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

                                    FORM 10-Q


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 1999

                         Commission File Number 33-83618

                          SELKIRK COGEN PARTNERS, L.P.
       (Exact name of Registrant (Guarantor) as specified in its charter)

             Delaware                                   51-0324332
  State or other jurisdiction of                       (IRS Employer
  incorporation or organization)                     Identification No.)


                        SELKIRK COGEN FUNDING CORPORATION
             (Exact name of Registrant as specified in its charter)


      Delaware                                          51-0354675
 (State or other jurisdiction of                       (IRS Employer
 incorporation or organization)                     Identification No.)


                 One Bowdoin Square, Boston, Massachusetts 02114
          (Address of principal executive offices, including zip code)


                                 (617) 788-3000
              (Registrant's telephone number, including area code)


      SECURITIES REGISTERED PURSUANT TO SECTION 12(b)OR 12 (g) OF THE ACT:
                                      None


         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __

         As of August 12, 1999,  there were 10 shares of common stock of Selkirk
Cogen Funding Corporation, $1 par value outstanding.

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<PAGE>


                                TABLE OF CONTENTS




                                                                          Page

                          PART I. FINANCIAL INFORMATION


Item 1.     Financial Statements (unaudited)

            Condensed Consolidated Balance Sheets as of June 30, 1999
            and December 31, 1998....................................      3

            Condensed Consolidated Statements of Operations for
            the three and six months ended June 30, 1999 and 1998....      4

            Condensed Consolidated Statements of Cash Flows for
            the three and six months ended June 30, 1999 and 1998....      5

            Notes to Condensed Consolidated Financial Statements.....      6

Item 2.     Management's Discussion and Analysis of Financial Condition
            and Results of Operations

            Results of Operations....................................      7

            Liquidity and Capital Resources..........................     10

Item 3.     Quantitative and Qualitative Disclosures About
            Market Risk .............................................     14


                           PART II. OTHER INFORMATION

Item 5.     Other Items..............................................     15

Item 6.     Exhibits and Reports on Form 8-K.........................     16

SIGNATURES...........................................................     17

                                       2
<PAGE>
                          SELKIRK COGEN PARTNERS, L.P.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)


<TABLE>
<CAPTION>
<S>                                              <C>            <C>           <C>

                                              (unaudited)
                                                June 30,      December 31,    March 31,
                                                  1999           1998          1999
                                             ------------     ------------    --------
ASSETS

Current assets:
    Cash and cash equivalents..................$  1,662       $  1,839      $  1,401
    Restricted funds...........................   5,238          4,185        21,718

    Accounts receivable........................  15,014         14,281        14,859
    Due from affiliates........................     556            743           721
    Fuel inventory and supplies................   4,996          5,033         5,039
    Other current assets.......................     274            333           371
                                                -------         ------        ------
       Total current assets....................  27,740         26,414        44,109

Plant and equipment, net....................... 303,072        308,999       305,914
Long-term restricted funds.....................  29,222         28,188        28,737
Deferred financing charges, net................  10,205         10,782        10,493
                                                -------        -------       -------
   Total Assets                                $370,239     $  374,383      $389,253
                                                -------        -------       -------
                                                -------        -------       -------

LIABILITIES AND PARTNERS' CAPITAL

Current liabilities:
    Accounts payable...........................$    263     $     617       $   245
    Accrued bond interest payable..............     375           379         8,913
    Accrued expenses...........................  11,919        12,235        10,101
    Due to affiliates..........................     366           639           322
    Current portion of long-term bonds.........   5,820         4,822         4,822
                                                -------        -------       -------
         Total current liabilities.............  18,743        18,692        24,403

Deferred revenues..............................   6,219         6,565         6,392
Other long-term liabilities....................  17,010        14,803        15,939
Long-term bonds, less current portion.......... 378,112       381,133       381,133

General partners' capital......................    (487)         (457)         (375)
Limited partners' capital...................... (49,358)      (46,353)      (38,239)
                                                --------      --------       -------
         Total partners' capital............... (49,845)      (46,810)      (38,614)
                                                --------      --------       -------

 Total Liabilities and Partners' Capital      $  370,239   $  374,383      $389,253
                                                 -------      -------       -------
                                                 -------      -------       -------


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

                                       3
</TABLE>

<PAGE>

                          SELKIRK COGEN PARTNERS, L.P.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (in thousands)
                                   (unaudited)



<TABLE>
<CAPTION>


                                               For the Three Months Ended    For the Six Months Ended     For the Three Months Ended
                                               --------------------------    ------------------------     --------------------------

