`======================================================================================================`

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 March 31, 2001

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 May 14, 2001,  there were 10 shares of common stock of Selkirk  Cogen
Funding Corporation, $1 par value outstanding.

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TABLE OF CONTENTS

`Page

                      PART I. FINANCIAL INFORMATION

Item 1.      Financial Statements (unaudited)

             Consolidated Balance Sheets as of March 31, 2001
             and December 31, 2000.............................      1

             Consolidated Statements of Operations for the three
             months ended March 31, 2001 and 2000..............      2

             Consolidated Statements of Cash Flows for the three
             months ended March 31, 2001 and 2000..............      3

             Notes to Consolidated Financial Statements........      4

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 ......................................     12


                        PART II. OTHER INFORMATION

Item 6.      Exhibits and Reports on Form 8-K..................     13

SIGNATURES.....................................................     14

                                       i

SELKIRK COGEN PARTNERS, L.P.
                          CONSOLIDATED BALANCE SHEETS
                                 (in Thousands)

                                                                  (unaudited)
                                                                   March 31,         December 31,
                                                                     2001                2000
                                                                 --------------     ---------------
ASSETS

CURRENT ASSETS:
    Cash and cash equivalents                                    $       1,697           $   3,187
    Restricted funds                                                    24,728               2,988
    Accounts receivable, net of allowance of $196 and $174              19,061              20,097
    Due from affiliates                                                  2,307               3,882
    Fuel inventory and supplies                                          6,866               6,693
    Other current assets                                                   345                 436
                                                                 --------------     ---------------
               Total current assets                                     55,004              37,283
                                                                 --------------     ---------------

PLANT AND EQUIPMENT:
    Plant and equipment, at cost                                       372,709             372,443
    Less: Accumulated depreciation                                      90,233              87,119
                                                                 --------------     ---------------
    Plant and equipment, net                                           282,476             285,324
                                                                 --------------     ---------------
LONG-TERM RESTRICTED FUNDS                                              28,657              27,833

DEFERRED FINANCING CHARGES, net of accumulated amortization
of $8,069 and $7,789, respectively                                       8,222               8,502
                                                                 --------------     ---------------
TOTAL ASSETS                                                        $  374,359          $  358,942
                                                                 ==============     ===============

LIABILITIES AND PARTNERS' DEFICITS

CURRENT LIABILITIES:
    Accounts payable                                                  $    137            $     49
    Accrued bond interest payable                                        8,639                 368
    Accrued expenses                                                    18,567              21,156
    Due to affiliates                                                      663                 635
    Current portion of long-term bonds                                  11,062              11,062
    Current portion of liability for foreign exchange
    contacts                                                             3,301                 ---
                                                                 --------------     ---------------
               Total current liabilities                                42,369              33,270

LONG-TERM LIABILITIES:
    Deferred revenue                                                     5,127               5,304
    Other long-term liabilities                                          6,430               7,250
    Long-term bonds -  net of current portion                          362,764             362,764
    Liability for foreign exchange contracts - net of
    current portion                                                      6,741                 ---
                                                                 --------------     ---------------
               Total liabilities                                       423,431             408,588
                                                                 --------------     ---------------

COMMITMENTS AND CONTINGENCIES

PARTNERS' DEFICITS:
    General partners' deficits                                           (378)               (485)
    Limited partners' deficits                                        (38,652)            (49,161)
    Accumulated other comprehensive income                            (10,042)                 ---
                                                                 --------------     ---------------
               Total partners' deficits                               (49,072)            (49,646)
                                                                 --------------     ---------------
TOTAL LIABILITIES AND PARTNERS' DEFICITS                            $  374,359          $  358,942
                                                                 ==============     ===============
See notes to consolidated financial statements.

