CALENERGY CO INC, 10-K/A, 1996-03-29

CALENERGY CO INC
10-K/A, 1996-03-29
STEAM & AIR-CONDITIONING SUPPLY

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March 29, 1996

The Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Attention: Filing Desk, Stop 1-4

Re: CalEnergy Company, Inc. Form 10-K

Gentlemen:

Submitted herewith via electronic transmission pursuant to EDGAR is the
Annual Report on Form 10-K for the fiscal year ended December 31, 1995 of
CalEnergy Company, Inc. (the "Company").

The Form 10-K (including exhibits) is also being filed with the New
York Stock Exchange and the Pacific Stock Exchange concurrently herewith.

Sincerely,

Douglas L. Anderson
Assistant General Counsel,
U.S. and Corporate

(10K.SEC)

CERTIFICATE OF OWNERSHIP AND MERGER

CalEnergy Company, Inc.,
a Delaware corportaion

into

California Energy Company, Inc.,
a Delaware corporation

IT IS HEREBY CERTIFIED THAT:

1. California Energy Company, Inc., (the "Company") is a business corporation
of the State of Delaware.

2. The Company is the owner of all of the outstanding shares of stock of
CalEnergy Company, Inc., which is also a business corporation of the State of
Delaware.

3. On December 5, 1995, the Board of Directors of the Company adopted the
following resolutions authorizing the officers to take all appropriate actions
to change the corporate name of the Company to CalEnergy Company, Inc.

WHEREAS, the Board believes the name of the Company should be changed to
reflect the broader scope of its activities.

RESOLVED, that the Board hereby authorized and approves the change of the
Company's name to "CalEnergy Company, Inc." and all such documents and
resolutions necessary to complete such name change.

RESOLVED, FURTHER, that any corporate resolutions necessary or desired in
order to effectuate the foregoing are hereby adopted and approved in all
respects, and the officers of the Company are hereby authorized and directed
to execute such resolutions and file them with the Corporation's minute book.

4. Pursuant to the aforesaid authorization, on December 5, 1995, the following
further resolutions of the Board of Directors were adopted to merge CalEnergy
Company, Inc. into the Company pursuant to Section 253 of the General
Corporation Law of the State of Delaware and in connection with this merger
to change the corporate name of the Company to CalEnergy Company, Inc.

RESOLVED, that the Board hereby authorized and approves the merger of a
wholly-owned subsidiary of the Company, a Delaware corporation named CalEnergy
Company, Inc. ("Subsidiary") into the Company in such a manner that all of the
estate, property, rights, privileges, powers and franchises of the Subsidiary
be vested in and held and enjoyed by the Company as fully and entirely and
without change or diminution as the same were held and enjoyed by the Subsidiary
in its name change.

RESOLVED, FURTHER, that the Company shall assume all of the liabilities and
obligaitons of the Subsidiary.

RESOLVED, FURHER, that, by virtue of the merger and without any action on the
part of the holders thereof, each issued and outstanding share of capital stock
of the Subsidiary shall be cancelled and no consideration issued in respect
thereof.

RESOLVED, FURTHER, that, by virtue of the merger and without any action on the
part of the holders thereof, each issued and outstanding share of capital stock
of the Company shall remain unchanged and continue to be such issued and out-
standing share of the capital stock of the Company.

RESOLVED, FURTHER, that the Company's name shall be CalEnergy Company, Inc.
upon merger of the Subsidiary into the Company.

RESOLVED, FURTHER, that the Certificate of Incorporation, By-laws and other
outstanding instruments and securities of the Company shall be unchanged and
unaffected by the merger.

RESOLVED, FURTHER, that the officers and directors of the Company before the
merger shall continue to be the officers and directors of the Company following
the merger without change.

RESOLVED, FURTHER, that the officers of the Company are hereby authorized and
directed to take such actions and execute and file such documents as they deem
appropriate to implement the purposes of the foregoing resolutions.

5. The effective date of this merger and name change shall be March 26, 1996.

Executed as of March 22, 1996.

CALIFORNIA ENERGY COMPANY, INC.
a Delaware corporation

By: /s/ Steven A. McArthur
Steven A. McArthur
Secretary

By: /s/ Douglas L. Anderson
Douglas L. Anderson
Assistant Secretary

BY-LAWS AS AMENDED THROUGH MAY 11, 1995

B Y - L A W S
OF
CALIFORNIA ENERGY COMPANY, INC.
(Formerly Phydeaux Corporation)
a Delaware corporation

ARTICLE I

MEETINGS OF STOCKHOLDERS

Section 1. Annual Meeting. The annual meeting of the
stockholders of California Energy Company, Inc. (hereinafter called
the "Corporation") shall be held at 10:00 a.m. on such day in the
month of May in each year as shall be selected by the Chairman of
the Board, or, failing such selection, by the Board of Directors.
At the annual meeting, the stockholders shall elect by a plurality
vote a board of directors (hereinafter referred to as "Board"), and
transact such other business as may properly be brought before the
meeting. If the annual meeting shall not be held on the day
hereinabove provided for, the Board shall cause the meeting to be
held as soon thereafter as convenient.

Section 2. Special Meetings. Special meetings of the
stockholders may be called for any purpose or purposes at any time
only by the Board, or the President, upon not less than ten nor
more than fifty days written notice. Special meetings may not be
called by the stockholders.

Section 3. Notice of Meetings. Notice of the place, date and
time of the holding of each annual and special meeting of the
stockholders and, in the case of a special meeting, the purpose or
purposes thereof, shall be given personally or by mail in a postage
prepaid envelope to each stockholder entitled to vote at such
meeting, not less than ten nor more than fifty days before the date
of such meeting, and, if mailed, it shall be directed to such
stockholder at his address as it appears on the records of the
Corporation, unless he shall have filed with the Secretary of the
Corporation a written request that notices to him be mailed to some
other address, in which case it shall be directed to him at such
other address. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who shall attend such
meeting in person or by proxy and shall not, at the beginning of
such meeting, object to the transaction of any business because the
meeting is not lawfully called or convened, or who shall, either
before or after the meeting, sign a waiver. Notice of an adjourned
meeting need not be given if the time and place to which the
meeting shall be adjourned were announced at the meeting at which
the adjournment is taken. At the adjourned meeting the Corporation
may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days,
or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given
to each stockholder of record entitled to vote at the meeting.

Section 4. Place of Meetings. Meetings of the stockholders
may be held at such place, within or without the State of Delaware,
as the Board or the officer calling the same shall specify in the
notice of such meeting, or in a duly executed waiver of notice
thereof.

Section 5. Quorum. (a) At all meetings of the stockholders,
the holders of a majority of the shares of stock of the Corporation
issued and outstanding and entitled to vote shall be present in
person or by proxy to constitute a quorum for the transaction of
any business (except business referred to in subsection (b) below),
except when stockholders are required to vote by class, in which
event a majority of the issued and outstanding shares of the
appropriate class shall be present in person or by proxy, or except
as otherwise provided by statute. (b) At all meetings of the
stockholders in which the action to be taken requires the approval
of sixty-six and two-thirds percent (66 2/3%) of the issued and
outstanding shares of stock entitled to vote, the holders of sixty-
six and two-thirds percent (66 2/3%) of the shares of stock of the
Corporation issued and outstanding and entitled to vote shall be
present in person or by proxy in order to constitute a quorum for
the transaction of any such business, except when stockholders are
required to vote by class, in which event, sixty-six and two-thirds
percent (66 2/3%) of the issued and outstanding shares of the
appropriate class shall be present in person or by proxy, or except
as otherwise provided by statute. (c) In the absence of a quorum,
the holders of a majority of the shares of stock present in person
or by proxy and entitled to vote, or if no stockholder entitled to
vote is present, then any officer of the Corporation, may adjourn
the meeting from time to time. At any such adjourned meeting at
which a quorum may be present any business may be transacted which
might have been transacted at the meeting as originally called.

Section 6. Organization. At each meeting of the stockholders
the Chairman of the Board, or in his absence or inability to act,
the President, or in the absence or inability to act of the
Chairman of the Board or President, a Vice President, or in the
absence of all of the foregoing, any person chosen by a majority of
those stockholders present, shall act as chairman of the meeting.
The Secretary, or in his absence or inability to act, the Assistant
Secretary or any person appointed by the chairman of the meeting,
shall act as secretary of the meeting and keep the minutes thereof.

Section 7. Order of Business. The order of business at all
meetings of the stockholders shall be as determined by the chairman
of the meeting.

Section 8. Voting. Except as otherwise required by statute
or by the Certificate of Incorporation, each holder of record of
shares of stock of the Corporation having voting power shall be
entitled at each meeting of the stockholders to one vote for every
share of such stock standing in his name on the record of
stockholders of the Corporation on the date fixed by the Board as
the record date for the determination of the stockholders who shall
be entitled to notice of and to vote at such meeting; or at the
close of business on the day next preceding the day on which notice
thereof shall be given, or if notice is waived, at the close of
business on the day next preceding the day on which the meeting is
held; or each stockholder entitled to vote at any meeting of
stockholders may authorize another person or persons to act for him
by a proxy signed by such stockholder or his attorney-in-fact. Any
such proxy shall be delivered to the secretary of such meeting at
or prior to the time designated in the order of business for so
delivering such proxies. No proxy shall be valid after the
expiration of three years from the date thereof, unless otherwise
provided in the proxy. Every proxy shall be revocable at the
pleasure of the stockholder executing it, except in those cases
where an irrevocable proxy is permitted by law. Except as
otherwise provided by statute, these By-Laws, or the Certificate of
Incorporation, any corporate action to be taken by vote of the
stockholders shall be authorized by a majority of the total votes,
or when stockholders are required to vote by class by a majority of
the votes of the appropriate class, cast at a meeting of
stockholders by the holders of shares present in person or
represented by proxy and entitled to vote on such action. Unless
required to be advisable, the vote on any question need not be by
written ballot. On a vote by written ballot, each ballot shall be
signed by the stockholder voting, or by his proxy, if there be such
proxy, and shall state the number of shares voted.

Section 9. List of Stockholders. The officer who has charge
of the stock ledger of the Corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at that meeting, arranged
in alphabetical order, and showing the addresses of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to
the meeting, either at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.

Section 10. Consent of Stockholders in Lieu of Meeting.
Whenever the vote of stockholders at a meeting thereof is required
or permitted to be taken for or in connection with any corporate
action, the meeting and vote of stockholders can be dispensed with:
(1) if all of the stockholders who would have been entitled to
vote upon the action if such meeting were held shall consent in
writing to such corporate action being taken; or (2) unless the
Certificate of Incorporation provides otherwise, with the written
consent of the holders of not less than the minimum percentage of
the total vote required by statue for the proposed corporate
action, and provided that prompt notice must be given to all
stockholders of the taking of corporate action without a meeting.

ARTICLE II
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the
Corporation shall be managed by the Board. The Board may exercise
all such authority and powers of the Corporation and do all such
lawful acts and things as are not by statute or the Certificate of
Incorporation directed or required to be exercised or done by the
stockholders.

Section 2. (a) Number, Qualifications, Election and Term of
Office. The business and affairs of the Corporation shall be
managed and controlled by a Board of Directors consisting of eleven
persons. At the 1989 Annual Meeting of Stockholders, the directors
were divided into three classes, as nearly equal in number as
possible, with the term of office of the first class to expire at
the 1990 Annual Meeting of Stockholders, the term of office of the
second class to expire at the 1991 Annual Meeting of Stockholders
and the term of office of the third class to expire at the 1992
Annual Meeting of Stockholders. At each Annual Meeting of
Stockholders following such initial classification and election,
directors elected to succeed those directors whose terms expire
shall be elected for a term of office to expire at the third
succeeding Annual Meeting of Stockholders after their election.
All directors shall be the age of majority and need not be
stockholders. Each director shall hold office until the end of his
term and until his successor shall have been duly elected and
qualified, or until his death, or until he shall have resigned, or
have been removed for cause, as hereinafter provided in these
By-Laws or as otherwise provided by statute or the Certificate of
Incorporation.

(b) Filling of Vacancies. Except as otherwise provided in
Article II, Section 11, any vacancies on the Board resulting from
death, resignation, retirement, disqualification, removal from
office or other cause shall be filled by a majority vote of the
directors then in office, and directors so chosen shall hold office
for a term expiring at the Annual Meeting of Stockholders at which
the term of the class to which they have been elected expires. No
decrease in the number of directors constituting the Board shall
shorten the term of any incumbent director.

(c) Removal. Any director, or the entire Board, may be
removed from office at any time, but only for cause and only by the
affirmative vote of a majority of the Board or the holders of at
least sixty six and two thirds percent (66 2/3%) of the voting
power of all of the shares of the Corporation entitled to vote for
the election of directors. For the purposes of this Paragraph (c),
"cause" shall mean the willful and continuous failure of a director
substantially to perform such director's duties to the Corporation
(other than such failure resulting from incapacity due to physical
or mental illness) or the willful engaging by a director in gross
misconduct materially and demonstrably injurious to the
Corporation.

Section 3. Place of Meetings. Meetings of the Board may be
held at such place, within or without the State of Delaware, as the
Board may from time to time determine or as shall be specified in
the notice or waiver of notice of such meeting.

Section 4. First Meeting. The Board shall meet for the
purpose of organization, the election of officers, and the
transaction of other business, as soon as practicable after each
Annual Meeting of Stockholders, on the same day and at the same
place where such annual meeting shall be held. Notice of such
meeting need not be given. Such meeting may be held at any other
time or place (within or without the State of Delaware) which shall
be specified in a notice thereof given as hereinafter provided in
Article II, Section 7.

Section 5. Regular Meetings. Regular meetings of the Board
shall be held at such time and place as the Board may from time to
time determine. If any day fixed for a regular meeting shall be a
legal holiday at the place where the meeting is to be held, then
the meeting which would otherwise be held on that day shall be held
at the same hour on the next succeeding business day. Notice of
regular meetings of the Board need not be given except as otherwise
required by statute or these By-Laws.

Section 6. Special Meetings. Special meetings of the Board
may be called by two or more directors of the Corporation or by the
Chairman of the Board or the President.

Section 7. Notice of Meetings. Notice of each special
meeting of the Board (and of each regular meeting for which notice
shall be required) shall be given by the Secretary as hereinafter
provided in this Section 7, in which notice shall be stated the
time and place (within or without the State of Delaware) of the
meeting. Notice of each such meeting shall be delivered to each
director either personally or by telephone, facsimile, telegraph,
cable or wireless, at least twenty-four hours before the time at
which such meeting is to be held or by first-class mail, postage
pre-paid, addressed to him at his residence, or usual place of
business, at least three days before the day on which such meeting
is to be held. Notice of any such meeting need not be given to any
director who shall, either before or after the meeting, submit a
signed waiver of notice or who shall attend such meeting without
protesting, prior to or at its commencement, the lack of notice to
him. Except as otherwise specifically required by these By-Laws,
a notice or waiver of notice of any regular or special meeting need
not state the purposes of such meeting.

Section 8. Quorum and Manner of Acting. Three directors or
one-third of the entire Board, whichever is greater, shall be
present in person at any meeting of the Board in order to
constitute a quorum for the transaction of business at such
meeting, and, except as otherwise expressly required by statute or
the Certificate of Incorporation, the act of a majority of the
directors present at any meeting at which a quorum is present shall
be the act of the Board. In the absence of a quorum at any meeting
of the Board, a majority of the directors present thereat, or if no
director be present, the Secretary may adjourn such meeting to
another time and place, or such meeting, unless it be the first
meeting of the Board, need not be held. At any adjourned meeting
at which a quorum is present, any business may be transacted which
might have been transacted at the meeting as originally called.
Except as provided in Article III of these By-Laws, the directors
shall act only as a Board and the individual directors shall have
no power as such.