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

                                                  June 30,     June 30,     June 30,       June 30,    March 31,    March 31,
                                                    1999         1998         1999           1998        1999         1998
                                                  --------     --------     --------       --------    ---------    ---------
   Operating revenues:
      Electric and steam....................     $ 37,684     $  37,930   $  78,920     $  77,348     $  41,236     $  39,418
      Gas resale............................        3,280         3,187       4,367         5,178         1,087         1,991
                                                  --------     --------     --------       --------     ---------    ---------
           Total operating revenues.........       40,964        41,117      83,287        82,526        42,323        41,409
   Cost of revenue..........................       29,782        28,770      54,887        56,878        25,105        28,108
                                                  --------     --------     --------       --------     ---------    ---------
   Gross profit.............................       11,182        12,347      28,400        25,648        17,218        13,301

   Other operating expenses:
      Administrative services - affiliates..          520           734        758           1,321          238           587
      Other general and administrative expenses       423           552        882           1,096          459           544
      Amortization of deferred financing charges.     289           292        578             583          289           291
                                                  --------     --------     --------       --------     ---------    ---------
           Total other operating expenses           1,232         1,578      2,218           3,000          986         1,422
                                                  --------     --------     --------       --------     ---------    ---------

   Operating income..........................       9,950        10,769     26,182          22,648       16,232        11,879

   Interest (income) expense:
      Interest income........................        (582)         (626)    (1,080)         (1,074)        (498)         (448)
      Interest expense.......................       8,529         8,603     17,063          17,208        8,534         8,605
                                                  --------     --------     --------       --------      ---------    ---------
           Net interest expense..............       7,947         7,977     15,983          16,134        8,036         8,157



   Net Income................................   $   2,003     $   2,792   $  10,199     $   6,514        $8,196       $ 3,722
                                                  --------     --------     --------       --------      ---------    ---------
                                                  --------     --------     --------       --------      ---------    ---------

   Allocated to:
      General partners.......................    $     20     $      28   $     102     $      65        $   82        $   37
      Limited partners                              1,983         2,764      10,097         6,449         8,114         3,685
                                                  --------     --------     --------       --------      ---------    ---------
           Total.............................    $  2,003      $  2,792   $  10,199     $   6,514        $8,196       $ 3,722
                                                  --------     --------     --------       --------      ---------    ---------
                                                  --------     --------     --------       --------      ---------    ---------


</TABLE>


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

                                       4


<PAGE>

<TABLE>
<CAPTION>
                          SELKIRK COGEN PARTNERS, L.P.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)


                                                   For the Three Months Ended      For the Six Months Ended
                                                   --------------------------      ------------------------
<S>                                               <C>            <C>              <C>           <C>

                                                   June 30,       June 30,         June 30,      June 30,
                                                    1999           1998             1999          1998
                                                   --------       --------         --------      --------

  Net cash provided by (used in)
    operating activites.........................  $ (1,162)      $ (5,392)         $15,390      $ 12,046

  Cash flows provided by (used in)
     investing activities:
         Plant and equipment additions..........      (265)           (14)            (310)          (14)
                                                  ---------      ---------         --------     ---------

         Net cash used in investing activities..      (265)           (14)            (310)          (14)

  Cash flows provided by (used in)
    financing activities:
      Cash distributions........................   (13,234)        (3,327)         (13,234)       (3,327)
      Payments of principal on long-term debt...    (2,023)        (1,881)          (2,023)       (1,881)
      Restricted Funds..........................    16,945          7,199             ---         (6,795)
                                                  ---------      ---------         --------     ---------

           Net cash provided by (used in)
            financing activities................     1,688          1,991          (15,257)      (12,003)

  Net increase (decrease) in cash...............       261         (3,415)            (177)           29
  Cash at beginning of period...................     1,401          4,781            1,839         1,337
                                                  ---------      ---------         --------     ---------
  Cash at end of period.........................  $  1,662      $   1,366         $  1,662         1,366
                                                  ---------      ---------         --------     ---------
                                                  ---------      ---------         --------     ---------


  Supplemental disclosures of cash flow information:

    Cash paid for interest......................  $ 17,067      $  17,210         $ 17,067      $ 17,210
                                                  ---------      ---------         --------     ---------
                                                  ---------      ---------         --------     ---------



</TABLE>

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

                                       5


<PAGE>

                          SELKIRK COGEN PARTNERS, L.P.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


Note 1. Basis of Presentation

The  accompanying   unaudited  condensed   consolidated   financial   statements
consolidate  Selkirk  Cogen  Partners,  L.P.  and its  wholly-owned  subsidiary,
Selkirk  Cogen  Funding  Corporation,   (collectively  the  "Partnership").  All
significant intercompany accounts and transactions have been eliminated.