                                       1
SELKIRK COGEN PARTNERS, L.P.
                              CONSOLIDATED STATEMENTS OF OPERATIONS
                                          (in Thousands)
                                           (unaudited)


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

                                                                     March 31,           March 31,
                                                                       2001                2000
                                                                 --------------     ---------------
OPERATING REVENUES:
     Electric and steam                                             $   61,584          $   48,081
     Fuel revenues                                                       4,889              12,504
                                                                 --------------     ---------------
                 Total operating revenues                               66,473              60,585
                                                                 --------------     ---------------

COST OF REVENUES:
     Fuel and transmission costs                                        40,454              34,278
     Other operating and maintenance                                     3,340               3,378
     Depreciation                                                        3,114               3,109
                                                                 --------------     ---------------
                 Total cost of revenues                                 46,908              40,765
                                                                 --------------     ---------------
GROSS PROFIT                                                            19,565              19,820
                                                                 --------------     ---------------

OTHER OPERATING EXPENSES:
     Administrative services, affiliates                                   431                 687
     Other general and administrative                                      605                 374
     Amortization of deferred financing charges                            280                 285
                                                                 --------------     ---------------
                 Total other operating expenses                          1,316               1,346
                                                                 --------------     ---------------

OPERATING INCOME                                                        18,249              18,474
                                                                 --------------     ---------------

INTEREST (INCOME) EXPENSE:
     Interest income                                                     (638)               (628)
     Interest expense                                                    8,271               8,429
                                                                 --------------     ---------------
                 Total interest expense, net                             7,633               7,801
                                                                 --------------     ---------------

Income before cumulative effect of a change
     in accounting principle                                            10,616              10,673

Cumulative effect of a change in
     accounting principle                                                  ---               7,866
                                                                 --------------     ---------------
NET INCOME                                                        $     10,616       $      18,539
                                                                 ==============     ===============

NET INCOME ALLOCATION:
     General partners                                             $        106       $         186
     Limited partners                                                   10,510              18,353
                                                                 --------------     ---------------
     TOTAL                                                        $     10,616       $      18,539
                                                                 ==============     ===============

See notes to consolidated financial statements.

                                       2

SELKIRK COGEN PARTNERS, L.P.
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         (in Thousands)


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

                                                                      March 31,        March 31,
                                                                        2001             2000
                                                                      --------         ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                       $  10,616        $  18,539
    Adjustments to reconcile net income to net cash
       provided by operating activities:
       Cumulative effect of a change in accounting principle              ---           (7,866)
       Depreciation and amortization                                     3,394            3,394
       Increase (decrease) in cash resulting from a change in:
          Restricted funds                                             (2,461)            (799)
          Accounts receivable                                            1,036           (5,285)
          Due from affiliates                                            1,575             (122)
          Fuel inventory and supplies                                    (173)               154
          Other current assets                                              91              (58)
          Accounts payable                                                  88           (1,949)
          Accrued bond interest payable                                  8,271             8,428
          Accrued expenses                                             (2,589)             2,585
          Due to affiliates                                                 28               413
          Deferred revenue                                               (177)             (176)
          Other long-term liabilities                                    (820)               730
                                                                  -------------   ---------------
               Net cash provided by operating activities                18,879            17,988
                                                                  -------------   ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Plant and equipment additions                                        (266)             (375)
                                                                  -------------   ---------------
               Net cash used in investing activities                     (266)             (375)
                                                                  -------------   ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Restricted funds                                                  (20,103)          (18,151)
                                                                  -------------   ---------------
               Net cash used in financing activities                  (20,103)          (18,151)
                                                                  -------------   ---------------

NET INCREASE (DECREASE) IN CASH AND
    CASH EQUIVALENTS                                                   (1,490)             (538)
                                                                  -------------   ---------------

CASH AND CASH EQUIVALENTS,
    BEGINNING OF YEAR                                                    3,187             1,732
                                                                  -------------   ---------------

CASH AND CASH EQUIVALENTS,
    END OF YEAR                                                   $      1,697    $        1,194
                                                                  =============   ===============



See notes to consolidated financial statements.