Section 9. Organization. At each meeting of the Board, the
Chairman of the Board (or, in his absence or inability to act, the
President, or in his absence or inability to act, another director
chosen by a majority of the directors present) shall act as
chairman of the meeting and preside thereat. The Secretary (or, in
his absence or inability to act, any person appointed by the
chairman) shall act as secretary of the meeting and keep the
minutes thereof.

Section 10. Resignation. Any director of the Corporation may
resign at any time by giving written notice of his resignation to
the Board or Chairman of the Board or the President or the
Secretary. Any such resignation shall take effect at the time
specified therein or, if the time when it shall become effective
shall not be specified therein, immediately upon its acceptance.
Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

Section 11. Certain Vacancies. Vacancies and newly created
directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in
office, though less than a quorum, or by a sole remaining director,
and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in
office, then an election of directors may be held in the manner
provided by statute. If, at the time of filling any vacancy or any
newly created directorship, the directors then in office shall
constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at
least ten percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the
directors then in office. When one or more directors shall resign
from the Board, effective at a future date, a majority of the
directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall
become effective, and each director so chosen shall hold office as
provided in this action in the filling of other vacancies.

Section 12. Compensation. The Board shall have authority to
fix the compensation, including fees and reimbursement of expenses,
of directors for services to the Corporation in any capacity,
provided no such payment shall preclude any director from serving
the Corporation in any other capacity and receiving compensation
therefor.

Section 13. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Board or of any
committee thereof may be taken without a meeting if all members of
the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.

Section 14. Telephonic Meetings. Unless otherwise restricted
by the Certificate of Incorporation or by these By-Laws, members of
the Board of Directors may participate in a meeting of the Board of
Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other and such
participation in a meeting shall constitute presence in person at
the meeting.

ARTICLE III
EXECUTIVE AND OTHER COMMITTEES
Section 1. Executive and Other Committees. The Board may, by
resolution passed by a majority of the whole Board, designate one
or more committees, each committee to consist of two or more of the
directors of the Corporation. The Executive Committee shall
consist of the Chairman of the Board and such of the other members
of the Board as shall be appointed pursuant to the immediately
preceding sentence. The Board may designate one or more directors
as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution creating the
committee, shall have and may exercise the powers of the Board in
the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all
papers which may require it; provided, however, that in the absence
or disqualification of any member of such committee or committees,
the member or members thereof present at any meeting and not
disqualified from voting, whether or not he, she or they constitute
a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified
member. Each committee shall keep written minutes of its
proceedings and shall report such minutes to the Board when
required. All such proceedings shall be subject to revision or
alteration by the Board; provided, however, that third parties
shall not be prejudiced by such revision or alteration.

Section 2. General. A majority of any committee may
determine its action and fix the time and place of its meetings,
unless the Board shall otherwise provide. Notice of such meetings
shall be given to each member of the committee in the manner
provided for in Article II, Section 7. The Board shall have any
power at any time to fill vacancies in, to change the membership
of, or to dissolve any such committee. Nothing herein shall be
deemed to prevent the Board from appointing one or more committees
consisting in whole or in part of persons who are not directors of
the Corporation; provided, however, that no such committee shall
have or may exercise any authority of the Board.

ARTICLE IV
OFFICERS
Section 1. Number and Qualifications. The officers of the
Corporation shall include the Chairman of the Board, the Vice-
Chairman of the Board, the President, one or more Vice-Presidents
(any of whom may be designated as Executive Vice-President), the
Chief Financial Officer, the Treasurer, the Controller and the
Secretary. Any two or more offices may be held by the same person.
Such officers shall be elected from time to time by the Board or by
the Chairman of the Board, each to hold office until his successor
shall have been duly elected or appointed and shall have qualified,
or until his death, or until he shall have resigned, or have been
removed, as hereinafter provided in these By-Laws. The Board may
from time to time elect, or the Chairman of the Board may appoint,
such other officers (including one or more Assistant Vice-
Presidents, Assistant Secretaries and Assistant Treasurers), and
such agents as may be necessary or desirable for the business of
the Corporation. Such other officers and agents shall have duties
and shall hold their offices for such terms as may be prescribed by
the Board or by the appointing authority.

Section 2. Resignations. Any officer of the Corporation may
resign at any time by giving written notice of his resignation to
the Board, the Chairman of the Board, the President or the
Secretary. Any such resignation shall take effect at the time
specified therein or, if the time when it shall become effective
shall not be specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

Section 3. Removal. Any officer or agent of the Corporation
may be removed, either with or without cause, at any time, by the
Chairman of the Board or by the vote of the majority of the entire
Board at any meeting of the Board . Such removal shall be without
prejudice to the contractual rights, if any, of the person so
removed.

Section 4. Vacancies. A vacancy in any office, whether
arising from death, resignation, removal or any other cause, may be
filled for the unexpired portion of the term of the office which
shall be vacant, in the manner prescribed in these By-Laws for the
regular elections or appointment to such office.

Section 5. The Chairman of the Board. The Chairman of the
Board shall be the Chief Executive Officer and shall have general
and active supervision and direction over the management of the
Corporation's business and over the President and Chief Operating
Officer and all of the Corporation's other officers, agents and
employees. The Chairman of the Board shall, if present, preside at
each meeting of the stockholders and of the Board and shall be an
ex officio member of all committees of the Board. The Chairman of
the Board shall perform all duties incident to the office of
Chairman of the Board and such other duties as may from time to
time be assigned to him by the Board.

Section 6. Vice-Chairman of the Board. The Vice-Chairman of
the Board shall be responsible for assisting the Chairman of the
Board and shall perform all such duties as may from time to time be
assigned to him by the Board.

Section 7. The President. Unless the President's duties are
otherwise modified by the Chairman of the Board, the President
shall, in consultation with and subject to the direction of the
Chairman of the Board, have general and active management of the
operations and business of the Corporation and general and active
supervision and direction over the affairs of the Corporation and
over all of its other officers, agents and employees (except the
Chairman of the Board and Chief Executive Officer). The President
shall be the Corporation's Chief Operating Officer and shall see
that all duties of subordinate officers are properly performed and
that their responsibilities are properly discharged. In performing
such duties, the President shall report directly to the Chairman of
the Board and shall consult with the Chairman of the Board and be
subject to the direction of the Chairman of the Board regarding
significant decisions and strategic options for the Company. At
the request of the Chairman of the Board, or in the case of his
absence or inability to act, the President shall perform the duties
of the Chairman of the Board and when so acting shall have all the
powers of, and be subject to, all the restrictions upon, the
Chairman of the Board. He shall perform all duties incident to the
office of President and such other duties as from time to time may
be assigned to him by the Chairman of the Board and by these
By-Laws.

Section 8. Vice Presidents. The Executive Vice-President and
each Vice-President shall have such powers and perform all such
duties as from time to time may be assigned to him by the Board or
by the Chairman of the Board.

Section 9. The Chief Financial Officer. The Chief Financial
Officer shall:
(a) have charge and custody of, and be responsible for, all
the funds and securities of the Corporation;
(b) keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and have
control of all books of account of the Corporation;
(c) cause all moneys and other valuables to be deposited to
the credit of the Corporation in such depositaries as may be
designated by the Board;
(d) receive, and give receipts for, moneys due and payable to
the Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investment of its funds as ordered or authorized by the Board,
taking proper vouchers therefor;
(f) render the Chairman of the Board, the President and the
Board, whenever the Board or the Chairman of the Board may require,
an account of the financial condition of the Corporation; and
(g) in general, perform all the duties incident to the office
of treasurer and such other duties as from time to time may be
assigned to him by the Board or by the Chairman of the Board.

Section 10. The Secretary. The secretary shall:
(a) keep or cause to be kept in one or more books provided
for the purpose, the minutes of all meetings of the Board, the
committees of the Board and the stockholders;
(b) see that all notices are duly given in accordance with
the provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the
Corporation and affix and attest the seal to all stock certificates
of the Corporation (unless the seal of the Corporation on such
certificates shall be a facsimile, as hereinafter provided) and
affix and attest the seal to all other documents to be executed on
behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and filed
are properly kept and filed; and
(e) in general, perform all the duties incident to the office
of Secretary and such other duties as from time to time may be
assigned to him by the Board or by the Chairman of the Board.

Section 11. Officers' Bonds or Other Security. If required
by the Board, any officer of the Corporation shall give a bond or
other security for the faithful performance of his duties, in such
amount and with such surety or sureties as the Board may require.

Section 12. Compensation. The compensation of the officers
of the Corporation for their services as such officers shall be
fixed from time to time by the Board; provided, however, that the
Board may delegate to the Chairman of the Board the power to fix
the compensation of officers and agents appointed by the Chairman
of the Board. An officer of the Corporation shall not be prevented
from receiving compensation by reason of the fact that he is also
a director of the Corporation, but any such officer who shall also
be a director shall not have any vote in the determination of the
amount of compensation paid to him.

ARTICLE V
INDEMNIFICATION
Section 1. Right to Indemnification. The Corporation shall
indemnify and hold harmless, to the fullest extent permitted by
applicable law as it presently exists or may hereafter be amended,
any person who was or is made or is threatened to be made a party
or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding"),
by reason of the fact that he, or a person for whom he is the legal
representative, is or was a director or officer of the Corporation
or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another
corporation or of a partnership, joint venture, trust, enterprise
or nonprofit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall
indemnify a person in connection with a proceeding initiated by
such person only if the proceeding was authorized by the Board.

Section 2. Prepayment of Expenses. The Corporation shall pay
the expenses incurred in defending any proceeding in advance of its
final disposition; provided, however, that the payment of expenses
incurred by a director or officer in his capacity as a director or
officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the director or
officer to repay all amounts advanced if it should be determined to
be indemnified under this Article V or otherwise.

Section 3. Claims. If a claim for indemnification or payment
of expenses under this Article V is not paid in full within ninety
days after a written claim therefor has been received by the
Corporation, the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part, shall
be entitled to be paid the expense of prosecuting such claim. In
any such action, the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification
or payment of expenses under applicable law.

Section 4. Nonexclusivity of Rights. The rights conferred on
any person by this Article V shall not be exclusive of any other
rights which such person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, these By-
Laws, agreement, vote of stockholders or disinterested directors or
otherwise.

Section 5. Contracts and Arrangements. The Corporation may
enter into contracts providing indemnification to the full extent
authorized or permitted by the Delaware General Corporation Law and
may create a trust fund, grant a security interest and/or use other
means (including, without limitation, letters of credit, surety
bonds and other similar arrangements) to ensure the payment of such
amounts as may become necessary to effect indemnification pursuant
to such contracts or otherwise.

Section 6. Amendment or Repeal. Any repeal or modification
of the foregoing provisions of this Article V shall not adversely
affect any right or protection of any person in respect of any act
or omission occurring prior to the time of such repeal or
modification.

ARTICLE VI
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
Section 1. Execution of Contracts. Except as otherwise
required by statute, the Certificate of Incorporation or these
By-Laws, any contracts or other instruments may be executed and
delivered in the name and on behalf of the Corporation by such
officer or officers (including any assistant officer) of the
Corporation as the Board may from time to time direct. Such
authority may be general or confined to specific instances as the
Board may determine. Unless authorized by the Board or expressly
permitted by these By-Laws, an officer or agent or employee shall
not have any power or authority to bind the Corporation by any
contract or engagement or to pledge its credit or to render it
pecuniarily liable for any purpose or to any amount.

Section 2. Loans. Unless the Board shall otherwise
determine, either (a) the President or the Chairman of the Board,
or (b) any Vice President, the Chief Financial Officer, the
Treasurer or the Secretary, together with the President or the
Chairman of the Board, may effect loans and advances at any time
for the Corporation from any bank, trust company or other
institution, or from any firm, corporation or individual, and for
such loans and advances may make, execute and deliver promissory
notes, bonds or other certificates or evidence of indebtedness of
the Corporation, but no officer or officers shall mortgage, pledge,
hypothecate or transfer any securities or other property of the
Corporation, except when authorized by the Board.

Section 3. Checks, Drafts, etc. All checks, drafts, bills of
exchange or other orders for the payment of money out of the funds
of the Corporation, and all notes or other evidences of
indebtedness of the Corporation, shall be signed in the name and on
behalf of the Corporation by such persons and in such manner as
shall from time to time be authorized by the Board.

Section 4. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the
credit of the Corporation in such banks, trust companies or other
depositories as the Board may from time to time designate or as may
be designated by any officer or officers of the Corporation to whom
such power of designation may from time to time be delegated by the
Board. For the purpose of deposit and for the purpose of
collection for the account of the Corporation, checks, drafts and
other orders for the payment of money which are payable to the
order of the Corporation may be endorsed, assigned and delivered by
any officer or agent of the Corporation, or in such manner as the
Board may determine by resolution.

Section 5. General and Special Bank Accounts. The Board may
from time to time authorize the opening and keeping of general and
special bank accounts with such banks, trust companies or other
depositories as the Board may designate or as may be designated by
any officer or officers of the Corporation to whom such power of
designation may from time to time be delegated by the Board. The
Board may make such special rules and regulations with respect to
such bank accounts, not inconsistent with the provisions of these
By-Laws, as it may deem expedient.

Section 6. Proxies in Respect of Securities of Other
Corporations. Unless otherwise provided by resolution adopted by
the Board, Chairman of the Board, the President or a Vice President
may from time to time appoint an attorney or attorneys or agent or
agents, of the Corporation, in the name and on behalf of the
Corporation to cast the votes which the Corporation may be entitled
to cast as the holder of stock or other securities in any other
corporation, any of the stock or other securities of which may be
held by the Corporation, at meetings of the holders of the stock or
other securities of such other corporation, or to consent in
writing, in the name of the Corporation as such holder, to any
action by such other corporation, and may instruct the person or
persons so appointed as to the manner of casting such votes or
giving such consent, and may execute or cause to be executed in the
name and on behalf of the Corporation and under its corporate seal,
or otherwise, all such written proxies or other instruments as he
may deem necessary or proper.

ARTICLE VII
SHARES, ETC.
Section 1. Stock Certificates. Each holder of stock of the
Corporation shall be entitled to have a certificate, in such form
as shall be approved by the Board, certifying the number of shares
of stock of the Corporation owned by him. The certificates
representing shares of stock shall be signed in the name of the
Corporation by the Chairman of the Board or the President or a
Vice-President and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer and sealed with the seal of
the Corporation (which seal may be a facsimile, engraved or
printed); provided, however, that where any such certificate is
countersigned by a transfer agent other than the Corporation or its
employee, or is registered by a registrar other than the
Corporation or one of its employees, the signature of the officers
of the Corporation upon such certificates may be facsimiles,
engraved or printed. In case any officer who shall have signed or
whose facsimile signature has been placed upon such certificates
shall have ceased to be such officer before such certificates shall
be issued, they may nevertheless be issued by the Corporation with
the same effect as if such officer were still in office at the date
of their issue.

Section 2. Books of Account and Record of Stockholders. The
books and records of the Corporation may be kept at such places
within or without the State of Delaware, as the Board may from time
to time determine. The stock record books and the blank stock
certificate books shall be kept by the Secretary or by any other
officer or agent designated by the Board.

