FORM 10-K-ANNUAL REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITIES 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, 1999

                                       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
                                               ---------

                             Coso Energy Developers
                          ----------------------------
                (Exact name of registrant as specified in its charter)

                 California                             94-3071296
                ------------                            ----------
    (State or other jurisdiction of                   (IRS Employer
     incorporation or organization)                 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 registrant's knowledge, in
definitive proxy or information statements  incorporated  by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ ]

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

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


                    Documents Incorporated by Reference: None


<PAGE>


                             COSO ENERGY DEVELOPERS
                           ANNUAL REPORT ON FORM 10-K
                      FOR THE YEAR ENDED DECEMBER 31, 1999

                                 Part 1                             Page
                                                                    ----

Item 1.   Business                                                    1

Item 2.   Properties                                                  8

Item 3.   Legal Proceedings                                           9

Item 4.   Submission of Matters to a Vote of Security Holders         9

                                Part II

Item 5.   Market for the Registrant's Common Equity and
              Related Stockholder Matters (Not applicable)            9

Item 6.   Selected Financial Data                                     10

Item 7.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations                     14

Item 7A.  Quantitative and Qualitative Disclosures About
              Market Risk                                             25

Item 8.   Financial Statements and Supplementary Data                 26

Item 9.   Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure                     27

                            Part III

Item 10.  Directors and Executive Officers of the Registrants         27

Item 11.  Executive Compensation                                      29

Item 12.  Security Ownership of Certain Beneficial Owners and
              Management (Not applicable)                             29

Item 13.  Certain Relationships and Related Transactions              31

                             Part IV

Item 14.  Exhibits, Financial Statement Schedules and Reports
              on Form 8-K                                             34

 <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.

      The Navy I  partnership  owns Navy I and its related  facilities, the BLM
partnership owns BLM and its related facilities and the Navy II partnership
owns Navy II and its related facilities (collectively the Coso partnership).
The Coso partnerships and their affiliates own the exclusive right to explore,
developand  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 are 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 makes  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  Cosopartnership. Future energy payments 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.  The fixed energy
price period expired in  August  1997  for the  Navy I  partnership and in
March  1999  for the BLM partnership,  and will expire in January 2000 for the
Navy II  partnership.  The Edison power purchase agreements will expire:

                                        1

     *   In August 2011 for the Navy I partnership;

     *   In March 2019 for the BLM partnership; and

     *   In January 2010 for the Navy II partnership.


AB1890 Energy Subsidy Payments

     In addition to receiving payments under the power purchase agreements, the
Navy I partnership  and the  BLM  partnership  currently  qualify  for  subsidy
payments  from a special  purpose state  fund  established  under  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
an avoided  cost of energy  basis.  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 and the BLM  partnership  are
expected  to receive in the future  subsidy  payments for energy  delivered  to
Edison by the Navy I partnership or the BLM partnership, as the case may be, if
Edison's  avoided cost of energy falls below 3.0(cent) per kWh. This subsidy is
capped at  1.0(cent)  per kWh. The Navy II  partnership should also qualify for
these subsidy payments through 2001 once the fixed energy price period under
its power purchase agreement expires.


Purchase of CalEnergy Interests

      On February 25, 1999, Caithness Acquisition  purchased all of CalEnergy's
interests in the Coso projects. 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 at the Coso projects
which  then  totaled  approximately $67.0  million.  In order to  complete  the
purchase, Caithness Acquisition  arranged for short-term debt financing in the
principal amount of approximately $211.5 million. Caithness  Acquisition 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
amounts owed under their short-term debt facility.


Operating Strategy

      The Coso  partnerships  seek to  maximize  cash flow at the Coso  projects
through  active  management of the Coso  projects'  cost  structure and the Coso
geothermal resource. As a result of Caithness  Acquisition's  purchase of all of
CalEnergy's interests in the Coso projects,  the Coso partnerships have retained
Coso Operating  Company,  which is one of our affiliates,  to maintain all three
plants,  the  transmission  lines and the  geothermal  resource,  including well
drilling.  As a result  of the  change in  operators  and the  restructuring  of
operator fees, the aggregate annual fees to be paid by the Coso  partnerships to
Coso  Operating  Company have been reduced  significantly.  Payments of operator
fees have been  subordinated to all payments to be made under the senior secured
notes. Caithness Acquisition,  which purchased the managing partners interest in
the Coso partnerships,  has caused any management committee fees payable by each
Coso  partnership to its partners to be  subordinated to all payments to be made
under the senior secured notes.

                                        2

      The Coso projects qualify as Small Power QFs under PURPA and the rules and
regulations  promulgated under PURPA by 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.

      Caithness Energy believes that it is currently the second largest owner of
geothermal  power projects in the United States,  based on the total  electrical
generating  capacity of its power projects.  Through its controlled  affiliates,
Caithness  Energy owns  interests in six geothermal  plants,  including the Coso
projects,  totaling  340 MW.  Caithness  Energy is also  seeking to develop  two
additional   geothermal  power  projects  with  a  total  potential   electrical
generating  capacity of over 400 MW, and has interests in other  operating power
generating  facilities,  including  solar,  wind and  natural  gas,  totaling an
additional 480 MW.

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


The Issuer

      Caithness Coso Funding Corp.  (Coso 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.  The Coso partnerships have jointly, severally, and
unconditionally guaranteed repayment of the senior secured notes.

      Coso Funding Corp. has no other 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.


                                       3

Steam Sharing Program

      The Coso  partnerships  previously  implemented a  steam-sharing  program,
which they established among the Coso projects under a Coso Geothermal  Exchange
Agreement they entered into in 1994. The purpose of the steam-sharing program is
to  enhance  the  management,  and to  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 which 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.

      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 each of the Navy and the
Bureau of Land Management has 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 1999, the Navy I partnership and the Navy II partnership paid aggregate
royalties to the Navy of  approximately  $6.3 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  partnership  paid
approximately  $2.8 million and the Navy II partnership paid  approximately $3.5
million.  The BLM partnership  reimbursed the Navy II partnership  approximately
$0.8 million of the royalties paid by Navy II  partnership.  The BLM partnership
did not pay a royalty for  electricity  generated  by BLM for steam  transferred
from 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 Navy, the Bureau of Land
Management and certain other persons.


Navy I

      Under the Navy  Contract,  as a  royalty  for Unit 1 at Navy I, the Navy I
partnership  is  obligated  to  reimburse  partially  the Navy  for  electricity
supplied to it by Edison from electricity generated at Navy I. The reimbursement
payment is based  upon a pricing  formula  included  in the Navy  Contract.  The
percentage rate of reimbursement changes semiannually,  but cannot exceed 95% of
the price paid by the 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 Navy the sum of $25.0  million on or before  December  31,
2009,  the  expiration  date of the term of the 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.

                                       4

      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%  from 2004  through  2009,  the  expiration  date of the 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 to
Coso Land Company,  a general  partnership of which  Caithness  Acquisition  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 that has
been accrued to Coso Land Company to date has been paid.


BLM North

      Coso Land Company applied,  as a  tenant-in-common,  to the Bureau of Land
Management  for  assignment  of an  undivided  one-third  interest  in the LADWP
leases.  Once this assignment becomes  effective,  the Coso partnerships will be
required to pay $8.00 per acre in rent and additional rent to the Bureau of Land
Management.  When a leased property  commences to produce  geothermal steam, the
Coso  partnerships  will pay monthly  royalties under the LADWP leases of 10% of
the  amount  or value of the  steam  produced  5% of any  by-products  and 5% of
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  Navy  under  the  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,  and will increase to 18.0% from 2000 through 2004 and to
20.0% from 2005 through the end of the initial term.


Operations and Maintenance

      The operations and maintenance  services for the Coso projects,  including
Navy I,  BLM and  Navy  II,  the  Navy I  Transmission  Line,  the  BLM/Navy  II
Transmission  Line,  the  wells,  the  gathering  system  and the other  related
facilities,  are  performed  by Coso  Operating  Company  on  behalf of the Coso
partnerships  pursuant to O&M  agreements.  Coso  Operating  Company is a wholly
owned subsidiary of Caithness Acquisition.  It was initially formed by CalEnergy
to  facilitate  the  transfer  of  operational  control of the Coso  projects to
Caithness Energy's affiliates.

                                       5

     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.  The  amended and
restated  operation and maintenance  agreement  between FPLEOSI and the managing
general partners was implemented.  Under the agreement, FPLEOSI became the plant
operator and Coso  Operating  Company 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 Coso Operating  Company became the
sole operator of the plant and the geothermal field.


Insurance

       The Coso partnerships currently maintain property, business interruption,
catastrophe and general liability for the Coso projects.  The plants are insured
for $600.0  million per  occurrence  for  general  property  damage  (limited to
replacement costs) and $240.0 million per occurrence 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.


Employees

      Employees  necessary  for  the  operation  of the  Coso  partnerships  are
provided  by Coso  Operating  Company,  under  their  respective  operation  and
maintenance agreements. As of December 31, 1999, Coso Operating Company employed
116 people to operate and maintain the Coso projects.

      Coso Operating  Company  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.


Competition

       The Coso  partnerships  sell all the 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  their  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 the facility in compliance
with applicable laws,  permits and approvals,  governmental  agencies could levy
fines or curtail operations.

                                       6

      The Coso  partnerships  believe  they are in  compliance  in all  material
respects with all applicable environmental regulatory requirements applicable to
the Coso project,  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)

Navy I Partnership                                                       Years Ended December 31,

                                                               1997                 1998              1999(c)
                                                               ----                 ----             -------
<S>                                                           <C>                 <C>                <C>
Total Operating Revenue                                       100,431              53,153             55,666
Operating Income                                               66,439              21,259             23,995
Total Assets                                                  209,390             202,266            217,712


BLM Partnership                                                          Years Ended December 31,

                                                               1997                 1998              1999(c)
                                                               ----                 ----             -------

Total Operating Revenue                                       102,868             107,199             49,877
Operating Income                                               59,675              62,512             11,343
Total Assets                                                  225,172             228,381            216,391


Navy II Partnership                                                      Years Ended December 31,

                                                               1997                 1998              1999(c)
                                                               ----                 ----             -------

Total Operating Revenue                                       112,796             119,564            113,746
Operating Income                                               75,047              78,444             70,169
Total Assets                                                  228,653             220,867            273,269



                               See Footnotes to Summary Selected Historical Financial and Operating Data

                                       7
</TABLE>

Item 2.  Properties.


Plants


Navy I

      Navy I and its steam  resource  are  located  on the United  States  Naval
Weapons Center at China Lake. It commenced operations in 1987.  Geothermal steam
for Navy I was 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 at Navy I commenced firm operation in 1987, and Units 2 and 3 at
Navy I 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 95.4% in 1999, 94.6% in 1998, and 103.2% in
1997, based on a nameplate capacity of 80 MW.


BLM

      BLM and its steam  resource  are  located  on  Bureau  of Land  Management
property (other than the Bureau of Land  Management  property that is subject to
the LADWP  leases),  within the  boundaries  of the United  States Naval Weapons
Center at China Lake.  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 was  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.  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.  All three units
commenced firm  operation  during 1989.  BLM has an aggregate  gross  electrical
generating capacity of approximately 90 MW, and operated at an average operating
capacity factor of 105.0% in 1999, 104.4% in 1998, and 99.6% in 1997, based on a
nameplate capacity of 80 MW.


Navy II

      Navy II and its steam  resource  are  located on the United  States  Naval
Weapons Center at China Lake. It commenced operations in 1989.  Geothermal steam
for Navy II was 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.  Navy II's steam supply
systems  are  cross-connected  to Navy I's and BLM's  steam  supply  systems via
metered  transfers to allow steam to be transferred  between or among the plants
pursuant to the steam sharing  program.  All three Navy II units  commenced firm
operation  in  1990.  Navy II has an  aggregate  gross  electrical  capacity  of
approximately  90 MW, and operated at an average  operating  capacity  factor of
112.0%  in 1999,  108.6%  in 1998,  and  108.9%  in 1997,  based on a  nameplate
capacity of 80 MW.


                                       8

Transmission Lines

      The  electricity  generated  by Navy I is conveyed  over an  approximately
28.8-mile  115  kilovolt  ("kV")  transmission  line on 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 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 February  2000,  Navy I, Navy II, BLM and Edison  reached a settlement,
subject to the approval of the  California  Public  Utilities  Commission of all
matters of litigation  between the Coso Partnerships and Edison. The cost of the
settlement was allocated among the Coso Partnerships.

      In June  1999,  Navy I, Navy II,  BLM,  and Fuji  Electric  Co.,  and Fuji
Electric  Corporation  of  America  reached a  settlement  agreement.  Fuji,  in
consideration of the settlement  agreement,  must provide various  equipment and
spare parts to the Coso Partnerships.

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


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

      None


                                     Part II

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

      Not applicable.

                                      9

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


                                                            1995             1996           1997           1998        1999 (c)
                                                           ------           ------         ------          -----       -------
<S>                                                       <C>             <C>            <C>            <C>            <C>
Statement of Operations Data:

    Operating Revenues.............................       $ 107,063       $ 118,206      $ 100,431(b)   $  53,153(b)   $ 55,666
    Operating expenses.............................         (37,145)        (36,147)       (33,992)       (31,894)      (31,671)
                                                          ----------      ----------     ----------     ----------     ---------

    Operating income...............................          69,918          82,059         66,439         21,259        23,995


Non-Operating income and (expense):

    Interest expense................................        (11,356)        (8,868)        (6,260)        (4,333)       (11,591)
    Other expenses.................................           --               --             --            (923)        (4,359)
    Interest and other income, net...............             2,893          3,286          1,980            585          1,776
                                                          ---------       ---------      ---------      ----------     ---------

    Net income.....................................       $  61,455       $ 76,477       $ 62,159       $ 16,588       $  9,821
                                                          =========       ========       =========      ==========     =========

Operating Data:

    Operating capacity factor (d)(e)...............          112.1%         112.1%         103.2%          94.6%         95.4%
    kWh produced...................................         785,400        787,688        723,116        662,560       668,388


                               See Footnotes to Summary Selected Historical Financial and Operating Data
</TABLE>
                                       10
<PAGE>
<TABLE>
<CAPTION>
                                                               BLM Partnership
                                                                (Stand-alone)
                                                        (In thousands, except ratio data)



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

<S>                                                        <C>           <C>          <C>         <C>         <C>
                                                              1995          1996         1997        1998       1999 (c)
                                                             ------       -------       ------      ------     ---------
Statement of Operations Data:

    Operating Revenues.................................    $ 100,534    $ 101,923     $ 102,868   $ 107,199    $ 49,877(b)
    Operating expenses.................................      (40,418)     (40,017)      (43,193)    (44,687)    (38,534)
                                                           ---------    ---------      ---------  ---------    --------


    Operating income...................................       60,116       61,906        59,675      62,512      11,343


Non-Operating income and (expense):

    Interest expense..............................          (15,063)      (13,162)       (9,105)    (6,267)     (8,739)
    Other expenses..............................               --             --           --         (953)     (3,318)
    Interest and other income, net............                2,644         2,520         1,712      1,181       1,066
                                                           --------      --------      --------   --------     -------


    Net income...............................              $ 47,697      $ 51,264      $ 52,282   $ 56,473     $   352
                                                           ========      ========      ========   ========     =======
Operating Data:

    Operating capacity factor (d)(e)...................      107.5%        107.9%        99.6%      104.4%      105.0%
    kWh produced.......................................     753,200       758,115       697,794    731,767     735,840




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

<PAGE>

<TABLE>
<CAPTION>

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


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


                                                                  1995         1996       1997          1998         1999 (c)
                                                                 ------      ------      ------        ------       ---------
<S>                                                             <C>        <C>         <C>          <C>           <C>
Statement of Operations Data:

