was $5,124 and $2,329, respectively.


(4)  Investment in Coso Transmission Line Partners

     Coso  Transmission  Line Partners  (CTLP) is a partnership  between CPD and
     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.


(5)  Investment in China Lake Plant Services, Inc.

     China Lake Plant Services, Inc. (CLPSI) is a wholly owned subsidiary of
     CAC. CLPSI purchases, stores, and distributes spare parts to CPD, CED, and
     CFP. Also,  certain other facilities  utilized by the Coso Partnerships are
     held by CLPSI.  CPD's investments in CLPSI represent funds advanced for the
     purchase of spare parts  inventory and other assets.  Spare parts inventory
     held by CLPSI on behalf of CPD is valued at the lower of cost or market.


(6)  Property, Plant, and Equipment

     Property, plant, and equipment at December 31, 2000 and 1999 consist of the
     following:

                                                  2000                1999
                                              ---------------    --------------

     Power, plant, and gathering system        $  142,350             141,068
     Transmission line                              7,245               7,245
     Wells and resources development costs         60,010              59,735
                                              ---------------    --------------
                                                  209,605             208,048
     Less accumulated depreciation
       and amortization                           (72,658)            (60,526)
                                              ---------------    --------------
                                               $  136,947             147,522
                                             ================    ==============


     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.


(7)  Project Loans

     In order to complete  the  purchase  of  CalEnergy's  interest in CPD,  CAC
     arranged for short-term debt financing of $211,500,  of which approximately
     $78,634 was allocated to CPD. As a result of  "push-down"  accounting,  the
     short-term  debt was reflected in the  financial  statements of CPD and was
     repaid on May 28, 1999 from a portion of the proceeds  from the offering of
     senior  secured  notes.  Financing  costs  associated  with the  short-term
     financing are included in interest expense - acquisition debt.

     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 consists of one note of $69,350 at 6.80% and
     another note of $84,200 at 9.05% with payments due at various dates through
     December 15, 2001 and December 15, 2009,  respectively,  beginning December
     15, 1999.  As of December 15, 1999,  the  principal  payment of $43,004 was
     available  for payment by the trustee.  The trustee paid this amount to the
     noteholders on January 19, 2000. The failure to make the principal  payment
     on December  15, 1999 did not result  from the lack of  performance  on the
     part of Funding Corp. or the Partnership and the  Partnership's  management
     believes  this  is  not an  event  of  default.  Furthermore,  all  related
     penalties  will be assumed by the  trustee.  Through  this  financing,  the
     existing project loan and short-term  financing of  approximately  $139,957
     was repaid and an extraordinary loss of approximately $2,147 from the early
     extinguishment of this debt was incurred. The extraordinary loss was due to
     a premium and other costs incurred to pay the existing  project loan before
     its maturity date.

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

               Year ending December 31                   Amount
               -----------------------                   ------

                     2001                             $   9,976
                     2002                                 3,799
                     2003                                 9,155
                     2004                                10,718
                     2005                                11,697
                     Thereafter                          48,831
                                                         ------
                                                      $  94,176
                                                         ======


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

                     2001                             $  27,067
                     2002                                21,771
                     2003                                27,618
                     2004                                31,332
                     2005                                35,480
                     Thereafter                         186,799
                                                        -------
                                                      $ 330,067
                                                        =======


(8)  Related Party Transactions

     The amounts due from and to related parties at  December 31,  2000 and 1999
     consist of the following:

                                                  2000            1999
                                                 -----           -----
     Amounts due from related parties:
       CED for steam sharing                 $     127             673
       Coso Operating Company                    1,784           2,714
       China Lake Joint Venture:
       Principal                                 1,562           1,562
       Accrued interest                          2,480           2,109
                                                 -----           -----
                                             $   5,953           7,058
                                                 =====           =====

     Amounts due to related parties:
       CFP for steam sharing                 $   1,357           2,807
       Caithness Coso Funding Corp.                365             418
       Caithness Operating Company                  94             --
                                                 -----           -----
                                             $   1,816           3,225
                                                 =====           =====



     COC is reimbursed monthly for  non-third-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.


