UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


              Quarterly Report Pursuant to Section 13 or 15 (d) of
                       the Securities Exchange Act of 1934


                    For the quarter ended September 30, 2001
                          Commission File No. 333-89521


                               CE Generation, LLC
             (Exact name of registrant as specified in its charter)


         Delaware                                             47-0818523
     ----------------                                      -------------------
     (State or other jurisdiction of                       (I.R.S. Employer
     Incorporation or organization)                        Identification No.)

     302 South 36th Street, Suite 400 Omaha, NE            68131
     ------------------------------------------            -----
     (Address of principal executive offices)              (Zip Code)


     Registrant's telephone number, including area code: (402) 341-4500
                                                         --------------
     Securities registered pursuant to Section 12(b) of the Act: N/A

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

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days:


                                 Yes X No _____


     The members  equity  accounts are held 50% by MidAmerican  Energy  Holdings
Company and 50% by El Paso Merchant  Energy  Holding  Company as of November 14,
2001.



<PAGE>




                                TABLE OF CONTENTS


Part I  Financial Information...............................................1
  Item 1.  Financial Statements.............................................2
  Item 2.  Management's Discussions and Analysis of
           Financial Condition and Results of Operations...................10


Part II....................................................................18
  Item 1.  Legal Proceedings...............................................18
  Item 2.  Changes in Securities and Use of Proceeds.......................18
  Item 3.  Defaults on Senior Securities ..................................18
  Item 4.  Submission of Matters to a Vote of Security Holders.............18
  Item 5.  Other Information ..............................................18
  Item 6.  Exhibits and Reports on Form 8-K................................18

Signatures.................................................................19


<PAGE>





                         INDEPENDENT ACCOUNTANTS' REPORT


Board of Directors
CE Generation, LLC

     We  have  reviewed  the  accompanying  consolidated  balance  sheet  of  CE
Generation,  LLC and subsidiaries  (the "Company") as of September 30, 2001, and
the related  consolidated  statements  of  operations  for the  three-month  and
nine-month   periods  ended   September  30,  2001  and  2000  and  the  related
consolidated statements of cash flows for the nine-month periods ended September
30, 2001 and 2000.  These  financial  statements are the  responsibility  of the
Company's management.

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

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

     We have previously audited, in accordance with auditing standards generally
accepted in the United States of America,  the consolidated  balance sheet of CE
Generation,  LLC and  subsidiaries  as of  December  31,  2000,  and the related
statements of operations, members' equity and cash flows for the year then ended
(not presented herein); and in our report dated January 18, 2001 (March 27, 2001
as to Note 9A),  we  expressed  an  unqualified  opinion  on those  consolidated
financial  statements.  In  our  opinion,  the  information  set  forth  in  the
accompanying  consolidated  balance  sheet as of  December  31,  2000 is  fairly
stated, in all material respects,  in relation to the consolidated balance sheet
from which it has been derived.


DELOITTE & TOUCHE LLP
Omaha, Nebraska
October 26, 2001




<PAGE>


                       CE GENERATION, LLC AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (Amounts in Thousands)

                                                     September 30,  December 31,
                                                         2001           2000
                                                     ------------   ------------
                                                     (unaudited)

 ASSETS
 Cash and cash equivalents                           $  117,050     $   36,152
 Restricted cash                                         14,830         14,794
 Accounts receivable (net of allowance of $89,991,
  and $0, respectively)                                  70,203         89,576
 Prepaid expenses                                         3,778         19,981
 Inventory                                               24,551         27,424
                                                     ----------     ----------
 Total current assets                                   230,412        187,927

 Restricted cash                                         12,639          9,618
 Properties, plants, contracts and equipment, net     1,309,016      1,348,715
 Excess of cost over fair value
  of net assets acquired, net                           269,101        276,294
 Note receivable from related party                     140,212        140,528
 Deferred financing charges and other assets             12,815         21,363
                                                     ----------     ----------
 Total assets                                        $1,974,195     $1,984,445
                                                     ==========     ==========
 LIABILITIES AND EQUITY
 Liabilities:
 Accounts payable                                    $    5,587     $      140
 Accrued interest                                        18,373          4,049
 Accrued income taxes                                    36,103          4,175
 Other accrued liabilities                               46,425         60,336
 Interest rate swap                                      14,335            ---
 Due to affiliates                                        5,388          2,578
 Current portion of long term debt                       72,089         67,473
                                                     ----------     ----------
 Total current liabilities                              198,300        138,751

 Project loan                                           175,588        199,006
 Salton Sea notes and bonds                             507,805        520,250
 Senior secured bonds                                   366,700        377,000
 Deferred income taxes                                  197,359        242,059
                                                     ----------     ----------
 Total liabilities                                    1,445,752      1,477,066

 Minority interest                                       64,965         68,464
 Commitments and contingencies (Note 2)

 Members' equity                                        472,432        438,915
 Accumulated other comprehensive income                  (8,954)           ---
                                                     ----------     ----------
 Total liabilities and equity                        $1,974,195     $1,984,445
                                                     ==========     ==========

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


<PAGE>


                       CE GENERATION, LLC AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             (Amounts in Thousands)
                                   (Unaudited)


                                        Three Months Ended    Nine Months Ended
                                           September 30,        September 30,
                                         2001       2000        2001      2000
                                         ----       ----        ----      ----
 Revenue:

 Sales of electricity and steam         $120,089   $146,522  $392,122  $348,955

 Interest and other income                 3,560      3,236    10,619     7,778
                                        --------   --------  --------  --------
 Total revenues                          123,649    149,758   402,741   356,733



 Cost and Expenses:

 Fuel                                     28,675     30,378    95,137    85,423

 Plant operations                         34,170     32,552   100,863    75,968

 Depreciation and amortization            21,453     20,564    64,965    59,661

 Interest expense                         20,392     21,992    61,563    66,793

 Less interest capitalized                   ---        (74)      ---    (4,291)
                                        --------   --------  --------  --------
 Total expenses                          104,690    105,412   322,528   283,554
                                        --------   --------  --------  --------

 Income before provision
 for income taxes                         18,959     44,346    80,213    73,179

 Provision for income taxes                2,509      8,490    20,019    11,627
                                        --------   --------  --------  --------
 Income before minority interest and
 cumulative effect of accounting change   16,450     35,856    60,194    61,552

 Minority interest                         5,543      4,447    11,741    11,238
                                        --------   --------  --------  --------
 Income before cumulative effect
 of accounting change                     10,907     31,409    48,453    50,314

 Cumulative effect of accounting
 change, net of tax                          ---        ---   (15,386)      ---
                                        --------   --------  --------  --------
 Net income                             $ 10,907   $ 31,409  $ 33,067  $ 50,314
                                        ========   ========  ========  ========


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


<PAGE>


                       CE GENERATION, LLC AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in Thousands)
                                   (Unaudited)