    Operating Revenues......................................    $ 108,390  $ 115,126   $ 112,796    $ 119,564     $ 113,746
    Operating expenses......................................      (39,168)   (37,911)    (37,749)     (41,120)      (43,577)
                                                                ---------  ---------   ---------    ---------     ----------


    Operating income........................................       69,222     77,215      75,047       78,444        70,169


Non-Operating income and (expense):

    Interest expense..........................................    (13,868)   (12,149)   (10,532)      (8,122)       (11,967)
    Other expenses..........................................         --         --         --         (1,664)        (4,171)
    Interest and other income, net.........................         3,040      3,174      2,187        1,799          2,174
                                                                 --------   --------   --------     ---------      ---------



    Net income...............................................    $ 58,394   $ 68,240   $ 66,702     $ 70,457       $ 56,205
                                                                  ========   ========   ========     ========      ========

Operating Data:

    Operating capacity factor (d)(e)........................       111.3%    110.6%      108.9%       108.6%        112.0%
    kWh produced............................................      779,800   777,243     762,821      760,659       785,772



                               See Footnotes to Summary Selected Historical Financial and Operating Data
</TABLE>
                                       12
<PAGE>

<TABLE>
<CAPTION>


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

<S>                                                             <C>             <C>           <C>         <C>           <C>

Balance Sheet Data (in thousands):                                1995            1996            1997       1998          1999
----------------------------------                               ------          ------          ------     ------        ------
Navy I Partnership (stand-alone)(a)

     Cash..................................................     $ 45,093        $ 15,724       $  2,888   $     --       $  7,821
     Restricted cash and investments.......................       28,161          29,016          6,479       7,524        25,001
     Property, plant and equipment, net....................      205,451         195,146        186,399     180,189       153,879
     Power purchase agreement, net......................           --               --             --          --          13,388
     Total assets............................................... 301,474         264,250        209,390     202,266       217,712
     Project loans:
       Existing project debt, payable to                         127,340          76,056         45,666      40,566         __
               Coso Funding Corp...............................
      Project notes (f)........................................... --               --             --          --         151,550
     Partners' capital.......................................   $164,581      $  167,834      $ 155,568   $ 149,933      $ 49,362

BLM Partnership (stand-alone)

     Cash...................................................    $ 40,219      $   13,166      $     873        --         $ 6,423
     Restricted cash and investments......................        23,533          23,298            290         290         9,806
     Property, plant and equipment, net............              216,278         208,867        198,296     202,270       165,650
     Power purchase agreement, net.......................          --              --            --          --            20,549
     Total assets................................................305,327         269,637        225,172     228,381       216,391
     Project loans:
         Existing project debt, payable to                       137,748         105,990         76,654      37,958         __
                Coso Funding Corp..............................
     Project notes (f)...........................................  --              --              --          --        107,900
     Partners' capital......................................... $119,560      $  112,666      $ 124,113   $ 163,191     $ 79,350

Navy II Partnership (stand-alone)

     Cash.......................................................$ 44,721      $   18,133      $   1,148   $     818     $  6,020
     Restricted cash and investments.......................       22,841          22,391           --          --         54,338
     Property, plant and equipment, net...................       212,848         203,454        199,134     188,840      147,522
     Power purchase agreement, net......................           --              --             --          --          28,409
     Total assets............................................... 309,009         272,549        228,653     220,867      273,269
     Project loans:
           Existing project debt, payable to                     156,043         124,361         97,267      61,323         __
              Coso Funding Corp...............................
     Project notes (f)..........................................    --             --            --            --        153,550
     Partners' capital.........................................$ 140,082       $ 126,092      $ 125,413   $ 153,661    $ 104,331




                     See Footnotes to Summary Selected Historical Financial and Operating Data

                                       13
</TABLE>


     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.  At 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  decrease in energy  revenues is due to the fact that the fixed  energy
     price period  expired for the Navy I partnership  in August 1997. The fixed
     energy price period for the BLM partnership  expired in March 1999 and will
     expire for the Navy II partnership in January 2000.

(c)  After Caithness  Acquisition's  purchase of all of CalEnergy's interests in
     the Coso projects,  on February 25, 1999, the Coso  partnerships  adopted a
     new basis of accounting and 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 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 nameplate capacity of 80 MW.

(e)  The reduction in the operating  capacity  factor for the Navy I partnership
     and the increase in the operating  capacity  factor for the BLM partnership
     and the Navy II partnership is due to the transfer of steam from the Navy I
     partnership to the BLM  partnership  and the Navy II partnership  under the
     steam sharing program.

(f)  Reflects  indebtedness owed to Caithness Coso Funding Corp., who 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  Partnership",  and
together  with  the  Navy I  Partnership  and the  BLM  Partnership  (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) that the  information  is of a preliminary
nature  and may be  subject to  further  adjustment,  (ii) risks  related to the
operation  of power  plants,  (iii) the impact of  avoided  cost  pricing,  (iv)
general  operating risks,  (v) the dependence on third parties,  (vi) changes in
government regulation,  (vii) the effects of competition,  (viii) the dependence
on  senior   management,   (ix)   fluctuations  in  quarterly  results  and  (x)
seasonality.

                                       14
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  system 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,  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 Southern  California Edison  ("Edison") under a long-term  Standard
Offer No.4 power purchase  agreement.  Each Company's  power purchase  agreement
expires after the final  maturity date of the 6.8% Series B Senior Secured Notes
due 2001 and the 9.05% Series B Senior  Secured Notes due 2009 issued by Funding
Corp.

       Each Coso  partnership  receives 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 are fixed for the first ten years of firm operation under
each  power  purchase  agreement.  Firm  operation  was  achieved  for each Coso
partnership  when Edison and that Coso  partnership  agreed that each generating
unit at such Coso  partnership's  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 a Coso partnership's power
purchase agreement expires, Edison makes energy payments to the Coso partnership
based on Edison's  "avoided cost of energy".  Edison's avoided cost of energy is
Edison's cost to generate electricity if Edison were to produce it itself or buy
it from  another  power  producer  rather  than  buy it from the  relevant  Coso
partnership. The power purchase agreement for the Navy I partnership will expire
in August 2011, the power purchase agreement for the BLM partnership will expire
March 2019,  and the power purchase  agreement for the Navy II partnership  will
expire in January 2010.

                                       15

       The fixed  energy  price  period  expired  in August  1997 for the Navy I
partnership  and in March  1999 for the BLM  partnership,  and  will  expire  in
January 2000 for the Navy II partnership.

       The  Coso   Partnerships   have   implemented  and  intend  to  expand  a
steam-sharing  program,  which they established under a 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.

       For the year ended December 31, 1999,  Edison's  annual  average  avoided
cost of energy paid to the Navy I and the BLM Partnership was 3.1(cent) 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  following the end of the fixed energy price period under the Navy
II Partnership's power purchase agreement in January 2000.

       Coso 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.  The  Coso
partnerships have jointly,  severally, and unconditionally  guaranteed repayment
of the senior secured notes.

       On May 28, 1999,  Coso Funding Corp.  was 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 Coso Funding Corp from payments of principal and
interest on the notes.  Coso Funding Corp. does not conduct any other operations
apart from issuing the notes.

       Under the note 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.


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.

                                       16

       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)        1999          1998           1997
                                          ----          ----           ----
  Operating capacity factor              95.4%         94.6%         103.2%
  Capacity (MW) (average)                76.34         75.63          82.55
  kWh produced (000s)                  668,388       662,560        723,116

  BLM Partnership (stand alone)

  Operating capacity factor             105.0%        104.4%          99.6%
  Capacity (MW) (average)                84.00         83.54          79.66
  kWh produced (000s)                  735,840       731,767        697,794

  Navy II Partnership (stand alone)

  Operating capacity factor             112.1%        108.6%         108.9%
  Capacity (MW) (average)                89.70         86.83          87.08
  kWh produced (000s)                  785,772       760,659        762,821

       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 0.6%.  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%,  due to  increased
steam transfers from the Navy I partnership.

       Total energy  production for the Navy I partnership was 662.6 million kWh
for 1998 as compared to 723.1  million kWh for 1997,  a decrease of 8.4%.  Total
energy  production  for the BLM  partnership  was 731.8  million kWh for 1998 as
compared to 697.8  million kWh in 1997,  and an increase of 4.9%.  Total  energy
production  for the  Navy II  partnership  was  760.7  million  kWh for  1998 as
compared  to  762.8  million  kWh in  1997,  a  decrease  of  0.3%.  The  Navy I
partnership's  decrease in energy  production in 1998 was due to the transfer of
steam from Navy I to Navy II and to BLM under the steam sharing program.

                                       17

Results of Operations for the years ended December 31, 1999, 1998 and 1997.
---------------------------------------------------------------------------

       The   following   discusses   the  results  of  operations  of  the  Coso
partnerships  for the years  ended  December  31,  1999,  1998 and 1997  (dollar
amounts in tables in thousands, except per kWh data):
<TABLE>
<CAPTION>

Revenue

                                        1999                          1998                           1997
                                        ----                          ----                           ----
                                  $            cents/kWh           $           cents/kWh          $        cents/kWh
                                  -            ---------           -           ---------          -        ---------
<S>                           <C>               <C>           <C>                <C>           <C>           <C>

Total Operating Revenues

Navy I partnership              55,666             8.3          53,153             8.0          100,431       13.9
BLM partnership                 49,877             6.8         107,199            14.6          102,868       14.7
Navy II partnership            113,746            14.5         119,564            15.7          112,796       14.8

Capacity & Bonus Revenues

Navy I partnership              13,372             2.0          13,573             2.0           13,845        1.9
BLM partnership                 13,938             1.9          13,847             1.9           13,939        2.0
Navy II partnership             14,018             1.8          14,018             1.8           14,018        1.8

Energy Revenues

Navy I partnership              42,294             6.3          39,580             6.0           86,586       12.0
BLM partnership                 35,939             4.9          93,352            12.8           88,929       12.7
Navy II partnership             99,728            12.7         105,546            13.9           98,778       12.9
</TABLE>


         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  were $49.9million
for 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 3.21 cents per kWh for energy delivered for
the period April 1999 to December 1999.

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

      Total  operating  revenues for the Navy I  partnership,  which  consist of
capacity  payments,  capacity  bonus  payments  and energy  payments  were $53.2
million for 1998 as compared to $100.4 million in 1997, a decrease of 47.1%. The
Navy I partnership's  energy revenues were $39.6 million in 1998, as compared to
$86.6 million in 1997, a decrease of 54.3%. These decreases were attributable to
the  expiration of the fixed energy price period under the Navy I  partnership's
power  purchase  agreement and are the result of a full year of energy  payments
based upon  Edison's  avoided cost of energy after the fixed energy price period
expired in August 1997.  During the final year of its fixed energy price period,
the Navy I  partnership  received  approximately  14.6(cent)  per kWh for energy
delivered. Under the avoided cost of energy formula, since August 1997, the Navy
I partnership has been receiving an average of  approximately  3.0(cent) per kWh
for energy delivered. This significant decrease in energy payments was partially
offset by the Navy I partnership's  ability to transfer  geothermal steam to the
BLM partnership and the Navy II partnership,  both of which were still receiving
fixed energy payments under their respective power purchase  agreements  through
December 31,  1998.  For 1998,  as a result of its  transfers of steam under the
steam sharing program,  the Navy I partnership  received steam transfer payments
of  approximately  $13.5 million from the BLM  partnership and $5.5 million from
the Navy II partnership.

                                       18

      The BLM  partnership's  total  operating  revenues were $107.2  million in
1998,  as compared  to $102.9  million in 1997,  an  increase  of 4.2%.  The BLM
partnership's  energy  revenues were $93.4 million in 1998, as compared to $88.9
million in 1997, an increase of 5.0%.  These  increases  were due to a 1.0(cent)
per kWh  increase in the rate paid by Edison under the BLM  partnership's  power
purchase  agreement.  In  addition,  kWh  produced  increased  primarily  due to
increased steam transfers from the Navy I partnership.  However, the impact from
such increased  production was offset by steam sharing  payments paid by the BLM
partnership to the Navy I partnership.

      The Navy II partnership's  total operating revenues were $119.6 million in
1998, as compared to $112.8  million in 1997,  an increase of 6.0%.  The Navy II
partnership's  energy revenues were $105.5 million in 1998, as compared to $98.8
million in 1997, an increase of 6.9%.  These  increases were due primarily to an
increase  in the rate  paid by  Edison  under  the Navy II  partnership's  power
purchase agreement.  The Navy II partnership was paid 14.6(cent) per kWh in 1998
for the  energy  component  of the  electricity  it sold to Edison  compared  to
13.6(cent) per kWh in 1997.


Interest and Other Income
<TABLE>
<CAPTION>

                                   1999                      1998                      1997
                                   ----                      ----                      ----
                               $      cents/kWh         $         cents/kWh       $       cents/kWh
                               -      ---------         -         ---------       -       ---------

<S>                          <C>         <C>          <C>           <C>         <C>         <C>

Navy I partnership           1,776       0.3            585          0.1        1,980        0.3
BLM partnership              1,066       0.1          1,181          0.2        1,712        0.2
Navy II partnership          2,174       0.3          1,799          0.2        2,187        0.3
</TABLE>

       The Navy I  partnership's  interest  and other  income  increased by $1.2
million  in 1999.  During  the first  quarter  of 1999,  the Navy I  partnership
accrued a $1.6 million  business loss insurance  recovery in connection with the
shutdown of one of the Navy I partnership's  turbine  generator  units. 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 reserves required by the senior notes issued on May 29, 1999. The
BLM  partnership's  interest  and other  income was $1.1  million  for 1999,  as
compared to $1.2 million for 1998,  a decrease of 9.7%.  The decrease was due to
the  reduction in energy  revenues  subsequent  to the  expiration  of the fixed
energy price period under the BLM partnership 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 for 1999,  as
compared to $1.8 million for 1998,  an increase of 20.8%.  Interest on increased
cash  reserves  required  by the senior  secured  notes  issued on May 29,  1999
contributed to the increases in interest income.

                                       19

    The Navy I  partnership's  interest  income was $0.6 million for 1998,  as
compared to $2.0  million in 1997,  a decrease of 70.5%.  The BLM  partnership's
interest  income was $1.2 million for 1998, as compared to $1.7 million in 1997,
a decrease of 31.0%. The Navy II partnership's  interest income was $1.8 million
for 1998,  as  compared  to $2.2  million in 1997,  a decrease  of 17.7%.  These
decreases were due to the replacement of a cash funded debt service reserve fund
with a  letter  of  credit  in  1997  and to a  generally  lower  interest  rate
environment during 1998 versus 1997.

<PAGE>
Legal Expenses and Settlement Costs
<TABLE>
<CAPTION>

                                      1999                       1998                       1997
                                      ----                       ----                       ----
                              $         cents/kWh         $           cents/kWh        $         cents/kWh
                              -         ---------         -           ---------        -         ---------

<S>                        <C>            <C>            <C>            <C>          <C>           <C>

Navy I partnership          2,373          0.4           2,969           0.4            0           0.0
BLM partnership             4,169          0.6           2,968           0.4          675           0.1
Navy II partnership         5,819          0.7           2,956           0.4            0           0.0

</TABLE>



     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,  as a  result  of, among  other  expenses, an  accrued
settlement  obligation  that will be paid to Edison upon approval of the settle
ment by the California  Public Utility  Commission.  The legal expenses and
settement costs were inconsequential in 1997 as compared to 1998.