     Both  CalEnergy and Navy II were  reimbursed at approved  amounts for their
     respective costs incurred in relation to the CPD Management Committee.  For
     the years ended December 31, 2000, 1999, and 1998, CalEnergy received $-0-,
     $25, and $148,  respectively,  while Navy II received $-0-, $130, and $223,
     respectively.

     As of May 28, 1999,  the  management  committee  fees were  eliminated  and
     replaced  by a  nonmanaging  fee  payable to  Navy II.  For the years ended
     December 31, 2000 and 1999, Navy II received $234 and $129, respectively.

     CPD is charged for its use of the transmission  line owned by CTLP. For the
     years ended  December  31,  2000,  1999,  and 1998,  the amount of such net
     charges was $179, $127, and $127, 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 2000, 1999,
     and 1998 were approximately $318, $78, and $361, 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, 2000,  1999, and
     1998 at 10.0%,  12.5%,  and 12.5%,  respectively.  Interest on the loan was
     $371, $421, and $371 in 2000, 1999, and 1998, respectively.

     The amount due to Caithness Coso Funding Corp.  represents accrued interest
     for fifteen days in December, related to the project loans (see note 7).

     The amount due to Caithness Operating Company relates to reimbursements for
     payments of operating expenses.

     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 $5,751
     and $18,618 for the years ended  December 31, 2000 and 1999,  respectively,
     and a revenue,  net of  expense,  of $342 for the year ended  December  31,
     1998.


(9)  Settlement of Litigation

     In February 2000, the  Partnership,  CED, and CFP reached a settlement with
     Edison,  subject  to  the  approval  of  the  California  Public  Utilities
     Commission  (CPUC),  which approval was received in December 2000. The case
     has not yet been dismissed pending completion of certain  obligations under
     the settlement  agreements.  The cost of the  settlement  will be allocated
     among the Coso  Partnerships.  A portion of that cost was  reflected in the
     purchase  accounting applied to the acquisition of CalEnergy's  interest in
     the Partnership  (see note 3). The balance of the settlement was charged to
     settlement of litigation and related expenses.

     In June 1999, the  Partnership,  CED, CFP, Fuji Electric Co., Ltd. and Fuji
     Electric  Corporation  of America  (Fuji)  reached a settlement  agreement.
     Fuji,  in  consideration  of the  settlement  agreement,  must send various
     equipment or spare parts to the Coso Partnerships.


(10) Risks and Uncertainties

     The  Partnership's  future results of operations  involve a number of risks
     and uncertainties. Increases in natural gas prices and an imbalance between
     supply and demand, among other factors,  has lead to significant  increases
     in wholesale electricity prices in California. Edison had previously agreed
     to fixed tariffs with their retail customers that were significantly  below
     the wholesale  prices they pay in California.  This resulted in significant
     under-recoveries by Edison of their electricity  purchase costs. On January
     16, 2001 Edison announced that it was temporarily  suspending  payments for
     energy provided,  including the energy provided by CPD, pending a permanent
     solution to its liquidity crisis (see note 2).

     In 2001,  the  Partnership  has  continued  to sell  electricity  under its
     existing PPC with Edison.  The State of  California  is expected to enact a
     law that will,  among other things,  provide for long-term  price stability
     and payments to qualifying  facilities such as the  Partnership.  Under the
     draft legislation currently being considered by the California legislature,
     the  Partnership  believes  that it will  ultimately  collect a  sufficient
     amount of revenue from its electricity sales to fund its operations.