The  condensed   consolidated  financial  statements  for  the  interim  periods
presented  are  unaudited  and have  been  prepared  pursuant  to the  rules and
regulations of the Securities and Exchange Commission. The information furnished
in the condensed consolidated financial statements reflects all normal recurring
adjustments  which,  in the  opinion of  management,  are  necessary  for a fair
presentation  of such financial  statements.  Certain  information  and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles  have been condensed or omitted
pursuant to rules and regulations  applicable to interim  financial  statements.
Certain   reclassifications   have  been  made  to  the  Condensed  Consolidated
Statements of  Operations  for the quarter and six months ended June 30, 1998 to
conform with the current period's basis of presentation.

These condensed  consolidated financial statements should be read in conjunction
with the audited consolidated financial statements included in the Partnership's
December 31, 1998 Annual Report on Form 10-K.

Note 2. New Accounting Pronouncements

In  June  1998,  the  FASB  issued  SFAS  No.  133,  Accounting  for  Derivative
Instruments  and Hedging  Activities.  SFAS No. 133  establishes  accounting and
reporting  standards  requiring that every derivative  instrument be recorded in
the balance  sheet as either an asset or  liability  measured at its fair value.
Changes in the  derivatives  fair value must be  recognized  in the statement of
operations as a gain or loss unless specific hedge accounting  criteria are met.
SFAS No. 133 is effective for fiscal years  beginning  after June 15, 2000. SFAS
No. 133 must be applied to (a) derivative instruments and (b) certain derivative
instruments embedded in hybrid contracts.  Management has not yet quantified the
impact of adopting SFAS No. 133 on the Partnership's financial statements.

                                       6
<PAGE>



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


Results of Operations

Three and Six Months  Ended June 30,  1999  Compared to the Three and Six Months
Ended June 30, 1998

Net income for the quarter ended June 30, 1999 was approximately $2.0 million as
compared to approximately $2.8 million for the corresponding period in the prior
year. The $0.8 million decrease in net income is primarily due to an increase in
maintenance expenses (offset in part by a decrease in other operating expenses).
Net income  for the six  months  ended  June 30,  1999 was  approximately  $10.2
million as compared to approximately  $6.5 million for the corresponding  period
in the prior year.  The $3.7 million  increase in net income is primarily due to
an increase in Unit 1 revenues and  decreases in fuel costs and other  operating
expenses.

Total  revenues  for the  quarter  and six  months  ended  June  30,  1999  were
approximately $41.0 million and $83.3 million as compared to approximately $41.1
million and $82.5 million for the corresponding periods in the prior year.

Electric Revenues (dollars and kWh's in millions):

<TABLE>
<CAPTION>

                                       For the Three Months Ended
                          June 30, 1999                           June 30, 1998
          ----------------------------------------   ---------------------------------------
<S>       <C>        <C>     <C>         <C>         <C>       <C>     <C>        <C>
          Dollars    kWh's   Capacity    Dispatch    Dollars   kWh's   Capacity   Dispatch
          -------    -----   --------    --------    -------   -----   --------   --------
Unit 1     8.4       125.9     73.73%     91.62%        6.9     58.6     33.60%     39.10%
Unit 2    29.1       397.3     68.64%     73.67%       31.0    504.8     87.22%     94.78%

</TABLE>

<TABLE>
<CAPTION>
                                       For the Six Months Ended
                          June 30, 1999                           June 30, 1998
          ----------------------------------------   ---------------------------------------
<S>       <C>        <C>     <C>         <C>         <C>       <C>     <C>        <C>
          Dollars   kWh's    Capacity    Dispatch    Dollars   kWh's   Capacity   Dispatch
          -------    -----   --------    --------    -------   -----   --------   --------
Unit 1    19.8       278.6     82.15%     96.89%       15.2      161.2     46.45%   51.70%
Unit 2    58.6       863.0     74.97%     81.19%       62.1   1,024.2     88.97%    94.36%
</TABLE>