                                       3`

SELKIRK COGEN PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1.    Basis of Presentation

The accompanying  unaudited  consolidated  financial  statements include 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  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. Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with generally
accepted  accounting   principles  have  been  omitted  pursuant  to  rules  and
regulations   applicable  to  interim  financial  statements.   The  information
furnished in the 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  reclassifications have been
made to the  Consolidated  Statement  of  Operations  for the three months ended
March 31, 2000 to conform with the current  periods basis of presentation.
Operating  results for the three months ended March 31, 2001 are not necessarily
indicative  of the results that may be expected for the year ended  December 31,
2001.

These consolidated  financial  statements should be read in conjunction with the
audited  consolidated  financial  statements included in the  Partnerships
December 31, 2000 Annual Report on Form 10-K.

Note 2.   Adoption of New Accounting Pronouncement

The   Partnership   adopted   Statement   of  Financial   Accounting   Standards
(SFAS)  No. 133,  Accounting for Derivative  Instruments and Hedging
Activities,  as amended  by SFAS Nos.  137 and 138,  on  January  1, 2001.  This
standard  requires the Partnership to recognize all  derivatives,  as defined in
the Statement,  on the balance sheet at fair value. Under the standard there are
three types of hedges: fair value hedges, cash flow hedges, and foreign currency
hedges.  A fair value  hedge is a hedge of the  exposure  to changes in the fair
value of a recognized asset or liability or of an unrecognized  firm commitment,
that is  attributable  to its fixed terms.  If the derivative  qualifies and is
designated as a fair value hedge,  the  accounting  treatment  dictates that the
changes in the fair value of the hedging  instrument  will be offset against the
changes in fair value of the hedged  assets,  liabilities,  or firm  commitments
attributable to the hedged risk and reflected in the  consolidated  statement of
operations in the current  period.  A cash flow hedge is a hedge of the exposure
to  variability  in the  cash  flows  associated  with  a  recognized  asset  or
liability,  or a  forecasted  transaction  that is  attributable  to  changes in
variable  rates or prices.  If the  derivative  qualifies and is designated as a
cash flow hedge, the accounting  treatment  dictates that the effective portions
of the changes in the fair value of that  derivative will be recognized in other
comprehensive  income, a separate component of partners  equity during the
hedge period, and will subsequently be recognized in the consolidated  statement
of operations when the hedged item affects earnings.

4

The  Partnership  has foreign  exchange swaps  accounted for as cash flow hedges
that are used to economically hedge foreign currency risk associated with future
purchases denominated in foreign currencies.  Hedge effectiveness is measured at
least quarterly.  Any  ineffectiveness  is recognized in the income statement in
the period that the ineffectiveness  occurs. If a derivative instrument that has
qualified for hedge accounting is liquidated or sold prior to maturity, the gain
or loss at the time of termination remains in other  comprehensive  income until
the hedged item impacts earnings.

The Partnership has certain derivative commodity contracts with optionality that
result in the  physical  delivery of  commodities  used in the normal  course of
business.  At this time,  these  derivatives are exempt from the requirements of
SFAS No. 133 under the normal  purchases and sales  exception,  and thus are not
reflected  on the balance  sheet at fair value.  The  Derivative  Implementation
Group (DIG) of the Financial  Accounting  Standards  Board has recently  defined
normal  purchase  and sales to exclude  certain  commodity  contracts  that were
previously  exempt under the normal  purchases and sales  provisions of SFAS No.
133.  The  Partnership  is  currently   evaluating  the  impact  of  the  recent
implementation  guidance,  which would be accounted for on a prospective  basis,
and in accordance with the guidance from the DIG; the Partnership will implement
the approved guidance as of July 1, 2001.

The  transition  adjustment  to  implement  this  new  standard  was a  negative
adjustment  of  approximately  $9.0  million to other  comprehensive  income,  a
component of partners equity and had no affect on net income on January 1,
2001.  The ongoing  effects  will  depend on the future  market  conditions  and
hedging activities at the Partnership.