                                      F-26
<PAGE>


<TABLE>
<CAPTION>



Quarterly Data (Unaudited)

Condensed consolidated quarterly Financial
 information for 2000 and 1999 are as follows:

                                                  March 31(a)    June 30(a)     September 30(a)      December 31(a)
                                                  -----------    ----------     ---------------      --------------
<S>                                                  <C>             <C>             <C>                  <C>

Caithness Coso Funding Corp:

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

    1999
    Total revenues                               $     --            4,986          11,459                4,046
    Operating income                                   --              --              --                   --
      Net income                                 $     --              --              --                   --


Coso Finance Partners:

    2000
    Total revenues                               $   9,303          13,483          22,929               24,444
    Operating income                                 3,689           6,958          13,781                1,373
    Income before extraordinary item                   386           3,709          10,556               (1,863)
      Net income (loss)                          $     386           3,709          10,556               (1,863)

    1999
    Total revenues                               $  14,859          12,648          18,648               11,745
    Operating income                                 6,451           5,667           9,333                4,320
    Income before extraordinary item                 4,158           1,346           6,123                  569
      Net income (loss)                          $   4,158          (1,029)          6,123                  569


Coso Energy Developers:

    2000
    Total revenues                               $  12,495          11,628          20,311               21,144
    Operating income                                 6,015           4,699          11,880               (3,709)
    Income before extraordinary item                 3,627           2,345           9,514               (6,093)
      Net income (loss)                          $   3,627           2,345           9,514               (6,093)

    1999
    Total revenues                               $  21,573           7,097          14,674                7,599
    Operating income                                10,266          (1,059)          6,130               (2,928)
    Income before extraordinary item                 8,417          (4,690)          3,817               (5,370)
      Net income (loss)                          $   8,417          (6,512)          3,817               (5,370)


Coso Power Developers:

    2000
    Total revenues                               $  10,317          11,812          20,207               18,898
    Operating income                                 2,739           3,577          10,827               (5,804)
    Income before extraordinary item                   193           1,077           8,349               (8,179)
      Net income (loss)                          $     193           1,077           8,349               (8,179)

    1999
    Total revenues                               $  24,943          28,637          34,763               27,577
    Operating income                                14,058          19,082          25,366               13,837
    Income before extraordinary item                11,313          14,428          22,171               10,440
      Net income                                 $  11,313          12,281          22,171               10,440
</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.


                                      F-27
<PAGE>


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.








<PAGE>


<TABLE>
<CAPTION>

                                       COSO PARTNERSHIPS

                         UNAUDITED CONDENSED COMBINED BALANCE SHEETS

                                    December 31, 2000 and 1999

                                     (Dollars in thousands)




                     Assets                                                               2000               1999
                                                                                     ---------          ---------
   <S>                                                                                  <C>                <C>
   Cash                                                                              $  17,109             20,264
   Restricted cash and investments                                                      47,712             89,145
   Accounts receivable, net                                                                590             32,269
   Prepaid expenses and other assets                                                     2,671                100
   Amounts due from related parties                                                      6,191              8,809
   Property, plant and equipment, net                                                  439,641            467,051
   Power purchase agreement, net                                                        57,364             62,346
   Investments                                                                          13,485             14,179
   Deferred financing costs, net                                                         8,564             10,171
                                                                                     ---------          ---------

                   Total assets                                                      $ 593,327            704,334
                                                                                     =========          =========


                   Liabilities and Partners' Capital

   Accounts payable and accrued liabilities                                          $  36,260             36,952
   Amounts due to related parties                                                       23,460             21,339
   Project loan                                                                        330,067            413,000
                                                                                     ---------          ---------

                   Total liabilities                                                   389,787            471,291


     Partners' capital                                                                 203,540            233,043
                                                                                     ---------          ---------

                   Total liabilities and partners' capital                           $ 593,327            704,334
                                                                                     =========          =========
</TABLE>



                                      F-28
<PAGE>
<TABLE>
<CAPTION>


                                                              COSO PARTNERSHIPS

                                            UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS

                                                Years ended December 31, 2000, 1999 and 1998

                                                           (Dollars in thousands)