Section 3. Transfers of Shares. Transfers of shares of stock
of the Corporation shall be made on the stock records of the
Corporation only upon authorization by the registered holder
thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a
transfer agent or transfer clerk, and on surrender of the
certificate or certificates for such shares properly endorsed or
accompanied by a duly executed stock transfer power and the payment
of all taxes thereon. Except as otherwise provided by law, the
Corporation shall be entitled to recognize the exclusive right of
a person in whose name any share or shares stand on the record of
stockholders as the owner of such share or shares for all purposes,
including, without limitation, the rights to receive dividends or
other distributions, and to vote as such owner, and the Corporation
may hold any such stockholder of record liable for calls and
assessments and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in any such share or shares
on the part of any other person whether or not it shall have
express or other notice thereof. Whenever any transfers of shares
shall be made for collateral security and not absolutely, and both
the transferor and transferee request the Corporation to do so,
such fact shall be stated in the entry of the transfer.

Section 4. Regulations. The Board may make such additional
rules and regulations, not inconsistent with these By-Laws, as it
may deem expedient concerning the issue, transfer and registration
of certificates for shares of stock of the Corporation. It may
appoint, or authorize any officer or officers to appoint, one or
more transfer agents or one or more transfer clerks and one or more
registrars and may require all certificates for shares of stock to
bear the signature or signatures of any of them.

Section 5. Lost, Destroyed or Mutilated Certificates. The
holder of any certificate representing shares of stock of the
Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of such certificate, and the Corporation
may issue a new certificate of stock in the place of any
certificate theretofore issued by it which the owner thereof shall
allege to have been lost, stolen or destroyed, or which shall have
been mutilated, and the Board may, in its discretion, require such
owner or his legal representative to give to the Corporation a bond
in such sum, limited or unlimited, and in such form and with such
surety or sureties as the Board in its absolute discretion shall
determine, to indemnify the Corporation against any claim that may
be made against it on account of the alleged loss, theft, or
destruction of any such certificate, or the issuance of a new
certificate. Anything herein to the contrary notwithstanding, the
Board, in its absolute discretion, may refuse to issue any such new
certificate, except pursuant to legal proceedings under the laws of
the State of Delaware.

Section 6. Stockholder's Right of Inspection. Any person who
shall have been a stockholder of record of the Corporation for at
least six months immediately preceding his demand, or any person
holding, or thereunto authorized by the holders of, at least five
percent of the outstanding shares of stock of the Corporation,
shall, in person or by attorney or other agent, upon written demand
under oath stating the purpose thereof, have the right during the
ordinary business hours to inspect for any proper purpose the
Corporation's stock ledger, a list of its stockholders and its
other books and records, and to make copies or extracts therefrom.
A proper purpose shall mean a purpose reasonably related to such
person's interest as a stockholder. In every instance where an
attorney or other agent shall be the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power
of attorney or such other writing which authorizes the attorney or
other agent to so act on behalf of the stockholder. The demand
under oath shall be directed to the Corporation at its registered
office in this State or at its principal place of business.

Section 7. Fixing of Record Date. In order that the
Corporation may determine the stockholders entitled to notice of or
to vote at the meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board may fix, in
advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty
days prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the
adjourned meeting.
ARTICLE VIII
OFFICES
Section 1. Registered Office. The registered office of the
Corporation in the State of Delaware shall be at 1209 Orange
Street, Wilmington, County of New Castle, Delaware. The name of
the resident agent in charge thereof shall be the Corporation Trust
Company.

Section 2. Other Offices. The Corporation may also have an
office or offices other than said principal office at such place or
places, either within or without the Sate of Delaware, as the Board
shall from time to time determine or the business of the
Corporation may require.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall be January 1 to
December 31 of each year.
ARTICLE X
SEAL
The Board shall provide a corporate seal, which shall be in
the form of two concentric circles and bear the name of the
Corporation and the words and figures "Corporate Seal 1971
Delaware."
ARTICLE XI
AMENDMENTS
The Board shall have the power to amend these By-Laws by a
majority vote. Notwithstanding anything contained in these By-Laws
to the contrary, the stockholders may amend these By-Laws, but only
by an affirmative vote of sixty-six and two-thirds percent (66
2/3%) of the voting power of all shares of the Corporation entitled
to vote, except when stockholders are required to vote by class, in
which event sixty-six and two-thirds percent (66 2/3%) of the
voting power of that class shall be required.

Legal/ByLaws.3

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Employment Agreement is entered into as of August 21, 1995, by and
between California Energy Company, a Delaware corporation (the "Company"), and
David L. Sokol (the "Executive").

RECITALS

The Company desires to employ the Executive as its Chairman and Chief
Executive Officer on the terms set forth in this Agreement, and the Executive
desires to accept such employment.

Accordingly, the Company and the Executive agree as follows:

AGREEMENT

Section 1. Defined Terms. Terms used but not defined in this Agreement
will have the meanings ascribed to them in Exhibit A to this Agreement.

Section 2. Employment.

(a) The Company will employ the Executive as, and the Executive will
act as, the Chairman and Chief Executive Officer of the Company upon the terms
set forth in this Agreement, for the Term of Employment.

(b) The Executive's primary place of employment will be Omaha,
Nebraska.

Section 3. Duties.

(a) The Executive (i) will manage the business of the Company and
supervise and direct the other officers of the Company and its employees,
agents and representatives, and (ii) will perform and discharge such other
duties, and will have such other authority, as are customary to his office.
In performing such duties, the Executive will report directly to the Board of
Directors.

(b) The Board will not reduce the title, office, duties or author-
ity of the Executive in any material respect and will not require the Executive
to relocate his residence from Omaha, Nebraska except pursuant to Section 7.
During the Term of Employment, the Company will use its best efforts to cause
the Executive to be nominated and elected to the Company's Board of Directors.

(c) The Executive will act, without any compensation in addition to
the compensation payable pursuant to this Agreement, as an officer of any
subsidiary of the Company, or as a member of the board of directors of any
subsidiary of the Company, if so appointed or elected.

(d) During the Term of Employment, the Executive (i) will devote his
entire time, attention and energies during normal business hours to the business
of the Company, and (ii) will not, without the Consent of the Board, perform any
services for any other Person or engage in any other business or professional
activity.

(e) Notwithstanding subsection (d), the Executive, without the
consent of the Board, may (i) perform the consulting duties contemplated in
the letter agreement dated October 5, 1990, as it may be amended, by and
among the Executive, Ogden Corporation and Ogden Projects, Inc., (ii) purchase
securities issued by, or otherwise passively invest his personal or family
assets in, any other company or business, and (iii) engage in governmental,
political, educational or charitable activities, but only to the extent that
those activities (A) are not inconsistent with any direction of the Board or
any duties under this Agreement, and (B) do not interfere with the devotion
by the Executive of his time, attention and energies during normal business
hours to the business of the Company.

Section 4. Compensation.

(a) During the Term of Employment, the Company will pay the Execu-
tive a base salary at a minimum annual rate of $500,000, in substantially equal
periodic payments in accordance with the Company's practices for executive
employees.

(b) The Board will review the salary payable to the Executive at
least annually beginning in the fourth fiscal quarter of 1996. The Board, in
its discretion, may increase the salary of the Executive from time to time, but
may not reduce the salary of the Executive below the amount set forth in
subsection (a) above. The Board may issue the Executive stock options from
time to time at its discretion.

(c) During the Term of Employment, the Company will pay the Execu-
tive an annual bonus, not later than ten calendar days after the end of the
preceding fiscal year of the Company in an amount determined by the Board, by
reference to the accomplishment by the Executive of goals established by the
Board for the related fiscal year. The annual bonus paid to the Executive,
however, will not be less than the Minimum Bonus.

(d) If the Executive suffers a Disability which continues for more
than 60 calendar days, the Company may elect to pay the Executive, for so long
as the Disability continues, fifty (50) percent of the salary otherwise payable
to the Executive under Section 4(a), and fifty (50) percent of the Minimum Bonus
otherwise payable to the Executive pursuant to Section 4(c). Any such election
will not affect the rights of the Company under Section 7(a)(v).

(e) The Company will reimburse the Executive, (i) subject to
compliance by the Executive with the Company's customary reimbursement
practices, for all reasonable and necessary out-of-pocket expenses incurred by
the Executive on behalf of the Company in the course of its business.

(f) The Company may reduce any payments made to the Executive
under this Agreement by any required federal, state or local government with-
holdings or deductions for taxes or similar charges, or otherwise pursuant to
law, regulation or order.

(g) The compensation payable to the Executive pursuant to this
Agreement will be in consideration for all services rendered by the Executive
under this Agreement, and the Executive will receive no other compensation
from the Company unless determined otherwise by the Board of Directors.

(h) Any base salary or Minimum Bonus payable to the Executive for
any period of employment of less than a year during the Term of Employment will
be reduced to reflect the actual number of days of employment during the period
except as provided in Section 8(b).

Section 5. Other Benefits.

(a) During the Term of Employment, the Executive and his family may
participate in and receive benefits under any employee benefit plan which the
Company makes generally available to its employees and their families, including
any pension, life insurance, medical benefits, dental benefits or disability
plan, but only to the extent that the Executive or his family otherwise
satisfies the standards established for participation in the plan.

(b) The Executive may take up to four weeks of vacation during each
full calendar year during the Term of Employment, without loss of compensation
or other benefits under this Agreement.

Section 6. Confidentiality and Post-Employment Restrictions.

(a) The Executive acknowledges that the Company has confidential
information and trade secrets, whether written or unwritten, with respect to
carrying on its business, including sensitive technology and engineering
information and data, names of past, present and prospective customers and
vendors of the Company, methods of pricing contracts and income and expenses
associated therewith, negotiated prices and offers outstanding, credit terms
and status of accounts and the terms or circumstances of any business arrange-
ments between the Company and any third parties ("Confidential Information and
Trade Secrets"). As used in this Agreement, the term Confidential
Information and Trade Secrets does not include (i) information which becomes
generally available to the public other than as a result of a disclosure by the
Executive, (ii) information which becomes available to the Executive on a
noncon-fidential basis from a source other than the Company, or (iii) informa-
tion known to the Executive prior to any disclosure to him by the Company. The
Executive further acknowledges that the Executive possesses a high degree of
knowledge of the geothermal energy industry and, in particular, has committed
to a long-standing relationship with the Company as employee, director and
officer, which has allowed, and will continue to allow, him access to the
Company's Confidential Information and Trade Secrets. Accordingly, any
employment by the Executive with another employer in the geothermal energy
industry or participation by him as a substantial investor in any such industry
may necessarily involve disclosure of the Company's Confidential Information and
Trade Secrets. Consequently, the Executive agrees that, if he voluntarily
resigns his employment with the Company for any reason other than a breach of
this Agreement by the Company, he shall not at any time during the two-year
period after such resignation, directly or indirectly accept employment by or
invest in (except as a passive investor in a public corporation or in a publicly
issued partnership interest which, in either event, would not exceed an
ownership interest of 3% of the outstanding equity or partnership interest) in
any person, firm, corporation, partnership, joint venture or business which is
primarily engaged in the production or marketing of electrical energy from
geothermal resources.

(b) Without the Consent of the Board, the Executive will not, for
two years after the Term of Employment, (i) disclose any Confidential Informa-
tion and Trade Secrets of the Company or any Affiliate of the Company to any
Person (other than the Company, directors, officers or employees of the Company
or representatives thereof), or (ii) otherwise make use of any Confidential
Information and Trade Secrets other than in connection with authorized dealings
with or by the Company.

(c) For a period of two years after the Term of Employment, the
Executive shall neither directly nor indirectly solicit, on behalf of another
employer, the employment of any person who is then currently employed by the
Company, or otherwise induce, on behalf of another employer, such person to
leave the employment of the Company without the Company's prior written
approval.

(d) The Executive will hold, on behalf of the Company and as the
property of the Company, all memoranda, manuals, books, papers, letters,
documents, computer software and other similar property obtained during the
course of his employment by the Company and relating to the Company's business,
and will return such property to the Company at any time upon demand by the
Board and, in any event, within five calendar days after the end of the Term
of Employment.

Section 7. Termination of Employment.

(a) The employment of the Executive under this Agreement will
terminate on the earliest of: (i) written notice by the Executive of his
resignation; (ii) the 30th calendar day after the Company gives to the Executive
written notice of termination without Cause; (iii) the fifth calendar day after
the Company gives to the Executive written notice of the existence of Cause;
(iv) the 30th calendar day after the Executive gives to the Company written
notice of (A) the failure by the Company to pay to the Executive, for a material
period of time and in a material amount, compensation due and payable by the
Company under Section 4(a) or 4(c), or (B) any breach by the Company or the
Board of Section 3(b) or Section 4(b); (v) the Permanent Disability of the
Executive; or (vi) the death of the Executive.

(b) If the employment of the Executive is terminated under this
Agreement, the obligations of the Executive under Section 6 will remain in full
force and effect, and the termination will not abrogate any rights or remedies
of the Company or the Executive with respect to any breach of the Agreement,
except as expressly provided in Sections 8 and 9.

Section 8. Payment Upon Termination.

(a) If the employment of the Executive is terminated pursuant to
subsections (i), (iii), (v), or (vi) of Section 7(a), the Company will pay to
the Executive, within 30 calendar days, (i) any salary pursuant to Section
4(a) which is accrued but unpaid through the Termination Date, and (ii) a
bonus payment, in an amount determined by the Board by reference to the
performance of the Executive for a portion of the fiscal year of the Company
before the Termination Date, which is not less than a pro rata share (determined
by reference to the portion of the fiscal year before the Termination Date) of
the Minimum Bonus.

(b) If the employment of the Executive is terminated pursuant to
subsection (ii) or subsection (iv) of Section 7(a), the Company will pay the
Executive, on or before the related Termination Date, an amount equal to three
times the sum of the annual salary and Minimum Bonus then in effect pursuant to
Section 4. In addition, any portion of the options granted to the Executive
which would become vested within the next 36 months (beginning with the month
following the month in which the Termination Date occurs) will vest immediately
and may be exercised within the remaining term of the options as provided in the
option agreement.

Section 9. Remedies.

(a) The Company will be entitled, if it elects, to enjoin any breach
or threatened breach of, or enforce the specific performance of, the obligations
of the Executive under Sections 3 or 6, without showing any actual damage or
that monetary damages would be inadequate. Any such equitable remedy will not
be the sole and exclusive remedy for any such breach, and the Company may pursue
other remedies for such a breach.

(b) Any court proceeding to enforce this Agreement may be commenced
in federal courts, or in the absence of federal jurisdiction the state courts,
located in Omaha, Nebraska. The parties submit to the jurisdiction of such
courts and waive any objection which they might have to pursuit of any such
proceeding of any such court.

(c) Except to the extent that the Company elects to seek injunctive
relief in accordance with subsection (a), any controversy or claim arising out
of or relating to this Agreement or the validity, interpretation, enforceability
or breach of this Agreement will be submitted to arbitration in Omaha, Nebraska,
in accordance with the then existing rules of the American Arbitration Associa-
tion, and judgement upon the award rendered in any such arbitration may be
entered in any court having jurisdiction.

(d) The Company will pay, promptly upon request, any legal fees or
expenses incurred by the Executive in connection with any legal proceedings
instituted by the Company to enforce the provisions of this Agreement against
the Executive, but such advances will be reimbursable to the Company, but only
to the extent the Company ultimately prevails in the proceeding (after any
applicable appeals have been exhausted).

Section 10.Assignment. Neither the Company nor the Executive may sell,
transfer or otherwise assign their rights, or delegate their obligations,
under this Agreement.

Section 11.Unfunded Benefits. All compensation and other benefits payable
to the Executive under this Agreement will be unfunded, and neither the Company
nor any affiliate of the Company will segregate any assets to satisfy any
obligation of the Company under this Agreement. The obligations of the Company
to the Executive are not the subject of any guarantee or other assurance of any
Person other than the Company.