Below is a table  summarizing the quantitative  information  associated with the
cash flow hedges associated with foreign currency contracts for the three months
ended March 31, 2001.

`(in thousands)
     Net gain (loss) recognized in earnings                            --
     Amount of the hedge's ineffectiveness                             --
     Component of the derivative instrument's gain or loss
         excluded from assessment of hedge's ineffectiveness           --
     Net loss to be reclassified into earnings within 12 months    $(3,301)
     Net gain (loss) reclassified into earnings
         because the original transaction will not occur               --




                                       5`

The schedule below summarizes the activities affecting accumulated
other  comprehensive  income from  derivative  instruments  for the three months
ended March 31, 2001.

`(in thousands)
    Beginning accumulated derivative loss
     from SFAS133 transition adjustments at January 1, 2001             $(8,968)
     Net change of current period hedging transactions gain (loss)       (1,828)
     Net reclassification to earnings                                       754
                                                                   -------------
     Ending accumulated other comprehensive income(loss)              $ (10,042)
                                                                      ==========`

Note 3.   Bankruptcy of Affiliated Company

JMC  Selkirk,   Inc.  is  the  managing  general  partner  of  the  Partnership.
Approximately 90% of the ownership  interest in JMC Selkirk,  Inc. is held by an
indirect subsidiary of the PG&E National Energy Group,  Inc.("NEG").  NEG is
an indirect, wholly-owned subsidiary of PG&E Corporation, the parent company
of Pacific Gas and Electric Company (the "Utility").

On April 6, 2001,  the Utility  filed a voluntary  petition for relief under the
provision  of  Chapter  11 of the U.S.  Bankruptcy  Code in the U.S.  Bankruptcy
Court.  Pursuant to Chapter 11 of the U.S.  Bankruptcy Code, the Utility retains
control of its assets and is  authorized  to operate its business as a debtor in
possession  while being subject to the  jurisdiction  of the  Bankruptcy  Court.
Management  believes that the NEG and its direct and indirect  subsidiaries,  as
described  above,   would  not  be  substantively   consolidated  with  PG&E
Corporation  or  the  Utility  in  any  insolvency  or  bankruptcy   proceeding.

6

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

Adoption of New Accounting Pronouncement

The Partnership adopted Statement of Financial Accounting Standards ("SFAS") No.
133, Accounting for Derivative Instruments and Hedging Activities, as amended by
SFAS  Nos.  137 and 138,  on  January  1,  2001.  See Note 2 of the Notes to the
Consolidated Financial Statements for further discussion of SFAS No. 133.

Results of Operations

Three Months Ended March 31, 2001 Compared to the Three Months Ended March
31, 2000

Net income for the quarter ended March 31, 2001 was approximately  $10.6 million
as compared to  approximately  $18.5 million in the prior year. The $7.9 million
decrease in net income is primarily due to the Partnership  recording  income in
the prior year of approximately  $7.9 million,  reflecting the cumulative effect
of a change in accounting principle.

Effective January 1, 2000, the Partnership  changed its method of accounting for
major  maintenance  and overhaul costs.  Beginning  January 1, 2000, the cost of
major maintenance and overhauls has been accounted for as incurred.  Previously,
the estimated cost of major  maintenance and overhauls was accrued in advance in
a systematic and rational  manner over the period between major  maintenance and
overhauls.

Total operating revenues for the quarter ended March 31, 2001 were approximately
$66.5 million as compared to approximately  $60.6 million for the  corresponding
period in the prior year.