                                          Twelve-Months    Two-Months    Ten-Months    Twelve-Months     Twelve-Months
                                             Ended           Ended         Ended          Ended             Ended
                                           December 31,   February 28,   December 31,   December31,       December 31,
                                              2000           1999           1999           1999              1998
                                          ------------    -----------    -----------    ----------        -----------
                                                          (old basis)    (new basis)                      (old basis)
<S>                                       <C>              <C>           <C>           <C>                <C>

Revenue:
   Energy revenues                        $ 141,248           41,501       136,460       177,961           238,478
   Capacity                                  42,224            2,113        39,215        41,328            41,438
   Interest and other income                 13,499            1,052         4,422         5,474             3,565
                                          ----------       ---------     ---------     ---------        ----------

       Total revenue                        196,971           44,666       180,097       224,763           283,481
                                          ----------       ---------     ---------     ---------        ----------

Operating expenses:
   Plant operating expenses                  30,026            8,652        27,806        36,458            38,709
   Royalty expense                           25,070            4,385        20,997        25,382            29,184
   Depreciation and amortization             40,025            6,493        33,546        40,039            40,915
   Provision for doubtful accounts           45,825              --            --            --                --
   Edison legal expense and
     settlement costs                           --             1,707        10,654        12,361             8,893
                                          ----------       ---------     ---------     ---------        ----------

       Total operating expenses             140,946           21,237        93,003       114,240           117,701
                                          ----------       ---------     ---------     ---------        ----------

       Operating income                      56,025           23,429        87,094       110,523           165,780
                                          ----------       ---------     ---------     ---------        ----------


Other expenses:
   Interest expense                          30,797            2,180        24,678        26,858            18,233
   Interest expense-acquisition debt            --               --          5,387         5,387               --
   Costs related to acquisition debt            --               --          4,346         4,346               --
   Amortization on deferred financing         1,607               52         1,158         1,210               489
                                          ----------       ---------     ---------     ---------        ----------

       Total other expenses                  32,404            2,232        35,569        37,801            18,722
                                          ----------       ---------     ---------     ---------        ----------

       Income before extraordinary item
       and cumulative effect of change
       in accounting principle               23,621           21,197        51,525        72,722           147,058

Extraordinary item-loss on
   extinguishment of debt                       --               --          6,344         6,344               --
Cumulative effect of change in
   accounting principle: start-up
   activities                                   --               --            --            --              3,540
                                          ----------       ---------     ---------     ---------        ----------

       Net income                         $  23,621           21,197        45,181        66,378           143,518
                                          ==========       =========     =========     =========        ==========

</TABLE>




                                       F-29
<PAGE>

<TABLE>
<CAPTION>


                                                                     COSO PARTNERSHIPS

                                                    UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS

                                                         Years ended December 31, 2000, 1999 and 1998

                                                                    (Dollars in thousands)


                                                       Twelve-Months   Two-Months   Ten-Months   Twelve-Months   Twelve Months
                                                           Ended         Ended         Ended         Ended           Ended
                                                        December 31,  February 28,  December 31,  December 31,    December 31,
                                                            2000         1999          1999          1999            1998
                                                        -----------   -----------   -----------   -----------     -----------
                                                                      (old basis)  (new basis)                    (old basis)
<S>                                                    <C>             <C>           <C>          <C>              <C>

Net cash provided by operating activities............   $   99,103      $  29,285    $   99,711   $  128,996      $  192,616
Net cash provided by (used in) investing activities..       33,800         (1,588)      (97,957)     (99,545)        (35,140)
Net cash provided by (used in) financing activities..     (136,058)           --        (10,005)     (10,005)       (161,567)
                                                        ----------      ---------    ----------   ----------      ----------

Net change in cash and cash equivalents..............   $   (3,155)     $  27,697    $   (8,251)  $   19,446      $   (4,091)
                                                        ==========      =========    ==========   ==========      ==========