Revenues from Unit 1 increased  approximately  $1.5 million and $4.6 million for
the quarter and six months ended June 30, 1999 as compared to the  corresponding
periods in the prior year, respectively. During the quarter and six months ended
June 30, 1999 revenues from Niagara Mohawk Power Corporation  ("Niagara Mohawk")
were  approximately $7.5 million and $18.2 million,  respectively,  and revenues
from  PG&E  Energy  Trading  -  Power,   L.P.   ("PG&E  Energy   Trading")  were
approximately $0.9 million and $1.6 million, respectively. During the six months
ended June 30,  1998 all  revenues  from Unit 1 were from  Niagara  Mohawk.  The
increase in revenues  from Unit 1 for the quarter and six months  ended June 30,
1999 was  primarily  due to  increases  in  delivered  energy  as  evidenced  by
increases in the capacity factor for the corresponding

                                       7

<PAGE>

periods and  improved  contract  pricing  resulting  from the  execution  of the
Amended and Restated Niagara Mohawk Power Purchase Agreement on August 31, 1998.
In  conjunction  with the execution of the Amended and Restated  Niagara  Mohawk
Power Purchase  Agreement,  Niagara Mohawk no longer has the right to direct the
dispatch  of Unit 1.  During  the six  months  ended  June  30,  1999,  with the
exception of April 1999, the Partnership  received Monthly Contract Payments and
delivered energy up to the monthly contract  quantity to Niagara Mohawk.  During
the  month  of  January  1999 the  Partnership  sold  all of the  Excess  Energy
generated from Unit 1 to Niagara  Mohawk.  During the months of February,  March
and June 1999 the Partnership  sold all of the Excess Energy generated from Unit
1 to  PG&E  Energy  Trading.  During  the  months  of  April  and May  1999  the
Partnership  sold  Excess  Energy  from Unit 1 to both  Niagara  Mohawk and PG&E
Energy  Trading.  Excess  Energy  delivered  to Niagara  Mohawk and PG&E  Energy
Trading was sold at negotiated market prices. Deferred revenues of approximately
$0.3 million are also  included in revenues  from Niagara  Mohawk during the six
months ended June 30, 1999.

During the six months  ended June 30, 1998,  Niagara  Mohawk  dispatched  Unit 1
on-line during  January,  February,  May and June and off-line  during March and
April.  Energy delivered during most of January and the entire month of February
was sold at full contract rates.  Energy delivered during the first four days of
January and the entire months of May and June were sold under  special  dispatch
arrangements  which called for the pricing of delivered energy at variable rates
less than full contract  rates.  If the Partnership had not entered into special
dispatch arrangements, the Unit would have been otherwise dispatched off-line.

Revenues from Unit 2 decreased  approximately  $1.9 million and $3.5 million for
the quarter and six months ended June 30, 1999 as compared to the  corresponding
periods in the prior  year.  During the  quarter  and six months  ended June 30,
1999, revenues from Consolidated Edison Company of New York, Inc. ("Con Edison")
were $29.1  million and $58.3  million,  respectively,  and  revenues  from PG&E
Energy Trading were approximately $0 and $0.3 million, respectively.  During the
quarter and six months ended June 30, 1998,  revenues from Con Edison were $30.9
million and $62.0 million,  respectively,  and revenues from PG&E Energy Trading
were approximately $33.8 thousand and $75.0 thousand, respectively. The decrease
in revenues  from Unit 2 for the quarter and six months  ended June 30, 1999 was
primarily  due to the decrease in the Con Edison  contract  price for  delivered
energy  resulting  from lower  index fuel prices and the  decrease in  delivered
energy as evidenced by  decreases in the capacity  factor for the  corresponding
periods.  During the six months ended June 30, 1999,  revenues  from PG&E Energy
Trading resulted from the sale of other energy-related products.  During the six
months ended June 30, 1998,  revenues from PG&E Energy Trading resulted from the
sale of generated  capacity in excess of the  contract  amount due under the Con
Edison Power Purchase Agreement.

Steam  revenues  for  the  quarter  and  six  months  ended  June  30,  1999  of
approximately  $0.3  million  and $0.6  million  were  reduced  by a reserve  of
approximately  $69.2  thousand to reflect the estimated  annual  true-up so that
General  Electric  would  be  charged  a

                                       8

<PAGE>

nominal amount which is the annual  equivalent of 160,000 lbs/hr.  There were no
steam  revenues for the quarter ended June 30, 1998.  Steam revenues for the six
months  ended June 30, 1998 of  approximately  $0.2  million  were  reduced by a
reserve of the same amount to reflect the estimated  annual  true-up.  Delivered
steam for the quarter and six months ended June 30, 1999 was approximately 403.4
million  pounds and 813.2  million  pounds as  compared to  approximately  297.6
million  pounds and 683.5 million  pounds for the  corresponding  periods in the
prior year.  The increase in steam revenues for the quarter and six months ended
June 30, 1999 was primarily due to the increase in delivered steam.