Section 12.Severability. Should any provision, paragraph, clause or
portion thereof of this Agreement be declared or be determined by any court or
arbitrator of competent jurisdiction to be illegal, unenforceable or invalid,
the validity or enforceability of the remaining parts, terms or provisions shall
not be affected thereby and said illegal or invalid part, term or provision
shall be deemed not to be a part of this Agreement. Alternatively, the court
or arbitrator having jurisdiction shall have the power to modify such illegal,
unenforceable or invalid provision so that it will be valid and enforceable,
and, in any case, the remaining provisions of this Agreement shall remain in
full force and effect.

Section 13.Miscellaneous.

(a) This Agreement may be amended or modified only by a writing
executed by the Executive and the Company.

(b) This Agreement will be governed by and construed in accordance
with the internal laws of the State of Nebraska.

(c) This Agreement constitutes the entire agreement of the Company
and the Executive with respect to the matters set forth in this Agreement and
supersedes any and all other agreements between the Company and the Executive
relating to those matters.

(d) Any notice required to be given pursuant to this Agreement will
be deemed given (i) when delivered in person, or (ii) on the third calendar day
after it is sent by facsimile, express delivery service, or registered or
certified mail, if to the Company or to the Executive, at 302 South 36th Street,
Suite 400, Omaha, Nebraska 68131, fax number (402) 231-1658, or to such other
address as may be designated by the Company or the Executive in writing to
the other party.

(e) A waiver by a party of a breach of this Agreement will not
constitute a waiver of any other breach, prior or subsequent, of this Agreement.

IN WITNESS WHEREOF, the Company and the Executive have entered into this
Agreement as of August 21, 1995.

CALIFORNIA ENERGY COMPANY, INC.

BY:
Steven A. McArthur
Senior Vice President

EXECUTIVE:

BY:
David L. Sokol

EXHIBIT A

Defined Terms

"Affiliate" means, with respect to a Person, (a) any Person directly or
indirectly owning, controlling, or holding power to vote 10% or more of the
outstanding voting securities of the Person; (b) any Person 10% or more of whose
outstanding voting securities are directly or indirectly owned, controlled or
held with power to vote by the Person; (c) any Person directly or indirectly
controlling, controlled by or under common control with, the Person and (d)
any officer or director of the Person, or of any Person directly or indirectly
controlling the Person, controlled by the Person or under common control with
the Person. As used in this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person.

"Agreement" means this Employment Agreement dated as of August 21, 1995, by
and between the Company and the Executive, as it may be amended from time to
time in accordance with its terms.

"Board" means the Board of Directors of the Company or, if the context is
appropriate, any duly authorized and appointed committee or member of the Board
of Directors having authority to act on behalf of the Board of Directors with
respect to the matter in question.

"Cause" means any or all of the following:

(a) the willful and continued failure by the Executive to perform
substantially the services contemplated by the Agreement (other than
any such failure resulting from the Executive's incapacity due to
disability) after a written demand for substantial performance is
delivered to the Executive by a member or representative of the
Board which specifically identifies the manner in which it is alleged
that the Executive has not substantially performed such services;

(b) the willful engaging by the Executive in gross misconduct which is
materially and demonstrably injurious to the Company, provided that,
no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, in bad
faith and without reasonable belief that such action or omission
was in, or not opposed to, the best interests of the Company; or

(c) the gross negligence of the Executive in performing the services
contemplated by the Agreement which is materially and demonstrably
injurious to the Company.

"Cause" will exist only if the Board has delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of a majority of the entire
membership of the Board at a meeting of the Board called and held for that
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board), finding
that, in the good faith judgement of the Board, the Executive was guilty of
the conduct constituting such Cause and specifying the particulars thereof in
detail.

"Company" means California Energy Company, Inc., a Delaware corporation,
and any successor or assign permitted under the Agreement.

"Consent of the Board" means, with respect to an action, the consent of the
Board to the action given prior to the action in a resolution duly adopted by
the Board, appropriate committee of the Board, or by a member of the Board duly
authorized to consent to such action.

"Disability" means, with respect to the Executive, that the Executive has
become physically or mentally incapacitated or disabled so that, in the reason-
able judgement of majority of the members of the Board, he is unable to perform
his duties under this Agreement and such other services as he performed on
behalf of the Company before incurring such incapacity or disability.

"Minimum Bonus" means, with respect to a fiscal year, $400,000.

"Permanent Disability" means a Disability which has continued for at least
six consecutive calendar months.

"Person" means any natural person, general partnership, limited partner-
ship, corporation, joint venture, trust, business trust, or other entity.

"Term of Employment" means the period of time beginning on August 21, 1995,
and ending on the fifth anniversary of such date, unless earlier terminated
pursuant to Section 7(a) or automatically extended pursuant to the following
sentence. The Term of Employment will be automatically extended for one year
on each anniversary of the date of this Agreement beginning on the fifth
anniversary unless the Executive has given the Company a notice declining
automatic extension at least 120 calendar days before the anniversary.

"Termination Date" means the date of termination of employment of the
Executive pursuant to Section 7 of this Agreement.

CALIFORNIA ENERGY COMPANY, INC.

RESTRICTED STOCK EXCHANGE AGREEMENT

THIS AGREEMENT is entered into as of the 29th day of November,
1995, between California Energy Company, Inc. (the "Company") and David L.
Sokol ("Recipient").

W I T N E S S E T H:

WHEREAS, the Company regards Recipient as a valuable contributor
to the Company, and has determined that it would be in the interest of the
Company and its shareholders to exchange options (the "Options," as described
more fully in Section 8 hereof) held by Recipient to acquire 500,000 shares of
common stock of the Company, $0.0675 par value ("Common Stock"), for shares of
Stock (as hereinafter defined) as a reward for past efforts and an incentive
for continued service with the Company and for increased achievements in the
future by the Recipient;

NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties to this Agreement hereby agree as follows:

1. Options/Restricted Stock Exchange. Contemporaneously with
the execution of this Agreement, Recipient will surrender the Options to the
Company and the Company will issue to Recipient 500,000 shares of Common Stock
of the Company, $0.0675 par value (the "Stock"). Stock Certificates
evidencing the Stock will be restricted as to transfer by the Company, by
means of a restrictive legend and standing instructions to the Company's Stock
Transfer Agent, for the period during which such shares of the Stock
constitute Restricted Stock pursuant to the terms of Sections 2 and 3, hereof.
All shares of Stock issued hereunder shall be deemed issued to Recipient as
fully paid and nonassessable shares, and Recipient shall have all rights of a
stockholder with respect thereto, including the right to vote, receive
dividends (including stock dividends), participate in stock splits or other
recapitalizations, and tender or exchange such shares in a tender or exchange
offer, merger, consolidation or other reorganization. The Company shall pay
any applicable stock transfer taxes in connection with the Stock issued
hereunder. The term "Stock" refers not only to the Stock granted hereunder,
but also to all securities received in replacement of the Stock, as a stock
dividend or as a result of any stock split, recapitalization, merger,
reorganization, exchange or the like, and all other new, substituted or
additional securities or other properties to which Recipient is entitled by
reason of Recipient's ownership of the Stock.

2. Restrictions. No shares of Stock issued to the Recipient
hereunder shall be sold, transferred by gift, hypothecated, or otherwise
transferred or disposed of by the Recipient prior to the date when the
Recipient shall become vested in such shares of Stock pursuant to Section 3,
hereof, and any unvested shares of Stock shall constitute "Restricted Stock"
for purposes of this Agreement until their vesting. If (i) Recipient
voluntarily terminates employment with the Company (under the circumstances
described in Section 7(a)(i) of the Amended and Restated Employment Agreement
entered into as of August 21, 1995, by and between Company and Recipient (the
"Employment Agreement")), or (ii) Recipient's employment with the Company is
terminated for Cause (as defined in the Employment Agreement) at a time when
the Recipient holds any Restricted Stock, such Restricted Stock shall be
deemed reconveyed to the Company without payment of any consideration by the
Company, and Company shall thereafter be the legal and beneficial owner of the
Restricted Stock and shall have all rights and interest in or related thereto
without further action by Recipient. Any attempt to transfer Stock in
violation of this Section 2 shall be null and void and shall be disregarded by
the Company.

3. Vesting. For purposes of this Agreement, the term "vest"
shall mean with respect to any share of the Stock that such share is no longer
subject to the restrictions on transfer set forth in Section 2 and that such
share is released from the reconveyance provision of that Section. If
Recipient would become vested in any fraction of a share of Stock on any date,
such fractional share shall not vest and shall remain Restricted Stock until
the Recipient becomes vested in the entire share. The Stock subject to this
Agreement shall vest:

(a) As to 25% of the number of shares covered by this
Agreement, or 125,000 shares, contemporaneously with the execution of this
Agreement;

(b) As to the remaining 75% of the number of shares
covered by this Agreement, or 375,000 shares, beginning with the last day of
the month of December, 1995 and continuing with the las day of each month
thereafter, ratably (that is, 1/60 of such shares, or 6,250 shares, shall vest
each month) over the 60-month period following the execution of this
Agreement, until all shares covered by this Agreement have become vested.

(c) Notwithstanding the foregoing, all Restricted Stock
granted under this Agreement shall be fully vested, nonforfeitable and not
subject to restriction or reconveyance in the event of:

(i) a termination of the Recipient's employment by the
Company without Cause (as defined in the Employment Agreement).

(ii) the Permanent Disability (as defined in the
Employment Agreement) or death of the Recipient.

(iii) a Change in Control. For purposes of this
Agreement, a Change in Control means (i) the dissolution of the Company, (ii)
the merger or consolidation of the Company where the Company is not the
surviving corporation, (iii) the sale of all or substantially all of the
Company's assets, or (iv) a change in control of more than fifty percent of
the outstanding voting shares of all classes of stock of the Company after the
date of this Agreement in one or a related series of transactions. To the
extent that any acceleration of vesting that occurs pursuant to this clause
(iii) results in the recognition of an "excess parachute payment" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), that also results in excise taxes payable by Recipient under Section
4999 of the Code, the Company shall pay to Recipient an amount equal to such
excise taxes together with a related gross-up payment, so that, after taking
into account additional taxes (including, without limitation, excise taxes)
payable by Recipient as a result of the receipt of the total payments provided
for by this sentence, the net amount received by Recipient pursuant to this
sentence will be sufficient to pay the total amount of excise taxes payable by
Recipient under Section 4999 of the Code.

4. Withholding of Taxes. Recipient shall provide the Company
with a copy of any timely election made pursuant to Section 83(b) of the Code
or similar provision of state or local law (collectively, and "83(b)
Election"). If Recipient makes a timely 83(b) Election, Recipient shall
immediately pay the Company (or the Affiliate that employs Recipient) the
amount necessary to satisfy any applicable federal, state, and local income
tax withholding requirements. If Recipient does not make a timely 83(b)
Election, Recipient shall, either at the time that the restrictions lapse
under this Agreement, at the end of the Section 16(b) period referred to in
Section 83(c)(3) of the Code or at the time withholding is otherwise required
by any applicable law, pay the Company (or the Affiliate that employs
Recipient) the amount necessary to satisfy any applicable federal, state, and
local income tax withholding requirements.

5. Additional Securities. Any securities received as the
result of ownership of Restricted Stock (hereinafter called "Additional
Securities"), including, but not by way of limitation, warrants, options and
securities received as a stock dividend or stock split, or as a result of a
recapitalization or reorganization, shall be restricted by the Company in the
same manner and subject to the same conditions as the Restricted Stock with
respect to which they were issued. Recipient shall be entitled to direct the
Company to exercise any warrant or option received as Additional Securities
upon meeting the conditions necessary to do so, in which event the securities
so purchased shall constitute Additional Securities. If Additional Securities
consist of a convertible security, Recipient may exercise any conversion
right, and any securities so acquired shall constitute Additional Securities.
Additional Securities shall be subject to the provisions of Sections 2 and 3,
above, in the same manner as the Restricted Stock to which they relate and
Additional Securities shall no longer be subject to the restrictions set forth
in Section 2 when the shares of Restricted Stock to which they relate becomes
vested hereunder.

6. Legends; Stop Transfer.

(a) All certificates for shares of the Restricted Stock
shall bear the following legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS
OF THAT CERTAIN RESTRICTED STOCK EXCHANGE AGREEMENT BETWEEN THE COMPANY
AND DAVID L. SOKOL, DATED AS OF ________, 1995. THE SHARES REPRESENTED
BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH SUCH
AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

(b) The Company shall issue appropriate stop transfer
instructions to its Stock Transfer Agent regarding Restricted Stock and shall
automatically issue instructions to remove the restrictive legend for shares
of Stock which become vested hereunder, without any further action by
Recipient.

7. NO EFFECT ON TERMS OF EMPLOYMENT. THIS AGREEMENT SHALL NOT
AMEND RECIPIENT'S EMPLOYMENT CONTRACT IN ANY MANNER OR OTHERWISE HAVE ANY
EFFECT ON RECIPIENT'S TERMS OF EMPLOYMENT.

8. Surrender of Options and Related Matters. As provided in
Section 1 hereof, contemporaneous with the execution of this Agreement,
Recipient will surrender the Options, as described below, to the Company. The
Options were granted pursuant to that certain Non-Qualified Stock Option
Agreement of Grant No. 211, executed as of December 9, 1993, by the Company
and Recipient, and entered into pursuant to the Company's Amended and Restated
1986 Stock Option Plan (the "Option Agreement"), which covered options to
acquire 750,000 shares of the Company's Common Stock at an option exercise
price of $19 per share, subject to certain vesting provisions. Options to
acquire a total of 500,000 shares shall be surrendered. Options surrendered
first shall consist of unvested options and second shall consist of the most
recently vested options, but shall consist of vested options only to the
extent necessary to cause the total options surrendered to equal 500,000.
Upon the surrender of the Options, the Option Agreement shall continue in full
force and effect as to the options not surrendered. [ ]

9. Distributions. The Company shall disburse to Recipient all
dividends, interest and other distributions paid or made in cash or property
with respect to Stock and Additional Securities, less any applicable federal
or state withholding obligations (except as provided in Sections 3 and 12
hereof), free and clear of any restrictions or encumbrances hereunder, except
that Additional Securities paid as distributions shall be subject to
restrictions hereunder as specified in Section 5 above.

10. Successors. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns.

11. Notice. Any notice or other document required to be given
or sent pursuant to the terms of this Agreement shall be sufficiently given or
served hereunder to any party when transmitted by registered or certified
mail, postage prepaid, addressed to the party to be served as follows:

Company: California Energy Company, Inc.
302 South 36th Street, Suite 400
Omaha, NE 68131
Attention: General Counsel

Recipient: At Recipient's address as it appears under
Recipient's signature to this Agreement, or to
such other address as Recipient may specify in
writing to the Company

Any party may designate another address for receipt of notices so long as
notice is given in accordance with this Section.

12. Costs. All costs, obligations and expenses incurred or to
be incurred (including, without limitation, the Medicare portion of employment
taxes) in connection with this Agreement, the exchange provided for in Section
1 and the Stock (except solely for the personal income tax obligations of
Recipient set forth in Section 4 above) shall be the obligation of, and shall
be paid by, the Company, and the Company shall pay all applicable gross-ups to
preserve the intended economic benefit to Recipient under this Agreement.

13. Nebraska Law. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Nebraska.

IN WITNESS WHEREOF, the parties hereto have duly executed this
Restricted Stock Exchange Agreement as of the date first above written.

CALIFORNIA ENERGY COMPANY, INC.