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

`For the Three Months Ended
                       March 31, 2001                              March 31, 2000
            ------------------------------------     ----------------------------------------
            Dollars   kWh's   Capacity  Dispatch     Dollars    kWh's     Capacity   Dispatch
            -------   -----   --------  --------     -------    ------    --------   --------
Unit 1     17.9      103.0    59.70%     60.60%         12.5     151.5     89.27%     95.24%
Unit 2     43.0      518.7    90.61%     95.19%         34.4     472.2     81.58%     94.96%`

Unit 1 revenues increased approximately $5.4 million for the quarter ended March
31, 2001 as compared to the  corresponding  period in the prior year. During the
quarter  ended March 31, 2001,  revenues from Niagara  Mohawk Power  Corporation
(Niagara   Mohawk),   PG&E   Energy   Trading   -  Power,   L.P.
(PG&E  Energy  Trading)  and the  New  York  Independent  System
Operator  (ISO)  were approximately $12.4 million,  $3.3 million and
$2.2 million,  respectively  as compared to  approximately  $11.3 million,  $1.2
million and $0.0  million,  respectively,  for the  corresponding  period in the
prior year. The increase in Unit 1 revenues for the quarter ended March 31, 2001
was  primarily due to increases in Monthly  Contract  Payments and market energy
prices, partially offset by a decrease in volume of delivered energy. During the
quarters  ended  March  31,  2001 and 2000,  the  Partnership  received  Monthly

7

Contract  Payments  from  Niagara  Mohawk.  Effective  with the  termination  of
Transitional  Rights on October 31, 2000,  Niagara Mohawk is no longer obligated
to  purchase  energy  up  to  the  monthly  contract  quantity   (Contract
Energy)  or  capacity  associated  with  Contract  Energy  (Contract
Capacity)  from the Partnership.  During the quarter ended March 31, 2001,
the Partnership  did not deliver any Contract  Energy to Niagara Mohawk.  During
the month of January 2001, the  Partnership  sold all of the energy  produced by
Unit 1 to PG&E Energy Trading; during the month of February 2001, all of the
energy  produced  by Unit 1 was sold to the ISO;  and  during the month of March
2001,  no sales of energy were made from Unit 1. During the quarter  ended March
31, 2000, the Partnership  delivered  Contract Energy to Niagara Mohawk.  During
the months of January and March 2000, the  Partnership  sold the energy produced
by Unit 1 in excess of the Contract Energy (Unit 1 Excess Energy) to
both  Niagara  Mohawk  and  PG&E  Energy  Trading;  and  during the month of
February 2000 all of the Unit 1 Excess Energy was sold to Niagara Mohawk. During
the quarter  ended March 31,  2001,  the  Partnership  did not sell any Contract
Capacity to Niagara Mohawk, but instead sold all of the capacity associated with
Unit 1 to the ISO. During the quarter ended March 31, 2000 the Partnership  sold
Contract  Capacity to Niagara Mohawk and capacity in excess of Contract Capacity
(Unit 1 Excess Capacity) to PG&E Energy Trading. Contract Energy
sales to Niagara Mohawk, Contract Capacity sales to Niagara Mohawk, energy sales
to the ISO and  capacity  sales  to the ISO  were  sold at ISO  market  clearing
prices.  Unit 1 Excess  Energy  sales to  PG&E  Energy  Trading  and Niagara
Mohawk, Unit 1 Excess Capacity sales to PG&E Energy Trading and energy sales
to PG&E  Energy were sold at negotiated  market prices.  Amortized  deferred
revenues  of  approximately  $0.2  million are also  included  in revenues  from
Niagara Mohawk for the quarters ended March 31, 2001 and 2000.

Unit 2 revenues increased approximately $8.6 million for the quarter ended March
31, 2001 as compared to the  corresponding  period in the prior year. During the
quarter  ended  March 31,  2001 and 2000,  all of the Unit 2 revenues  were from
Consolidated  Edison Company of New York,  Inc.  (Con  Edison).  The
increase in revenues  from Unit 2 was  primarily  due to the increase in the Con
Edison  contract  price for delivered  energy  resulting  from higher index fuel
prices.