Gas resale revenues for the quarter ended June 30, 1999 were  approximately $3.3
million  on  sales  of   approximately   1.4  million  MMBtu's  as  compared  to
approximately $3.2 million on sales of approximately 1.3 million MMBtu's for the
corresponding  period in the prior year. Gas resale  revenues for the six months
ended June 30, 1999 were  approximately  $4.4 million on sales of  approximately
2.0  million  MMBtu's as  compared  to  approximately  $5.2  million on sales of
approximately  2.2  million  MMBtu's for the  corresponding  period in the prior
year.  The $0.8 million  decrease in gas resale  revenues  during the six months
ended June 30, 1999 is primarily due to the higher  dispatch of Unit 1 and lower
natural  gas resale  prices,  which  resulted  in lower  volumes of natural  gas
becoming  available  for resale at lower  prices.  The  decrease  in natural gas
resale prices during the six months ended June 30, 1999 generally  resulted from
more  moderate  temperatures  in the  Northeast  region  as  compared  to colder
temperatures,  which  resulted  in higher  demand for  natural  gas,  during the
corresponding period in the prior year. The Partnership entered into gas resales
during periods when Units 1 and 2 were not operating at full capacity.

Cost of revenues for the quarter  ended June 30, 1999 were  approximately  $29.8
million on gas  purchases of  approximately  6.9 million  MMBtu's as compared to
$28.8  million on gas  purchases of  approximately  7.1 million  MMBtu's for the
corresponding  period in the prior year.  The largest  component of the increase
for the quarter ended June 30, 1999 were maintenance  expenses,  which increased
approximately $0.9 million from the corresponding  period in the prior year. The
increase in maintenance  expenses was primarily due to higher  maintenance costs
and the scheduling of planned  maintenance to occur during the second quarter of
1999 whereas,  in the prior year,  similar planned  maintenance was scheduled to
occur  during the fourth  quarter of 1998.  Cost of revenues  for the six months
ended  June 30,  1999 were  approximately  $54.9  million  on gas  purchases  of
approximately 13.8 million MMBtu's as compared $56.9 million on gas purchases of
approximately  14.1 million  MMBtu's for the  corresponding  period in the prior
year.  The largest  component  of the decrease for the six months ended June 30,
1999 was  fuel  costs,  which  decreased  approximately  $2.4  million  from the
corresponding  period in the prior  year.  The  decrease in the cost of fuel was
primarily due to lower  contract firm fuel rates which resulted from lower index
fuel prices and lower transportation demand costs and the write-off of a reserve
of  approximately  $0.5  million  for  amounts no longer in  dispute  with a gas
transporter.  The  Partnership  has foreign  currency  swap  agreements to hedge
against future exchange rate fluctuations under fuel  transportation  agreements
which are denominated in Canadian dollars.  During the six


                                       9
<PAGE>

months ended June 30, 1999 and 1998, fuel costs were increased by  approximately
$1.2 million and $1.0  million,  respectively,  as a result of the currency swap
agreements.

Total other  operating  expenses  for the quarter and six months  ended June 30,
1999  were   approximately   $1.2  million  and  $2.2  million  as  compared  to
approximately $1.6 million and $3.0 million for the corresponding periods in the
prior year. The decrease in other operating  expenses for the quarter ended June
30, 1999 was  primarily  due to lower  affiliate  administrative  services.  The
decrease in other operating  expenses for the six months ended June 30, 1999 was
primarily due to lower affiliate  administrative services and the write-off of a
reserve of  approximately  $0.2  million  for  amounts  no longer  claimed by an
affiliate.

Net  interest  expense  for the  quarter  and six months  ended June 30, 1999 of
approximately $8.0 million and $16.0 million was comparable to the corresponding
periods in the prior year.

Liquidity and Capital Resources
-------------------------------

Net cash flows used in operating  activities for the quarter ended June 30, 1999
were  approximately  $1.2 million as compared to approximately  $5.4 million for
the corresponding period in the prior year. Net cash flows provided by operating
activities  for the six  months  ended  June 30,  1999 was  approximately  $15.4
million as compared to approximately $12.0 million for the corresponding  period
in the prior year.  Net cash flows  provided by (used in)  operating  activities
primarily  represents  net  income  plus the net  effect of  normally  recurring
changes in cash receipts and disbursements  within the  Partnership's  operating
assets and liability accounts.