Plant Operations
<TABLE>
<CAPTION>

                                    1999                         1998                    1997
                                    ----                         ----                    ----
                             $          cents/kWh           $         cents/kWh      $        cents/kWh
                             -          ---------           -         ---------      -        ---------
<S>                       <C>             <C>            <C>             <C>      <C>            <C>

Navy I partnership        10,017          1.5            10,020          1.5      10,983         1.5
BLM partnership           15,568          2.1            16,418          2.2      17,806         2.6
Navy II partnership       10,873          1.4            12,271          1.6      12,768         1.7
</TABLE>

       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  committee fees,  insurance and other operating costs somewhat offset
by the increase in property taxes.

      The  decrease  in  operating  expenses  for the  Navy I,  BLM and  Navy II
partnerships  for 1998 as  compared  to 1997 were  primarily  due to a favorable
property tax appeal and  settlement  with Inyo County and decreases in operating
expenses.


Royalty Expenses
<TABLE>
<CAPTION>

                                    1999                         1998                        1997
                                    ----                         ----                        ----
                            $            cents/kWh         $           cents/kWh      $           cents/kWh
                            -            ---------         -           ---------      -           ---------
<S>                       <C>               <C>         <C>               <C>      <C>               <C>

Navy I partnership        9,699             1.5          6,824            1.0       9,849            1.4
BLM partnership           3,148             0.4         10,492            1.4      10,106            1.4
Navy II partnership      12,077             1.5         11,868            1.6      11,249            1.5
</TABLE>

       The Navy I partnership's  royalty expenses were $9.7 million for 1999, as
compared to $6.8 million in 1998, an increase of 42.1%.  The increase was due to
a scheduled  increase in the royalty rate paid to the 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  decreases  of 70.0%.  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  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 1.8%. The increase was due to an increase in production.

                                       20

       The Navy I partnership's  royalty  expenses were $6.8 million for 1998 as
compared to $9.8 million in 1997, a decrease of 30.7%.  This decrease was due to
a decrease in revenues over the same period in 1998 caused by the  expiration of
the fixed  energy price period  under the Navy I  partnership's  power  purchase
agreement.  The BLM partnership's  royalty expenses were $10.5 million for 1998,
as compared to $10.1 million for 1997, an increase of 3.8%.  This was due to the
increased  revenues  generated by the BLM partnership  over the period.  The BLM
partnership's  royalty  expenses  for 1998 and 1997 include $3.1 million and 3.2
million,  respectively  of royalties  payable to Coso Land Company.  The Navy II
partnership's royalty expenses were $11.9 million for 1998, as compared to $11.2
million in 1997,  an increase of 5.5%.  This  increase was due to an increase in
revenues generated by the Navy II partnership.


Depreciation and Amortization
<TABLE>
<CAPTION>

                                   1999                        1998                      1997
                                   ----                         ----                      ----

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

<S>                        <C>          <C>            <C>            <C>       <C>              <C>

  Navy I partnership         9,582       1.4           12,081          1.8      13,160           1.8
  BLM partnership           15,649       2.1           14,809          2.0      14,606           2.1
  Navy II partnership       14,808       1.9           14,025          1.8      13,732           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 current year additions.  The BLM partnership's  depreciation and
amortization  expense was $15.6  million for 1999 and $14.8 million for 1998, an
increase of 5.7%. The increase was due to substantial  increases in current year
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 and $14.0  million  in 1998.  The  increase  was due to
purchase accounting  adjustments and depreciation  expense on current year asset
additions.

       The Navy I partnership's  depreciation and amortization expense was $12.1
million for 1998, as compared to $13.2 million for 1997, a decrease of 8.2%. The
decrease was primarily due to the cessation of depreciation  expense for certain
wells,   which  became  fully   depreciated   during  these  periods.   The  BLM
partnership's  depreciation and amortization expense was $14.8 million for 1998,
as  compared  to $14.6  million  for  1997,  an  increase  of 1.4%.  The Navy II
partnership's  depreciation and amortization expense was $14.0 million for 1998,
as compared to $13.7 million in 1997, an increase of 2.1%.

                                       21

Interest Expense
<TABLE>
<CAPTION>

                                      1999                    1998                    1997
                                      ----                    ----                    ----
                             $         cents/kWh         $        cents/kWh         $       cents/kWh
                             -         ---------         -        ---------         -       ---------

<S>                        <C>          <C>            <C>          <C>          <C>          <C>

Navy I partnership         9,629         1.4           4,333        0.7           6,260       0.9
BLM partnership            7,324         1.0           6,267        0.9           9,105       1.3
Navy II partnership        9,957         1.3           8,122        1.1          10,532       1.4
</TABLE>



       The Navy I  partnership's  interest  expense was $9.6 million in 1999 and
$4.3  million in 1998,  an increase of 122.2%.  The BLM  partnership's  interest
expense was $7.3 million in 1999 and $6.3 million in 1998, an increase of 16.9%.
The Navy II  partnership's  interest  expense was $10.0 million in 1999 and $8.1
million  in 1998,  an  increase  of 22.6%.  These  increases  were due to higher
outstanding  debt  balances  resulting  from the  $413  million  senior  secured
financing which closed on May 28, 1999.

       The Navy I partnership's  interest  expense was $4.3 million for 1998, as
compared to $6.3  million in 1997,  a decrease of 30.8%.  The BLM  partnership's
interest expense was $6.3 million for 1998, as compared to $9.1 million in 1997,
a  decrease  of 31.2%.  The Navy II  partnership's  interest  expenses  was $8.1
million for 1998,  as compared  to $10.5  million in 1997,  a decrease of 22.9%.
These  decreases  were due to a  decrease  in the  amounts  owed  under the then
existing  project  debt that was  repaid at the  closing  of the  Series A notes
offering.


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
$2.0 million, $1.5 million and $2.0 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 were  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.


Loss on early extinquishment of debt

       The Navy I, BLM and Navy II  partnerships  recorded  a loss on the  early
extinguishment of its 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.

                                       22

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 following table sets forth a summary of each Coso  partnership's cash
flows for the years ended December 31, 1999, December 31, 1998, and December 31,
1997.
<TABLE>
<CAPTION>

                                                                       1999                1998              1997
                                                                       ----                ----              ----
<S>                                                                <C>                 <C>            <C>
Navy I partnership (stand alone)
 Net cash provided by operating activities                           $ 24,388           $ 31,928         $  88,089
 Net cash used in investing activities                                (24,094)            (7,493)           18,399
 Net cash provided (used) by financing activities                       7,527            (27,323)         (119,324)
                                                                     ---------          ---------        ----------
     Net change in cash and cash equivalents                         $ 7,821            $ (2,888)        $ (12,836)
                                                                     =========          =========        ==========

BLM partnership (stand alone)
 Net cash provided by operating activities                           $ 29,806           $ 75,855         $  60,793
 Net cash used in investing activities                                (16,699)           (20,637)           19,435
 Net cash provided (used) by financing activities                      (6,684)           (56,091)          (92,521)
                                                                     ---------          ---------        ----------
      Net change in cash and cash equivalents                        $  6,423           $   (873)        $ (12,293)
                                                                    ==========          =========        ==========


Navy II partnership (stand alone)
 Net cash provided by operating activities                          $  74,802           $ 84,833         $  80,529
 Net cash used in investing activities                                (58,752)            (7,010)          (14,530)
 Net cash provided (used) by financing activities                     (10,848)           (78,153)         (112,044)
                                                                    ----------          ---------        ----------
      Net change in cash and cash equivalents                       $   5,202           $   (330)        $ (16,985)
                                                                    ==========          =========        ==========
</TABLE>


       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 Coso
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 Coso 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 and increased financing costs
associated  with the short  term debt  obtained  to  complete  the  purchase  of
CalEnergy's interest in the BLM partnership.

                                       23

       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 Coso Funding Corp.

       The BLM partnership's cash flows from financing  activities  increased by
$49.4  million in 1999 as compared to 1998 as a result of the project  loan from
Coso 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 flows from 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 Coso Funding
Corp.

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

       The Navy I partnership's cash flows from operating  activities  decreased
by $56.1  million in 1998 as  compared  to 1997  primarily  due to a decrease in
revenues for the Navy I  partnership  in 1998 when they  received a full year of
energy payments based on Edison's avoided cost of energy.

       Cash flows from investing activities at the Navy I partnership  decreased
by $25.9  million in 1998 as  compared to 1997  primarily  due to the release in
1997 of a debt service  reserve  fund,  and further  decreased by an increase in
capital expenditures in 1998.

       The Navy I partnership's cash used by financing  activities  decreased by
$92.0  million in 1998 as compared to 1997,  primarily  as a result of decreased
distributions to partners.

       The BLM partnership's cash flows from operating  activities  increased by
$15 million in 1998 as compared 1997,  primarily due to increased  related party
transactions.

       Cash flows from investing activities at the BLM partnership  decreased by
40.1 million in 1998 as compared to 1997,  primarily  due to the release in 1997
of a debt service reserve fund, and further  decreased by an increase in capital
expenditures in 1998.

       The BLM partnership's cash flows from financing  activities  increased by
$36.4 million in 1998 as compared to 1997 as a result of decreased distributions
to partners and the repayment of CalEnergy's promissory note in 1997.

       The Navy II partnership's cash flows from operating  activities increased
by $4.3  million in 1998 as  compared  1997,  primarily  due to an  increase  in
revenue in 1998.

       Cash flows from investing activities at the Navy II partnership decreased
by $21.5  million in 1998 as  compared to 1997  primarily  due to the release in
1997  of  a  debt  service  reserve  fund  and  further   decreased  by  capital
expenditures in 1998.

       The Navy II partnership's cash flows from financing  activities increased
by $33.9 million in 1998 as compared to 1997  primarily as a result of decreased
distributions to partners in 1998.

                                       24

Year 2000

       In 1999, the Coso partnership's developed a plan to identify,  assess and
remediate "Year 2000" issues within each of their significant  computer programs
and certain machinery and equipment.  The Coso partnerships have not experienced
disruptions  to their  financial  or operating  activities  caused by failure of
computerized  systems from Year 2000 issues. In addition,  the Coso partnerships
have not experienced disruptions to operations caused by failure of computerized
systems of suppliers or customers from Year 2000 issues.  Management of the Coso
partnerships do not expect Year 2000 issues to have a material adverse effect on
their power plant's operations or financial results in 2000.


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
for the Coso partnerships to operate the Coso projects, could require additional
capital expenditures or could reduce certain benefits currently available to the
Coso  partnerships.  A variety of other risks 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;

     *   The Coso geothermal resource could be interrupted or unavailable;

     *   Operating costs could increase;

     *   Energy prices paid by Edison could decrease;

     *   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.

                                       25

      In  addition,  the  Coso  partnerships  must  meet  specified  performance
requirements  under their 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 significantly decrease.


Item 8. Financial Statements and Supplementary Data.

        Index to Financial Statements



<PAGE>

                        CAITHNESS COSO FUNDING CORP. AND

                           COSO OPERATING PARTNERSHIPS

                              Financial Statements

                                December 31, 1999

                   (With Independent Auditors' Report Thereon)


<PAGE>
                         CAITHNESS COSO FUNDING CORP. AND
                          COSO OPERATING PARTNERSHIPS

                                      Index

Section I                                                             Page

Caithness Coso Funding Corp:

    KPMG LLP Independent Auditors' Report                             F-1

    Balance Sheet as of December 31, 1999                             F-2

    Statement of Income for the year ended                            F-3
       December 31, 1999

    Statement of Cash Flows for the year
       ended December 31, 1999                                        F-4

    Notes to Financial Statements                                     F-5


Section II

Coso Finance Partners:

    KPMG LLP Independent Auditors' Report                            F-6

    PricewaterhouseCoopers LLP Report of Independent Accountants     F-7

    Balance Sheets as of December 31, 1999 and 1998                  F-8

    Statements of Operations for each of the years in the
       three-year period ended December 31, 1999                     F-9

    Statements of Partners' Capital for each of the years
       in the three-year period ended December 31, 1999             F-10

    Statements of Cash Flows for each of the years in
       the three-year period ended December 31, 1999                F-11

    Notes to Financial Statements                                   F-12



Section III

Coso Energy Developers:

    KPMG LLP Independent Auditors' Report                           F-13

    PricewaterhouseCoopers LLP Report of Independent Accountants    F-14

    Balance Sheets as of December 31, 1999 and 1998                 F-15

    Statements of Operations for each of the years in the
       three-year period ended December 31, 1999                    F-16

    Statements of Partners' Capital for each of the years
       in the three-year period ended December 31, 1999             F-17

    Statements of Cash Flows for each of the years in
       the three-year period ended December 31, 1999                F-18

    Notes to Financial Statements                                   F-19



Section IV

Coso Power Developers:

    KPMG LLP Independent Auditors' Report                           F-20

    PricewaterhouseCoopers LLP Report of Independent Accountants    F-21

    Balance Sheets as of December 31, 1999 and 1998                 F-22

    Statements of Operations for each of the years in
       the three-year period ended December 31, 1999                F-23

    Statements of Partners' Capital for each of the years
       in the three-year period ended December 31, 1999             F-24

    Statements of Cash Flows for each of the years in
       the three-year period ended December 31, 1999                F-25

    Notes to Financial Statements                                   F-26





                          Independent Auditors' Report







The Partners
Caithness Coso Funding Corp.:


We have audited the  accompanying  balance sheet of Caithness Coso Funding Corp.
as of December 31, 1999, and the related statements of income and cash flows for
the year 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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides 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, 1999,  and the results of its  operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.


February 7, 2000





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





                                      F-1

<PAGE>
                                             CAITHNESS COSO FUNDING CORP.

                                                     Balance Sheet

                                                   December 31, 1999

                                                (Dollars in thousands)

<TABLE>
<CAPTION>


                                                        Assets
<S>                                                                                 <C>

Accrued interest receivable                                                           $             1,392
Project loan to Coso Finance Partners                                                             151,550
Project loan to Coso Energy Developers                                                            107,900
Project loan to Coso Power Developers                                                             153,550
                                                                                            ----------------

                   Total assets                                                        $          414,392
                                                                                            ================

                                         Liabilities and Stockholders' Equity

Senior secured notes:
Accrued interest payable                                                               $           1,392
    6.80% notes due December 15, 2001                                                            110,000
    9.05% notes due December 15, 2009                                                            303,000
                                                                                             ----------------

                   Total liabilities                                                             414,392

Stockholders equity (note 4)
                                                                                             ----------------

                                                                                       $         414,392
                                                                                             ================


See accompanying notes to financial statements.
</TABLE>




                                      F-2

<PAGE>
                                         CAITHNESS COSO FUNDING CORP.

                                             Statement of Income

                                         Year ended December 31, 1999

                                            (Dollars in thousands)

<TABLE>
<CAPTION>


<S>                                                                                <C>
Revenue:
    Interest income                                                                 $          20,491

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


Net income                                                                          $          ---
                                                                                        ===============



See accompanying notes to financial statements.
</TABLE>





                                      F-3

<PAGE>
                                              CAITHNESS COSO FUNDING CORP.

                                                Statement of Cash Flows

                                             Year ended December 31, 1999

                                                 (Dollars in thousands)



<TABLE>
<CAPTION>

<S>                                                                               <C>

Cash flows from investing activities                                               $             ---
                                                                                            --------------
Cash flows from financing activities                                                             ---
                                                                                            --------------

                     Net change in cash                                                          ---

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

See accompanying notes to financial statements.
</TABLE>





                                      F-4

<PAGE>
                           CAITHNESS COSO FUNDING CORP.

                          Notes to Financial Statements

                                December 31, 1999

                             (Dollars in thousands)




(1)    Organization of the Corporation

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

       On May 28, 1999, Funding Corp. sold $413,000 of 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

       Based on quoted market rates of the senior secured notes,  the fair value
       of the project  loans and  underlying  Notes as of  December  31, 1999 is
       $108,900  for the  Notes  maturing  in 2001 and  $301,485  for the  Notes
       maturing in 2009.