Supplemental cash flow disclosure:
         Cash paid for interest......................   $   30,902     $      --     $   29,871   $   29,871      $   18,233
                                                        ==========      =========    ==========   ==========      ==========

</TABLE>

                                       F-30
<PAGE>



                                COSO PARTNERSHIPS

                        NOTES TO THE UNAUDITED CONDENSED

                          COMBINED FINANCIAL STATEMENTS

                        December 31, 2000, 1999 and 1998

                             (Dollars in thousands)

(1)  Basis of Presentation

     The accompanying  unaudited  condensed combined  financial  statements were
     derived from the stand alone financial statements of Caithness Coso Funding
     Corp.,  Coso  Finance  Partners,  Coso  Energy  Developers  and Coso  Power
     Developers.  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  read  in  conjunction  with  each
     individual partnership's financial statements.

(2)  Acquisition

     On February 25, 1999,  Caithness  Acquisition  Company, LLC (CAC), a wholly
     owned subsidiary of Caithness Energy,  LLC,  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 $5.0 million in contingent
     payments,  plus the assumption of CalEnergy's and its affiliates'  share of
     debt  outstanding.  The  acquisition  was  accounted for under the purchase
     method,  and  no  goodwill  was  recorded.  After  Caithness  Acquisition's
     purchase  of  CalEnergy's  interest  in Coso  Partnerships,  a new basis of
     accounting was adopted and is referred to as "New Basis" as compared to the
     former cost basis  which is  referred  to as "Old  Basis" in the  financial
     statements.  The purchase  price was allocated to the portion of the assets
     and liabilities purchased from CalEnergy based upon 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.

     In  order  to  complete  the  purchase  of  CalEnergy's  interest  in  Coso
     Partnerships,  Caithness Acquisition arranged for short-term debt financing
     of approximately $211.5 million. This short-term debt was repaid on May 28,
     1999 from a portion of the  proceeds  from the  offering of senior  secured
     notes (see note 3).

(3)  Debt Financing

     On May 28, 1999 Caithness Coso Funding Corp.  loaned  approximately  $413.0
     million  to Coso  Partnerships  from a  portion  of the  proceeds  from the
     offering of senior secured  notes.  The loan consists of one note of $110.0
     million with an interest  rate of 6.80% and another of $303.0  million with
     an interest  rate of 9.05% with  maturity  dates of  December  15, 2001 and
     December 15, 2009,  respectively.  All prior project loans of approximately
     $351.4  million  were repaid  from the  proceeds  of the  financing  and an
     extraordinary loss from the early  extinguishment of this debt was incurred
     for approximately $6.3 million. The extraordinary loss was due to a premium
     and other costs incurred to pay the prior project loans before maturity.




                                       F-31

<PAGE>

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

     Since 1991,  Caithness Energy and CalEnergy,  the two former 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 Coso Finance Partners and Coso Finance Partners II, Coso
Energy  Developers  and Coso Power  Developers  for each of the two years in the
period ended  December 31, 1998 and through  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, 2000:

<TABLE>
<CAPTION>

Name                            Age                    Position(s)
<S>                             <C>                    <C>

James D. Bishop, Sr.            67      Director, Chairman and Chief Executive Officer

Leslie J. Gelber                44      Director, President and Chief Operating Officer

James D. Bishop, Jr.            40      Director, Vice Chairman

Christopher T. McCallion        39      Director, Executive Vice President and Chief
                                        Financial Officer

Kenneth Hoffman                 48      Senior Vice President

Larry K. Carpenter              51      Director, Executive Vice President

Mark A. Ferrucci                48      Director

David V. Casale                 37      Vice President and Controller

John A. McNamara                41      Vice President Finance

Barbara Bishop Gollan           42      Vice President

</TABLE>

                                       24


     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.