By: /s/ Steven A. McArthur
Steven A. McArthur
Title: Senior Vice President

DAVID L. SOKOL

By: /s/ David L. Sokol
David L. Sokol

c/o California Energy Company
302 South 36th Street, Suite 400
Omaha, NE 68131

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this "Agreement"), dated as of March 27,
1996, is entered into between Edison Mission Energy, a California corporation
("Seller"), and CalEnergy Imperial Valley Company, Inc., a Delaware corporation
("Buyer").

RECITALS

A. Seller owns the shares of common stock described in Exhibit A
attached hereto, constituting all of the outstanding capital stock (the "Stock")
of (a) Conejo Energy Company, a California corporation, (b) Niguel Energy
Company, a California corporation, (c) San Felipe Energy Company, a California
corporation, and (d) BN Geothermal, Inc. a Delaware corporation (individually,
a "Company" and collectively, the "Companies"). The Companies own the
partnership interests set forth in Exhibit B attached hereto, constituting a
one-half (1/2) equity interest in, each of the following partnerships: (i)
Del Ranch, L.P., a California limited partnership, (ii) Elmore, Ltd., a
California limited partnership, (iii) Leathers, L.P., a California limited
partnership, and (iv) Vulcan/BN Geothermal Power Company, a Nevada general
partnership (individually, a "Partnership" and collectively, the "Partner-
ships"), which own the Hoch (Del Ranch), Elmore, Leathers and Vulcan geothermal
power generation facilities, respectively, located in the Imperial County,
California.

B. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all of the Stock subject to the terms and conditions of this Agreement.

AGREEMENT

NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1 Defined Terms. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.

"Action" shall mean any action, order, writ, injunction, judgment or
decree of any court or governmental or regulatory entity or any claim, suit,
litigation, proceeding, labor dispute, arbitral action, governmental or
regulatory audit or investigation.

"affiliate" shall have the meaning set forth in the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder.

"Books and Records" shall mean, with respect to a Company, records
of the Company pertaining to the Company's business, properties or assets and
books, ledgers, files, reports, documents and records of every kind (including
computer records and other forms of electronic data storage) relating thereto
maintained by the Company or by Representatives on its behalf.

"Closing" shall have the meaning set forth in Section 3.1 hereof.

"Closing Date" shall mean the second business day after the
conditions to Closing are satisfied or such other date mutually agreed to.

"Encumbrance" shall mean any claim, lien, pledge, option, warrant,
put, call, obligation, charge, easement, security interest, deed of trust,
mortgage, right-of-way, encroachment, building or use restriction, conditional
sales agreement, encumbrance or other right of third parties, whether volun-
tarily incurred or arising by operation of law, and includes, without
limitation, any agreement to give any of the foregoing in the future, and any
contingent sale or other title retention agreement or lease in the nature
thereof.

"material adverse change" shall mean with respect to the business or
financial condition of a Company any adverse effect or change in the financial
condition, business, results of operations, prospects, assets, liabilities or
operations of the Company's business and/or its assets which individually or in
the aggregate of all such changes has had a material adverse affect on the
business or financial condition of such Company taken as a whole, or on the
ability of the Seller or the Company to consummate the transactions contemplated
hereby, or any event or condition which would, with notice or the passage of
time, constitute a "material adverse change."

"Consents" shall mean all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, or any other person,
reasonably necessary for the present or anticipated conduct of, or relating to
the operation of, the Companies' businesses or for the consummation of the
transactions contemplated hereby.

"Purchase Price" shall have the meaning set forth in Section 2.2
hereof.

"Representative" shall mean any officer, director, principal,
attorney, accountant, agent, employee or other representative.

"Tax" or "Taxes" shall mean any federal, state, local, foreign or
other tax, levy, impost, fee, assessment or other government charge, including
without limitation income, estimated income, business, occupation, franchise,
property, payroll, personal property, sales, transfer, use, employment,
commercial rent, occupancy, license, gross receipts, ad valorem, excise, social
security, severance or withholding taxes, and any premium, including without
limitation interest, penalties, fines and additional sums to be paid in
connection therewith.

"Tax Return" means any return, report, information return audit,
investigation or other proceeding response or other document (including any
related or supporting information and, where applicable, profit and loss
accounts and balance sheets) with respect to Taxes.

ARTICLE II

PURCHASE AND SALE OF STOCK

2.1 Transfer of Stock. Upon the terms and subject to the conditions
contained herein, at the Closing, Seller will sell, convey, transfer, assign and
deliver to Buyer, and Buyer will acquire from Seller, all shares of the Stock.

2.2 Consideration for Stock. Upon the terms and subject to the
conditions contained herein, as consideration for the purchase of all shares of
the Stock, Buyer shall pay to Seller at the Closing the aggregate amount of
Seventy Million U.S. Dollars (US$70,000,000) in immediately available funds (the
"Purchase Price").

ARTICLE III

CLOSING

3.1 Closing. The closing of the transactions contemplated herein (the
"Closing") shall be held on the Closing Date at 9:00 a.m. local time at the
offices of Seller, unless the parties hereto otherwise agree in writing.

3.2 Documents to be Delivered. To effect the transfer referred to in
Section 2.1 hereof and the delivery of the consideration described in Section
2.2 hereof, Seller and Buyer shall, on the Closing Date, deliver the following:

(a) Seller shall deliver to Buyer certificates evidencing all
shares of the Stock, free and clear of all Encumbrances of any nature
whatsoever, duly endorsed in blank for transfer or accompanied by stock powers
duly executed in blank.

(b) Seller and Buyer each shall deliver all documents required to
be delivered pursuant to Articles VII and VIII hereof.

(d) Seller shall deliver to Buyer all Books and Records of the
Companies and written resignations of the Companies' nominees to the
Partnerships' management committees and of all directors and officers of the
Companies, it being agreed that Seller may retain copies of the Books and
Records for bona fide business purposes, subject to the confidentiality and use
restrictions contained herein.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF SELLER AND THE COMPANIES

Seller hereby agrees with and represents and warrants to Buyer as follows,
which representations and warranties are, as of the date hereof true and
correct:

4.1 Organization. Each of Seller and the Companies is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation.

4.2 Authorization. Each of Seller and the Companies has all requisite
power and authority, and has taken all corporate action necessary, to execute
and deliver this Agreement, to consummate the transactions contemplated hereby
and to perform its obligations hereunder. This Agreement has been duly executed
and delivered by Seller and is a legal, valid and binding obligation of Seller
enforceable against Seller and each of the Companies in accordance with its
terms.

4.3 Capitalization and Partnership Interests. Seller owns all the
outstanding shares of Stock set forth in Exhibit A hereto and such shares
constitute the entire outstanding capital stock and equity interest of the
Companies as set forth in Exhibit C attached hereto; and there are no other
outstanding debt or equity securities or similar instruments or interests in
respect of the Companies (except for the Company's proportionate share of any
debt obligations of the Partnerships, if any, set forth on the Balance Sheets
referred to in Section 4.6). Upon transfer to Buyer of the shares of Stock,
Seller shall have indirectly transferred to Buyer all of the Partnership
Interests set forth in Exhibit B, which include all of Seller's and the
Companies' right, title and interest in and to the Partnerships of any kind
whatsoever, including, without limitation, any interest in any proceeds in
respect of Partnership litigation or other claims against third parties.

4.4 No Encumbrances. Seller owns as of the date hereof, and will own as
of the Closing Date, all of the outstanding and authorized capital stock and
equity interests of the Companies free and clear of all Encumbrances.

4.5 Scope of Business. The sole business of the Companies has in the
past and presently consists solely of owning the partnership interests in the
Partnerships as set forth in Exhibit B hereto and none of the Companies has had
in the past or presently has any business activities of any kind (including
holding securities or other investments) other than owning such partnership
interests. None of the Companies has any employees; or any obligations or
liabilities of any kind other than as a partner of the Partnerships.

4.6 December 31, 1995 Balance Sheets; No Material Adverse Change.
Attached as Exhibit D are balance sheets for each of the Companies as of
December 31, 1995 prepared by Seller in accordance with generally accepted
accounting principles ("GAAP") and which set forth all of the assets and
liabilities of the respective Companies as of such date that are required to
be set forth in balance sheets conforming to GAAP; provided that it is under-
stood that Seller makes no representation or warranty in respect of the balance
sheets or liabilities of the Partnerships and shall have no liability under this
representation for any inaccuracy therein or inadequacy thereof that causes or
results in any inaccuracy in or inadequacy of the balance sheets of the
Companies. Subject to the proviso of the preceding sentence, except as
expressly set forth on the Companies' balance sheets, there exist, as of
December 31, 1995, no liabilities, obligations or expenses of the Companies
of any kind, whether accrued, contingent or otherwise (and whether or not
such liabilities would be required to be set forth in balance sheets conforming
to GAAP, including, without limitation, any contingent liabilities that may
arise as a result of the Companies being part of a consolidated group for ERISA
or tax purposes) and Seller is not aware of any event, condition or occurrence
(or threat thereof) which would reasonably be expected to cause a material
adverse change. Seller shall be responsible for and shall fully pay and
discharge any liabilities, obligations or expenses of any kind of the Companies,
if any, existing at the time of the Closing, which were not specifically set
forth on the December 31, 1995 Balance Sheets, except for liabilities,
obligations and expenses arising after December 31, 1995 that solely and
directly result from liabilities, obligations or expenses of the Partnerships
arising after such date.

4.7 Post 1995 Partnership Distributions; Pay Over Assurance. Seller
acknowledges that all economic distributions in respect of the Partnership
Interests for the period commencing after December 31, 1995 are intended to be
transferred to Buyer hereunder, and accordingly, Seller agrees that if any
monies, properties, securities, proceeds or any other benefits in respect of the
Partnership Interests (for the period commencing after December 31, 1995) are
inadvertently received by it or its affiliates; that it will immediately notify
and pay over the same to Buyer or to Buyer's nominee.

4.8 Taxes. Each of the Seller and the Companies have timely filed with
the appropriate governmental authorities all Tax Returns required to be filed by
or with respect to each of the Companies or their respective operations or
assets, and such Tax Returns are true, correct and complete in all material
respects. All Taxes shown to be due on such Tax Returns, all Taxes required to
be paid on an estimated or installment basis, and all Taxes required to be
withheld with respect to the Seller or any of the Companies or their respective
operations or assets have been timely paid or, if applicable, withheld and paid
to the appropriate taxing authority in the manner provided by law, and all Taxes
which are or may become due in respect of the Companies for tax periods ending
prior to January 1, 1996 will be fully paid and discharged by Seller; provided,
that it is understood that Seller makes no representation or warranty in respect
of Tax Returns or Taxes due and payable by the Partnerships and shall have no
liability under this representation for any inaccuracy of such Tax Returns or
any failure of the Partnerships to pay such Taxes, except that, notwithstanding
any such inaccuracy or failure, Seller shall be obligated to pay and discharge
the Companies' allocable share of Taxes arising in respect of the Partnerships
for tax periods ending prior to January 1, 1996, including any adjustments to
Taxes resulting from tax audits and the Companies' allocable share of costs and
expenses in connection therewith.

4.9 No Brokers, Etc. Neither Seller nor the Companies nor any of their
respective Representatives, shareholders or affiliates has employed or made any
agreement with any Representative, broker, finder or similar agent or any other
person or firm which will result in the obligation of Buyer, any Company or any
of their respective affiliates to pay any finder's fee, brokerage fee,
consulting fee, severance fee, services fee, commission or similar payment or
expense in connection with the transactions contemplated hereby. Seller will
pay all of its own and the Companies' expenses in connection with this
Agreement, as provided in Section 11.7 hereof.

4.10 Books and Records. Seller represents and warrants to Buyer that the
Books and Records delivered to Buyer at the closing are originals or true and
accurate copies of the actual Books and Records of the Companies and contain all
information reasonably required for Buyer to own and operate the Companies
following the Closing.

ARTICLE V

REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER

Buyer agrees with and hereby represents and warrants to Seller as follows,
which representations and warranties are, as of the date hereof, and will be, as
of the Closing Date, true and correct:

5.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of Delaware.

5.2 Authorization. Buyer has all requisite power and authority, and has
taken all action necessary, to execute and deliver this Agreement, to consummate
the transactions contemplated hereby and to perform its obligations hereunder.
This Agreement has been duly executed and delivered by Buyer and is a legal,
valid and binding obligation of Buyer enforceable against Buyer in accordance
with its terms.

5.3 No Brokers, Etc. Neither Buyer nor any of its Representatives,
shareholders or affiliates has employed or made any agreement with any
Representative, broker, finder or similar agent or any other person or firm
which will result in the obligation of Seller, any Company, or any of Seller's
affiliates to pay any finder's fee, brokerage fee, consulting fee, severance
fee, services fee, or commission or similar payment or expense in connection
with the transactions contemplated hereby. Buyer will pay all of its own
expenses in connection with this Agreement, as provided in Section 11.7 hereof.

ARTICLE VI

COVENANTS OF BUYER, SELLER AND THE COMPANIES

Buyer and Seller each covenant with the other as follows:

6.1 Actions to Consummate Closing; Further Assurances. Each of the
parties hereto agrees, both before and after the Closing, (a) to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to remove or satisfy
Closing conditions which are within such party's control and otherwise to
consummate and make effective the transactions contemplated by this Agreement,
(b) to execute any documents, instruments or conveyances of any kind which may
be reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder, and (c) to cooperate with each other in connection with
the foregoing.

6.2 Conduct of Business. From the date hereof through the Closing, the
Companies shall, except as consented to by Buyer in writing, continue to operate
solely in the ordinary course of business and substantially in accordance with
past practice and will not take any action inconsistent with this Agreement or
with the consummation of the Closing.

6.3 Tax Elections. Seller and Buyer each agree to cause a Section
338(h)(10) election to be made in connection with the Companies. Without
diminishing any obligation of the Seller under Section 4.8, Buyer agrees to pay
all Taxes and to prepare and file all Tax Returns and tax elections of the
Companies (including preparing the Section 338(h)(10) election for Seller) for
tax periods ending after December 31, 1995.

ARTICLE VII

CONDITIONS TO SELLER'S OBLIGATIONS

The obligations of Seller to consummate the transactions provided for
hereby are subject to the satisfaction, on or prior to the Closing Date, of each
of the following conditions, any of which may be waived by Seller:

7.1 Representations, Warranties and Covenants. All representations and
warranties of Buyer contained in this Agreement shall be materially true and
correct at and as of the date of this Agreement and at and as of the Closing
Date as if made thereon, and Buyer shall have performed and satisfied all
agreements and covenants required hereby to be performed by it on or prior to
the Closing Date.

7.2 Consents. All Consents and waivers necessary to the consummation of
the transactions contemplated hereby shall have been obtained, including without
limitation any notice and approval required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and any other third party
consents (to the extent not waived).

7.3 No Proceedings or Litigation. No Action by any governmental
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to (a) materially affect the right or ability
of Buyer to own, possess or transfer the Stock after the Closing, or (b)
materially damage Seller if the transactions contemplated hereunder are
consummated. There shall not be any statute, rule or regulation that makes the
purchase and sale of the Stock contemplated hereby illegal or otherwise
prohibited.

7.4 Exhibit. Buyer shall have delivered to Seller a duly executed copy
of Exhibit E.

7.5 Certificates. Buyer shall furnish Seller with such Certificates of
its duly authorized officers to evidence compliance with the conditions set
forth in Sections 7.1 through 7.3 of this Article VII as may be reasonably
requested by Seller.