                                                             Nine Months Ended
                                                               September 30,
                                                             2001         2000
                                                             ----         ----
Cash flows from operating activities:
Net income                                               $  33,067    $  50,314
Adjustments to reconcile to cash flows from
   operating activities:
Depreciation and amortization                               64,965       59,661
Cumulative effect of change in accounting
   principle, net of tax                                    15,386          ---
Provision for deferred income taxes                        (29,400)       3,191
Distributions to minority interest
   less than (in excess) of related income                  (3,499)      (5,688)
Changes in other items:
   Accounts receivable                                      19,373      (20,767)
   Due to affiliates                                         2,810        7,257
   Accounts payable and other accrued liabilities           39,809       20,660
   Other assets                                              2,413       (6,125)
                                                         ---------    ---------

Net cash flows from operating activities                   144,924      108,503

Cash flows from investing activities:
Capital expenditures                                       (19,422)     (45,534)
Consolidation of equity investment's cash                      ---        2,559
Decrease (increase) in restricted cash                      (3,021)      11,222
                                                         ---------    ---------

Net cash flows from investing activities                   (22,443)     (31,753)

Cash flows from financing activities:
Repayment of Salton Sea notes and bonds                    (11,829)     (22,552)
Proceeds from related party notes                              ---       13,000
Repayment of project loans                                 (29,718)     (27,343)
Decrease in restricted cash                                    (36)         (45)
                                                         ---------    ---------
Net cash flows from financing activities                   (41,583)     (36,940)
                                                         ---------    ---------
Net increase in cash and cash equivalents                   80,898       39,810

Cash and cash equivalents at beginning of period            36,152       29,120
                                                         ---------    ---------
Cash and cash equivalents at end of period               $ 117,050    $  68,930
                                                         =========    =========
Supplemental disclosure:
Interest paid, net of capitalized interest               $  46,192    $  45,122
                                                         =========    =========
Income taxes paid                                        $  28,630    $   8,720
                                                         =========    =========

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


<PAGE>

                       CE GENERATION, LLC AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   General

     In the opinion of the management of CE Generation,  LLC ("CE Generation" or
the "Company") the  accompanying  unaudited  consolidated  financial  statements
contain all adjustments  (consisting of normal recurring  accruals) necessary to
present  fairly the financial  position as of September 30, 2001 and the results
of  operations  for the three and nine months ended  September 30, 2001 and 2000
and cash  flows for the nine  months  ended  September  30,  2001 and 2000.  The
results of operations for the three and nine months ended September 30, 2001 and
2000 are not  necessarily  indicative of the results to be expected for the full
year.

     The unaudited  combined  financial  statements shall be read in conjunction
with the financial  statements  included in the CE  Generation  annual report on
Form 10-K for the year ended December 31, 2000.

     Certain prior year amounts have been  reclassified in order to conform with
current year classifications.

2.   Commitments and Contingencies

A.   Southern California Edison

     Southern California Edison ("Edison"),  a wholly-owned subsidiary of Edison
International,  is a  public  utility  primarily  engaged  in  the  business  of
supplying   electric  energy  to  retail   customers  in  Central  and  Southern
California, excluding the city of Los Angeles. CE Generation is aware that there
have  been  public   announcements   that  Edison's   financial   condition  has
deteriorated as a result of reduced  liquidity.  Edison's senior  unsecured debt
obligations are currently rated Caa2 by Moody's and D by S&P.

     Edison failed to pay the Company  approximately  $119 million due under the
Power Purchase  Agreements for power delivered in November and December 2000 and
January, February and March 2001, although the Power Purchase Agreements provide
for billing and payment on a schedule  where  payments  would have normally been
received in early January, February, March, April and May 2001.

     On February 21, 2001, the Imperial  Valley Projects  (excluding  Salton Sea
Unit V and CE Turbo) filed a lawsuit  against  Edison in  California's  Imperial
County  Superior  Court  seeking  a court  order  requiring  Edison  to make the
required  payments  under  the  Power  Purchase  Agreements.  The  lawsuit  also
requested,  among other things,  that the court order permit the Imperial Valley
Projects  to suspend  deliveries  of power to Edison and to permit the  Imperial
Valley Projects to sell such power to other purchasers in
California.

     On March 22, 2001, the Superior Court granted the Imperial Valley Projects'
Motion for Summary  Adjudication  and a Declaratory  Judgment  ordering that: 1)
under the Power Purchase Agreements, the Imperial Valley Projects have the right
to  temporarily  suspend  deliveries  of capacity  and energy to Edison,  2) the
Imperial Valley Projects are entitled to resell the energy and capacity to other
purchasers  and 3) the interim  suspension  of deliveries to Edison shall not in
any respect  result in the  modifications  or  termination of the Power Purchase
Agreements and the Power Purchase  Agreements shall in all respects  continue in
full force and effect  other than the  temporary  suspension  of  deliveries  to
Edison.
<PAGE>
     As a result of the March 22, 2001 Declaratory Judgment, the Imperial Valley
Projects suspended deliveries of energy to Edison and entered into a transaction
agreement  with El Paso  Merchant  Energy,  L.P.  ("EPME") in which the Imperial
Valley  Projects'  available  power was sold to EPME based on percentages of the
Dow Jones  SP-15  Index.  On June 18, 2001 the  Superior  Court  terminated  the
Imperial  Valley  Projects'  right to resell power  pursuant to the  Declaratory
Judgment.

     On June 20, 2001, the Imperial Valley Projects (excluding Salton Sea Unit V
and CE Turbo) entered into Agreements  Addressing  Renewable  Energy Pricing and
Payment Issues with Edison ("Settlement Agreements").  The Settlement Agreements
require  that Edison  make a series of  payments to repay the past due  balances
under  the Power  Purchase  Agreements  (the  "stipulated  amounts").  The first
payment of approximately $11.6 million,  which represented 10% of the stipulated
amounts,  was received June 22, 2001. A second partial payment of 10% is payable
within  5  days  following  the  occurrence  of  Events  to  restore  Edison  to
creditworthiness  (the "Effective  Date").  The final payment,  representing the
remaining stipulated amounts, shall be paid on the 5th business day after Edison
receives proceeds from the financing  resulting from the occurrence of Events to
restore Edison to  creditworthiness.  In addition to these  payments,  Edison is
required to make monthly interest payments  calculated at a rate of 7% per annum
on the outstanding  stipulated amounts. The Settlement Agreements also provide a
revised  energy  pricing  structure,  whereby  Edison elects to pay the Imperial
Valley Projects a fixed energy price of 5.37  cents/kilowatt hour in lieu of the
Commission-approved  SRAC  Methodology  under  the  Power  Purchase  Agreements,
commencing  on the first  day of the  month  following  the  Effective  Date and
expiring five years from such date. All other contract terms remain unchanged.