     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  and a Director 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. Since 1997, Mr. Ferrucci
has been an employee of CT  Corporation  System,  an  independent  company  that
provides corporate and UCC services to businesses and law firms. From 1977 until
1992, Mr. Ferrucci served as CT Corporation  System's Assistant Secretary and as
Assistant Vice President of CT Corporation System from 1992 until the present.

                                       25

     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.

     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 Senate Committee on Small Business. He received
a BA from Denison University and an MBA from Georgetown 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 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, 2000 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.

                                       26


     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.


<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)...............         0.6%               1.0%                -               0.7%

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

James D. Bishop, Jr. (1)(4)...............        25.0%               24.5%             28.0%             22.6%

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%              30.9%             43.6%             31.3%

</TABLE>



*     Less than 5.0%.
(1)  The  address of such  person is c/o  Caithness  Corporation,  1114
     Avenue of the Americas, 41st Floor, New York, New York 10036-7790.
(2)  The beneficial  ownership of James D. Bishop, Sr.'s interests is based upon
     his  ownership of shares of common stock of Mojave  Power,  Inc. and Mojave
     Power II, Inc. which own,  indirectly  through  various  entities,  general
     partnership   interests  in  the  Navy  I  partnership   and  the  Navy  II
     partnership.  In addition to these interests,  James D. Bishop,  Sr. is the
     beneficiary  of The James D. Bishop  Trust-2001  (''Bishop,  Sr.  Trust''),
     which owns shares of common stock of Caithness  Corporation  and membership
     units in Caithness 1997, LLC. Caithness Corporation 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
     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.

                                       27

(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  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 CCH, 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.

                                       28

     Each managing partner is a limited  liability  company managed by a manager
who is appointed by 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.

     CAC, a limited liability company, is the manager and sole member of each of
the managing  partners.  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,  2000,  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:

                                       29

<TABLE>
<CAPTION>


        Name                      Age              Partnership(s)
        ----                      ---              --------------
        <S>                      <C>                        <C>
James D. Bishop, Jr.              40     Navy I partnership, BLM partnership,
                                         Navy II partnership

Christopher T. McCallion          39     Navy I partnership, BLM partnership,
                                         Navy II partnership


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

</TABLE>

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,
1997, 1998, 1999 and 2000, 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

                                               1997             1998             1999            2000
                                            ---------        ---------        ---------       ---------
<S>                                          <C>              <C>              <C>             <C>
Navy I Partnership
     New CLOC                               $     --         $     --         $     --         $    --
     Predecessor of New CLOC                  143,000          147,000           25,000             --
     ESCA                                     214,000          221,000          258,000         234,000
                                            ---------        ---------        ---------       ---------
                                            $ 357,000        $ 368,000        $ 283,000       $ 234,000
                                            =========        =========        =========       =========
BLM Partnership
     New CHIP                               $     --         $     --         $     --        $     --
     Predecessor of New CHIP                  145,000          148,000           25,000             --
     CCH                                      218,000          223,000          259,000         234,000
                                            ---------        ---------        ---------       ---------
                                            $ 363,000        $ 371,000        $ 284,000       $ 234,000
                                            =========        =========        =========       =========
Navy II Partnership
     New CTC                                $     --         $     --         $     --        $     --
     Predecessor of New CTC.                  145,000          148,000           25,000             --
     Navy II Group                            218,000          223,000          259,000         234,000
                                            ---------        ---------        ---------       ---------
                                            $ 363,000        $ 371,000        $ 284,000       $ 234,000
                                            =========        =========        =========       =========

</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 $0.01 per share,  of which
300 shares were  outstanding.  The outstanding  common stock is owned equally by
the Coso partnerships.