ARTICLE VIII

CONDITIONS TO BUYER'S OBLIGATIONS

The obligations of Buyer to consummate the transactions provided for hereby
are subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by Buyer:

8.1 Representations, Warranties and Covenants. All representations and
warranties of Seller and the Companies contained in this Agreement shall be
materially true and correct at and as of the date of this Agreement and at and
as of the Closing Date, as if made thereon, and Seller and the Companies shall
have performed and satisfied all agreements and covenants required hereby to be
performed by them on or prior to the Closing Date.

8.2 Consents. All Consents and waivers necessary to the consummation of
the transactions contemplated hereby shall have been obtained, including without
limitation any notice and approval required pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and any other third party
consents (to the extent not waived).

8.3 No Proceedings or Litigation. No Action by any governmental
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to (a) materially affect the right or ability
of Buyer to own, possess or transfer the Stock after the Closing, or (b)
materially damage Buyer or any Company if the transactions contemplated
hereunder are consummated. There shall not be any statute, rule or regulation
that makes the purchase and sale of the Stock contemplated hereby illegal or
otherwise prohibited.

8.4 Certificates. Seller and the Companies shall furnish Buyer with such
certificates of their duly authorized officers to evidence compliance with the
conditions set forth in Sections 8.1 through 8.3 of this Article VIII as may be
reasonably requested by Buyer.

8.5 Material Adverse Changes. Since the date of this Agreement, there
shall not have been any material adverse change with respect to any Company.

8.6 Exhibits; Books and Records. Seller shall have delivered to Buyer
the Books and Records referenced in Section 3.2(d) and duly executed copies of
Exhibits E and F hereof.

ARTICLE IX

ACTIONS BY BUYER, SELLER AND THE COMPANIES AFTER THE CLOSING

9.1 Books and Records; Tax Matters:

(a) Books and Records. Each party agrees that it will cooperate
with and make available to the other party, during normal business hours, all
Books and Records and other information retained and remaining in existence
after the Closing which are necessary or useful in connection with any tax
inquiry, audit, investigation or dispute, any litigation or investigation or any
other matter requiring such Books and Records and information for any reasonable
business purpose. The party requesting any such Books and Records and
information shall bear all of the out-of-pocket costs and expenses reasonably
incurred in connection with providing such Books and Records and information.
All information received pursuant to this Section 9.1 shall be subject to the
confidentiality provisions of this Agreement.

(b) Cooperation and Records Retention. Buyer, Seller and the
Companies shall (i) each provide the others with such assistance as may
reasonably be requested by any of them in connection with the preparation of any
return, audit, or other examination by any taxing authority or judicial or
administrative proceedings relating to liability for Taxes, (ii) each retain and
provide the others with any records or other information that may be reasonably
requested in connection with such return, audit or examination, proceeding or
determination, and (iii) each provide the others with any final determination of
any such audit or examination, proceeding, or determination that affects any
amount required to be shown on any tax return of the others for any period.
Without limiting the generality of the foregoing, Buyer and Seller shall each
retain, until the applicable statutes of limitations have expired, copies of all
Company tax returns, supporting work schedules, and other records or information
that may be relevant to such returns for all tax periods or portions thereof
ending on or before January 1, 1996 and shall not destroy or otherwise dispose
of any such records without first providing the others with a reasonable
opportunity to review and copy the same.

9.2 Survival of Representations, Etc. All statements contained in any
certificate, document, exhibit or instrument or conveyance delivered by or on
behalf of the parties pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by the parties hereunder. The representations, warranties, covenants
and agreements (including the indemnity agreement set forth in Section 9.3
hereof) of Buyer and Seller contained herein shall survive the consummation of
the transactions contemplated hereby and the Closing Date for a period of five
years following the Closing Date.

9.3 Indemnification.

(a) Each of Buyer and Seller hereby agree to fully indemnify,
defend and hold harmless the other against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages, recoveries
and deficiencies, including interest, penalties and reasonable attorneys' fees
and costs of investigation, (as the same are incurred), that such other party
shall incur or suffer, which arise, result from, or relate to any inaccuracy in
or breach of, or failure by the indemnifying party to perform any of its
representations, warranties, covenants or promises in this Agreement. Such a
failure or breach by a Company prior to or as of the Closing shall be deemed to
be a failure or breach of the Seller. The party to be indemnified shall
promptly notify the other party of the existence of any claim, demand or other
matter to which the other party's indemnification obligations would apply, and
shall give it a reasonable opportunity to defend and control the defense of the
same at its own expense and with counsel of its own selection; provided that the
party to be indemnified shall at all times also have the right to participate
fully in the defense at its own expense; and provided further that, if in the
opinion of counsel to the party to be indemnified, there is a reasonable
probability of a conflict of interest between the indemnifying and indemnified
parties in respect of such claim, the indemnifying party shall be responsible
(as the same are incurred) for the reasonable fees and expenses of separate
counsel to the indemnified party. If a party shall, within a reasonable time
after such notice, fail to defend, the party to be indemnified shall have the
right, but not the obligation, to undertake the defense of, and to compromise
or settle (exercising reasonable business judgment), the claim or other matter
on behalf, for the account, and at the expense and risk of the other party. The
indemnifying party shall not settle any matter for which the indemnified party
seeks indemnity hereunder without the consent of the indemnified party unless
such settlement provides for a reasonably satisfactory release of the
indemnified party.

ARTICLE X

SECURITIES LAW

10.1 Acquisition for Investment. Buyer hereby acknowledges that the
shares of Stock to be purchased pursuant to the terms of this Agreement shall be
acquired in good faith for investment for its own account and not with a view to
a distribution or resale of any such Stock.

10.2 Legend. Each certificate representing shares of Stock sold pursuant
to the provisions hereof, if deemed advisable by the Companies, shall bear the
following legends:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THE SECURITEIS MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF EXEMPTION THEREFROM UNDER SAID ACT OR THE RULES AND
REGULATIONS PROMULGATED THEREUNDER."
and

"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY,
OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE
OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."

ARTICLE XI

MISCELLANEOUS

11.1 Termination.

(a) Termination. This Agreement may be terminated at any time
prior to the Closing:

(i) By mutual written consent of Buyer and Seller;

(ii) By Buyer or Seller if the Closing shall not have occurred
on or prior to May 31, 1996 or on such other date mutually agreed to in writing
by Buyer and Seller; provided, however, that this provision shall not be
available to Buyer if Seller has the right to terminate this Agreement under
Subsection (iv) of this Section 11.1(a), and this provision shall not be
available to Seller if Buyer has the right o terminate this Agreement under
Subsection (iii) of this Section 11.1(a);

(iii)By Buyer, at its option, if there is a material breach
of any representation or warranty set forth herein or any covenant or agreement
to be complied with or performed by Seller or the Companies pursuant to the
terms of this Agreement or the failure of a condition set forth in Article VIII
to be satisfied (and such condition is not waived in writing by Buyer) on or
prior to the Closing Date, or the occurrence of any event which results or
would result in the failure of a condition set forth in Article VIII to be
satisfied on or prior to the Closing Date; provided that Buyer may not
terminate this Agreement prior to the Closing if Seller has not had an adequate
notice and opportunity to cure such breach or failure; or

(iv) By Seller, at its option, if there is a material breach
of any representation or warranty set forth herein or of any covenant or
agreement to be complied with or performed by Buyer pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VII to be
satisfied (and such condition is not waived in writing by Seller) on or prior to
the Closing Date, or the occurrence of any event which results or would result
in the failure of a condition set forth in Article VII to be satisfied on or
prior to the Closing Date; provided that Seller may not terminate this Agreement
prior to the Closing Date if Buyer has not had an adequate notice and
opportunity to cure such breach or failure.

(b) In the Event of Termination. In the event of termination of
this Agreement as permitted by Subsection (a) of this Section 11.1:

(i) The confidentiality provisions of this Agreement shall
continue in full force and effect; and

(ii) No party hereto shall have any liability or further
obligation to any other party to this Agreement, except as stated in Section 9.3
hereof and Subsections (i), and (ii) of this Section 11.1(b). The foregoing
provisions shall not limit or restrict the availability of specific performance
or other injunctive relief to the extent that specific performance or such other
relief would otherwise be available to a party hereunder.

11.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the prior written
consent of the other parties; provided, however, that Buyer may, at its
election, direct Seller to transfer all or a portion of the Stock to one or more
designees who are affiliates of Buyer rather than to Buyer in connection with
the Closing. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, and no other person shall have any right, benefit or
obligation under this Agreement as a third party beneficiary or otherwise.

11.3 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by facsimile; the day after it is sent, if sent
for next day delivery to a domestic address by a recognized overnight delivery
service (e.g., Federal Express); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice shall be
sent to:

If to Seller, or the Companies prior to the Closing, addressed to:

Edison Mission Energy
18101 Von Karman Avenue, Suite 1700
Irvine, California 92715-1007
Attention:General Counsel
Fax No.: 714-757-0807

If to Buyer, or the Companies following the Closing, addressed to:

CalEnergy Imperial Valley Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Attention: General Counsel
Fax No.: (402) 231-1658

and to such other places and with such other copies as either party may
designate as to itself by written notice to the others.

11.4 Choice of Law. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State of
California, except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity derives its powers shall govern.

11.5 Amendments and Waivers. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.

11.6 Multiple Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

11.7 Expenses. Each of Seller (for itself and the Companies) and Buyer
hereto shall pay their own legal, accounting, out-of-pocket and other expenses
incident to this Agreement and to any action taken by or on behalf of such party
in preparation for carrying this Agreement into effect.

11.8 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.

11.9 Captions. The titles, captions or headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.

11.10Public Statements and Press Releases. The parties hereto covenant
and agree that, if either party plans to issue a press release or other public
announcement disclosing the execution of this agreement ("Initial Release"), it
shall provide a copy of such Initial Release to the other party for review and
comment in advance of issuance. Following such Initial Release, Mission agrees
that any future public announcements by it with respect to the Companies or the
business of the Partnerships shall be consistent with its Initial Release and
CalEnergy agrees that CalEnergy's future public announcements will be consistent
with its obligations as a public company.

11.11Confidential Information. Seller acknowledges that the
Representatives of Seller and the Companies are aware of and the Books and
Records of the Companies contain confidential and proprietary information
regarding the Companies and the business of the Partnerships and accordingly,
Seller agrees that it shall not, on or after the date hereof, directly or
indirectly, make disclosure of such confidential and proprietary information to
any third party (including affiliates of Seller with whom the Partnerships are
involved in litigation) except if compelled to do so by subpoena, court order or
similar binding legal process (issued or initiated by an unaffiliated third
party) in which case Seller agrees to give Buyer adequate notice in order for
Buyer to seek a protective order or similar protection and, in connection
therewith, Seller agrees to reasonably cooperate with Buyer. Seller agrees that,
in the event of a breach or threatened breach of this Section, Buyer shall be
entitled to equitable relief, including injunction and specific performance, in
addition to all other remedies available at law or at equity. For purposes of
this Section, confidential and propriatary information shall not include
information which is or becomes generally available to the public other than
through a breach of this Agreement.

11.12Cumulative Remedies. All rights and remedies of either party hereto
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their respective behalf, by their respective officers
thereunto duly authorized, all as of the day and year first above written.

BUYER:

CALENERGY IMPERIAL VALLEY COMPANY, INC.,
a Delaware corporation

By: /s/ Steven A. McArthur
Name: Steven A. McArthur
Title: Senior Vice President

SELLER:

EDISON MISSION ENERGY,
a California corporation

By: /s/ Edward R. Muller
Name: Edward R. Muller
Title: President and Chief Executive Officer

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT

1. Contract ID Code
2. Amendment/Modification No.: P00019
3. Effective Date:See Block 14
4. Requisition/Purchase Req. No.:
5. Project No. (if applicable):
6. Issued by:. Effective Date:See Block 14
4. Requisition/Purchase Req. No.:
5. Project No. (if applicable):
6. Issued by: Engineering Field Activity, West
Naval Facilities Engineering Command
900 Commodore Drive
San Bruno, CA 94066-5006
Code: N62474
7. Administered by (if other than Item 6):
8. Name and Address of Contractor: California Energy Company
302 South 36th Street, Suite 400
Omaha, NE 68131
9A. Amendment of Solicitation No.:
9B. Dated (see Item 11)
10A. Modification of Contract/Order No.: N62474-79-C-5382
10B. Dated (see Item 13): 06 Dec 79
11. This item only applies to Amendments of Solicitations
_ The above numbered solicitation is amended as set forth in Item 14. The
hour and date specified for receipt of Offers _ is extended, _ is not extended.
Offers must acknowledge receipt of this amendment prior to the hour and date
specified in the solicitation or as amended, by one of the following methods:
(a) By completing Items 8 and 15, and returning copies of the amendment;
(b) By acknowledging receipt of this amendment on each copy of the offer
submitted; or (c) By separate letter or telegram which includes a reference
to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO
BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE
HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER.
If by virtue of this amendment you desire to change an offer already submitted,
such change may be made by telegram or letter, provided each telegram or letter
makes reference to the solicitation and this amendment, and is received prior
to the opening hour and date specified.
12. Accounting and Appropriation Data (if required):
13. This item applies only to Modifications of Contracts/Orders, it
modifies the Contract/Order No. as described in Item 14.
A. This Change Order is issued pursuant to: (specify authority) The
Changes set forth in Item 14 are made in the Contract Order No. in
Item 10A.
B. The above numbered Contract/Order is modified to reflect the admin-
istrative changes (such as changes in paying office, appropriation
date, etc.) set forth in Item 14, pursuant to the Authority of Far
43.103(b).
C. This Supplemental Agreement is entered into pursuant to authority of:
(XX) D. Other (specify type of modification and authority): Far 42.12 Novation
and Change of Name Agreements.
E. Important: Contractor X is not, ____ is required to sign
this document and return _____ copies to the issuing office.
14. Description of Amendment/Modification (Organized by UCF section \
headings, including solicitation/contract subject matter where feasible.)
Subj: Geothermal power development at the Naval Air Weapons Station,
China Lake, California.
Description of this Modification begins on Page 2
Except as provided herein, all terms and conditions of the document
referenced in Item 9A or 10A, as heretofore changed, remains unchanged
and in full force and effect.
15A. Name and Title of Signer:
15B. Contractor/Offeror:
15C. Date Signed:
16A: Name and Title of Contracting Officer:Catherine B. Morris
Head, Environmental Services Contracts
16B: United States of America
By: /s/ Catherine B. Morris
16C: Date Signed: 1 Aug '95

N62474-79-C-5382
Modification P000019
Page 2 of 3

Block 14. DESCRIPTION OF MODIFICATION

1. By this modification the Government recognizes the following transfers, in
accordance with the terms and conditions of the "Novation Agreement Under
Contract N62474-79-C-5382 Concerning Navy II Lands Assignment of Contractual
Rights and Obligations from China Lake Joint Venture to Coso Energy
Developers and From Coso Energy Developers to Coso Power Developers (Navy II
Project Novation Agreement)" executed 16 December 1992, a copy of which is
attached hereto and incorporated herein, of the rights, interests, and
obligations under the contract pertaining to the Navy II lands:

a. Effective 30 December 1988, from China Lake Joint Venture (CLJV) to
Coso Energy Developers (CED), a single purpose California general
partnership.

b. Effective 31 July 1989, from CED to Coso Power Developers (CPD), a single
purpose California general partnership.