     As a result  of the  aforementioned  Settlement  Agreements,  the  Imperial
Valley Projects resumed power sales to Edison on June 22, 2001.  Energy payments
are currently calculated using the SRAC formulas set forth in the Power Purchase
Agreements until the fixed rate period begins.

     On October 2, 2001 the California  Public  Utilities  Commission  (PUC) and
Edison  reached a settlement in the Filed Rate Doctrine  lawsuit Edison filed in
Federal Court against the PUC. By its own terms,  the  settlement is intended to
restore Edison to  creditworthiness  so that it is able to resume  procuring the
electricity  needed by its customers;  limit ratepayers' costs of paying off the
debt;  and maintain the state's role in regulating the investor owned utility by
enabling Edison to pay down its back debts over a reasonable  period of time. As
a result of such settlement, the Imperial Valley Projects believe the conditions
to the  Effective  Date under the  Settlement  Agreements  have been  satisfied.
Edison  disputes  such  conditions  have been  satisfied.  The  Imperial  Valley
Projects  are  vigorously  pursuing   enforcement  of  their  rights  under  the
Settlement Agreements.

     As a result of Edison's  failure to make the  payments  due under the Power
Purchase  Agreements  and the  downgrades of Edison's  credit  ratings,  Moody's
downgraded  the  ratings for the Salton Sea Funding  Corporation  (the  "Funding
Corporation")  Securities  to Caa2  (negative  outlook) and S&P  downgraded  the
ratings for the Funding Corporation Securities to BBB- and placed the Securities
on "credit watch negative". Moody's downgraded the ratings for the CE Generation
Securities  to B1 from Baa3  (review  for  possible  downgrade).  Following  the
execution of the  Settlement  Agreements,  Moody's placed the Salton Sea Funding
and CE Generation securities on "credit watch positive".  A failure by Edison to
make these payments as well as subsequent  monthly  payments,  for a substantial
period of time after the  payments  are due, is not  expected to have a material
adverse  effect on the  ability  of CE  Generation  to make  payments  on the CE
Generation bonds due to cash flows from the Gas Projects.  However, there can be
no assurance  that such a failure by Edison  would not cause a material  adverse
effect.

     As a result of the  uncertainties  related to Edison,  the letter of credit
that  supports the debt service  reserve fund at Salton Sea Funding  Corporation
has not been  renewed and as such cash  distributions  are not  available  to CE
Generation until the Salton Sea Funding Corporation debt service reserve fund of
approximately  $67.0  million,  has been funded or the letter of credit has been
renewed or replaced.

<PAGE>
     The Imperial Valley Projects are contractually entitled to receive payments
under the Power Purchase Agreements and Settlement  Agreements.  However, due to
the uncertainties  associated with Edison's  financial  condition and failure to
pay  contractual  obligations,  CE Generation  has  established an allowance for
doubtful  accounts of  approximately  $90 million at  September  30,  2001.  The
allowance for doubtful accounts has been recorded as a reduction of net sales in
the statement of operations.

B.   NYSEG

     On February 14, 1995, New York State Electric Gas ("NYSEG")  filed with the
FERC a Petition for a Declaratory Order, Complaint, and Request for Modification
of Rates in Power  Purchase  Agreements  Imposed  Pursuant to the Public Utility
Regulatory  Policies Act of 1978  ("Petition")  seeking FERC (i) to declare that
the rates NYSEG pays under the Saranac Power Purchase Agreement ("Saranac PPA"),
which was approved by the New York Public Service  Commission (the "PSC"),  were
in excess of the level  permitted  under PURPA and (ii) to authorize  the PSC to
reform the Saranac PPA. On March 14, 1995, the Saranac Partnership intervened in
opposition  to the Petition  asserting,  inter alia,  that the Saranac PPA fully
complied with PURPA,  that NYSEG's  action was untimely and that the FERC lacked
authority to modify the Saranac PPA. On April 12, 1995,  the FERC by a unanimous
(5-0) decision issued an order denying the various forms of relief  requested by
NYSEG and finding that the rates required under the Saranac PPA were  consistent
with  PURPA  and the  FERC's  regulations.  On May  11,  1995,  NYSEG  requested
rehearing of the order and, by order issued July 19, 1995, the FERC  unanimously
(5-0) denied  NYSEG's  request.  On June 14, 1995,  NYSEG  petitioned the United
States  Court of Appeals for the  District of  Columbia  Circuit  (the "Court of
Appeals")  for  review of FERC's  April 12,  1995  order.  FERC moved to dismiss
NYSEG's  petition for review on July 28, 1995. On October 30, 1996,  all parties
filed final briefs and the Court of Appeals heard oral  arguments on December 2,
1996.  On July 11,  1997,  the Court of Appeals  dismissed  NYSEG's  appeal from
FERC's denial of the petition on jurisdictional grounds.

     On August 7, 1997,  NYSEG filed a complaint in the U.S.  District Court for
the Northern  District of New York against the FERC,  the PSC (and the Chairman,
Deputy  Chairman  and the  Commissioners  of the  PSC as  individuals  in  their
official capacity), the Saranac Partnership and Lockport Energy Associates, L.P.
("Lockport")  concerning the power purchase  agreements  that NYSEG entered into
with the Saranac Partnership and Lockport. NYSEG's suit asserts that the PSC and
the FERC  improperly  implemented  PURPA in  authorizing  the pricing terms that
NYSEG, the Saranac  Partnership and Lockport agreed to in those  contracts.  The
action raises similar legal arguments to those rejected by the FERC in its April
and July 1995 orders. NYSEG in addition asked for retroactive reformation of the
contracts  as of the date of  commercial  operation  and  seeks a refund of $281
million from the Saranac Partnership.  The Saranac Partnership and other parties
filed motions to dismiss and oral arguments on those motions were heard on March
2, 1998 and again on March 3, 1999.  On September  30, 2000 the  District  Court
granted the  motions to  dismiss.  NYSEG filed a Notice of Appeal on October 25,
2000 appealing the decision to the United States Court of Appeals for the Second
Circuit.  On October 5, 2001,  the Court of Appeals  upheld the  decision of the
District Court in all material respects.

3.   Related Party Transactions

     On  January  17,  2001,  Salton  Sea  Power  and CE  Turbo  entered  into a
transaction  agreement  with  EPME in which  Salton  Sea  Unit V and CE  Turbo`s
available power after sales to the Salton Sea Zinc Recovery  project was sold to
EPME on day ahead basis.