                                       30


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

(b)      Current reports on Form 8-K:

         None

(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.*

                                       31

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.*

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.*

                                       32

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.*

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.*

                                       33

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.*

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).*

                                       34

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.*

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.*

                                       35

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.*

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.*

                                       36

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.*

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

99.2      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.**

99.3      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.**

                                       37

99.4      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 - 1999      DEC - 31 - 2000
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD START
(example: JAN-01-1997)                      Jan - 01 - 1999      JAN - 01 - 2000
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD END
(example: SEP-30-1997)                      Dec - 31 - 1999      DEC - 31 - 2000
                                            ---------------      ---------------
                                            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                                            414,392                     331,353
ALLOWANCES                                                   0                           0
INVENTORY                                                    0                           0
CURRENT ASSETDS                                          1,392                       1,286
PP&E                                                         0                           0
DEPRECIATION                                                 0                           0
TOTAL ASSETS                                           414,392                     331,353
CURRENT LIABILITIES                                      1,392                       1,286
BONDS                                                  413,000                     330,067
PREFERRED MANDATORY                                          0                           0
PREFERRED                                                    0                           0
COMMON                                                       0                           0
OTHER SE                                                     0                           0
TOTAL LIABILITY AND EQUITY                             414,392                     331,353
SALES                                                        0                           0
TOTAL REVENUES                                          20,491                      30,799
CGS                                                          0                           0
TOTAL COSTS                                                  0                           0
OTHER EXPENSES                                               0                           0
LOSS PROVISION                                               0                           0
INTEREST EXPENSES                                       20,491                      30,799
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 - 1999      DEC - 31 - 2000
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD START
(example: JAN-01-1997)                      Jan - 01 - 1999      JAN - 01 - 2000
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD END
(example: SEP-30-1997)                      Dec - 31 - 1999      DEC - 31 - 2000
                                            ---------------      ---------------
                                            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                                                     7,821                       3,506
SECURITIES                                              25,001                      22,996
RECEIVABLES                                             10,142                      17,715
ALLOWANCES                                                   0                      15,234
INVENTORY                                                    0                           0
CURRENT ASSETS                                          17,963                       6,796
PP&E                                                   225,157                     228,718
DEPRECIATION                                            71,278                      79,642
TOTAL ASSETS                                           218,192                     198,409
CURRENT LIABILITIES                                     17,280                      16,554
BONDS                                                  151,550                     134,984
PREFERRED MANDATORY                                          0                           0
PREFERRED                                                    0                           0
COMMON                                                       0                           0
OTHER SE                                                     0                           0
TOTAL LIABILITY AND EQUITY                             218,192                     198,409
SALES                                                   55,666                      67,653
TOTAL REVENUES                                          57,900                      70,159
CGS                                                          0                           0
TOTAL COSTS                                                  0                           0
OTHER EXPENSES                                          32,129                      44,358
LOSS PROVISION                                               0                           0
INTEREST EXPENSES                                       13,575                      13,013
INCOME PRETAX                                                0                           0
INCOME TAX                                                   0                           0
INCOME CONTINUING                                            0                           0
DISCONTINUED                                                 0                           0
EXTRAORDINARY                                            2,375                           0
CHANGES                                                      0                           0
NET INCOME                                               9,821                      12,788
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 - 1999      DEC - 31 - 2000
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD START
(example: JAN-01-1997)                      Jan - 01 - 1999      JAN - 01 - 2000
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD END
(example: SEP-30-1997)                      Dec - 31 - 1999      DEC - 31 - 2000
                                            ---------------      ---------------
                                            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                                                     6,423                       5,862
SECURITIES                                               9,806                      14,502
RECEIVABLES                                              6,856                      15,684
ALLOWANCES                                                   0                      15,279
INVENTORY                                                    0                           0
CURRENT ASSETS                                          13,379                       7,280
PP&E                                                   237,183                     238,244
DEPRECIATION                                            71,533                      84,626
TOTAL ASSETS                                           216,391                     201,312
CURRENT LIABILITIES                                     29,141                      31,160
BONDS                                                  107,900                     100,907
PREFERRED MANDATORY                                          0                           0
PREFERRED                                                    0                           0
COMMON                                                       0                           0
OTHER SE                                                     0                           0
TOTAL LIABILITY AND EQUITY                             216,391                     201,312
SALES                                                   49,877                      57,453
TOTAL REVENUES                                          50,943                      65,578
CGS                                                          0                           0
TOTAL COSTS                                                  0                           0
OTHER EXPENSES                                          38,534                      46,693
LOSS PROVISION                                               0                           0
INTEREST EXPENSES                                       10,235                       9,492
INCOME PRETAX                                                0                           0
INCOME TAX                                                   0                           0
INCOME CONTINUING                                            0                           0
DISCONTINUED                                                 0                           0
EXTRAORDINARY                                            1,822                           0
CHANGES                                                      0                           0
NET INCOME                                                 352                       9,393
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 - 1999      DEC - 31 - 2000
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD START
(example: JAN-01-1997)                      Jan - 01 - 1999      JAN - 01 - 2000
                                            ---------------      ---------------
                                            mmm - dd - yyyy      mmm - dd - yyyy