2. By this modification the Government also recognizes, in accordance with the
terms and conditions of the "Consent Under Contract N62474-79-C-5382 Concerning
the Navy II Project Assignment of Contractual Rights and Obligations From Coso
Power Developers to Bank of America" executed 13 October 1992 and effective 16
December 1992, a copy of which is attached hereto and incorporated herein,
the assignment by CPD to Lender (Bank of America National Trust and Savings
Association not in its individual capacity, but solely as trustee pursuant to
a Trust Indenture between Bank of America NT&SA and Coso Funding Corporation)
as security interest all of CPD's right, title, and interest in the Contract.

3. Notices from the Navy concerning the rights, interests, or obligations of
the parties with respect to the Navy II lands and the Navy II project and the
contract will be sent to:

China Lake Joint Venture
c/o California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154

Coso Power Developers
c/o Coso Technology Corporation
10831 Old Mill Road
Omaha, Nebraska 68154

Bank of America National Trust and Savings Association
Attn: Corporate Trust
One Embarcadero Center
20th Floor
San Francisco, CA 94111

4. All other terms and conditions of the contract remain unchanged.

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT

1.
2. Amendment/Modification No.: P00020
3. Effective Date:See Block 14
4. Requisition/Purchase Req. No.:
5. Project No. (if applicable):
6. Issued by: Engineering Field Activity West
Naval Facilities Engineering Command
900 Commodore Drive
San Bruno, CA 94066-5006
Code: N62474
7. Administered by:
8. Name and Address of Contractor: California Energy Company
302 South 36th Street, Suite 400
Omaha, NE 68131
9A. Amendment of Solicitation No.:
9B. Dated:
10A. Modification of Contract/Order No.:
10B. Dated: 06 Dec 79
11. This item only applies to Amendments of Solicitations
_ The above numbered solicitation is amended as set forth in Item 14.
The hour and date specified for receipt of Offers _ is extended, _
is not extended. Offers must acknowledge receipt of this amendment
prior to the hour and date specified in the solicitation or as amended,
by one of the following methods: (a) By completing Items 8 and 15, and
returning _____ copies of the amendment; (b) By acknowledging receipt
of this amendment on each copy of the offer submitted; or (c) By separate
letter or telegram which includes a reference to the solicitation and
amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT
THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND
DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of
this amendment you desire to change an offer already submitted, such
change may be made by telegram or letter, provided each telegram or
letter makes reference to the solicitation and this amendment, and is
received prior to the opening hour and date specified.
12. Accounting and Appropriation Data (if required):N/A
13. This item applies only to modifications of contracts/orders, it
modifies the contract/order no. as described in Item 14.
A. This change order is issued pursuant to: (specify authority) the
changes set forth in Item 14 are made in the Contract Order No. in
Item 10A.
B. The above numbered Contract/Order is modified to reflect the admin-
istrative changes (such as changes in paying office, appropriation
date, etc.) set forth in Item 14, pursuant to the authority of far
43.10(b).
C. This supplemental agreement is entered into pursuant to authority of:
_XX__ D. Other (specify type of modification and authority):FAR 42.12 Novation
and Change of Name Agreements.
E. Important: Contractor _X_ is not, ____ is required to sign
this document and return _____ copies to the issuing office.
14. Description of Amendment/Modification (Organized by UCF section headings,
including solicitation/contract subject matter where feasible.)
Subj: Geothermal Power Development at the Naval Air Weapons Station,
China Lake, California.
Description of this Modification begins on Page 2.
Except as provided herein, all terms and conditions of the document
referenced in Item 9A or 10A, as heretofore changed, remains unchanged
and in full force and effect.
15A. Name and Title of Signer:
15B. Contractor/Offeror:
15C. Date Signed:
16A. Name and Title of Contracting Officer:Catherine B. Morris
Head, Environmental Service Contracts
16B: United States of America
By: /s/ Catherine B. Morris
16C. 1 Aug '95

N62474-79-C-5382
Modification P000020
Page 2 of 2

Block 14. Description of Modification

By this modification the Government acknowledges, and incorporates into the
contract its previously executed and delivered consent to the assignment by
China Lake Joint Venture and Atkinson-Mitsibushi Joint Venture to Coso
Finance Partners of certain contract rights and interests pertaining to the
"Initial Plant," "Initial Project," "Initial Project Area," and the "Initial
Project Rights," hereafter known as Navy I, Units I-1, I-2, and I-3, in
accordance with the terms and conditions of the following Consents to
Assignment and Amendments thereof, copies of which are attached hereto and
incorporated herein:

1. Consent to Assignment by U.S. Navy executed on 10 July 1987
2. Amendment to Consent to Assignment by U.S. Navy executed on 15 July 1988
3. Amendment to Consent to Assignments by U.S. Navy executed on 1 November
1988
4. Second Amendment to Consent to Assignments by U.S. Navy executed 13 October
1992
5. Third Amendment to Consent to Assignments by U.S. Navy executed 13 October
1992

Addresses

For Borrower

c/o California Energy Company, Inc.
10831 Old Mill Road
Omaha, Nebraska 68154

For Lender

Bank of America National Trust and Savings Association
One Embarcadero Center
20th Floor
San Francisco, CA 94111
Attn: Corporate Trust

<PAGE>
AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT
1.
2. Amendment/Modification No.: P00033
3. Effective Date:95Dec08
4. Requisition/Purchase Req. No.: N/A
5. Project No. (if applicable):
6. Issued by: Commanding Officer
Attn: NAVFACCO, Code 2711, Bldg. 41
Construction Batalion Center
1000 23rd Avenue
Port Hueneme CA 93043-4301
POC: Marcia A. Barnard, Code 271A, (805)982-5094
7. Administered by:
8. Name and Address of Contractor: California Energy Company
302 South 36th Street, Suite 400
Omaha, NE 68131
9A. Amendment of Solicitation No.:
9B. Dated:
10A. Modification of Contract/Order No.: N47408-79-C-5382
10B. Dated: 06 Dec 79
11. This item only applies to Amendments of Solicitations
_ The above numbered solicitation is amended as set forth in Item
14. The hour and date specified for receipt of Offers _ is extended,
_ is not extended. Offers must acknowledge receipt of this amendment
prior to the hour and date specified in the solicitation or as amended,
by one of the following methods: (a) By completing Items 8 and 15, and
returning _____ copies of the amendment; (b) By acknowledging receipt of
this amendment on each copy of the offer submitted; or (c) By separate
letter or telegram which includes a reference to the solicitation and
amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT
THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND
DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of
this amendment you desire to change an offer already submitted, such
change may be made by telegram or letter, provided each telegram or
letter makes reference to the solicitation and this amendment, and is
received prior to the opening hour and date specified.
12. Accounting and Appropriation Data (if required):N/A
13. This item applies only to modifications of contracts/orders, it
modifies the contract/order no. as described in Item 14.
A. This change order is issued pursuant to: (specify authority) the
changes set forth in Item 14 are made in the Contract Order No. in
Item 10A.
B. The above numbered Contract/Order is modified to reflect the admin-
istrative changes (such as changes in paying office, appropriation
date, etc.) set forth in Item 14, pursuant to the authority of far
43.10(b).
X C. This supplemental agreement is entered into pursuant to authority of:
FAR 52.243.1 - Changes - Fixed Price
D. Other (specify type of modification and authority):FAR 42.12
Novation and Change of Name Agreements.
E. Important: Contractor is not, __X__ is required to
sign this document and return __2___ copies to the issuing office.
14. Description of Amendment/Modification (Organized by UCF section headings,
including solicitation/contract subject matter where feasible.)
1. The purpose of this modification is to revise the method of
calculating the value of transferred steam for the Navy revenue
purposes and to incorporate the requirement for the submittal of
an annual "Escrow Assurance Plan".

See Page 2 of 2

Except as provided herein, all terms and conditions of the document
referenced in Item 9A or 10A, as heretofore changed, remains unchanged
and in full force and effect.
15A. Name and Title of Signer: Thomas R. Mason, President
15B. Contractor/Offeror: /s/ Thomas R. Mason
15C. Date Signed: 12/20/95
16A. Name and Title of Contracting Officer:Sally K. Middlebrooks
Contracting Officerl
16B: United States of America
By: /s/ Sally K. Millebrooks
16C. 8 Jan 96

N47408-97-C-5382
Modification P000033
Page 2 of 2

2. Delete: "Coso Geothermal Project Exchange Agreement" dated January 11,
1994, Exhibit "A" that was executed as part of Modification P00029.

Incorporate: Exhibit A: CALCULATION OF PAYMENTS FOR TRANSFERS OF STEAM
AT COSO, dated April 12, 1995.

3. By the 31st day of January, each calendar year the contractor shall
submit, to the Contracting Officer, an "Escrow Assurance Plan". The
plan shall reflect the escrow account balance as of 31 December of the
previous year. The contractor shall illustrate the compounded interest
rate necessary to ensure that the account will contain $25,000,000 on or
before 31 December 2009. The plan will also discuss all relevant
financial data, such as investments, shrinking or increasing interest
rates, etc. to demonstrate that the account is being monitored on a
regular basis.

4. ALL OTHER TERMS AND CONDITIONS REMAIN THE SAME.

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT
1.
2. Amendment/Modification No.: P00034
3. Effective Date:95Feb08
4. Requisition/Purchase Req. No.: N/A
5. Project No. (if applicable):
6. Issued by: Commanding Officer
Attn: NAVFACCO, Code 2711, Bldg. 41
Construction Batalion Center
1000 23rd Avenue
Port Hueneme CA 93043-4301
POC: Marcia A. Barnard, Code 271A, (805)982-5094
7. Administered by:
8. Name and Address of Contractor: California Energy Company
302 South 36th Street, Suite 400
Omaha, NE 68131
9A. Amendment of Solicitation No.:
9B. Dated:
10A. Modification of Contract/Order No.: N47408-79-C-5382
10B. Dated: 06 Dec 79
11. This item only applies to Amendments of Solicitations
_ The above numbered solicitation is amended as set forth in Item
14. The hour and date specified for receipt of Offers _ is extended,
_ is not extended. Offers must acknowledge receipt of this amendment
prior to the hour and date specified in the solicitation or as amended,
by one of the following methods: (a) By completing Items 8 and 15, and
returning _____ copies of the amendment; (b) By acknowledging receipt of
this amendment on each copy of the offer submitted; or (c) By separate
letter or telegram which includes a reference to the solicitation and
amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT
THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND
DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of
this amendment you desire to change an offer already submitted, such
change may be made by telegram or letter, provided each telegram or
letter makes reference to the solicitation and this amendment, and is
received prior to the opening hour and date specified.
12. Accounting and Appropriation Data (if required):N/A
13. This item applies only to modifications of contracts/orders, it
modifies the contract/order no. as described in Item 14.
A. This change order is issued pursuant to: (specify authority) the
changes set forth in Item 14 are made in the Contract Order No. in
Item 10A.
B. The above numbered Contract/Order is modified to reflect the admin-
istrative changes (such as changes in paying office, appropriation
date, etc.) set forth in Item 14, pursuant to the authority of far
43.10(b).
X C. This supplemental agreement is entered into pursuant to authority of:
FAR 52.245.4 - Government Furnished Property (Short Form)
D. Other (specify type of modification and authority):
E. Important: Contractor is not, __X__ is required to
sign this document and return __2___ copies to the issuing office.
14. Description of Amendment/Modification (Organized by UCF section
headings, including solicitation/contract subject matter where feasible.)
The purpose of this modification is to transfer Government Furnished
Property to California Energy Company, Inc. for a period not to exceed
six months from the effective date of this modification.

See Page 2 of 2

Except as provided herein, all terms and conditions of the document
referenced in Item 9A or 10A, as heretofore changed, remains unchanged
and in full force and effect.
15A. Name and Title of Signer: Douglas L. Anderson, Assistant General
Counsel, U.S. and Corporate 15B.
Contractor/Offeror: /s/ Douglas L. Anderson
15C. Date Signed:
16A. Name and Title of Contracting Officer:M. A. Barnard
Contracting Officerl
16B: United States of America
By: /s/ M. A. Barnard
16C.

N47408-97-C-5382
Modification P000034
Page 2 of 2

ITEMS QUANTITY ACQN COST

Acropolis 1.2 BG, 3.5 inch disk drive 1 $2,095.00
storage subsystem, Serial #92150136,
NAWS Plant Account #458571

Artecon Model DSU 1-331 1 $1,330.00
330 Mbyte External Hard Disk Drive,
Serial #7998, NAWS Plant Account #445381

Artecon Model DSU 351 1 $1,978.00
660 Mbyte External Hard Disk Drive,
Serial #7242, NAWS Plant Account #445384

TOTAL VALUE GFE $5,430.00

2. Add the following clause to Section VII Appendix I, "General Provisions"
FAR 52.245-4 Government-Furnished Property (Short Form) (APR 1984)

3. ALL OTHER TERMS AND CONDITIONS REMAIN THE SAME.

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT

1.
2. Amendment/Modification No.: P00035
3. Effective Date:95Feb08
4. Requisition/Purchase Req. No.: N/A
5. Project No. (if applicable):
6. Issued by: Commanding Officer
Attn: NAVFACCO, Code 2711, Bldg. 41
Construction Batalion Center
1000 23rd Avenue
Port Hueneme CA 93043-4301
POC: Marcia A. Barnard, Code 271A, (805)982-5094
7. Administered by:
8. Name and Address of Contractor: California Energy Company
302 South 36th Street, Suite 400
Omaha, NE 68131
9A. Amendment of Solicitation No.:
9B. Dated:
10A. Modification of Contract/Order No.: N47408-79-C-5382
10B. Dated: 06 Dec 79
11. This item only applies to Amendments of Solicitations
_ The above numbered solicitation is amended as set forth in Item
14. The hour and date specified for receipt of Offers _ is extended,
_ is not extended. Offers must acknowledge receipt of this amendment
prior to the hour and date specified in the solicitation or as amended,
by one of the following methods: (a) By completing Items 8 and 15, and
returning _____ copies of the amendment; (b) By acknowledging receipt of
this amendment on each copy of the offer submitted; or (c) By separate
letter or telegram which includes a reference to the solicitation and
amendment numbers. FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT
THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND
DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of
this amendment you desire to change an offer already submitted, such
change may be made by telegram or letter, provided each telegram or
letter makes reference to the solicitation and this amendment, and is
received prior to the opening hour and date specified.
12. Accounting and Appropriation Data (if required):N/A
13. This item applies only to modifications of contracts/orders, it modifies
the contract/order no. as described in Item 14.
A. This change order is issued pursuant to: (specify authority) the
changes set forth in Item 14 are made in the Contract Order No. in
Item 10A.
X B. The above numbered Contract/Order is modified to reflect the admin-
istrative changes (such as changes in paying office, appropriation
date, etc.) set forth in Item 14, pursuant to the authority of far
43.10(b).
C. This supplemental agreement is entered into pursuant to authority of:
D. Other (specify type of modification and authority):
E. Important: Contractor X is not, ____ is required
to sign this document and return __2___ copies to the issuing office.
14. Description of Amendment/Modification (Organized by UCF section headings,
including solicitation/contract subject matter where feasible.)
1. The purpose of this modification is to revise data cited in block 6
of the SF form 30, Modification P00006 to the above referenced
contract.
Delete: Disbursing Officer Insert: Commander
Code 0862 Code 761100B, Costing Branch
Navals Weapons Center NAVAIRWARCENWPNDIV
China Lake, CA 93555 1 Administration Circle
China Lake, CA 93555-6001
Except as provided herein, all terms and conditions of the document
referenced in Item 9A or 10A, as heretofore changed, remains unchanged
and in full force and effect.
15A. Name and Title of Signer:
15B. Contractor/Offeror:
15C. Date Signed:
16A. Name and Title of Contracting Officer:M. A. Barnard
Contracting Officerl
16B: United States of America
By: /s/ M. A. Barnard
16C.