     On March 27, 2001 and May 1, 2001,  the Imperial  Valley  Projects  entered
into  transaction  agreements with EPME in which the Imperial  Valley  Projects'
available  power is sold to EPME  based on  percentages  of the Dow Jones  SP-15
Index. As of June 22, 2001 the Imperial Valley  Projects  (excluding  Salton Sea
Unit V and CE Turbo), are no longer selling power to EPME.
<PAGE>
4.   Accounting Pronouncements

     In June 1998,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement  of  Financial   Accounting  Standard  (SFAS)  133,   "Accounting  for
Derivative  Instruments and Hedging Activities",  which was delayed by SFAS 137,
"Accounting  for  Derivative  Instruments  and Hedging  Activities - Deferral of
Effective Date of FASB  Statement No. 133" and amended by SFAS 138,  "Accounting
for Certain  Derivative  Instruments and Certain Hedging  Activities".  SFAS 133
requires  an entity to  recognize  all of its  derivatives  as either  assets or
liabilities in its statement of financial position and measure those instruments
at fair value. CE Generation utilizes derivative financial instruments solely to
manage the risk that  changes in  interest  rates will  affect the amount of its
future  interest  payments and adopted SFAS 133 effective  January 1, 2001. As a
result of the adoption of SFAS 133, CE Generation recorded the fair value of the
interest  rate swap  agreements  at January 1, 2001.  These  interest  rate swap
agreements are considered  cash flow hedges and therefore the offset is recorded
in accumulated other comprehensive  income. The adoption did not have a material
impact on results of operations or cash flows.

     The  FASB   continues   to  identify   and  provide   guidance  on  various
implementation  issues related to SFAS 133/138 that are in the varying stages of
review  and  clearance  by the  Derivative  Implementation  Group and  FASB.  CE
Generation has not  determined if the ultimate  resolution of those issues would
have a material impact on its financial statements.

     In June  2001,  FASB  approved  the  issuance  of SFAS No.  141,  "Business
Combinations",  and SFAS No. 142, "Goodwill and Other Intangible Assets".  These
standards,  issued in July 2001, establish accounting and reporting for business
combinations.  SFAS No. 141  requires  all  business  combinations  entered into
subsequent  to June 30, 2001 to be accounted  for using the  purchase  method of
accounting. SFAS No. 142 provides that goodwill and other intangible assets with
indefinite lives will not be amortized,  but will be tested for impairment on an
annual basis.  SFAS No. 142 is effective for CE Generation  beginning on January
1, 2002. CE Generation has not quantified the impact resulting from the adoption
of this standard.

     In July 2001, FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations"  (SFAS 143).  This  standard  addresses  financial  accounting  and
reporting  for  obligations  related to the  retirement  of tangible  long-lived
assets and the related  asset  retirement  costs.  SFAS 143 is effective for the
Company's fiscal year beginning January 1, 2003. Management is in the process of
evaluating  the impact this  standard  will have on the  Company's  consolidated
financial statements.

     In October 2001,  FASB issued SFAS No. 144,  "Accounting  for Impairment of
Disposal of Long-Lived  Assets"  (SFAS 144).  The standard  addresses  financial
accounting and reporting for the impairment or disposal of long-lived assets and
is effective for the Company's fiscal year beginning January 1, 2002. Management
is in the  process of  evaluating  the  impact  this  standard  will have on the
Company's consolidated financial statements.

5.   Change in Accounting Policy

     CE  Generation  has changed its  accounting  policy for major  maintenance,
overhaul and well workover  costs.  These costs,  which have  historically  been
accounted for using deferral and accrual methods,  are now expensed as incurred.
The new policy went into effect  January 1, 2001 and the Company has  recorded a
cumulative effect of this change of approximately $15.4 million, net of tax.

6.   Comprehensive Income

     Comprehensive income for the three and nine months ended September 30, 2001
was $7.8 million and $24.1 million,  respectively.  The comprehensive income for
the nine months ended September 30, 2001, includes the transition  adjustment of
$7.7  million,  net of  tax,  related  to the  initial  adoption  of  SFAS  133.
Comprehensive income differs from net income due to the fair value adjustment of
cash flow hedges.
<PAGE>
Item 2.  Management's  Discussion  and Analysis of Financial  Condition and
         Results of Operations

     The  following  is  management's  discussion  and  analysis of  significant
factors,  which have  affected  CE  Generation,  LLC's ("CE  Generation"  or the
"Company")  financial  condition  and results of  operations  during the periods
included in the  accompanying  statements of  operations.  The Company's  actual
results in the future could differ significantly from the historical results.
Business

     The consolidated  financial  statements reflect the consolidated  financial
statements of CE  Generation,  and its  wholly-owned  subsidiaries,  Magma Power
Company   ("Magma"),   FSRI  Holdings,   Inc.  ("FSRI")  and  Yuma  Cogeneration
Associates.

   The following table sets out information concerning CE Generation Projects:

PROJECT              FUEL             COMMERCIAL       CAPACITY       LOCATION
                                       OPERATION

Vulcan               Geothermal       1986             34 MW          California
Del Ranch            Geothermal       1989             38 MW          California
Elmore               Geothermal       1989             38 MW          California
Leathers             Geothermal       1990             38 MW          California
CE Turbo             Geothermal       2000             10 MW          California
Salton Sea I         Geothermal       1987             10 MW          California
Salton Sea II        Geothermal       1990             20 MW          California
Salton Sea III       Geothermal       1989             49.8 MW        California
Salton Sea IV        Geothermal       1996             39.6 MW        California
Salton Sea V         Geothermal       2000             49 MW          California
Power Resources      Gas              1988             200 MW         Texas
Yuma                 Gas              1994             50 MW          Arizona
Saranac              Gas              1994             240 MW         New York

     The Vulcan Project, Del Ranch Project, Elmore Project, Leathers Project and
CE Turbo Project are referred to as the Partnership  Projects.  The Salton Sea I
Project,  Salton Sea II Project,  Salton Sea III Project,  Salton Sea IV Project
and Salton  Sea V Project  are  referred  to as the  Salton  Sea  Projects.  The
Partnership Projects and the Salton Sea Projects are collectively referred to as
the Imperial  Valley  Projects.  The Power Resources  Project,  Yuma Project and
Saranac Project are collectively referred to as the Gas Projects.

Factors Affecting Results of Operations

     The capacity factor for a particular  project is determined by dividing the
total quantity of electricity sold by the product of the project's  capacity and
the total hours in the year.  Each plant  possesses an operating  margin,  which
allows for production in excess of the amount listed above.  Utilization of this
operating  margin is based upon a variety of factors and can be expected to vary
throughout the year under normal  operating  conditions.  The amount of revenues
received  by these  projects is affected by the extent to which they are able to
operate and generate electricity.  Accordingly, the capacity and capacity factor
figures  provide  information  on  operating  performance  that has affected the
revenues received by these projects.


<PAGE>
Power Purchase Agreements

     Imperial Valley Projects. As a result of legal proceedings with Edison, the
Imperial Valley  Projects  suspended power sales to Edison on March 22, 2001 and
entered into a transaction  agreement to sell  available  power to EPME. On June
20, 2001, the Imperial  Valley Projects  entered into Agreements  Addressing the
Payment and Pricing  Issues with Edison.  As a result of these  agreements,  the
Imperial  Valley  Projects  resumed power sales to Edison on June 22, 2001.  See
discussion in Liquidity and Capital Resources, page 14.