PERIOD END
(example: SEP-30-1997)                      Dec - 31 - 1999      DEC - 31 - 2000
                                            ---------------      ---------------
                                            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                                                     6,020                       7,741
SECURITIES                                              54,338                      10,214
RECEIVABLES                                             27,598                      21,294
ALLOWANCES                                                   0                      15,312
INVENTORY                                                    0                           0
CURRENT ASSETS                                          33,618                      14,572
PP&E                                                   208,048                     209,605
DEPRECIATION                                            60,526                      72,658
TOTAL ASSETS                                           273,269                     195,693
CURRENT LIABILITIES                                     15,388                      14,094
BONDS                                                  153,550                      94,176
PREFERRED MANDATORY                                          0                           0
PREFERRED                                                    0                           0
COMMON                                                       0                           0
OTHER SE                                                     0                           0
TOTAL LIABILITY AND EQUITY                             273,269                     195,639
SALES                                                  113,746                      58,366
TOTAL REVENUES                                         115,920                      61,234
CGS                                                          0                           0
TOTAL COSTS                                                  0                           0
OTHER EXPENSES                                          43,577                      49,895
LOSS PROVISION                                               0                           0
INTEREST EXPENSES                                       13,991                       9,899
INCOME PRETAX                                                0                           0
INCOME TAX                                                   0                           0
INCOME CONTINUING                                            0                           0
DISCONTINUED                                                 0                           0
EXTRAORDINARY                                            2,147                           0
CHANGES                                                      0                           0
NET INCOME                                              56,205                       1,440
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>


                                   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.



Date:  March 28, 2001                       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)


                                            COSO FINANCE PARTNERS
                                            a California corporation

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


                                            COSO ENERGY DEVELOPERS
                                            a California corporation

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


                                            COSO POWER DEVELOPERS
                                            a California corporation

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






     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.




<TABLE>
<CAPTION>

               Signature                                    Title                               Date
<S>                                               <C>                                        <C>
/S/    JAMES D. BISHOP, SR.                        Director, Chairman and Chief              March 28, 2001
--------------------------------------------       Executive Officer (Principal
        James D. Bishop, Sr.                        Executive Officer)


/S/    CHRISTOPHER T. MCCALLION                    Director, Executive Vice President        March 28, 2001
--------------------------------------------       and Chief Financial Officer
        Christopher T. McCallion                    (Principal Accounting Officer)


/S/    LESLIE J. GELBER                            Director, President and Chief             March 28, 2001
--------------------------------------------        Operating Officer
        Leslie J. Gelber


/S/    JAMES D. BISHOP, JR.                        Director                                  March 28, 2001
--------------------------------------------
        James D. Bishop, Jr.

/S/    LARRY K. CARPENTER                          Director                                  March 28, 2001
--------------------------------------------
        Larry K. Carpenter

/S/    MARK A. FERRUCCI                            Director                                  March 28, 2001
--------------------------------------------
        Mark A. Ferrucci


</TABLE>