(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 6.80% 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, 1999,  the  principal  payment of $52,665 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  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
             ------------------------                     -------

                      2000                           $     82,933
                      2001                                 27,067
                      2002                                 21,771
                      2003                                 27,618
                      2004                                 31,332
                      Thereafter                          222,279
                                                          -------
                                                     $    413,000
                                                          =======



       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.





                                       F-5




<PAGE>






                          Independent Auditors' Report




The Partners and Management Committee
Coso Finance Partners:


We have audited the  accompanying  balance sheet of Coso Finance  Partners as of
December 31, 1999, and the related  statements of operations,  partners' capital
and cash  flows for the year 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  audit.  The  combined
financial statements of Coso Finance Partners and Coso Finance Partners II as of
December  31, 1998 and for the years  ended  December  31,  1998 and 1997,  were
audited by other  auditors whose report,  dated February 12, 1999,  expressed an
unqualified opinion.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for our opinion.

In our opinion,  the 1999 financial statements referred to above present fairly,
in all material respects,  the financial position of Coso Finance Partners as of
December 31, 1999,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

As discussed in note 4 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.


February 7, 2000






/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 financial position,
results of operations  and cash flows of Coso Finance  Partners and Coso Finance
Partners  II at  December  31,  1998 and for each of the two years in the period
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 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, 1999 and 1998 (note 4)

                                                (Dollars in thousands)



                                                                                                      Combined CFP and
                                                                                                      CFP II (note 4)
                                                                                       1999                 1998
                                                                                  ----------------   -------------------

                                    Assets
<S>                                                                            <C>                  <C>
Cash and cash equivalents                                                      $       7,821                 ---
Restricted cash and investments (note 2)                                              25,001                7,524
Accounts receivable                                                                    5,154                5,404
Prepaid expenses and other assets                                                       ---                   617
Amounts due from related parties  (note 9)                                             4,508                4,160
Property, plant and equipment,  net (notes 4 and 6)                                  153,879              180,189
Investment in China Lake Plant Services, Inc. (note 5)                                 4,212                4,139
Power purchase contract, net (note 4)                                                 13,388                 ---
Deferred financing costs, net (note 2)                                                 3,749                  233
                                                                                 ----------------   -------------------

                   Total assets                                                $     217,712              202,266
                                                                                 ================   ===================

                      Liabilities and Partners' Capital

Accounts payable and accrued liabilities (note 7)                              $      16,236               11,389
Amounts due to related parties (note 9)                                                  564                  378
Project loans (note 8)                                                               151,550               40,566
                                                                                 ----------------    -----------------

                   Total liabilities                                                 168,350               52,333

Commitments and contingencies (notes 7, 8 and 10)

Partners capital                                                                      49,362              149,933
                                                                                  ----------------    ----------------

                   Total liabilities and partners  capital                     $     217,712              202,266
                                                                                  ================    ================


See accompanying notes to financial statements.
</TABLE>





                                      F-8
<PAGE>

<TABLE>
<CAPTION>

                                                COSO FINANCE PARTNERS

                                               Statements of Operations

                                Years ended December 31, 1999, 1998 and 1997 (note 4)

                                                (Dollars in thousands)




                                                                                               Combined CFP and
                                                                                                CFP II (note 4)
                                                                                         ------------------------------
                                                                             Twelve         Twelve          Twelve
                                           Two months     Ten months         months         months          months
                                              ended          ended           ended          ended           ended
                                          February 28,   December 31,     December 31,    December 31,   December 31,
                                              1999           1999             1999           1998            1997
                                          -------------- --------------  --------------- -------------  ---------------
                                           (old basis)    (new basis)                    (old basis)     (old basis)
<S>                                     <C>              <C>            <C>              <C>            <C>

Revenue:
    Energy revenues                     $    8,098           34,196           42,294         39,580           86,586
    Capacity payments                          474           12,898           13,372         13,573           13,845
    Interest and other income                  824              952            1,776            585            1,980
                                      --------------   --------------  ---------------  -------------   -------------

        Total revenue                        9,396           48,046           57,442          53,738         102,411
                                      --------------   --------------  ---------------  -------------   -------------

Operating expenses:
    Plant operating expense                  2,556            7,461           10,017         10,020           10,983
    Royalty expense                            987            8,712            9,699          6,824            9,849
    Depreciated and amortization             1,604            7,978            9,582         12,081           13,160
    Edison legal expenses
       and settlement costs (note 10)          569            1,804            2,373          2,969           ---
                                      --------------   --------------  ---------------  -------------   -------------

        Total operating expenses             5,716           25,955           31,671         31,894           33,992
                                      --------------   --------------  ---------------  -------------   -------------

        Operating income                     3,680           22,091           25,771         21,844           68,419
                                      --------------   --------------  ---------------  -------------   --------------

Other expenses:
    Interest expense                           663            8,966            9,629          4,333            6,260
    Interest expense - acquisition debt       ---             1,962            1,962           ---            ---
    Costs related to acquisition debt         ---             1,984            1,984           ---            ---
                                      --------------   --------------  ---------------  -------------   -------------

        Total other expenses                   663           12,912           13,575          4,333            6,260
                                      --------------   --------------  ---------------  -------------   -------------

        Income before extraordinary
           item and cumulative effect of
           change in accounting principle    3,017            9,179           12,196         17,511          62,159

    Extraordinary item - loss on
      extinguishment of debt (note 8)         ---             2,375            2,375           ---            ---
    Cumulative effect of change in
      accounting principle: start-up
      activities (note 2)                     ---              ---              ---            923            ---
                                      --------------  --------------  ---------------  -------------   -------------

        Net income                   $       3,017            6,804           9,821         16,588           62,159
                                      ==============  ==============  ===============  =============   =============


See accompanying notes to financial statements.
</TABLE>





                                      F-9

<PAGE>

<TABLE>
<CAPTION>

                                              COSO FINANCE PARTNERS

                                           Statements of Partners Capital

                                Years ended December 31, 1999, 1998 and 1997 (note 4)

                                               (Dollars in thousands)



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


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

Balance at December 31, 1996$     76,526     70,587           ---       11,202        9,519         ---       167,834
Net income                        33,222     28,760           ---           95           82         ---        62,159
Distributions to partners        (39,892)   (34,533)          ---         ---          ---          ---       (74,425)
                                ---------- -----------  ------------  -----------  ------------ ----------  -----------

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

See accompanying notes to financial statements.
</TABLE>




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

                                               Statements of Cash Flows

                                     Years ended December 31, 1999, 1998 and 1997 (note 4)

                                                (Dollars in thousands)

                                                                                                                Combined CFP and
                                                                                                                 CFP II (note 4)
                                                                                                        ----------------------------
                                                                                               Twelve        Twelve         Twelve
                                                               Two months    Ten months        months        months         months
                                                                 ended          ended          ended          ended         ended
                                                               February 28,  December 31,   December 31,   December 31, December 31,
                                                                  1999           1999           1999          1998           1997
                                                            -------------  -------------  ------------- -------------- -------------
                                                             (old basis)    (new basis)                   (old basis)    (old basis)
<S>                                                       <C>              <C>             <C>         <C>            <C>

Cash flows from operating activities:
    Net income                                              $    3,017          6,804         9,821         16,588        62,159
    Adjustments to reconcile net income to net
       cash provided by operating activities:
         Depreciation and amortization                           1,604          7,978         9,582         12,081        13,160
         Amortization of deferred financing costs                   18            373           391            123           190
         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                                   1,015           (514)          501         (1,277)       13,666
            Investment in China Lake Plant                          19            (92)          (73)          (172)         (239)
              Services, Inc.
            Accounts payable and accrued liabilities               378          3,773         4,151          3,233         2,346
            Amounts due from related parties                    (1,751)         1,025          (726)            51        (3,152)
            Amounts due to related parties                         594            (30)          564            378           (41)
                                                            -----------    -----------   -----------   ------------ -------------
                 Net cash provided by
                   operating activities                          4,894         19,494         24,388        31,928        88,089
                                                            -------------  -----------   -----------   ------------ -------------

Cash flows from investing activities:
    Capital expenditures                                          (571)        (5,904)       (6,475)        (6,448)       (4,138)
    (Increase) decrease in restricted cash                        (194)       (17,425)      (17,619)        (1,045)       22,537
                                                            -------------  -----------  -----------    ------------ -------------
                 Net cash (used in) provided by
                   investing activities                           (765)       (23,329)      (24,094)        (7,493)       18,399
                                                            -------------  -----------   -----------   ------------ -------------

Cash flows from financing activities:
    Distributions to partners                                     ---       (103,457)      (103,457)       (22,223)      (88,934)
    Increase in project financing debt                            ---        151,550        151,550          ---          ---
    Repayment of project financing loans                          ---        (40,566)       (40,566)        (5,100)      (30,390)
                                                            -------------  -----------   -----------   ------------ -------------
                 Net cash provided by (used in)
                   financing activities                           ---          7,527          7,527         27,323)     (119,324)
                                                            -------------  -----------   -----------   ------------ -------------

                 Net change in cash and cash
                   equivalents                                  4,129          3,692          7,821         (2,888)      (12,836)

Cash and cash equivalents at beginning of period                 ---           4,129          ---            2,888        15,724
                                                            -----------     ----------    ----------   ------------   -----------

Cash and cash equivalents at end of period               $      4,129          7,821          7,821         ---            2,888
                                                           =============  =============  ===========   ============  ============

Supplemental cash flow disclosure:
    Cash paid for interest                               $      ---           10,694         10,694         4,210          6,070
                                                           =============  =============  ============= ============  ============

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, 1999, 1998 and 1997

                             (Dollars in thousands)



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  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,  and for  financing  the expansion of that power plant
       from 30 NMW to approximately 80 NMW.

       CFP was formed to acquire 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 NMW. 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  transforming  CFP into a general
       partnership  owned by ESCA LLC (ESCA) and New CLOC  Company  (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),  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 4) and formed two wholly owned subsidiaries,  New CLOC Company,  LLC
       (New CLOC), a Delaware limited liability  company,  and New CLGMC Company
       (New CLGMC), a Delaware limited  liability  company.  In May 1999, CFP II
       merged into CFP, with CFP being the surviving entity, 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 is now New CLOC.

       Since CFP and CFP II  operated  under  common  ownership  and  management
       control,  the  financial  statements of CFP and CFP II as of December 31,
       1998 and 1997  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 escalate 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  adjusts to the
          actual avoided energy  costexperienced  by Edison. In August 1997, the
          Partnership completed the ten-year period. At that time, Edison ceased
          paying the scheduled  energy rates.  For the years ended  December 31,
          1999, 1998 and 1997, Edison's average avoided cost of energy was 3.13,
          2.95 and 3.28  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 1999, 1998 and 1997,
          the bonus payments aggregated $1,345, $1,510 and $1,805, respectively.

       CalEnergy   served  as  the  operator,   maintaining  the   Partnership's
       accounting  records and  operating  the CFP plant on a day-to-day  basis,
       until February 1, 1999 when 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,  who
       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 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 was 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

       Recognition of Revenue

       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 power  purchase  contract  with Edison
       until August 1997.  After August  1997,  revenue is  recognized  based on
       Edison's avoided energy cost.

       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 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.  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 Deferred 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 $292 and $109 at December 31, 1999 and
       1998,  respectively,  are  included  in  property,  plant and  equipment.
       Currently,  plant  overhauls are amortized  over three to four years from
       the point of completion.

       Well rework costs are deferred and amortized  over the  estimated  period
       between  reworks as these costs extend the useful life of the  respective
       assets.  These deferred costs of $4 and $9 at December 31, 1999 and 1998,
       respectively,  are included in property, plant and equipment.  Currently,
       both  production  and injection  rework costs are  amortized  over twelve
       months.

       Reclassifications

       Certain  reclassifications  have been made to the 1998 balance  sheet and
       the 1998 and 1997  statements of operations  and cash flows to conform to
       the 1999 presentation.

       Deferred Financing Costs

       Deferred financing costs as of December 31, 1999 and 1998 consist of loan
       fees and other costs of financing that are amortized over the term of the
       related  financing,  using the  straight-line  method  and the  effective
       interest  method,  respectively.  In 1999 fees of $1,978  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.  Accumulated  amortization  at
       December  31, 1999 and 1998 was $373 and $1,918,  respectively.  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 8).

       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, 1999 and 1998,  all of the  Partnership's  investments
       were  classified as held to maturity and reported at amortized  cost. The
       noncurrent  restricted  cash and  investments  includes  a  sinking  fund
       related to a lump-sum  royalty  payment of $25,000 to be paid to the Navy
       in 2009 (see note 7) totaling  $8,583 and $7,382 at December 31, 1999 and
       1998,  respectively.   This  account  comprised  various  mortgage-backed
       securities  with  maturities  ranging from 1999 through 2005.  Restricted
       cash and  investments  also  includes a sinking fund for the project debt
       service  required by the senior secured notes related to the  acquisition
       of CalEnergy's  interest in CFP of $16,418 in restricted cash at December
       31, 1999,  funding  requirements  for such debt of $5,556 at December 31,
       1999 (see note 8) and various  certificates of deposit  totaling $-0- and
       $142, respectively, at December 31, 1999 and 1998. The carrying amount of
       restricted   cash  and   investments   at  December  31,  1999  and  1998
       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, 1999, because of the
       relatively short maturity of these  instruments.  The project loans as of
       December 31, 1999 and 1998 have an  estimated  fair value of $150,647 and
       $43,603,  respectively,  based on the quoted  market  price of the senior
       secured notes and the Coso Funding Corp.  notes,  respectively  (see note
       8). The investment in China Lake Plant Services,  Inc.,  approximates the
       fair value of such investment.

(3)    Interest Rate Swap Agreement

       In January 1993, CFP entered into a five-year  deposit interest rate swap
       agreement  which,  until certain  investments were liquidated in February
       1997,  effectively  converted  notional  deposit balances from a variable
       rate to a fixed rate.  Under the agreement,  which matured on January 11,
       1998, CFP made payments to the  counterparty  each January 11 and July 11
       at  variable  rates  based on LIBOR,  reset and  compounded  every  three
       months,  and in return received  payments based on a fixed rate of 6.34%.
       The effective  LIBOR rate ranged from 5.5313% to 5.8125%  during 1997 and
       was 5.7500% at December 31, 1997 and at January 11, 1998, the termination
       date.  The  counterparty  to this  agreement  was a  large  international
       financial  institution.  The carrying amount of the interest rate swap at
       December 31, 1997 was $50 (payable to CFP),  which  approximated its fair
       value.  The fair value was based on the  estimated  amount that CFP would
       have received to terminate the swap agreement at that date as provided by
       the financial institution which was the counterparty to the swap.

(4)    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 Coso operating ventures,  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 in the recorded amounts
       for the power purchase  contract of $14,344.  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.  Accumulated  amortization on
       the power purchase contract at December 31, 1999 was $956.

       The following  unaudited  pro forma  financial  information  for the year
       ended December 31, 1999 and 1998 present the results of operations of CFP
       as if the  acquisition  had occurred as of January 1, 1998,  after giving
       effect  to  certain  adjustments  including  amortization  of  intangible
       assets, reduced depreciation and operating expense and increased interest
       expense. The pro forma financial information does not necessarily reflect
       the results of operations  that would have  occurred had the  acquisition
       been completed on January 1, 1998.

                                                         Year ended December 31

                                                            1999       1998
                                                           ------     ------
Total revenues                                        $   57,442      53,738
                                                         ========    ========
Income before  extraordinary  item and cumulative
effectof change in accounting principle               $   12,512      10,315
                                                         ========    ========
Net income                                                10,137       9,392
                                                         ========    ========


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

       China Lake Plant Services,  Inc.  (CLPSI) is a wholly owned subsidiary of
       CAC (see note 4). CLPSI purchases,  stores and distributes spare parts to
       CFP, CED and CPD. Also,  certain other  facilities  utilized by all three
       operating ventures are held by CLPSI. CFP's investment in CLPSI represent
       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.