     The operating  Partnership  Projects  (excluding the CE Turbo Project) sell
all  electricity  generated by the  respective  plants under four  long-term SO4
Agreements  between the  Partnership  Projects and Edison.  These SO4 Agreements
provide for capacity  payments,  capacity  bonus  payments and energy  payments.
Edison is  contractually  obligated to make fixed  annual  capacity and capacity
bonus payments to the Partnership  Projects to the extent that capacity  factors
exceed  benchmarks  set forth in the  agreements.  The price  for  capacity  and
capacity  bonus  payments  is fixed for the life of the SO4  Agreements  and the
capacity  payments  are  significantly  higher  in the  months  of June  through
September.  The price for energy sold is based on the cost that Edison avoids by
purchasing energy from the Partnership  Projects instead of obtaining the energy
from other sources.

     The Salton Sea Unit I Project sells  electricity  to Edison under a 30-year
negotiated  power  purchase  agreement,  which  provides for capacity and energy
payments.  The energy payment is calculated using a base price, which is subject
to quarterly  adjustments based on a basket of indices. The time period weighted
average  energy  payment  for Salton Sea Unit I was 5.9 cents per  kilowatt-hour
during the nine months ended  September 30, 2001. As the Salton Sea Unit I Power
Purchase  Agreement  ("PPA") is not a SO4 Agreement,  the energy payments do not
revert to payments  based on the cost that Edison  avoids by  purchasing  energy
from Salton Sea Unit I instead of obtaining the energy from other sources.

     The  Salton  Sea Unit II  Project  and  Salton  Sea Unit III  Project  sell
electricity  to Edison under 30-year  modified SO4  Agreements  that provide for
capacity  payments,  capacity bonus payments and energy payments.  The price for
contract  capacity and contract capacity bonus payments is fixed for the life of
the modified SO4 Agreements.  The energy payments for each of the first ten year
periods,  which  period  expired in April 2000 for Salton Sea II and  expired in
February  1999 for Salton Sea III,  were  levelized  at a time  period  weighted
average  of 10.6 cents per  kilowatt-hour  and 9.8 cents per  kilowatt-hour  for
Salton  Sea Unit II and  Salton  Sea Unit  III,  respectively.  Thereafter,  the
monthly  energy  payments are based on the cost that Edison avoids by purchasing
energy from Salton Sea Unit II or III instead of obtaining the energy from other
sources. For Salton Sea Unit II only, Edison is entitled to receive, at no cost,
5% of all energy  delivered in excess of 80% of contract  capacity through March
31, 2004.

     The Salton Sea Unit IV Project sells electricity to Edison under a modified
SO4 Agreement which provided for contract  capacity  payments on 34 megawatts of
capacity at two  different  rates based on the  respective  contract  capacities
deemed  attributable to the original Salton Sea Unit I PPA option (20 megawatts)
and to the original Fish Lake PPA (14 megawatts). The capacity payment price for
the 20 megawatt portion adjusts  quarterly based upon specified  indices and the
capacity  payment price for the 14 megawatt  portion is a fixed  levelized rate.
The energy payment (for deliveries up to a rate of 39.6 megawatts) is at a fixed
rate for 55.6% of the total energy  delivered by Salton Sea Unit IV and is based
on an energy payment  schedule for 44.4% of the total energy delivered by Salton
Sea Unit IV. The  contract  has a 30-year  term,  but Edison is not  required to
purchase the 20 megawatts of capacity and energy originally  attributable to the
Salton Sea Unit I PPA option after September 30, 2017, the original  termination
date of the Salton Sea Unit I PPA.

     For the nine  months  ended  September  30,  2001 and  2000,  respectively,
Edison's average avoided cost of energy was 8.9 cents per  kilowatt-hour and 4.6
cents per kilowatt-hour, respectively. Estimates of Edison's future avoided cost
of energy vary substantially from year to year.
<PAGE>
     The CE Turbo Project,  which  commenced  commercial  operation in the third
quarter of 2000,  sells its output  through  market  transactions.  The CE Turbo
Project  may sell its  output to a zinc  facility,  which is  wholly  owned by a
subsidiary of MidAmerican and is expected to commence  commercial  operations in
2002.  The  remainder  of the CE  Turbo  output  is sold  through  other  market
transactions.

     The Salton  Sea Unit V Project,  which  commenced  operations  in the third
quarter of 2000, will sell approximately one-third of its net output to the zinc
facility,  which is wholly owned by a subsidiary of MidAmerican  and is expected
to commence  commercial  operations  in 2002.  The remainder of the Salton Sea V
output is sold through other market transactions.

     As a result of the legal  proceedings  with  Edison,  on March 22, 2001 the
Imperial Valley Projects  suspended power sales to Edison. On March 27, 2001 and
May 1, 2001 the Imperial Valley Projects entered into transaction  agreements to
sell available  power to EPME based on percentages of the Dow Jones SP-15 Index.
On June 20, 2001 the Imperial Valley Projects  (excluding  Salton Sea Unit V and
CE Turbo)  entered into  Agreements  Addressing  Payment and Pricing Issues with
Edison and, as a result,  resumed  power sales to Edison on June 22,  2001.  See
discussion in Liquidity and Capital Resources, page 14.

     Gas  Projects.  The Saranac  Project sells  electricity  to NYSEG under the
Saranac PPA, which provides for capacity and energy payments. Capacity payments,
which for the nine  months  ended  September  30,  2001  totaled  2.57 cents per
kilowatt-hour,  are received  for  electricity  produced  during "peak hours" as
defined in the Saranac PPA and escalate at  approximately  4.1% annually for the
remaining term of the contract.  Energy payments,  which averaged 7.54 cents per
kilowatt-hour  for the  nine  months  ended  September  30,  2001,  escalate  at
approximately  4.4%  annually  for the  remaining  term of the Saranac  PPA. The
Saranac PPA expires in June of 2009.

     The Power Resources Project sells  electricity to Texas Utilities  Electric
Company under the Power  Resources  PPA,  which provides for capacity and energy
payments. Capacity payments and energy payments, which for the nine months ended
September 30, 2001 were $3.48 million per month and 3.5 cents per kilowatt-hour,
respectively,  escalate at 3.5%  annually  for the  remaining  term of the Power
Resources PPA. The Power Resources PPA expires in September 2003.

     The Yuma  Project  sells  electricity  to San Diego Gas & Electric  Company
("SDG&E")  under the Yuma PPA.  The energy is sold at a price  based on the cost
that  SDG&E  avoids  by  purchasing  energy  from the Yuma  Project  instead  of
obtaining  the energy from other  sources and the capacity is sold to SDG&E at a
fixed price for the life of the Yuma PPA.  The power is  delivered to SDG&E over
transmission lines constructed and owned by Arizona Public Service Company.