Net cash used in investing  activities  for the quarter ended June 30, 1999 were
approximately  $265.0 thousand as compared to  approximately  $14.0 thousand for
the  corresponding  period  in the  prior  year.  Net  cash  used  in  investing
activities  for the six months  ended June 30,  1999 were  approximately  $310.0
thousand as compared  to  approximately  $14.0  thousand  for the  corresponding
period in the prior year. Net cash flows used in investing  activities primarily
represents additions to plant and equipment.

Net cash  provided by financing  activities  for the quarter ended June 30, 1999
was approximately $1.7 million as compared to approximately $2.0 million for the
corresponding  period in the prior year.  Net cash used in financing  activities
for the six  months  ended  June 30,  1999 was  approximately  $15.3  million as
compared to  approximately  $12.0  million for the  corresponding  period in the
prior year. The decrease in net cash flows provided by financing  activities for
the  quarter  ended  June 30,  1999 and the  increase  in net cash flows used in
financing  activities for the six months ended June 30, 1999 is primarily due to
more cash  becoming  available to distribute to the Partners and the increase in
the semi-annual payment of principal on long-term debt.


                                  10
<PAGE>

In 1994 and 1995 Con Edison  claimed the right to acquire  that  portion of Unit
2's firm  natural  gas  supply  not used in  operating  Unit 2,  when  Unit 2 is
dispatched  off-line  or at less  than full  capability  ("non-plant  gas"),  or
alternatively  to be compensated  for 100% of the margins derived from non-plant
gas sales. The Con Edison Power Purchase  Agreement contains no express language
granting  Con  Edison any  rights  with  respect  to such  excess  natural  gas.
Nevertheless,  Con Edison argued that, since payments under the contract include
fixed  fuel  charges  which  are  payable  whether  or not Unit 2 is  dispatched
on-line,  Con Edison is  entitled  to  exercise  such  rights.  The  Partnership
vigorously   disputes  the  position  adopted  by  Con  Edison,  and  since  the
commencement  of Unit 2's operation in 1994 has made and continues to make, from
time  to  time,  non-plant  gas  sales  from  Unit  2's  gas  supply.   Although
representatives of Con Edison have expressly reserved all rights that Con Edison
may have to pursue its asserted  claim with respect to non-plant gas sales,  the
Partnership has received no further formal communication from Con Edison on this
subject since 1995.  In the event Con Edison were to pursue its asserted  claim,
the Partnership  would expect to pursue all available legal remedies,  but there
can be no certainty that the outcome of such remedial  action would be favorable
to the Partnership or, if favorable,  would provide for the  Partnership's  full
recovery of its damages.  The Partnership's cash flows from the sale of electric
output would be materially and adversely  affected if Con Edison were to prevail
in its claim to Unit 2's excess natural gas volumes and the related margins.

On July 21, 1998 the New York Public  Service  Commission  ("NYPSC")  approved a
plan  submitted by Con Edison for the  divestiture  of certain of its generating
assets (the "Con Edison Divestiture Plan").  Although the Con Edison Divestiture
Plan  does  not  include  any  proposal  by Con  Edison  for the  sale or  other
disposition of its contractual obligations for purchasing power from non-utility
generators,  like the Partnership,  the NYPSC has ordered Con Edison to submit a
report  regarding  the  feasibility  of  divesting  its  non-utility   generator
entitlements.  At this time, the  Partnership  has  insufficient  information to
determine  whether,  in the course of these proceedings at the NYPSC, Con Edison
may seek to  assign  its  rights  and  obligations  under the Con  Edison  Power
Purchase  Agreement with the  Partnership to a third party or to take some other
action for the purpose of  divesting  itself of the power  purchase  obligations
under such contract;  nor can the Partnership evaluate the impact which any such
assignment or other action,  if proposed,  may ultimately have on the Con Edison
Power Purchase Agreement.

Future  operating  results and cash flows from operations are also dependent on,
among other  things,  the  performance  of equipment  and processes as expected,
levels of dispatch,  the receipt of certain  capacity and other fixed  payments,
electricity  prices,  natural gas resale prices,  fuel  deliveries and prices as
contracted.  A significant  change in any of these factors could have a material
adverse effect on the results for the Partnership.

The Partnership  believes that based on current  conditions and circumstances it
will have sufficient  liquidity available provided by cash flows from operations
to fund existing debt obligations and operating costs.

                                       11

<PAGE>

Year 2000
---------

The Year 2000 issue exists because many computer programs use only two digits to
refer  to a year,  and was  developed  without  considering  the  impact  of the
upcoming  change in the  century.  The  Partnership  has a  program  in place to
address  its  exposure  to the Year 2000  issue.  This  program is  designed  to
minimize the possibility of significant Year 2000 interruptions.