(6)    Property, Plant and Equipment

       Property,  plant and  equipment at December 31, 1999 and 1998 consists of
       the following:

                                                     1999              1998
                                                    ------            ------

  Power plant and gathering system             $   151,282            173,927
  Transmission line                                  5,705              6,515
  Wells and resource development costs              68,170            118,592

                                                   225,157            299,034
  Less accumulated depreciation and
  Amortization                                     (71,278)          (118,845)
                                                   -------           --------

                                               $   153,879            180,189
                                                  ========           ========


       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)    Royalty Expense

       Royalty expense is summarized as follows:

                                  1999               1998               1997
                                  -----             ------             ------

    Unit 1                  $     3,394              3,114              3,437
    Units 2 and 3                 6,305              3,710              6,412
                                  -----              -----              -----

    Total                   $     9,699              6,824              9,849
                                 =======             =====              =====


       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  lands,  for the first  turbine  only,  CFP pays 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 1999, 1998 and 1997, CFP was reimbursed for approximately 76%, 76%
       and 75%,  respectively,  of the amount of the Navy's Edison bills paid by
       CFP. The fee payable 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, 1999 and 1998 was $8,583 and $7,382, respectively.

(8)    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.  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

                     2000                                   $    16,566
                     2001                                        12,434
                     2002                                        11,597
                     2003                                        13,408
                     2004                                        10,694
                     Thereafter                                  86,851
                                                                 ======
                                                            $   151,550
                                                                =======



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

                     2000                                  $    82,933
                     2001                                       27,067
                     2002                                       21,771
                     2003                                       27,618
                     2004                                       31,332
                     Thereafter                                222,279
                                                               =======
                                                           $   413,000
                                                               =======


       The  project  loan  outstanding  as of  December  31,  1998 was from Coso
       Funding Corp., a single purpose corporation formed to issue notes for its
       own account and as an agent  acting on behalf of CFP,  CED,  and CPD. The
       project loan had a weighted  average  interest rate of 8.79% and 8.76% as
       of December 31, 1998 and 1997, respectively.

(9)    Related Party Transactions

       The amounts due from and to related parties at December 31, 1999 and 1998
       consist of the following:

                                                         1999         1998
                                                        ------       ------

       Amounts due from related parties:

           Due from Coso Operating Company           $   1,663         --
           Due from CPD for steam sharing                2,807       1,902
           Due from CED for steam sharing                   38       2,258
                                                        ------     -------

                                                     $   4,508       4,160
                                                        ======      ======

       Amounts due to related parties:
           Due to Caithness Coso Funding Corp.       $    564          --
           Due to CalEnergy                               --           378
                                                       ------       ------
                                                     $    564          378
                                                       ======       ======


       CalEnergy, as operator,  through February 1, 1999, was reimbursed monthly
       for  non-third-party  costs  incurred  on behalf of CFP.  These costs are
       comprised principally of approved direct CalEnergy operating costs of the
       CFP geothermal facility,  allocable general and administrative costs, and
       operator  fees,  totaling  $4,910 and $5,385 for the years ended December
       31, 1998 and 1997, respectively.

       COC, as the new operator  (see note 1),  received an operator fee for the
       year ended December 31, 1999 of $443.

       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, 1999, 1998 and 1997,  CalEnergy received
       $25,  $147 and $143,  respectively,  while ESCA received  $129,  $221 and
       $214, respectively.

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

       The  amount  due from COC  relates  to  reimbursements  for  payments  of
       operating  expenses.  This  will be paid  back  as COC  funds  additional
       operating expenses on behalf of CFP.

       The amount due to Caithness Coso Funding Corp. is accrued interest from
       December 16,  1999 to December 31,  1999 related to the senior secured
       notes (see note 8).

       The December 31, 1998 due to CalEnergy balance relates to the Partnership
       reimbursing  CalEnergy for the costs of operating the plant.  This amount
       fluctuated in concert with the timing of billings and incurring of costs.


       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 1999,
       1998 and 1997 were approximately $65, $532 and $486, respectively.

       During 1994,  the Coso  operating  ventures  entered  into steam  sharing
       agreements  under  which  the  ventures  may  transfer  steam,  with  the
       resulting  incremental  revenue and royalty expense shared equally by the
       ventures. 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
       $17,579, $17,556 and $10,345 in 1999, 1998 and 1997, respectively.

       In addition,  as of December 31, 1998,  the accrued unpaid royalty due to
       CFP II from CFP aggregated $8,748.

(10)   Settlement of Litigation

       In  February  2000,  the  Partnership,  CED,  CPD and  Edison  reached  a
       settlement,  subject to the approval of the California  Public  Utilities
       Commission of all matters of litigation between the Coso Partnerships and
       Edison.  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 4). 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.



                                      F-12
<PAGE>







                          Independent Auditors' Report




The Partners and Management Committee
Coso Energy Developers:


We have audited the accompanying  balance sheet of Coso Energy  Developers as of
December 31, 1999, and the related  statements of operations,  partners' capital
and cash  flows for the year 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  audit.  The  financial
statements  of Coso Energy  Developers as of December 31, 1998 and for the years
ended December 31, 1998 and 1997 were audited by other  auditors,  whose report,
dated February 12, 1999, expressed an unqualified opinion.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for our opinion.

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

As discussed in note 4 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.


February 7, 2000






/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 financial  position,  results of
operations and cash flows of Coso Energy Developers at December 31, 1998 and for
each of the two years in the period 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 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




                                      F-14

<PAGE>

                                              COSO ENERGY DEVELOPERS

                                                   Balance Sheets

                                         December 31, 1999 and 1998 (note 4)

                                               (Dollars in thousands)
<TABLE>
<CAPTION>



                    Assets                                                 1999                  1998
                                                                      -----------------    -----------------
<S>                                                                 <C>                     <C>

Cash and cash equivalents                                            $         6,423                 ---
Restricted cash and investments (note 2)                                       9,806                 290
Accounts receivable                                                            6,095              19,835
Prepaid expenses and other assets                                                100                 856
Amounts due from related parties (note 9)                                        761                 294
Property, plant and equipment (notes 4 and 7)                                165,650             202,270
Investment in China Lake Plant Services, Inc. (note 6)                         1,228               1,567
Investments in Coso Transmission Line Partners (note 5)                        2,981               3,107
Power purchase contract, net (note 4)                                         20,549                 ---
Deferred financing costs, net (note 2)                                         2,798                 162
                                                                      -----------------    -----------------

                   Total assets                                     $        216,391             228,381
                                                                      =================    =================


                     Liabilities and Partners Capital

Accounts payable and accrued liabilities                            $          6,681               3,314
Amounts due to related parties (note 9)                                       22,460              23,918
Project loan (note 8)                                                        107,900              37,958
                                                                      -----------------    -----------------

                   Total liabilities                                         137,041              65,190

Commitments and contingencies (notes 8 and 10)

Partners' capital                                                             79,350             163,191
                                                                      -----------------    -----------------
                   Total liabilities and partners' capital          $        216,391             228,381
                                                                      =================    =================


See accompanying notes to financial statements.
</TABLE>





                                      F-15
<PAGE>
<TABLE>
<CAPTION>

                                                 COSO ENERGY DEVELOPERS

                                               Statements of Operations

                                 Years ended December 31, 1999, 1998 and 1997 (note 4)

                                                (Dollars in thousands)




                                                            Two months     Ten months    Twelve months  Twelve months  Twelve months
                                                              ended          ended          ended           ended          ended
                                                           February 28,   December 31,   December 31,    December 31,   December 31,
                                                              1999           1999           1999            1998            1997
                                                        --------------- -------------  --------------  -------------- --------------
                                                          (old basis)    (new basis)                    (old basis)    (old basis)
<S>                                                  <C>              <C>           <C>             <C>            <C>
Revenues:
    Energy revenues                                  $       16,716          19,223       35,939          93,352          88,929
    Capacity payments                                           817          13,121       13,938          13,847          13,939
    Interest and other income                                    78             988        1,066           1,181           1,712
                                                     ---------------    ------------  -------------   --------------  --------------

           Total revenues                                    17,611          33,332       50,943         108,380         104,580
                                                     --------------     ------------- -------------   -------------- --------------

Operating expenses:
    Plant operating expense                                  3,470          12,098        15,568          16,418          17,806
    Royalty expense                                          1,592           1,556         3,148          10,492          10,106
    Depreciation and amortization                            2,550          13,099        15,649          14,809          14,606
    Edison legal expenses and
        settlement costs (note 10)                             569           3,600         4,169           2,968             675
                                                     ---------------   -------------  -------------   -------------- ---------------


           Total operating expenses                          8,181          30,353        38,534          44,687          43,193
                                                     ---------------   -------------  -------------   -------------- --------------


           Operating income                                  9,430           2,979        12,409          63,693          61,387
                                                     ---------------   -------------  -------------   -------------- --------------


Other expenses:
    Interest expense                                          616           6,708          7,324           6,267          9,105
    Interest expense - acquisition debt                       ---           1,415          1,415           ---             ---
    Costs related to acquisition debt                         ---           1,496          1,496           ---             ---
                                                     ---------------    ------------ --------------  -------------- ---------------

           Total other expenses                               616           9,619         10,235           6,267          9,105
                                                     ---------------   ------------- --------------  -------------- ---------------


           Income (loss) before extraordinary
              item and cumulative effect of
              change in accounting principle                8,814          (6,640)        2,174         57,426           52,282

Extraordinary item - loss on
    extinguishment of debt (note 8)                          ---            1,822         1,822           ---             ---
Cumulative effect of change
    in accounting principle:
    start-up activities (note 2)                             ---           ---            ---              953            ---
                                                    --------------- -------------  -------------   ------------- ---------------

           Net income (loss)                      $        8,814           (8,462)         352          56,473          52,282
                                                    ===============  ============= =============   ============= ===============

See accompanying notes to financial statements.
</TABLE>




                                      F-16

<PAGE>
<TABLE>
<CAPTION>

                                                COSO ENERGY DEVELOPERS

                                           Statements of Partners' Capital

                                Years ended December 31, 1999, 1998 and 1997 (note 4)

                                                (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, 1996          $       61,623                51,043                ---              112,666

Distributions to partners                    (21,234)              (19,601)               ---              (40,835)

Net income                                    27,187                25,095                ---               52,282
                                         ----------------   --------------------  ------------------  -----------------

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


See accompanying notes to financial statements.
</TABLE>




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

                                               Statements of Cash Flows

                                Years ended December 31, 1999, 1998 and 1997 (note 4)

                                                (Dollars in thousands)



                                                             Two months    Ten months    Twelve months  Twelve months Twelve months
                                                               ended         ended          ended          ended          ended
                                                            February 28,  December 31,  December 31,    December 31,   December 31,
                                                               1999          1999          1999            1998           1997
                                                           ------------- ------------- --------------  ------------- ---------------
                                                             (old basis)   (new basis)                   (old basis)    (old basis)
<S>                                                       <C>             <C>           <C>           <C>             <C>

Cash flows from operating activities:
    Net income (loss)                                       $   8,814        (8,462)          352        56,473           52,282
    Adjustments to reconcile net income (loss) to
       net cash provided by operating activities:
          Depreciation and amortization                         2,550        13,099        15,649         14,809          14,606
          Amortization of deferred financing costs                 14           234           248            160             240
          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                                 (944)       14,833        13,889         (1,246)         (2,222)
            Investment in Coso Transmission
               Line Partners                                     (823)          949           126            115             111
            Investment in China Lake Plant
               Services, Inc.                                     141           198           339            646             (57)
            Accounts payable and accrued liabilities           (1,248)        2,215           967            903             853
            Amounts due from related parties                       (6)         (461)         (467)           (34)             59
            Amounts due to related parties                      2,055        (3,513)       (1,458)         3,076          (5,079)
                                                           ------------- ------------- --------------  ------------- ---------------
                    Net cash provided by
                       operating activities                    10,553        19,253        29,806          75,855         60,793
                                                           ------------- ------------- --------------  ------------- ---------------

Cash flows from investing activities:
    Capital reimbursements (expenditures)                         316        (7,252)       (6,936)        (20,637)        (3,573)
    Decrease (increase) in restricted cash                         43        (9,806)       (9,763)          ---           23,008
                                                            ------------- ------------- --------------  ------------- --------------
                    Net cash provided by (used in)
                        investing activities                      359       (17,058)      (16,699)        (20,637)        19,435
                                                            ------------- ------------- --------------  ------------- --------------

Cash flows from financing activities:
    Distributions to partners                                     ---       (76,626)      (76,626)        (17,395)       (53,142)
    Increase in project financing debt                            ---       107,900       107,900            ---           ---
    Repayment of project financing debt                           ---       (37,958)      (37,958)        (38,696)       (29,336)
    Repayment of CalEnergy promissory note                        ---          ---           ---             ---         (10,043)
                                                            ------------- ------------- --------------  ------------- --------------
                    Net cash used in
                        financing activities                      ---        (6,684)       (6,684)        (56,091)       (92,521)
                                                             ------------- ------------- --------------  ------------- -------------
                    Net change in cash and
                       cash equivalents                         10,912       (4,489)        6,423            (873)       (12,293)

Cash and cash equivalents at beginning of year                    ---        10,912          ---              873         13,166
                                                             ------------- ------------- --------------  ------------- -------------

Cash and cash equivalents at end of year                   $    10,912        6,423         6,423              ---           873
                                                             ============= ============= ==============  ============= =============

Supplemental cash flow disclosure:
    Cash paid for interest                                 $       ---        8,117         8,117           6,105         19,570
                                                             ============= ============= ==============  ============= =============

Schedule of noncash investing activities as a result
     of purchase accounting (note 4):
       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>
                             COSO ENERGY DEVELOPERS

                          Notes to Financial Statements

                        December 31, 1999, 1998 and 1997

                             (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).  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 4) 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 10 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 escalate 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  adjusts 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, 1999,  1998 and 1997,  Edison's  average  avoided cost of
          energy was 3.13, 2.95 and 3.28 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 1999, 1998 and 1997,
          the bonus aggregated $2,200, $2,124 and $2,177, respectively.

       CalEnergy  served  as  the  operator,   maintaining  the   Partnership's
       accounting  records and  operating  the CED plant on a day-to-day  basis,
       until February 1, 1999 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

       Recognition of Revenue

       Operating  revenues are  recognized  as income during the period in which
       electricity  is delivered to Edison.  Revenue is recognized  based on the
       payment  rates  scheduled in CED's power  purchase  contract  with Edison
       until  March  1999.  After March  1999,  revenue is  recognized  based on
       Edison's avoided energy cost.

       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 hold 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 Deferred 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 $271 and $502 at December 31, 1999 and
       1998,  respectively,  are  included  in  property,  plant and  equipment.
       Currently,  plant overhauls are amortized over three years from the point
       of completion.

       Well rework costs are deferred and amortized  over the  estimated  period
       between reworks as these costs extend the life of the respective  assets.
       These  deferred  costs of $46 and $669 at  December  31,  1999 and  1998,
       respectively,  are included in property, plant and equipment.  Currently,
       both  production  and injection  rework costs are  amortized  over twelve
       months.

       Reclassifications

       Certain  reclassifications  have been made to the 1998 balance  sheet and
       the 1998 and 1997  statements of operations  and cash flows to conform to
       the 1999 presentation.