Results of Operations

     Sales of  electricity  and steam  decreased to $120.1 million for the three
months ended September 30, 2001 from $146.5 million for the same period in 2000,
a 18%  decrease.  The decrease was  primarily  due to lower energy prices at the
Imperial Valley Projects. For the nine months ended September 30, 2001, sales of
electricity  and steam  increased to $392.1  million from $349.0 million for the
same period in 2000.  Approximately  $17 million of the increase was a result of
higher  energy prices at the Yuma  Project.  Approximately  $23.1 million of the
increase  was due to the  addition of the Salton Sea V and CE Turbo  Projects in
the third quarter of 2000.  Approximately $66 million of the increase was due to
higher energy prices at the Imperial Valley projects during the first and second
quarters,  and  approximately  $16  million  of the  increase  was the result of
increased production at the Imperial Valley Projects.  The remaining increase is
attributable  to escalated  contract  prices at the Power  Resources and Saranac
Projects and other increases in production.  The increase is partially offset by
an allowance for doubtful  accounts for the Edison  receivables of approximately
$90 million.


<PAGE>
     The  following   operating  data  represents  the  aggregate  capacity  and
electricity production of the Imperial Valley Projects:

                                 Three Months Ended         Nine Months Ended
                                     September 30,            September 30,
                                 2001          2000         2001         2000
                                 ------------------         -----------------
Overall capacity factor          92.5%         90.1%         90.7%        82.0%
Megawatt-hours produced        666,800       642,300     1,940,100    1,557,500
Capacity (net megawatts)
   (weighted average)            326.4         323.0         326.4        288.7

     The overall capacity factor for the Imperial Valley Projects  increased for
the three months and nine months ended  September  30, 2001 compared to the same
periods  in 2000 due to the  timing  of  overhauls  and other  maintenance.  The
capacity  increased  due to the  addition  of the Salton Sea Unit V and CE Turbo
Projects in 2000.

     The  following   operating  data  represents  the  aggregate  capacity  and
electricity production of the Gas Projects:

                                Three Months Ended          Nine Months Ended
                                     September 30,            September 30,
                                 2001          2000         2001         2000
                                 ------------------         -----------------
Overall capacity factor          91.9%         91.9%         91.7%        89.6%
Megawatt-hours produced        993,757       994,034     2,942,983    2,886,413
Capacity (net megawatts)
   (average)                       490           490           490          490

     The overall  capacity  factor of the Gas  Projects  reflects  the effect of
contractual  curtailments.  The capacity factors adjusted for these  contractual
curtailments during the nine months ended September 30, 2001 and 2000 were 97.3%
and 98.15%, respectively,  and for the three months ended September 30, 2001 and
2000 were 98.9% and 99.2%, respectively.

     Interest and other income increased to $3.6 million during the three months
ended September 30, 2001 from $3.2 million for the same period in 2000. Interest
and other  income  increased  to $10.6  million  during  the nine  months  ended
September 30, 2001 from $7.8 million for the same period in 2000.  The increases
are primarily the result of recognizing  interest income in the second and third
quarters of 2001 related to interest earned on past due balances from Edison.

     Fuel  expenses  decreased  to $28.7  million  during the three months ended
September  30, 2001 from $30.4  million  for the same  period in 2000,  which is
primarily  the  result of reduced  gas  prices at the Yuma  Project in the third
quarter 2001.  Fuel expense  increased to $95.1  million  during the nine months
ended  September 30, 2001 from $85.4 million for the same period in 2000,  which
is primarily  the result of higher gas prices and  increased  production  at the
Yuma Project during the first and second quarters of 2001.

     Plant operating  expenses increased during the three months ended September
30, 2001 to $34.2  million from $32.6  million for the same period in 2000.  For
the nine month period ended September 30, 2001 operating  expenses  increased to
$100.9  million  from $76.0  million in 2000.  These  costs  include  operating,
maintenance,  resource,  administration and other plant operating expenses.  The
increases were primarily due to increased operating costs at the Imperial Valley
Projects  due to the addition of Salton Sea V and CE Turbo  Projects,  increased
outage costs and increased brine disposal costs.
<PAGE>
     Depreciation and  amortization  increased to $21.5 million during the three
months ended  September 30, 2001 from $20.6 million for the same period in 2000.
For the nine months  ended  September  30, 2001  depreciation  and  amortization
increased to $65.0  million from $59.7  million in 2000.  The  increases are the
result of the  addition  of the Salton Sea V Project,  CE Turbo  Project  and an
upgraded brine handling system.

     Interest  expense,  less amounts  capitalized,  decreased  during the three
months ended September 30, 2001 to $20.4 million from $21.9 million for the same
period in 2000.  For the nine months ended  September  30, 2001  interest,  less
amounts  capitalized  decreased to $61.6 million from $62.5 million in 2000. The
changes reflect the repayment of debt,  partially offset by the  discontinuation
of capitalized interest on the construction projects.

     The provision for income taxes  decreased to $2.5 million  during the three
months ended  September  30, 2001 from $8.5 million for the same period in 2000.
For the nine months ended  September  30,  2001,  the  provision  for income tax
increased to $20.0 million from $11.6 million in 2000.  The changes from year to
year in the effective rate are due primarily to the  generation and  utilization
of energy tax credits and depletion deductions.

     The  Company  has  changed  its  accounting  policy for major  maintenance,
overhaul and well workover  costs.  These costs,  which have  historically  been
accounted  for using the  deferred  and  accrued  methods,  are now  expensed as
incurred.  The cumulative effect of the change in accounting policy represents a
January 1, 2001 write off of prepaid  and  accrued  major  maintenance  and well
workover balances of approximately $15.4 million, net of tax.

Liquidity and Capital Resources

     Cash and cash  equivalents  were $117.1  million at  September  30, 2001 as
compared to $36.2 million at December 31, 2000. In addition, restricted cash was
$27.5  million and $24.4  million at  September  30, 2001 and December 31, 2000,
respectively.

     Edison,  a  wholly-owned  subsidiary of Edison  International,  is a public
utility primarily engaged in the business of supplying electric energy to retail
customers  in  Central  and  Southern  California,  excluding  Los  Angeles.  CE
Generation  is aware that there have been  public  announcements  that  Edison's
financial condition has deteriorated as a result of reduced liquidity.  Edison's
senior  unsecured debt  obligations are currently rated Caa2 by Moody's and D by
S&P.

     Edison  failed  to pay  approximately  $119  million  due  under  the Power
Purchase  Agreements  for power  delivered  in November  and  December  2000 and
January, February and March 2001, although the Power Purchase Agreements provide
for billing and payment on a schedule  where  payments  would have normally been
received in early January, February, March, April and May 2001.