In 1998,  the  Partnership  established  the program to address its software and
hardware product and customer concerns, its internal business systems, including
technology infrastructure and embedded technology systems, and the compliance of
its  suppliers.  This  program  includes the  following  phases:  inventory  and
assessment,  remediation, testing, and certification.  Certification occurs when
mission-critical  software and hardware products are determined to be "Year 2000
Ready."  The "Year 2000  Ready"  category  indicates  that the  Partnership  has
determined  that the  product,  when  used in its  designated  manner,  will not
terminate abnormally or give incorrect results with respect to date data before,
during or after December 31, 1999.  Once Year 2000 Ready,  additional  standards
and processes are imposed to prevent systems from being compromised.

The Partnership's Year 2000 certification phase was completed in April 1999. The
Partnership will continue to perform work associated with  contingency  planning
implementation and the assessment and remediation of non-mission  critical items
through   the  end  of  1999.   The   Partnership   determined   that  its  only
mission-critical  software was vendor software.  As to  mission-critical  vendor
software,  Year 2000 ready upgrades have been obtained from the vendors,  tested
as appropriate and deemed Year 2000 Ready.

The Partnership  has tested  remediated  software and embedded  systems both for
ability to handle Year 2000 dates, including appropriate leap year calculations,
and to assure that code repair has not  affected the base  functionality  of the
code. Software and embedded systems were tested individually where necessary and
tested in an integrated manner with other systems,  with dates and data advanced
and aged to simulate  Year 2000  operations.  Testing,  by its nature,  however,
cannot  comprehensively  address  all future  combinations  of dates and events.
Because  some  uncertainty  remains  after  testing as to the ability of code to
process future dates, as well as the ability of remediated systems to work in an
integrated  fashion with other  systems,  failure of such  systems,  should they
occur, could have a material adverse impact on future results.

In addition to internal systems,  the Partnership depends upon external parties,
including  customers,  suppliers,  business  partners,  gas and electric  system
operators,  government  agencies,  and  financial  institutions  to support  the
functioning  of its  business.  To the  extent  that  any of these  parties  are
considered  mission-critical  to the Partnership's  business and experience Year
2000 problems in their  systems,  the  Partnership's  mission-critical  business
functions  may be  adversely  affected.  To deal  with this  vulnerability,  the
Partnership  has another  phased  approach.  The primary phases for dealing with
external parties are: (1) inventory,  (2) action planning,  (3) risk assessment,
and (4) contingency planning.

                                       12

<PAGE>

In April 1999, the Partnership  completed its inventory,  action planning,  risk
assessment  and  contingency  planning  phases  for  mission-critical   external
parties.

Although the Partnership  expects its efforts and those of its external  parties
to be largely  successful,  the  Partnership  recognizes  that with the  complex
interaction of today's computing and communication systems, it cannot be certain
the Partnership will be completely successful. Therefore, contingency plans have
been   developed  and  tested   through  April  1999  to  address  its  external
dependencies  as well as exposure  that could  result  from  failures in our own
essential  business  functions.  These  plans have taken into  account  possible
interruptions   of   power,    computing,    financial,    and    communications
infrastructures. Contingency plans will be revised throughout 1999 as necessary.
Due to the uncertainty  inherent in the  contingencies for which plans are being
prepared,  however,  it is uncertain  whether  these plans will be sufficient to
remove the risk of material  impacts on the  Partnerships  operations  resulting
from Year 2000 problems.

Through  July 1999,  the  Partnership  spent  approximately  $372,000 to assess,
remediate and test Year 2000 problems for both mission  critical and non-mission
critical items. The Partnership's  estimate of future costs to address Year 2000
issues is approximately  $20,000 to implement  contingency  plans and to address
remaining non-mission critical items; all of which will be expensed.

The Partnership  has concluded that the most  reasonably  likely worst case Year
2000  scenarios  that could  affect its  business  include  localized  telephone
problems due to congestion and small isolated  malfunctions in the Partnership's
computer  systems  that  would be  immediately  repaired.  The  Partnership  has
developed contingency plans to address these scenarios.

If  third  parties  with  whom  the   Partnership   has   significant   business
relationships,  fail to achieve Year 2000 readiness of mission-critical systems,
there  could  be a  material  adverse  impact  on  the  Partnership's  financial
position, results of operations, and cash flows.