       Deferred Financing Costs

       Deferred financing costs as of December 31, 1999 and 1998 consist of loan
       fees and other costs of financing that are amortized over the term of the
       related  financing  using  the  straight-line  method  and the  effective
       interest method,  respectively.  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.  Accumulated
       amortization  at  December  31,  1999  and  1998  was  $234  and  $1,845,
       respectively.  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 8).

       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, 1999 and 1998,  all of the  Partnership's  investments
       were  classified  as held to maturity  and  reported at  amortized  cost.
       Included in restricted cash and investments are sinking fund requirements
       for the project debt service required by the senior secured notes related
       to the acquisition of CalEnergy's interest in CED of $9,806 in restricted
       cash at  December  31,  1999 and  funding  requirements  for such debt of
       $4,105  at  December  31,  1999  (see  note 8).  The  carrying  amount of
       restricted   cash  and   investments   at  December  31,  1999  and  1998
       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, 1999,  because of the
       relatively short maturity of these  instruments.  The project loans as of
       December 31, 1999 and 1998 have an  estimated  fair value of $107,302 and
       $39,980,  respectively,  based on the quoted  market  price of the senior
       secured notes and the COSO Funding Corp.  notes,  respectively  (see note
       8).

       The investments in Coso  Transmission  Line Partners and China Lake Plant
       Services, approximates the fair value of such investments.

(3)    Interest Rate Swap Agreement

       In January 1993, CED entered into a five-year  deposit interest rate swap
       agreement  which,  until certain  investments were liquidated in February
       1997,  effectively  converted  notional  deposit balances from a variable
       rate to a fixed rate.  Under the agreement,  which matured on January 11,
       1998, CED made payments to the  counterparty  each January 11 and July 11
       at  variable  rates  based on LIBOR,  reset and  compounded  every  three
       months,  and in return received  payments based on a fixed rate of 6.34%.
       The effective  LIBOR rate ranged from 5.5313% to 5.8125%  during 1997 and
       was 5.7500% at December 31, 1997 and at January 11, 1998, the termination
       date.  The  counterparty  to this  agreement  was a  large  international
       financial  institution.  The carrying amount of the interest rate swap at
       December 31, 1997 was $42 (payable to CED),  which  approximated its fair
       value.  The fair value was based on the  estimated  amount that CED would
       have  received  to  terminate  the swap at that date as  provided  by the
       financial institution which was the counterparty to the swap

(4)    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 operating
       ventures,  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 in the recorded amounts
       for the power purchase  contract of $21,443.  The power purchase contract
       is being  amortized on a  straight-line  basis over the remaining term of
       the power purchase contract of 20 years.  Accumulated amortization on the
       power purchase contract at December 31, 1999 was $894.

       The following  unaudited pro forma  financial  information  for the years
       ended December 31, 1999 and 1998 present the results of operations of CED
       as if the  acquisition  had occurred as of January 1, 1998,  after giving
       effect to  certain  adjustments,  including  amortization  of  intangible
       assets, reduced depreciation and operating expense and increased interest
       expense. The pro forma financial information does not necessarily reflect
       the results of operations  that would have  occurred had the  acquisition
       been completed on January 1, 1998.

                                                     Year ended December 31
                                                   --------------------------
                                                    1999              1998
                                               --------------     ------------

      Total revenue                            $   50,943           108,380
                                               ==============     ============

      Income before extraordinary item
      and cumulative effect of change in
      accounting principle                     $    3,257            57,910
                                                ==============    ============

            Net Income                         $    1,435            56,957
                                                ==============    ============


(5)    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.

(6)    Investments in Advances to China Lake Plant Services, Inc.

       China Lake Plant Services,  Inc.  (CLPSI) is a wholly owned subsidiary of
       CAC (see note 4). CLPSI purchases,  stores and distributes spare parts to
       CED, CPD and CFP. Also,  certain other  facilities  utilized by all three
       operating  ventures  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.

(7)    Property, Plant and Equipment

       Property,  plant and  equipment  at December 31, 1999 and 1998 consist of
       the following:

                                                      1999               1998
                                                     -------            -------
  Power plant and gathering system             $      146,327           164,335
  Transmission line                                     9,120            10,201
  Wells and resources development costs                81,736           138,575
                                                     --------          ---------
                                                      237,183           313,111
  Less accumulated depreciation
   and amortization                                   (71,533)         (110,841)
                                                     --------          ---------
                                               $      165,650           202,270
                                                     ========          =========



       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.

(8)    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.  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  $1,882 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
        -------------------------                 --------



               2000                          $      6,993
               2001                                 4,657
               2002                                 6,375
               2003                                 5,055
               2004                                 9,920
               Thereafter                          74,900
                                                 --------
                                             $    107,900
                                                 ========


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

                2000                        $      82,933
                2001                               27,067
                2002                               21,771
                2003                               27,618
                2004                               31,332
                Thereafter                        222,279
                                                 --------
                                              $   413,000
                                                 ========


       The  project  loan  outstanding  as of  December  31,  1998 was from Coso
       Funding Corp., a single purpose corporation formed to issue notes for its
       own account and as an agent  acting on behalf of CFP,  CED,  and CPD. The
       project loan had a weighted  average  interest rate of 8.73% and 8.63% as
       of December 31, 1998 and 1997, respectively.

(9)    Related Party Transactions

       The amounts due from and to related parties at December 31, 1999 and 1998
       consist of the following:

                                                        1999             1998
                                                       -----             -----

      Amounts due from related parties:
         Due from CLC:
           Principal                             $       141              141
           Accrued interest                              190              153
         Due from Coso Operating Company, LLC            430              --
                                                    --------          -------

                                                 $       761              294
                                                    ========          =======

      Amounts due to related parties:
         Due to CPD for steam sharing            $       673              259
         Due to CFP for steam sharing                     38            2,258
         Due to CLC                                   21,339           20,699
         Due to Caithness Coso Funding Corp.             410              --
         Due to CalEnergy                                --               702
                                                   ---------          -------

                                                $     22,460           23,918
                                                   =========          =======


       CalEnergy, as operator,  through February 1, 1999, was reimbursed monthly
       for  non-third-party  costs  incurred  on behalf of CED.  These costs are
       comprised principally of approved direct CalEnergy operating costs of the
       CED geothermal facility,  allocable general and administrative costs, and
       operator fees totaling $6,628 and $6,761 for the years ended December 31,
       1998 and 1997, respectively.

       COC, as the new operator  (see note 1),  received an operator fee for the
       year ended December 31, 1999 of $443.

       Both CCH and  CalEnergy  are  reimbursed  at  approved  amounts for their
       respective  costs incurred in relation to the CED  Management  Committee.
       For the years ended December 31, 1999, 1998 and 1997,  CalEnergy received
       $25, $223 and $218, respectively, while CCH received $130, $148 and $145,
       respectively.

       As of May 28, 1999, the management  committee fees were  eliminated,  and
       replaced by a  non-managing  fee payable to CCH. CCH received $129 during
       the year ended December 31, 1999.

       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, 1999,  1998 and 1997 was
       $771, $3,057 and $3,176, respectively. Payment of royalties due to CLC is
       subordinated to payment of the project loans (see note 8).


       In  addition,  as  described in note 3, CED is charged for its use of the
       transmission line owned by CTLP. The amount of such net charges was $115,
       $115 and $112 for the  years  ended  December  31,  1999,  1998 and 1997,
       respectively.

       CED is charged by CLPSI for both its  inventory  usage and its portion of
       the expenses of operating CLPSI. The 1999, 1998 and 1997 costs charged to
       CED from CLPSI were approximately $143, $1,350 and $606, respectively.

       The  amount  due from COC  relates  to  reimbursements  for  payments  of
       operating  expenses.  This  will be paid  back  as COC  funds  additional
       operating expenses on behalf of CED.

       The  amount  due to  Caithness  Coso  Funding  Corp.  represents  accrued
       interest  from  December  16,  1999 to December  31, 1999  related to the
       senior secured notes (see note 8).

       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 at  12.5%.  Interest  on the  note was $34 and $29 in 1998 and
       1997, respectively.

       The December 31, 1998 due to CalEnergy balance relates to the partnership
       reimbursing  CalEnergy for the costs of operating the plant.  This amount
       fluctuated in concert with the timing of billings and incurring of costs.

       During 1994,  the Coso  operating  ventures  entered  into steam  sharing
       agreements  under  which  the  ventures  may  transfer  steam,  with  the
       resulting  incremental  revenue and royalty expense shared equally by the
       ventures. In the second half of 1995,  interconnection facilities between
       the plants were completed and the transfer of steam commenced.  CED steam
       sharing  revenue,  net of royalties and other related costs,  amounted to
       $6,430 and $1,584 in 1998 and 1997, respectively,  and in 1999, CED steam
       sharing resulted in an expense, net of royalties and other related costs,
       of $6,103.

(10)   Settlement of Litigation

       In  February  2000,  the  Partnership,  CFP,  CPD and  Edison  reached  a
       settlement,  subject to the approval of the California  Public  Utilities
       Commission of all matters of litigation  between the Coso Partnership and
       Edison.  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 4). 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.

       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.





                                      F-19

<PAGE>







                          Independent Auditors' Report




The Partners and Management Committee
Coso Power Developers:


We have audited the  accompanying  balance sheet of Coso Power  Developers as of
December 31, 1999, and the related  statements of operations,  partners' capital
and cash  flows for the year 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  audit.  The  financial
statements  of Coso Power  Developers  as of December 31, 1998 and for the years
ended December 31, 1998 and 1997, were audited by other  auditors,  whose report
dated February 12, 1999, expressed an unqualified opinion.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements.  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  audit  provides  a
reasonable basis for our opinion.

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

As discussed in note 4 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.


February 7, 2000





/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 financial  position,  results of
operations and cash flows of Coso Power  Developers at December 31, 1998 and for
each of the two years in the period 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, 1999 and 1998 (note 4)

                                                (Dollars in thousands)
<TABLE>
<CAPTION>



                                                                                         1999                 1998
                                                                                   -----------------    -----------------

                                   Assets
<S>                                                                           <C>                      <C>
Cash and cash equivalents                                                     $            6,020                818
Restricted cash and investments (note 2)                                                  54,338                ---
Accounts receivable                                                                       20,540              19,656
Prepaid expenses and other assets                                                            ---                 716
Amounts due from related parties (note 9)                                                  7,058               4,750
Property, plant and equipment, net (notes 4 and 7)                                       147,522             188,840
Investment in China Lake Plant Services, Inc. (note 6)                                     2,098               2,086
Investment in Coso Transmission Line Partners (note 5)                                     3,660               3,802
Power purchase contract, net (note 4)                                                     28,409                ---
Deferred financing costs, net (note 2)                                                     3,624                 199
                                                                                  -----------------   -----------------


                   Total assets                                               $          273,269             220,867
                                                                                  =================   =================


                      Liabilities and Partners' Capital

Accounts payable and accrued liabilities                                      $           12,163               3,981
Amounts due to related parties (note 9)                                                    3,225               1,902
Project loans (note 8)                                                                   153,550              61,323
                                                                                  -----------------   -----------------

                   Total liabilities                                                     168,938              67,206

Commitments and contingencies (notes 8 and 10)

Partners' capital                                                                        104,331             153,661
                                                                                  -----------------   -----------------

                   Total liabilities and partners' capital                    $          273,269             220,867
                                                                                  =================   =================



See accompanying notes to financial statements.
</TABLE>




                                     F-22

<PAGE>
<TABLE>
<CAPTION>


                                                COSO POWER DEVELOPERS

                                               Statements of Operations

                                Years ended December 31, 1999, 1998 and 1997 (note 4)

                                                (Dollars in thousands)



                                           Two months     Ten months      Twelve months   Twelve months  Twelve months
                                             ended           ended           ended           ended           ended
                                          February 28,   December 31,    December 31,    December 31,    December 31,
                                              1999           1999            1999            1998            1997
                                         --------------- --------------  --------------  --------------  --------------
                                          (old basis)     (new basis)                     (old basis)     (old basis)
<S>                                    <C>              <C>             <C>             <C>             <C>
Revenue:
    Energy revenues                    $     16,687           83,041          99,728        105,546          98,778
    Capacity payments                           822           13,196          14,018         14,018          14,018
    Interest and other income                   150            2,024           2,174          1,799           2,187
                                         -------------- --------------  --------------  --------------  --------------


          Total revenues                     17,659           98,261         115,920        121,363         114,983
                                         --------------- --------------  --------------  --------------  --------------


Operating expenses:
    Plant operating expense                   2,626            8,247          10,873         12,271          12,768
    Royalty expense                           1,806           10,271          12,077         11,868          11,249
    Depreciation and amortization             2,339           12,469          14,808         14,025          13,732
    Edison legal expenses and
        settlement costs (note 10)              569            5,250           5,819          2,956            ---
                                         --------------- --------------  --------------  --------------  --------------


          Total operating expenses            7,340           36,237          43,577         41,120          37,749
                                         --------------- --------------  --------------  --------------  --------------

          Operating income                   10,319           62,024          72,343         80,243          77,234
                                         --------------- --------------  --------------  --------------  --------------

Other expenses:
    Interest expense                            953            9,004           9,957          8,122          10,532
    Interest expense - acquisition debt         ---            2,010           2,010          ---              ---
    Costs related to acquisition debt           ---            2,024           2,024          ---              ---
                                         --------------- --------------  --------------  --------------  --------------

          Total other expenses                  953           13,038          13,991          8,122          10,532
                                         --------------- --------------  --------------  --------------  --------------

          Income before extraordinary item
             and cumulative effect of
             change in accounting principle   9,366           48,986          58,352         72,121          66,702

Extraordinary item - loss on
    extinguishment of debt (note 8)             ---            2,147           2,147          ---              ---
Cumulative effect of change in
    accounting principle:  start-up
    activities (note 2)                         ---             ---            ---            1,664            ---
                                         --------------- --------------  --------------  --------------  --------------


          Net income                   $      9,366          46,839           56,205         70,457          66,702
                                         =============== ==============  ==============  ==============  ==============


See accompanying notes to financial statements.
</TABLE>




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

                                                COSO POWER DEVELOPERS

                                           Statements of Partners' Capital

                                     Years ended December 31, 1999, 1998 and 1997 (note 4)

                                                (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, 1996           $     63,046.0               63,046.0                 ---            126,092.0

Distributions to partners                   (33,690.5)             (33,690.5)                ---            (67,381.0)

Net income                                   33,351.0               33,351.0                 ---             66,702.0
                                        ----------------  --------------------  ------------------  -----------------

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                 ---               28,102.0             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
                                          ================  ====================  ==================  =================


See accompanying notes to financial statements.
</TABLE>




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

                                               COSO POWER DEVELOPERS

                                              Statements of Cash Flows

                                    Years ended December 31, 1999, 1998 and 1997 (note 4)

                                               (Dollars in thousands)



                                                           Two months   Ten months       Twelve         Twelve          Twelve
                                                              ended        ended       months ended   months ended    months ended
                                                           February 28,  December 31,   December 31,   December 31,    December 31,
                                                              1999         1999           1999           1998            1997
                                                          -----------   ------------    -----------    -----------    ------------
                                                           (old basis)  (new basis)                     (old basis)    (old basis)
<S>                                                     <C>               <C>            <C>             <C>            <C>

Cash flows from operating activities:
    Net income                                           $    9,366        46,839         56,205         70,457           66,702
    Adjustments to reconcile net income to net
       cash provided by operating activities:
         Depreciation and amortization                        2,339        12,469         14,808         14,025           13,732
         Amortization of deferred financing costs                20           551            571            204              271
         Write-off of deferred financing costs                 ---            217            217           ---              ---
         Cumulative effect of accounting change                ---            ---            ---          1,664             ---
         Changes in operating assets and liabilities:
            Accounts receivable, prepaid expense and           (909)          329           (580)        (1,095)          (1,457)
               other assets
            Investment in Coso Transmission Line Partners      (989)        1,131            142            127              127
            Investment in China Lake Plant Services, Inc.        52           (64)           (12)          (343)             503
            Accounts payable and accrued liabilities            439         3,997          4,436            864              796
            Amounts due from related parties                  1,432        (3,740)        (2,308)        (1,268)            (795)
            Amounts due to related parties                    2,088          (765)         1,323            198              650
                                                          -----------  ------------   -----------    -----------      ------------