     On February 21, 2001, the Imperial Valley Projects  (excluding Salton Sea V
and CE Turbo) filed a lawsuit  against Edison in  California's  Imperial  County
Superior  Court  seeking a court  order  requiring  Edison to make the  required
payments under the Power Purchase Agreements.  The lawsuit also requested, among
other  things,  that the court  order  permit the  Imperial  Valley  Projects to
suspend deliveries of power to Edison and to permit the Imperial Valley Projects
to sell such power to other purchasers in California.

     On March 22, 2001, the Superior Court granted the Imperial Valley Projects'
Motion for Summary  Adjudication  and a Declaratory  Judgment  ordering that: 1)
under the Power Purchase Agreements, the Imperial Valley Projects have the right
to  temporarily  suspend  deliveries  of capacity  and energy to Edison,  2) the
Imperial Valley Projects are entitled to resell the energy and capacity to other
purchasers  and 3) the interim  suspension  of deliveries to Edison shall not in
any respect  result in the  modifications  or  termination of the Power Purchase
Agreements and the Power Purchase  Agreements shall in all respects  continue in
full force and effect  other than the  temporary  suspension  of  deliveries  to
Edison.
<PAGE>
     As a result of the March 22, 2001 Declaratory Judgment, the Imperial Valley
Projects suspended deliveries of energy to Edison and entered into a transaction
agreement  with El Paso  Merchant  Energy,  L.P.  ("EPME") in which the Imperial
Valley  Projects'  available  power was sold to EPME based on percentages of the
Dow Jones  SP-15  Index.  On June 18, 2001 the  Superior  Court  terminated  the
Imperial  Valley  Projects'  right to resell power  pursuant to the  Declaratory
Judgment.

     On June 20, 2001, the Imperial Valley Projects (excluding Salton Sea Unit V
and CE Turbo) entered into Agreements  Addressing  Renewable  Energy Pricing and
Payment Issues with Edison ("Settlement Agreements").  The Settlement Agreements
require  that Edison  make a series of  payments to repay the past due  balances
under  the Power  Purchase  Agreements  (the  "stipulated  amounts").  The first
payment of approximately $11.6 million,  which represented 10% of the stipulated
amounts,  was received June 22, 2001. A second partial payment of 10% is payable
within  5  days  following  the  occurrence  of  Events  to  restore  Edison  to
creditworthiness  (the "Effective  Date").  The final payment,  representing the
remaining stipulated amounts, shall be paid on the 5th business day after Edison
receives proceeds from the financing  resulting from the occurrence of Events to
restore Edison to  creditworthiness.  In addition to these  payments,  Edison is
required to make monthly interest payments  calculated at a rate of 7% per annum
on the outstanding  stipulated amounts. The Settlement Agreements also provide a
revised  energy  pricing  structure,  whereby  Edison elects to pay the Imperial
Valley Projects a fixed energy price of 5.37  cents/kilowatt hour in lieu of the
Commission-approved  SRAC  Methodology  under  the  Power  Purchase  Agreements,
commencing  on the first  day of the  month  following  the  Effective  Date and
expiring five years from such date. All other contract terms remain unchanged.

     As a result  of the  aforementioned  Settlement  Agreements,  the  Imperial
Valley Projects resumed power sales to Edison on June 22, 2001.  Energy payments
are currently calculated using the SRAC formulas set forth in the Power Purchase
Agreements until the fixed rate period begins.

     On October 2, 2001 the California  Public  Utilities  Commission  (PUC) and
Edison  reached a settlement in the Filed Rate Doctrine  lawsuit Edison filed in
Federal Court against the PUC. By its own terms,  the  settlement is intended to
restore Edison to  creditworthiness  so that it is able to resume  procuring the
electricity  needed by its customers;  limit ratepayers' costs of paying off the
debt;  and maintain the state's role in regulating the investor owned utility by
enabling Edison to pay down its back debts over a reasonable  period of time. As
a result of such settlement, the Imperial Valley Projects believe the conditions
to the  Effective  Date under the  Settlement  Agreements  have been  satisfied.
Edison  disputes  such  conditions  have been  satisfied.  The  Imperial  Valley
Projects  are  vigorously  pursuing   enforcement  of  their  rights  under  the
Settlement Agreements.

     As a result of Edison's  failure to make the  payments  due under the Power
Purchase  Agreements  and the  downgrades of Edison's  credit  ratings,  Moody's
downgraded  the  ratings for the Salton Sea Funding  Corporation  (the  "Funding
Corporation")  Securities  to Caa2  (negative  outlook) and S&P  downgraded  the
ratings  for the  Funding  Corporation  Securities  to BBB- and has  placed  the
Securities on "credit watch negative". Moody's downgraded the ratings for the CE
Generation Securities to B1 from Baa3 (review for possible downgrade). Following
the  execution  of the  Settlement  Agreements,  Moody's  placed  the Salton Sea
Funding and CE Generation  securities on "credit watch  positive".  A failure by
Edison to make these  payments as well as  subsequent  monthly  payments,  for a
substantial period of time after the payments are due, is not expected to have a
material  adverse effect on the ability of CE Generation to make payments on the
CE Generation bonds due to cash flows from the Gas Projects.  However, there can
be no assurance that such a failure by Edison would not cause a material adverse
effect.
<PAGE>
     As a result of the  uncertainties  related to Edison,  the letter of credit
that  supports the debt service  reserve fund at Salton Sea Funding  Corporation
has not been  renewed and as such cash  distributions  are not  available  to CE
Generation until the Salton Sea Funding Corporation debt service reserve fund of
approximately  $67.0  million,  has been funded or the letter of credit has been
renewed or replaced.

     The Imperial Valley Projects are contractually entitled to receive payments
under  the  Power  Purchase  Agreements.   However,  due  to  the  uncertainties
associated  with Edison's  financial  condition  and failure to pay  contractual
obligations, CE Generation has established an allowance for doubtful accounts of
approximately  $90 million at September  30, 2001.  The  allowance  for doubtful
accounts  has been  recorded as a  reduction  of net sales in the  statement  of
operations.

     The net revenues,  equity  distributions and royalties from the Partnership
and Salton Sea  Projects  are used to pay  principal  and  interest  payments on
outstanding  senior secured bonds issued by the Salton Sea Funding  Corporation,
the final series of which is scheduled  to mature in November  2018.  The Salton
Sea Funding  Corporation debt is guaranteed by subsidiaries of Magma and secured
by the capital stock of the Salton Sea Funding Corporation.  The proceeds of the
Salton Sea  Funding  Corporation  debt were  loaned by the  Salton  Sea  Funding
Corporation  under loan  agreements and notes to  subsidiaries of Magma and used
for  construction  of  Salton  Sea  Unit V  Project  and the CE  Turbo  Project,
refinancing of  indebtedness  and other  purposes.  Debt service on the Imperial
Valley loans is used to repay debt service on the Salton Sea Funding Corporation
debt.  The Imperial  Valley loans and the  guarantees  of the Salton Sea Funding
Corporation  debt  are  secured  by  substantially  all  of  the  assets  of the
guarantors,  including the Imperial Valley projects, and by the equity interests
in the guarantors.