Cautionary Statement Regarding Forward-Looking Statements
---------------------------------------------------------

Certain statements included herein are forward-looking statements concerning the
Partnership's  operations,  economic performance and financial  condition.  Such
statements are subject to various risks and uncertainties.  Actual results could
differ  materially from those currently  anticipated due to a number of factors,
including general business and economic conditions, the performance of equipment
and processes as expected,  levels of dispatch,  the receipt of certain capacity
and other fixed payments,  electricity  prices,  natural gas resale prices, fuel
deliveries and prices as contracted and issues related to Year 2000 compliance.


                                       13
<PAGE>

ITEM 3.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The  Partnership  is exposed to market risk from  changes in interest  rates and
foreign  currency  exchange  rates,  which  could  affect its future  results of
operations  and financial  condition.  The  Partnership  manages its exposure to
these  risks  through  its  regular  operating  and  financing  activities.  The
Partnership  does not enter into  derivative  financial  instruments for trading
purposes.

Interest Rates
--------------

The Partnership's  cash and restricted cash are sensitive to changes in interest
rates.  Interest rate changes would result in a change in interest income due to
the difference  between the current  interest rates on cash and restricted  cash
and the  variable  rate that these  financial  instruments  may adjust to in the
future.  A 10%  decrease in interest  rates for the quarter and six months ended
June 30, 1999 would have resulted in a negative  impact of  approximately  $58.0
thousand and $108.0 thousand,  respectively on the  Partnership's net income for
that period.

The  Partnership's  long-term  bonds have fixed interest  rates.  Changes in the
current  market  rates for the bonds  would not  result in a change in  interest
expense due to the fixed coupon rate of the bonds.

Foreign Currency Exchange Rates
-------------------------------

The  Partnership's  currency swap agreements  hedge against future exchange rate
fluctuations  which  could  result  in  additional  costs  incurred  under  fuel
transportation  agreements which are denominated in a Canadian currency.  In the
event  a  counterparty   fails  to  meet  the  terms  of  the  agreements,   the
Partnership's  exposure is limited to the currency  exchange rate  differential.
During  the  quarter  and six  months  ended  June 30,  1999 the  exchange  rate
differential  had a  negative  impact of  approximately  $0.6  million  and $1.2
million, respectively on the Partnership's net income.


                                       14
<PAGE>


                           PART II. OTHER INFORMATION

ITEM 5.  OTHER ITEMS

A written  Consent of  Directors  in lieu of a meeting was  executed on July 26,
1999 for both Selkirk  Cogen Funding  Corporation  and JMC Selkirk,  Inc.  ("The
Managing  General  Partner").  The  following  tables  set  forth  the names and
positions of newly appointed officers.

         Selkirk Cogen Funding Corporation:
         ----------------------------------

                  Name                           Position
                  ----                           --------
         Gary W. Weidinger                       Senior Vice President

         The Managing General Partner:
         -----------------------------

                  Name                           Position
                  ----                           --------
         Gary W. Weidinger                       Senior Vice President


         Gary W.  Weidinger is Senior Vice  President  Asset  Management of PG&E
Generating  Company (formerly "U.S.  Generating  Company"),  an affiliate of the
Partnership, and has been with PG&E Generating Company since 1991. Mr. Weidinger
was the officer responsible for the Engineering  Department prior to joining the
Operations  Department  in  1995.  Mr.  Weidinger  has  more  than 25  years  of
experience in the power generation business including  management positions with
Bechtel Power,  Puget Sound Power and Light and California  Energy.  He has also
managed a consulting firm providing  services to power generation and industrial
customers.

                                       15
<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


(A)          Exhibits

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

                  27                Financial Data Schedule
                                    (For electronic filing purposes only)


(B)      Reports on Form 8-K

         Not applicable.

Omitted  from this Part II are items  which are not  applicable  or to which the
answer is negative for the periods covered.



                                       16
<PAGE>



                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned thereunto duly authorized.


                                              SELKIRK COGEN PARTNERS, L.P.

                                              JMC SELKIRK, INC.
                                              General Partner

Date: August 13, 1999                         /s/  JOHN R. COOPER
                                              ----------------------------------
                                              Name:   John R. Cooper
                                              Title:  Senior Vice President and
                                                      Chief Financial Officer









                                       17
<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned thereunto duly authorized.



                                              SELKIRK COGEN FUNDING
                                              CORPORATION

Date:  August 13, 1999                        /s/  JOHN R. COOPER
                                              ----------------------------------
                                              Name:  John R. Cooper
                                              Title: Senior Vice President and
                                                     and Chief Financial Officer








                                       18
<PAGE>