              Net cash provided by operating activities      13,838        60,964         74,802         84,833           80,529
                                                          -----------  ------------  -----------     -----------      ------------

Cash flows from investing activities:
    Capital expenditures                                     (1,182)       (3,232)       (4,414)         (7,010)          (7,861)
    (Increase) decrease in restricted cash                    ---         (54,338)      (54,338)          ---             22,391
                                                          -----------  ------------  -----------     -----------      ------------
              Net cash (used in) provided by
                  investing activities                       (1,182)      (57,570)      (58,752)         (7,010)          14,530
                                                          -----------  ------------  -----------     -----------      ------------

Cash flows from financing activities:
    Distributions to partners                                  ---       (103,075)     (103,075)        (42,209)         (83,977)
    Increase in project financing debt                         ---        153,550       153,550           ---              ---
    Repayment of project financing debt                        ---        (61,323)      (61,323)        (35,944)         (27,094)
    Repayment of CalEnergy promissory note                     ---         ---          ---                ---              (973)
                                                          ----------- ------------  -----------     -----------       ------------

             Net cash used in financing activities            ---         (10,848)      (10,848)        (78,153)        (112,044)
                                                          -----------  ------------ -----------     -----------       ------------

             Net change in cash and cash equivalents         12,656        (7,454)        5,202            (330)         (16,985)

Cash and cash equivalents at beginning of year                  818        13,474           818           1,148           18,133
                                                          -----------  ------------  -----------   ------------       ------------

Cash and cash equivalents at end of year                 $   13,474         6,020         6,020             818            1,148
                                                          ===========  ============  ===========   ============       ============

Supplemental cash flow disclosure
    Cash paid for interest                               $      ---        11,060        11,060           7,918           10,877
                                                          ===========  ============  ===========   ============       ============

Schedule of noncash investing activities as a result
    of purchase accounting (note 4):
       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>
                              COSO POWER DEVELOPERS

                          Notes to Financial Statements

                        December 31, 1999, 1998 and 1997

                             (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).  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 4) and formed a
       wholly  owned  subsidiary,  New CTC  Company,  LLC (New CTC),  a Deleware
       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, then increased to 10% 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  expires  in 2009;  the U.S.  Navy has an option to extend it to
       2019.

       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  escalate  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  extends until  January 2000.  After the scheduled
          energy price period,  the energy payment adjusts to the actual avoided
          energy cost  experienced  by Edison.  For the years ended December 31,
          1999, 1998 and 1997, Edison's average avoided cost of energy was 3.13,
          2.95 and 3.28  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 1999, 1998 and
          1997,  the bonus  payments  aggregated  $2,248,  $2,242 and  $2,236,
          respectively.

       CalEnergy   served  as  the  operator,   maintaining  the   Partnership's
       accounting  records and  operating  the CPD plant on a day-to-day  basis,
       until February 1, 1999 when 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,"  which has occurred,
       are allocated 50% each to New CTC,  (formerly CTC), and Navy II. "Payout"
       is defined as the point at which earned  partner has  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

       Recognition of Revenue

       Operating  revenues are  recognized  as income during the period in which
       electricity  is delivered to Edison.  Revenue is recognized  based on the
       payment  rates  scheduled in CPD's power  purchase  contract  with Edison
       until January 2000. After January 2000,  revenue will be recognized based
       on Edison's avoided energy cost.

       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 Deferred 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 $97 and $176 at December  31, 1999 and
       1998,  respectively,  are  included  in  property,  plant and  equipment.
       Currently,  plant overhauls are amortized over three years from the point
       of completion.

       Well rework costs are deferred and amortized  over the  estimated  period
       between  reworks as these costs extend the useful life of the  respective
       assets.  These  deferred  costs of $-0- and $83 at December  31, 1999 and
       1998,  respectively,  are  included  in  property,  plant and  equipment.
       Currently,  both production and injection rework costs are amortized over
       twelve months.

       Reclassifications

       Certain  reclassifications  have been made to the 1998 balance  sheet and
       the 1998 and 1997  statements of operations  and cash flows to conform to
       the 1999 presentation.

       Deferred Financing Costs

       Deferred financing costs as of December 31, 1999 and 1998 consist of loan
       fees and other costs of financing that are amortized over the term of the
       related  financing  using  the  straight  line-method  and the  effective
       interest method,  respectively.  In 1999, fees of $2,004  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.  Accumulated  amortization  at
       December  31, 1999 and 1998 was $551 and $2,027,  respectively.  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 8).

       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,  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 sinking fund  requirements for the
       project debt service  required by the senior secured notes related to the
       acquisition of CalEnergy's  interest in CPD of $54,338 in restricted cash
       at December 31, 1999 and funding requirements for such debt of $43,004 at
       December 31, 1999 (see note 8). The carrying  amount of  restricted  cash
       and  investments at December 31, 1999 and 1998  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, 1999,  because of the
       relatively short maturity of these  instruments.  The project loans as of
       December 31, 1999 and 1998 have an  estimated  fair value of $152,435 and
       $63,912,  respectively,  based on the quoted  market  price of the senior
       secured notes and the Coso Funding Corp.  notes,  respectively  (see note
       8).

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

(3)    Interest Rate Swap Agreement

       In January 1993, CPD entered into a five-year  deposit interest rate swap
       agreement  which,  until certain  investments were liquidated in February
       1997,  effectively  converted  notional  deposit balances from a variable
       rate to a fixed rate.  Under the agreement,  which matured on January 11,
       1998, CPD made payments to the  counterparty  each January 11 and July 11
       at  variable  rates  based on LIBOR,  reset and  compounded  every  three
       months,  and in return received  payments based on a fixed rate of 6.34%.
       The effective  LIBOR rate ranged from 5.5313% to 5.8125%  during 1997 and
       was 5.7500% at December 31, 1997 and at January 11, 1998, the termination
       date.  The  counterparty  to this  agreement  was a  large  international
       financial  institution.  The carrying amount of the interest rate swap at
       December 31, 1997 was $41 (payable to CPD),  which  approximated its fair
       value.  The fair value was based on the  estimated  amount that CPD would
       have  received  to  terminate  the swap at that date as  provided  by the
       financial institution which was the counterparty to the swap.

(4)    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  (CFP  II),  collectively  known as the Coso  operating
       ventures,  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
       value of property,  plant and  equipment  and an increase in the recorded
       amounts for the power  purchase  contract of $30,738.  The power purchase
       contract is being amortized on a  straight-line  basis over the remaining
       term of the power purchase contract of 11 years. Accumulated amortization
       on the power purchase contract at December 31, 1999 was $2,329.

       The following  unaudited pro forma  financial  information  for the years
       ended  December 31, 1999 and 1998  presents the results of  operations of
       CPD as if the  acquisition  had  occurred  as of January  1, 1998,  after
       giving effect to certain adjustments including amortization of intangible
       assets, reduced depreciation and operating expense and increased interest
       expense. The pro forma financial information does not necessarily reflect
       the results of operations  that would have  occurred had the  acquisition
       been completed on January 1, 1998.

                                                    Year ended December 31
                                                    ----------------------

                                                   1999                1998
                                                  -------            -------

      Total revenues                           $  115,920            121,363

      Income before extraordinary item and
      cumulative effect of change in
      accounting principle                     $   59,528             69,283
                                                  =======             ======


      Net Income                               $   57,381             67,619
                                                  =======             ======



(5)    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.

(6)    Investments in China Lake Plant Services, Inc.

       China Lake Plant Services,  Inc.  (CLPSI) is a wholly owned subsidiary of
       CAC (see note 4). CLPSI purchases,  stores and distributes spare parts to
       CPD, CED and CFP. Also,  certain other  facilities  utilized by all three
       operating  ventures  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.

(7)    Property, Plant and Equipment

       Property,  plant and  equipment at December 31, 1999 and 1998 consists of
       the following:

                                                         1999             1998
                                                        ------            -----
       Power, plant and gathering system          $    141,068          164,952
       Transmission line                                 7,245            8,332
       Wells and resources development
       costs                                            59,735          114,764
                                                        ------          -------
                                                       208,048          288,048
       Less accumulated depreciation
         and amortization                              (60,526)         (99,208)
                                                       -------          -------

                                                  $    147,522          188,840
                                                      ========          =======


       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.

(8)    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.  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 penatlies 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
               ------------------------            --------

                          2000                $     59,374
                          2001                       9,976
                          2002                       3,799
                          2003                       9,155
                          2004                      10,718
                     Thereafter                     60,528
                                                  --------
                                              $    153,550
                                                  ========



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

                        2000                  $     82,933
                        2001                        27,067
                        2002                        21,771
                        2003                        27,618
                        2004                        31,332
                  Thereafter                       222,279
                                                   -------
                                              $    413,000
                                                  ========


       The  project  loan  outstanding  as of  December  31,  1998 was from Coso
       Funding Corp., a single purpose corporation formed to issue notes for its
       own account and as an agent  acting on behalf of CFP,  CED,  and CPD. The
       project loan had a weighted  average  interest rate of 8.65% and 8.61% as
       of December 31, 1998 and 1997, respectively.

(9)    Related Party Transactions

       The amounts due from and to related parties at December 31, 1999 and 1998
       consist of the following:

                                                       1999               1998
                                                     -------             ------

        Amounts due from related parties:

          Due from CED for steam sharing            $   673                259
          Due from Coso Operating Company             2,714                 --
          Due from China Lake Joint Venture:
             Principal                                1,562              1,562
             Accrued interest                         2,109              1,688
          Due from CalEnergy                            --               1,241
                                                     ------              -----

                                                    $ 7,058              4,750
                                                     ======              =====
        Amounts due to related parties:
          Due to CFP for steam sharing              $ 2,807              1,902
          Due to Caithness Coso Funding Corp.           418                 --
                                                      -----              -----

                                                    $ 3,225              1,902
                                                     ======              =====


       CalEnergy, as operator,  through February 1, 1999, was reimbursed monthly
       for  non-third-party  costs  incurred  on behalf of CPD.  These costs are
       comprised principally of approved direct CalEnergy operating costs of the
       CPD geothermal facility,  allocable general and administrative costs, and
       operator fees totaling $5,494 and $5,740 for the years ended December 31,
       1998 and 1997, respectively.

       COC, as the new operator  (see note 1),  received an operator fee for the
       year ended December 31, 1999 of $443.

       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, 1999, 1998 and 1997,  CalEnergy received
       $25, $148 and $145,  respectively,  while Navy II received $130, $223 and
       $218, respectively.

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

       As  discussed  in note 4, CPD is charged for its use of the  transmission
       line owned by CTLP.  The amount of such net  charges was $127 for each of
       the years ended December 31, 1999, 1998 and 1997, 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 1999,
       1998 and 1997 were approximately $78, $361 and $1,227, 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 at 12.5%.  Interest on the loan was $421,  $371
       and $329 in 1999, 1998 and 1997, respectively.

       The  amount  due from COC  relates  to  reimbursements  for  payments  of
       operating  expenses.  This  will be paid  back  as COC  funds  additional
       operating expenses on behalf of CPD.

       The  amount  due to  Caithness  Coso  Funding  Corp.  represents  accrued
       interest  from  December  16,  1999 to December  31, 1999  related to the
       senior secured notes (see note 8).

       The  December  31,  1998  due  from  CalEnergy  balance  relates  to  the
       Partnership  reimbursing  CalEnergy for the costs of operating the plant.
       This  amount  fluctuated  in  concert  with the  timing of  billings  and
       incurring of costs.

       During 1994, the three Coso operating ventures entered into steam sharing
       agreements  under  which  the  ventures  may  transfer  steam,  with  the
       resulting  incremental  revenue and royalty expense shared equally by the
       ventures. In the second half of 1995,  interconnection facilities between
       the plants were completed and the transfer of steam commenced.  CPD steam
       sharing  revenue,  net of royalties and other related costs,  amounted to
       $342 and $1,750 in 1998 and 1997,  respectively,  and in 1999,  CPD steam
       sharing resulted in an expense, net of royalties and other related costs,
       of $18,618.

(10)   Settlement of Litigation

       In  February  2000,  the  Partnership,  CED,  CFP and  Edison  reached  a
       settlement,  subject to the approval of the California  Public  Utilities
       Commission of all matters of litigation  between the Coso Partnership and
       Edison.  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 4). 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.





                                      F-26


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,   Caithness
Acquisition,  Caithness  Energy's  wholly  owned  subsidiary,  purchased  all of
CalEnergy's  interests in the Coso projects,  and Caithness  Energy engaged KPMG
LLP, its own independent  certified public  accountants,  to audit the financial
statements of the Coso  partnerships  in the future,  rather than to continue to
have  PricewaterhouseCoopers LLP audit those financial statements. 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  currently  serve as our
directors and executive officers as of December 31, 1999:
<TABLE>
<CAPTION>

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

James D. Bishop, Sr. .........     66      Director, Chairman and Chief Executive Officer

Leslie J. Gelber..............     43      Director, President and Chief Operating Officer

James D. Bishop, Jr. .........     39      Director, Vice Chairman

Christopher T. McCallion......     38      Director, Executive Vice President and Chief Financial
                                            Officer

Larry K. Carpenter............     50      Director, Executive Vice President

James C. Sullivan.............     72      Director, Senior Vice President and Secretary

Mark A. Ferrucci..............     47      Director

David V. Casale...............     36      Vice President and Controller

Barbara Bishop Gollan.........     41      Vice President
</TABLE>
                                       26

     James D.  Bishop,  Sr., Chairman, Chief Executive Officer and a Director of
Funding  Corp.  and of  Caithness  Energy,  has served asa Director of Caithness
Corporation  since  its  inception  in 1975.  Mr.  Bishop  served  as  Caithness
Corporation's  President from its inception  until December 1986 and as Chairman
of Caithness  Corporation  from January 1987 until the present.  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  Corporationsince  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 has  served  as
President and Chief  Operating  Officer of Caithness  Corporation  from November
1995  until  December  1998.  Mr.  Bishop  also  serves on all of 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.

     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.

     James C.  Sullivan,  a Senior Vice  President,  Secretary and a Director of
Funding  Corp.  and of Caithness  Energy,  has served as Senior Vice  President,
Secretary and a Director of Caithness Corporation since April 1996. Mr. Sullivan
attended Holy Cross Seminary at Notre Dame  University,  Indiana  University and
the  University  of  Tokyo  before  graduating  from  the  State  University  of
California at Pasadena.

                                       27

     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.

     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.

     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 we can take certain  actions,  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 Coso  Funding  Corp.
receives any  compensation  for his or her  services,  except Mr.  Ferruci,  who
received $8,400 in compensation for services provided in 1999.


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


       The  following  table  sets  forth,  as of  December  31,  1999,  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


                                       28

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

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

                        Beneficial Ownership of Coso Funding Corp. and the Coso Partnerships

                                             Percent Indirect   Percent Indirect  Percent Indirect  Percent Indirect
                                                Beneficial        Beneficial        Beneficial         Beneficial
                                               Ownership in      Ownership in      Ownership in       Ownership in
                                               Coso Funding       the Navy I         the BLM           the Navy II
   Name and Address of Beneficial Owner           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)...............        32.8%               32.2%             35.1%             31.3%

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

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

James C. Sullivan (1)(5)..................         2.8%               2.9%              2.9%              2.6%

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

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

Barbara Bishop Gollan (1)(3)(6)...........         --                  --                --                --

Dominion Energy, Inc. (7).................          *                  --               7.8%              2.8%
   901 East Byrd Street
   Richmond, VA 23219

Mojave Energy Company (8).................         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             36.2%               36.1%             38.0%             34.6%
management committee delegates as a group.
</TABLE>
                                       29

*     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--1998  ( "Bishop,  Sr. Trust "),
     which  owns  shares of common  stock of  Caithness  Corporation.  Caithness
     Corporation owns, 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.