     The  proceeds  of Series F of the Salton Sea Funding  Corporation  debt are
being used in part to construct the zinc  facility,  and the direct and indirect
owners of the zinc  facility are among the  guarantors of the Salton Sea Funding
Corporation debt.  MidAmerican has guaranteed the payment by the zinc guarantors
of a specified  portion of the  scheduled  debt service on the  Imperial  Valley
loans  described in the preceding  paragraph,  including  the current  principal
amount of approximately $140.2 million and associated interest.

     Certain  information  included  in  this  report  contains  forward-looking
statements made pursuant to the Private Securities Litigation Reform Act of 1995
("Reform Act"). Such statements are based on current  expectations and involve a
number of known and unknown risks and uncertainties  that could cause the actual
results and  performance of the Company to differ  materially  from any expected
future  results or  performance,  expressed or implied,  by the  forward-looking
statements. In connection with the safe harbor provisions of the Reform Act, the
Company has  identified  important  factors that could cause  actual  results to
differ materially from such expectations, including development and construction
uncertainty,  operating  uncertainty,  acquisition  uncertainty,   uncertainties
relating to doing business outside of the United States,  uncertainties relating
to geothermal  resources,  uncertainties  relating to domestic and international
economic and  political  conditions  and  uncertainties  regarding the impact of
regulations,   changes  in  government   policy,   industry   deregulation   and
competition. Reference is made to all of the Company's SEC filings, incorporated
herein by reference,  for a description of such factors.  The Company assumes no
responsibility to update forward-looking information contained herein.

Environmental Liabilities

     The Company may be exposed to environmental costs in the ordinary course of
business.  Expenditures for ongoing  compliance with  environmental  regulations
that relate to current  operations are expensed or  capitalized as  appropriate.
Expenditures that relate to an existing condition caused by past operations, and
which do not contribute to current or future revenue  generation,  are expensed.
Liabilities   are  recorded  when   environmental   assessments   indicate  that
remediation  efforts are  probable  and the costs can be  reasonably  estimated.
Estimates of the liability are based upon currently  available  facts,  existing
technology and presently enacted laws and regulations  taking into consideration
the likely  effects of  inflation  and other social and  economic  factors,  and
include  estimates of associated legal costs.  These amounts also consider prior
experience in remediating sites, other companies'  clean-up  experience and data
released by the Environmental  Protection Agency or other  organizations.  These
estimated  liabilities are subject to revision in future periods based on actual
costs or new circumstances,  and are included in the accompanying balance sheets
at their undiscounted  amounts.  As of September 30, 2001 and December 31, 2000,
the environmental liabilities recorded on the balance sheet were not material.
<PAGE>
Inflation

     Inflation  has  not  had  a  significant  impact  on CE  Generation's  cost
structure.

Recent Accounting Pronouncements

     In June 1998,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement  of  Financial   Accounting  Standard  (SFAS)  133,   "Accounting  for
Derivative  Instruments and Hedging Activities",  which was delayed by SFAS 137,
"Accounting  for  Derivative  Instruments  and Hedging  Activities - Deferral of
Effective Date of FASB  Statement No. 133" and amended by SFAS 138,  "Accounting
for Certain  Derivative  Instruments and Certain Hedging  Activities".  SFAS 133
requires  an entity to  recognize  all of its  derivatives  as either  assets or
liabilities in its statement of financial position and measure those instruments
at fair value. CE Generation utilizes derivative financial instruments solely to
manage the risk that  changes in  interest  rates will  affect the amount of its
future  interest  payments and adopted SFAS 133 effective  January 1, 2001. As a
result of the adoption of SFAS 133, CE Generation recorded the fair value of the
interest  rate swap  agreements  at January 1, 2001.  These  interest  rate swap
agreements are considered  cash flow hedges and therefore the offset is recorded
in accumulated other comprehensive  income. The adoption did not have a material
impact on results of operations or cash flows.

     The  FASB's   continues  to  identify  and  provide   guidance  on  various
implementation  issues related to SFAS 133/138 that are in the varying stages of
review  and  clearance  by the  Derivative  Implementation  Group and  FASB.  CE
Generation has not  determined if the ultimate  resolution of those issues would
have a material impact on its financial statements.

     In June  2001,  FASB  approved  the  issuance  of SFAS  No.  141,  Business
Combinations,  and SFAS No. 142,  Goodwill and Other  Intangible  Assets.  These
standards,  issued in July 2001, establish accounting and reporting for business
combinations.  SFAS No. 141  requires  all  business  combinations  entered into
subsequent  to June 30, 2001 to be accounted  for using the  purchase  method of
accounting. SFAS No. 142 provides that goodwill and other intangible assets with
indefinite lives will not be amortized,  but will be tested for impairment on an
annual basis.  SFAS No. 142 is effective for CE Generation  beginning on January
1, 2002. CE Generation has not quantified the impact resulting from the adoption
of this standards.

     In July 2001, FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations"  (SFAS 143).  This  standard  addresses  financial  accounting  and
reporting  for  obligations  related to the  retirement  of tangible  long-lived
assets and the related  asset  retirement  costs.  SFAS 143 is effective for the
Company's fiscal year beginning January 1, 2003. Management is in the process of
evaluating  the impact this  standard  will have on the  Company's  consolidated
financial statements.

     In October 2001,  FASB issued SFAS No. 144,  "Accounting  for Impairment of
Disposal of Long-Lived  Assets"  (SFAS 144).  The standard  addresses  financial
accounting and reporting for the impairment or disposal of long-lived assets and
is effective for the Company's fiscal year beginning January 1, 2002. Management
is in the  process of  evaluating  the  impact  this  standard  will have on the
Company's consolidated financial statements.

Qualitative and Quantitative Disclosures About Market Risk

     There have been no  significant  changes  in CE  Generation's  market  risk
during the nine months ended September 30, 2001. For additional  information see
the Company's Annual Report on Form 10-K for the year ended December 31, 2000.


<PAGE>



                           Part II Other Information.

Item 1 - Legal Proceedings

     Neither CE  Generation  nor its  subsidiaries  are parties to any  material
legal matters except those described in Footnote 2 of CE Generation's  financial
statements.

Item 2 - Changes in Securities

         Not applicable.

Item 3 - Default on Senior Securities

         Not applicable.

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

         Not applicable.

Item 5 - Other Information

         Not applicable.

Item 6 - Exhibits and Reports on Form 8-K

         (a)      Exhibits
                  None.

         (b)      Report on Form 8-K
                  None.





<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,  in the City of Omaha,
State of Nebraska, on this 14th day of November, 2001.

                                                CE Generation, LLC

                                                /s/ Joseph M. Lillo
                                                --------------------------
                                                By: Joseph M. Lillo
                                                Vice President and Controller