Steam  revenues  for the quarter  ended March 31, 2001 were  approximately  $0.6
million as compared to approximately  $1.2 million for the corresponding  period
in the prior year. The Partnership  charges General Electric a nominal price for
steam delivered in an amount up to the annual  equivalent of 160,000 lbs/hr (the
Discounted  Quantity).  The $0.6 million  decrease in steam revenues
was  primarily  due to a  decrease  in steam  sales in excess of the  Discounted
Quantity to General  Electric.  Delivered  steam for the quarter ended March 31,
2001 was  approximately  432.9 million  pounds or 198,191  lbs/hr as compared to
approximately  555.9  million  pounds or 249,057  lbs/hr  for the  corresponding
period in the prior year.

Fuel  revenues  for the quarter  ended March 31,  2001 were  approximately  $4.9
million as compared to $12.5 million for the  corresponding  period in the prior
year.  Gas resale  revenues for quarter ended March 31, 2001 were  approximately
$3.5 million on sales of approximately  0.6 million  MMBtus as compared to

8

approximately  $2.4 million on sales of approximately  0.8 million  MMBtus
for the corresponding period in the prior year. The $1.1 million increase in gas
resale  revenues  during the quarter  ended March 31, 2001 is  primarily  due to
higher  natural gas resale  prices.  The  increase in natural gas resale  prices
during the quarter  ended March 31, 2001  generally  resulted from higher market
pricing  for  both  gas  and  oil as  well  as  increased  demand  for  electric
generation.  Gas  resales  occur  during  periods  when  Units  1 and 2 are  not
operating at full  capacity.  Gas  optimization  revenues for the quarter  ended
March 31, 2001 were  approximately  $0.9 million on sales of  approximately  0.1
million  MMBtus  as compared  to  approximately  $8.3  million on sales of
approximately 2.8 million MMBtus for the corresponding period in the prior
year.  Gas  optimizations  occur when the  Partnership  is able to optimize  the
long-term supply and transportation  contracts and lower the cost of natural gas
delivered to the Facility by purchasing  and/or selling natural gas at favorable
prices along the transportation  route.  Revenues from peak shaving arrangements
for quarter ended March 31, 2001 were approximately $0.4 million on sales of 0.0
thousand  MMBtus  as compared to  approximately  $1.8  million on sales of
approximately  182 thousand  MMBtus  for the  corresponding  period in the
prior year. Peak shaving  arrangements  occur when the  Partnership  enters into
contracts with third party  purchasers which allow purchasers to buy a specified
portion of the Partnerships firm natural gas supply for a specified number
of days during the winter season.

Fuel  and  transmission  costs  for  the  quarter  ended  March  31,  2001  were
approximately  $40.5 million as compared to approximately  $34.3 million for the
corresponding  period in the prior year. Fuel costs,  excluding the cost of fuel
associated with gas optimizations, the cost of fuel associated with peak shaving
arrangements  and  transmission  costs,  for  quarter  ended March 31, 2001 were
approximately   $37.7  million  on  purchases  of   approximately   7.0  million
MMBtus  as  compared  to  approximately  $24.6  million  on  purchases  of
approximately 7.1 million MMBtus for the corresponding period in the prior
year.  The $13.1  million  increase in the cost of fuel was primarily due to the
higher price of gas under the firm fuel supply contracts.  Fuel costs associated
with gas optimizations  for the quarter ended March 31, 2001 were  approximately
$0.9 million on purchases of approximately 0.1 million  MMBtus as compared
to  approximately  $7.5  million  on  purchases  of  approximately  2.8  million
MMBtus  for  the  corresponding  period  in the  prior  year.  Fuel  costs
associated with peak shaving  arrangements  for the quarter ended March 31, 2001
were $0.0 million on purchases of 0.0 thousand  MMBtus as compared to $0.8
million on purchases of 182.2 thousand MMBtus for the corresponding period
in the prior year. 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 each of the quarters ended
March 31, 2001 and 2000, fuel costs were increased by approximately $0.8 million
and $0.6 million,  respectively,  as a result of the currency  swap  agreements.
Transmission  costs  for the  quarters  ended  March  31,  2001 and  2000,  were
approximately  $1.9  million and $1.4  million,  respectively.  The $0.5 million
increase is primarily due to higher Unit 2 transmission costs.