(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, 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 of  Mojave  Power,  Inc.;  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. (1.9%); Navy I partnership (1.5%); BLM
     partnership  (1.7%); and Navy II partnership  (2.5%).  James D. Bishop, Jr.
     disclaims beneficial ownership of the interests listed in (iii) above.

(5)  The beneficial  ownership of James C.  Sullivan's  interests is based upon
     his  ownership of shares of common stock of  Caithness  Corporation  which
     owns,  indirectly through various entities,  general partnership interests
     in  the  Navy  I  partnership,   the  BLM  partnership  and  the  Navy  II
     partnership,  and 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.

(6)  Barbara Bishop Gollan is the  beneficiary of the Gollan Trust,  which owns
     shares of common stock of Caithness Corporation.  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.

(7)  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  and a limited
     liability  company  membership  interest  in  CCH,  which  owns a  general
     partnership interest in the BLM partnership.

(8)  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.

                                       30

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

      Each managing partner is a limited liability company,  which is managed by
a manager who is  appointed by  Caithness  Acquisition,  the sole member of each
managing partner.  The manager is responsible for the ordinary course management
and  operations  by its Coso  partnership  of that  partnership's  Coso project.
Caithness  Acquisition  has  appointed  itself as the  manager of each  managing
partner.   Caithness   Acquisition  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 Coso
Funding  Corp.  , who  act  on  behalf  of the  managing  partners  of the  Coso
partnerships.

      Caithness  Acquisition,  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 Caithness  Acquisition,  has  delegated its role as manager of
Caithness Acquisition to the Caithness Acquisition 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 Caithness Acquisition. 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. Thedirectors of Funding Corp., other than Mr. Ferrucci, also currently
serve asmembers  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., Bishop, Jr. and Sullivan. 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 six individuals, together
with Mr. Ferrucci,  serve as the Caithness Acquisition board of directors.

                                     31

Management Committees

      Under  the  amended  and  restated  partnership  agreement  of  each  Coso
partnership,  the  managing  partner of the Coso  partnership  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,  1999,  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:

        Name                      Age              Partnership(s)
        -----                    ----              --------------
James D. Bishop, Jr. ..           39     Navy I partnership, BLM partnership,
                                         Navy II partnership

Christopher T. McCallion          38     Navy I partnership, BLM partnership,
                                         Navy II partnership

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


Management Committee Fees

      The members of the  management  committees  are not entitled to any direct
compensation  from Coso Funding Corp. or the Coso  partnerships.  However,  each
Coso partnership  previously paid to 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,
1996, 1997, 1998 and 1999, the total amount of management committee fees paid or
payable by each of the Coso partnerships to its partners:

                                       32
<TABLE>
<CAPTION>

                                                                   Year Ended December 31


                                             1996              1997             1998            1999
                                            ------            ------           ------          ------
<S>                                      <C>                <C>              <C>            <C>
Navy I Partnership

     New CLOC....................         $   ---            $   ---          $   ---        $    ---
     Predecessor of New CLOC                143,000            143,000          147,000         25,000
     ESCA........................           214,000            214,000          221,000        221,000
                                          ---------          ---------        ---------      ---------
                                          $ 357,000          $ 357,000        $ 368,000      $ 246,000
BLM Partnership

     New CHIP....................         $    ---           $   ---          $   ---        $   ---
     Predecessor of New CHIP                145,000            145,000          148,000         25,000
     CCH.........................           222,000            218,000          223,000        223,000
                                          ---------          ---------        ---------      ---------
                                          $ 367,000          $ 363,000        $ 371,000      $ 248,000
Navy II Partnership..............

     New CTC.....................         $   ---            $   ---          $    ---       $   ---
     Predecessor of New CTC......           145,000            145,000          148,000         25,000
     Navy II Group...............           218,000            218,000          223,000        223,000
                                          ---------          ---------        ---------      ---------
                                          $ 363,000          $ 363,000        $ 371,000      $ 248,000
</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 Coso 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.


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 Caithness  Acquisition and Caithness Energy.  Several of
these  directors  and  executive  officers  beneficially  own the  securities of
Caithness Corporation. Caithness Corporation and its affiliates beneficially own
all of the member 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:

         Coso Funding Corp. filed a current report on Form 8-K dated October 18,
         1999  reporting  the purchase of all the indirect  ownership  interests
         held by ESI  Geothermal,  Inc. in Coso  Finance  Partners by  Caithness
         Acquisition  Company, LLC pursuant to a Sale Agreement dated October 6,
         1999.

(c)      Exhibits:

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

                                       33

                                INDEX TO EXHIBITS

  Exhibit
  Number                      Description of Exhibit
  -------                     ----------------------
    3.1     Certificate of Incorporation of Caithness Coso Funding Corp.*

    3.2     Bylaws of Caithness Coso Funding Corp.*

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

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

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

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

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

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

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

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

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

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

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

    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.*

                                       34

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       35

   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.*

   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.*

                                       36

   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).*

                                       37

   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.*

                                       38

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

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

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

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

   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.*

                                       39

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

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

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

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

   10.82   Management Fee Subordination Agreement (Navy II), dated as of May 28,
           1999, by and among Caithness Navy II Group, LLC, New CTC Company,
           LLC, Coso Power Developers, and U.S. Bank Trust NationalAssociation,
           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 S-X--Caithness Coso Funding Corp.

   27.2    Financial Data Schedule--Form S-X--Coso Finance Partners.

   27.3    Financial Data Schedule--Form S-X--Coso Energy Developers.

                                       40

   27.4    Financial Data Schedule--Form S-X--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.**

   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.

                                       41
<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 qualified 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 filed period?
                     Yes     X No
                  ---       ---

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

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

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

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
                                        -- ----        -- ----
                                             YEAR         X YEAR
                                          ---            ---
                                        (For annual report filings)
                                             OTHER          OTHER
                                          ---            ---
FISCAL YEAR END
(example: DEC-31-1997)                                           DEC-31-1999
                                         -----------             -----------
                                         mmm-dd-yyyy             mmm-dd-yyyy

PERIOD START
(example: JAN-01-1997)                                           JAN-01-1999
                                         -----------             -----------
                                         mmm-dd-yyyy             mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997)                                           DEC-31-1999
                                         -----------             -----------
                                         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                                                           0                       414,392
ALLOWANCES                                                            0                             0
INVENTORY                                                             0                             0
CURRENT ASSETS                                                        0                         1,392
PP&E                                                                  0                             0
DEPRECIATION                                                          0                             0
TOTAL ASSETS                                                          0                       414,392
CURRENT LIABILITIES                                                   0                         1,392
BONDS                                                                 0                       413,000
PREFERRED MANDATORY                                                   0                             0
PREFERRED                                                             0                             0
COMMON                                                                0                             0
OTHER SE                                                              0                             0
TOTAL LIABILITY AND EQUITY                                            0                       414,392
SALES                                                                 0                             0
TOTAL REVENUES                                                        0                        20,491
CGS                                                                   0                             0
TOTAL COSTS                                                           0                             0
OTHER EXPENSES                                                        0                             0
LOSS PROVISION                                                        0                             0
INTEREST EXPENSE                                                      0                        20,491
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 qualified 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 filed period?
                     Yes     X No
                  ---       ---

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

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

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

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-31-1998             DEC-31-1999
                                         -----------             -----------
                                         mmm-dd-yyyy             mmm-dd-yyyy

PERIOD START
(example: JAN-01-1997)                   JAN-01-1998             JAN-01-1999
                                         -----------             -----------
                                         mmm-dd-yyyy             mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997)                   DEC-31-1998             DEC-31-1999
                                         -----------             -----------
                                         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                         7,821
SECURITIES                                                        7,524                        25,001
RECEIVABLES                                                       9,564                         9,662
ALLOWANCE                                                             0                             0
INVENTORY                                                             0                             0
CURRENT ASSETS                                                   10,181                        17,483
PP&E                                                            299,034                       225,157
DEPRECIATION                                                    118,845                        71,278
TOTAL ASSETS                                                    202,266                       217,712
CURRENT LIABILITIES                                              11,767                        16,800
BONDS                                                            40,566                       151,550
PREFERRED MANDATORY                                                   0                             0
PREFERRED                                                             0                             0
COMMON                                                                0                             0
OTHER SE                                                              0                             0
TOTAL LIABILITY AND EQUITY                                      202,266                       217,712
SALES                                                            53,153                        55,666
TOTAL REVENUES                                                   53,738                        57,442
CGS                                                                   0                             0
TOTAL COSTS                                                           0                             0
OTHER EXPENSES                                                   31,894                        31,671
LOSS PROVISION                                                        0                             0
INTEREST EXPENSE                                                  4,333                        13,575
INCOME PRETAX                                                         0                             0
INCOME TAX                                                            0                             0
INCOME CONTINUING                                                     0                             0
DISCONTINUED                                                          0                             0
EXTRAORDINARY                                                         0                         2,375
CHANGES                                                             923                             0
NET INCOME                                                       16,588                         9,821
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 qualified 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 filed period?
                     Yes     X No
                  ---       ---

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

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

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

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-31-1998             DEC-31-1999
                                         -----------             -----------
                                         mmm-dd-yyyy             mmm-dd-yyyy

PERIOD START
(example: JAN-01-1997)                   JAN-01-1998             JAN-01-1999
                                         -----------             -----------
                                         mmm-dd-yyyy             mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997)                   DEC-31-1998             DEC-31-1999
                                         -----------             -----------
                                         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                         6,423
SECURITIES                                                          290                         9,806
RECEIVABLES                                                      20,129                         6,856
ALLOWANCE                                                             0                             0
INVENTORY                                                             0                             0
CURRENT ASSETS                                                   20,985                        13,379
PP&E                                                            313,111                       237,183
DEPRECIATION                                                    110,841                        71,533
TOTAL ASSETS                                                    228,231                       216,391
CURRENT LIABILITIES                                              27,232                        29,141
BONDS                                                            37,958                       107,900
PREFERRED MANDATORY                                                   0                             0
PREFERRED                                                             0                             0
COMMON                                                                0                             0
OTHER SE                                                              0                             0
TOTAL LIABILITY AND EQUITY                                      228,231                       216,391
SALES                                                           107,199                        49,877
TOTAL REVENUES                                                  108,380                        50,943
CGS                                                                   0                             0
TOTAL COSTS                                                           0                             0
OTHER EXPENSES                                                   44,687                        38,534
LOSS PROVISION                                                        0                             0
INTEREST EXPENSE                                                  6,267                        10,235
INCOME PRETAX                                                         0                             0
INCOME TAX                                                            0                             0
INCOME CONTINUING                                                     0                             0
DISCONTINUED                                                          0                             0
EXTRAORDINARY                                                         0                         1,822
CHANGES                                                             953                             0
NET INCOME                                                       56,473                           352
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 qualified 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 filed period?
                     Yes     X No
                  ---       ---

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

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

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

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-31-1998             DEC-31-1999
                                         -----------             -----------
                                         mmm-dd-yyyy             mmm-dd-yyyy

PERIOD START
(example: JAN-01-1997)                   JAN-01-1998             JAN-01-1999
                                         -----------             -----------
                                         mmm-dd-yyyy             mmm-dd-yyyy
PERIOD END
(example: SEP-30-1997)                   DEC-31-1998             DEC-31-1999
                                         -----------             -----------
                                         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                                                                818                         6,020
SECURITIES                                                            0                        54,338
RECEIVABLES                                                      24,406                        27,598
ALLOWANCE                                                             0                             0
INVENTORY                                                             0                             0
CURRENT ASSETS                                                   25,940                        33,618
PP&E                                                            288,048                       208,048
DEPRECIATION                                                     99,208                        60,526
TOTAL ASSETS                                                    220,867                       273,269
CURRENT LIABILITIES                                               5,883                        15,388
BONDS                                                            61,323                       153,550
PREFERRED MANDATORY                                                   0                             0
PREFERRED                                                             0                             0
COMMON                                                                0                             0
OTHER SE                                                              0                             0
TOTAL LIABILITY AND EQUITY                                      220,867                       273,269
SALES                                                           119,564                       113,746
TOTAL REVENUES                                                  121,363                       115,920
CGS                                                                   0                             0
TOTAL COSTS                                                           0                             0
OTHER EXPENSES                                                   41,120                        43,577
LOSS PROVISION                                                        0                             0
INTEREST EXPENSE                                                  8,122                        13,991
INCOME PRETAX                                                         0                             0
INCOME TAX                                                            0                             0
INCOME CONTINUING                                                     0                             0
DISCONTINUED                                                          0                             0
EXTRAORDINARY                                                         0                         2,147
CHANGES                                                           1,664                             0
NET INCOME                                                       70,457                        56,205
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>


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.


COSO ENERGY DEVELOPERS
a California general partnership


By:   New CHIP Company, LLC,
         its Managing General Partner

By:   /s/   CHRISTOPHER T. MCCALLION
    ----------------------------------
            Christopher T. McCallion
            Executive Vice President


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.                   Chief Executive Officer of New                 March 30, 2000
-----------------------------------------     CHIP Company, LLC, as
       James D. Bishop, Sr.                   Managing General Partner of
                                              Registrant (Principal Executive
                                              Officer); Director of Caithness
                                              Acquisition Company, LLC, as
                                              Manager of New CHIP
                                              Company, LLC, as Managing
                                              General Partner of Registrant


/s/   CHRISTOPHER T. MCCALLION               Executive Vice President and                   March 30, 2000
-----------------------------------------     Chief Financial Officer of New
       Christopher T. McCallion               CHIP Company, LLC, as
                                              Managing General Partner of
                                              Registrant (Principal Financial
                                              Officer and Principal
                                              Accounting Officer);
                                              Director of Caithness
                                              Acquisition Company, LLC, as
                                              Manager of New CHIP
                                              Company, LLC, as Managing
                                              General Partner of Registrant


/s/    LESLIE J. GELBER                      President and Chief Operating                  March 30, 2000
-----------------------------------------     Officer of New CHIP Company,
        Leslie J. Gelber                      LLC, as Managing General
                                              Partner of Registrant; Director
                                              of Caithness Acquisition
                                              Company, LLC, as Manger of
                                              New CHIP Company, LLC,
                                              as Managing General Partner
                                              of Registrant


/s/     JAMES D. BISHOP, JR.                 Director of Caithness Acquisition              March 30, 2000
-----------------------------------------     Company, LLC, as Manager of
         James D. Bishop, Jr.                 New CHIP Company, LLC, as
                                              Managing General Partner of
                                              Registrant


/s/     LARRY K. CARPENTER                   Director of Caithness Acquisition              March 30, 2000
-----------------------------------------     Company, LLC, as Manager of
         Larry K. Carpenter                   New CHIP Company, LLC, as
                                              Managing General Partner of
                                              Registrant


/s/     JAMES C. SULLIVAN                    Director of Caithness Acquisition              March 30, 2000
-----------------------------------------     Company, LLC, as Manager of
         James C. Sullivan                    New CHIP Company, LLC, as
                                              Managing General Partner of
                                              Registrant


/s/     MARK A. FERRUCCI                     Independent Manager of New CHIP                March 30, 2000
-----------------------------------------     Company, LLC, as Managing
        Mark A. Ferrucci                      General Partner of Registrant

</TABLE>