Other operating and maintenance expenses for the quarter ended March 31, 2001 of
approximately  $3.3 million was  comparable to the  corresponding  period in the
prior year.

9

Total other operating  expenses,  excluding  amortization of deferred  financing
charges,  for the quarter ended March 31, 2001 of approximately $1.0 million was
comparable to the corresponding period in the prior year.

Amortization of deferred financing charges of approximately $0.3 million for the
quarter ended March 31, 2001 was comparable to the  corresponding  period in the
prior  year.  Deferred  financing  charges  are  amortized  using the  effective
interest method.

Net interest expense for the quarter ended March 31, 2001 was approximately $7.6
million as compared to approximately  $7.8 million for the corresponding  period
in the prior year.  The  decrease in net interest  expense is  primarily  due to
lower interest expense resulting from the lower principal  balance  outstanding.

Liquidity and Capital Resources

Net cash provided by operating  activities  for the quarter ended March 31, 2001
was approximately  $18.9 million as compared to approximately  $18.0 million for
the  corresponding  period in the prior year.  Net cash  provided  by  operating
activities  primarily  represents  net income  plus the net effect of  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 March 31, 2001 was
approximately  $0.3  million as compared to  approximately  $0.4 million for the
corresponding  period in the prior year.  Net cash used in investing  activities
primarily represents additions to plant and equipment.

Net cash used in financing  activities  for the quarter ended March 31, 2001 was
approximately  $20.1 million as compared to approximately  $18.2 million for the
corresponding  period  in the  prior  year.  The  increase  in net cash  used in
financing  activities  for the quarter ended March 31, 2001 was primarily due to
additional cash becoming available to deposit into the Principal Fund.  Pursuant
to the Partnerships Depositary and Disbursement Agreement, administered by
Bankers Trust  Company,  as depositary  agent,  the  Partnership  is required to
maintain certain  Restricted Funds. Net cash flows used in financing  activities
during the quarter  ended March 31, 2001 and 2000  represent  deposits of monies
into the Interest Fund and Principal Fund.

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

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

10

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;  levels of dispatch;  the receipt of
certain  capacity  and other fixed  payments;  electricity  prices;  natural gas
resale prices; fuel deliveries and prices and whether Con Edison were to prevail
in its claim to Unit  2s  excess  natural  gas  volumes  described  in the
Partnerships December 31, 2000 Annual Report on Form 10-K.

11

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The  Partnership  is exposed to market  risk from  changes  in  interest  rates,
foreign currency exchange rates and energy commodity prices,  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.

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 ended
March 31, 2001 would have resulted in a negative impact of approximately $64,000
on the Partnerships net income.

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 foreign  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  ended March 31, 2001,  the currency  exchange
rate differential resulted in a negative impact of approximately $0.8 million on
the Partnerships net income.Energy Commodity Prices

The  Partnership  seeks to reduce its  exposure to market risk  associated  with
energy  commodities  such as  electric  power and natural gas through the use of
long-term  purchase  and  sale  contracts.   As  part  of  its  fuel  management
activities,  the Partnership also enters into agreements to resell its long-term
natural gas volumes,  when it is feasible to do so, at favorable prices relative
to the cost of contract volumes and the cost of substitute  fuels. To the extent
the Partnership has open positions,  it is exposed to the risk that  fluctuating
market prices may adversely impact its financial results.

12

PART II. OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(A)     Exhibits

     Not applicable.


(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.

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: May 15, 2001                 /s/ JOHN R. COOPER
                                   ------------------------------------
                                   Name:    John R. Cooper
                                   Title:   Senior Vice President and
                                            Chief Financial Officer`

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:  May 15, 2001                  /s/  JOHN R. COOPER
                                     -----------------------------------
                                     Name:    John R. Cooper
                                     Title:   Senior Vice President and
                                              and Chief Financial Officer



















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