CalEnergy Company, Inc. Exhibit 11
Calculation of Earnings per share in accordance
with Interpretive Release No. 34-9083
For the three years ended December 31, 1995

(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>

1995 1994 1993
<S> <C> <C> <C>
Actual weighted average shares
outstanding for the period 47,248,807 33,187,971 35,454,539
Dilutive stock options using
average market prices 2,722,348 2,533,301 3,030,431
Total number of shares based on
shares outstanding and the
assumption that dilutive stock
options will be exercised at
average stock market prices 49,971,155 35,721,272 38,484,970
Additional dilutive stock options
using ending market price and
assuming conversion of convertible
debt and convertible subordinated
debenture* 7,771,195 4,444,444 2,296,296
Total shares based on shares out-
standing and the assumption that
dilutive stock options will be
exercised at ending market price
if more dilutive 57,742,350 40,165,716 40,781,266

Income before change in accounting
principles and extraordinary item $ 63,415 $ 38,834 $ 43,074

Cummulative effect of change in
accounting principles --- --- 4,100

Extraordinary item --- (2,007) ---

Net income 63,415 36,827 47,174

Less: Series C preferred stock
dividends (1,080) (5,010) (4,630)

Net income available for common
shares $ 62,335 $ 31,817 $ 42,544

Primary earnings per share before
change in accounting principal
and extraordinary item $ 1.25 $ .95 $ 1.00

Change in accounting principal per share --- --- .11

Extraordinary item per share --- (.06) ---

Primary earnings per share $ 1.25 $ .89 $ 1.11

Fully diluted earnings per share before
change in accounting principal and
exraordinary item based on SEC
Interpretive Release No. 34-9083*** $ 1.18 $ .93 $ .98

Change in accounting principal per share --- --- .11

Extraordinary items per share --- (.05) ---

Fully diluted earnings per share
based on SEC interpretive release
No. 34-9083** $ 1.18 $ .88 $ 1.09

</TABLE>

* The ending market price on December 31, 1994 and 1993 was lower than the
average market price for the twelve months ended December 31, 1994 and 1993.
Accordingly, inclusion of an adjustment for stock options would be antidilutive
and, therefore, contrary to paragraph 40 of APB Opinion 15.

**The net income available for common shareholders for the year ended December
31, 1995 was increased by the interest expense, net of tax effect, associated
with the convertible debt and convertible subordinated debenture of $6,038.
Net income available for common shareholders for the years ended December 31,
1994 and 1993 was increased by the interest expense, net of tax effect,
associated with the convertible subordinated debentures of $3,475 and $1,782,
respectively.

SELECTED Financial Data
Dollars in Thousands Except Per Share Amounts
<TABLE>
<CAPTION>
Year Ended December 31,

1995 1 1994 1993 1992 1991

<S> <C> <C> <C> <C>
Sales of electricity $332,732 $152,047 $129,861 $115,087 $104,155
Sales of steam 2,898 2,515 2,198 2,255 2,029
Royalties 19,482 --- --- --- ---
Other income 43,611 31,292 17,194 10,187 9,379
Expenses 301,672 130,018 87,995 76,797 80,697
Income before provision for
income taxes 97,051 55,836 61,258 50,732 34,866
Income before change in accounting
principle and extraordinary item 66,420 38,834 43,074 38,810 26,582
Cumulative effect of change in
accounting principle2 --- --- 4,100 --- ---
Minority interest 3,005 --- --- --- ---
Extraordinary item3 --- (2,007) --- (4,991) ---
Net income before preferred dividends 63,415 36,827 47,174 33,819 26,582
Preferred dividends 1,080 5,010 4,630 4,275 ---
Income per share before change in accounting
principle and extraordinary item 1.25 .95 1.00 .92 .75
Cumulative effect of change in accounting
principle per share --- --- .11 --- ---
Extraordinary item per share --- (.06) --- (.13) ---
Net income per share - primary 1.25 .89 1.11 .79 .75
Total assets 2,654,038 1,131,145 715,984 580,550 517,994
Total liabilities 2,084,474 867,703 425,393 336,272 298,146
Deferred income 26,032 19,851 20,288 21,164 22,015
Redeemable preferred stock --- 63,600 58,800 54,350 54,705
Stockholders' equity 543,532 179,991 211,503 168,764 143,128
Common stock cash dividends --- --- --- --- ---
</TABLE>

1 Reflects acquisition of Magma. See Note 3 to the financial statements.
2 See Note 14 to the consolidated financial statements.
3 See Note 20 to the consolidated financial statements.
<PAGE>
MANAGEMENT'S Discussion and Analysis of Financial Condition
and Results of Operations
Dollars and Shares in Thousands Except Per Share Data

The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial condition and results of
operations during the periods included in the accompanying statements of
operations.

General

For purposes of consistency in financial presentation, plant capacity factors
for Navy I, Navy II, and BLM (collectively the Coso Project), are based upon
a capacity amount of 80 net MW for each plant. Plant capacity factors for
Vulcan, Hoch (Del Ranch), Elmore, Leathers, (collectively the Partnership
Project) are based on contract nameplate amounts of 34, 38, 38, and 38 net MW
respectively, and for Salton Sea I, Salton Sea II and Salton Sea III plants
(collectively the Salton Sea Project), are based on contract nameplate
amounts of 10, 20 and 49.8 net MW, respectively (the Partnership Project and
the Salton Sea Project are collectively referred to as the Imperial Valley
Project). Each plant possesses an operating margin which periodically allows
for production in excess of the amount listed above. Utilization of this
operating margin is based upon a variety of factors and can be expected to
vary throughout the year under normal operating conditions.

The Coso Project and the Partnership Project sell all electricity generated
by the respective plants pursuant to seven long-term SO4 Agreements between
the projects and Southern California Edison Company ("Edison"). These SO4
Agreements provide for capacity payments, capacity bonus payments and energy
payments. Edison makes fixed annual capacity payments to the projects, and,
to the extent that capacity factors exceed certain benchmarks, is required to
make capacity bonus payments. The price for capacity and capacity bonus
payments is fixed for the life of the SO4 Agreements and are significantly
higher in the months of June through September. Energy is sold at increasing
fixed rates for the first ten years of each contract and thereafter at
Edison's Avoided Cost of Energy.

The fixed price periods of the Coso Project SO4 Agreements extend until at
least August 1997, March 1999 and January 2000 for each of the units operated
by the Navy I, BLM and Navy II Partnerships, respectively. The Company's
share of the annual capacity payments is approximately $5,600 to $5,900 per
annum for each plant. The Company's share of bonus payments is approximately
$1,000 per annum for each plant.

The fixed price periods of the Partnership Project SO4 Agreements extend
until February 1996, December 1998, December 1998, and December 1999 for each
of the Vulcan, Hoch (Del Ranch), Elmore and Leathers Partnerships,
respectively. The Company's share of the annual capacity payments is
approximately $12,000 and its share of the bonus payments is approximately
$2,200 in aggregate for the four plants.

The Company's SO4 Agreements provide for rates ranging from 11.4 cents per kWh
in 1995 to 15.6 cents per kWh in 1999.

The Salton Sea I Project sells electricity to Edison pursuant to a 30-year
negotiated power purchase agreement, as amended (the "Salton Sea I PPA"),
which provides for capacity and energy payments. The energy payment is
calculated using a Base Price which is subject to quarterly adjustments based
on a basket of indices. The time period weighted average energy payment for
Unit 1 was 4.99 cents per kWh during 1995. As the Salton Sea I PPA is not an SO4
Agreement, the energy payments do not revert to Edison's Avoided Cost of
Energy. The capacity payment is approximately $1,000 per annum.

The Salton Sea II and Salton Sea III Projects sell electricity to Edison
pursuant to 30-year modified SO4 Agreements. The contract capacities and
contract nameplates are 15 MW and 20 MW for Salton Sea II and 47.5 MW and
49.8 MW for Salton Sea III. The contract requires Edison to make capacity
payments, capacity bonus payments and energy payments. The price for contract
capacity and contract capacity bonus payments is fixed for the life of the
modified SO4 Agreements. The energy payments for the first ten year period,
which period expires in April 2000 and February 1999, are levelized at a time
period weighted average of 10.6 cents per kWh and 9.8 cents per kWh for Salton
Sea II and Salton Sea III, respectively. Thereafter, the monthly energy payments
will be Edison's Avoided Cost of Energy. For Salton Sea II only, Edison is
entitled to receive, at no cost, 5% of all energy delivered in excess of 80%
of contract capacity for the period April 1, 1994 through March 31, 2004. The
annual capacity payments for Salton Sea II and Salton Sea III are
approximately $2,000 and $8,300, respectively. The bonus payments for Salton
Sea II and Salton Sea III are approximately $500 and $1,400, respectively.

For the year ended December 31, 1995, Edison's average Avoided Cost of Energy
was 2.1 cents per kWh which is substantially below the contract energy prices
earned for the year ended December 31, 1995. Estimates of Edison's future
Avoided Cost of Energy vary substantially from year to year. The Company
cannot predict the likely level of Avoided Cost of Energy prices under the
SO4 Agreements and the modified SO4 Agreements at the expiration of the
scheduled payment periods. The revenues generated by each of the projects
operating under SO4 Agreements could decline significantly after the
expiration of the respective schedul ed payment periods.

Results of Operations

Three Years Ended December 31, 1995, 1994 and 1993 Sales of electricity and
steam increased to $335,630 in the year ended December 31, 1995 from $154,562
in the year ended December 31, 1994, a 117.1% increase. This improvement was
primarily due to the addition of production from the Imperial Valley Project,
as a result of the acquisition of Magma in the first quarter of 1995, an
increase in the Coso Project's electricity revenues to $152,128 from $137,013
due to an increase in the Coso Project's electric kilowatt hour sales to
2,318.4 million kWh from 2,238.6 million kWh, and an increased price per kWh
in accordance with the SO4 agreements and an increase in revenue received
from the Yuma Project which commenced operation in late May 1994.

The increase in sales of electricity and steam in 1994 to $154,562 from
$132,059 in 1993 was primarily due to a 2.4% increase in the Coso Project's
electric kWh sales to 2,238.6 million kWh from 2,186.7 million kWh, an
increased price per kWh in accordance with the SO4 agreements, and revenue
received from the Yuma Project, which commenced commercial operation in late
May, 1994. The increase in Coso Project kWh sales was primarily due to the
completion of new production wells.

The following operating data includes the aggregate capacity and electricity
production of the Coso Project:
<TABLE>
<CAPTION>
1995 1994 1993

<S> <C> <C> <C>
Overall Capacity Factor 110.3% 106.5% 104.0%
kWh Produced (in thousands) 2,318,400 2,238,600 2,186,700
Capacity NMW (Average) 240 240 240

</TABLE>
The Coso Plant capacity factor was 112.6% in the fourth quarter of 1995
compared to 112.2%, 106.1% and 110.2% for the third, second and first
quarters of 1995, respectively. A steam transfer agreement was signed and the
interties were constructed in the third quarter of 1995, providing for
increased production primarily at the BLM plant. Technical enhancements
provided for the increase in 1994 from 1993.

The following operating data includes the aggregate capacity and electricity
production of the Partnership Project:
<TABLE>
<CAPTION>
1995 1994 1993

<S> <C> <C> <C>
Overall Capacity Factor 105.9% 103.8% 100.7%
kWh Produced (in thousands) 1,373,310 1,346,000 1,305,700
Capacity NMW (Average) 148 148 148

</TABLE>
The Partnership Project capacity factor was 105.8% in the fourth quarter of
1995 compared to 108.0%, 107.5%, and 102.3% for the third, second, and first
quarters of 1995, respectively. The increased production in 1995 and 1994 are
a result of minimizing unscheduled downtime at the plants.

The following operating data includes the aggregate capacity and electricity
production of the Salton Sea Project:
<TABLE>
<CAPTION>
1995 1994 1993

<S> <C> <C> <C>
Overall Capacity Factor 86.5% 90.8% 91.3%
kWh Produced (in thousands) 604,300 634,890 638,262
Capacity NMW (Average) 79.8 79.8 79.8

</TABLE>
The overall Salton Sea Project capacity factor was 86.8% in the fourth
quarter of 1995 compared to 93.9%, 78.3% and 86.8% for the third, second and
first quarters of 1995, respectively. The Salton Sea Project capacity factor
has decreased in 1995 from 1994 and 1993 due to the scheduled Salton Sea Unit
III overhaul in the second quarter of 1995 and the conversion of that unit to
the pH Mod technology in the fourth quarter of 1995.

Electric sale price per kWh for the Coso Project varies seasonally in
accordance with the rate schedule included in the SO4 agreements. The Coso
Project's average electricity prices per kWh in 1995, 1994 and 1993 were
comprised of (in cents):
<TABLE>
<CAPTION>
Energy Capacity & Bonus Total

<C> <C> <C> <C>
Average fiscal 1995 11.81 1.82 13.63
Average fiscal 1994 10.91 1.90 12.81
Average fiscal 1993 10.11 1.93 12.04

</TABLE>

Electric sale price per kWh for the Partnership Project also varies
seasonally in accordance with the rate schedule included in the SO4
agreements. The Partnership Project's average electricity prices per kWh in
1995, 1994 and 1993 were comprised of (in cents):
<TABLE>
<CAPTION>
Energy Capacity & Bonus Total

<S> <C> <C> <C>
Average fiscal 1995 11.14 2.10 13.24
Average fiscal 1994 10.29 2.16 12.45
Average fiscal 1993 9.70 2.21 11.91

</TABLE>

Electric sale price per kWh for the Salton Sea Project also varies seasonally
in accordance with the rate schedule included in the power purchase
agreements. The Salton Sea Project's average electricity prices per kWh in
1995, 1994 and 1993 were comprised of (in cents):
<TABLE>
<CAPTION>
Energy Capacity & Bonus Total

<S> <C> <C> <C>
Average fiscal 1995 9.50 2.33 11.83
Average fiscal 1994 10.07 1.67 11.74
Average fiscal 1993* 9.54 2.59 12.13

</TABLE>

*The 1993 data is for the nine months ended December 31, 1993

The Roosevelt Hot Springs steam field supplied 100% of customer power plant
steam requirements for each of the past three years. Steam sales from the
Roosevelt Hot Springs field were $2,206, $2,185, and $2,198 in 1995, 1994,
and 1993, respectively. The Desert Peak power plant operated at or near its
ten net megawatt capacity for each of the past three years. Electric sales
from Desert Peak were $5,115, $5,281 and $5,177 for the years 1995, 1994, and
1993, respectively. Beginning in 1996, the Desert Peak power plant will
receive payments for delivered electricity based on Sierra Pacific Power
Company's short-run Avoided Cost of Energy. The Yuma power plant availability
was effectively 100% during 1995 and delivered 89.2% of its 50 net MW plant
capacity. Electric and steam sales from Yuma were $16,975 in 1995 and $10,082
for approximately seven months in 1994.

Royalty income in 1995 of $19,482 is a result of the acquisition of Magma
which receives royalties from the Partnership Project, East Mesa Project and
the Mammoth Project.

Interest and other income increased in 1995 to $43,611 from $31,292 in 1994
and from $17,194 in 1993. The increase reflects management fee income
received from the Partnership Project partially offset by lower interest
income due to lower cash and investment balances.

The Company's cost per kWh was as follows (in cents):
<TABLE>
<CAPTION>
1995 1994 1993

<S> <C> <C> <C>
Plant operations (net of Company's
management fees and Yuma fuel cost) 2.31 1.82 1.98
General and administration .78 .82 1.03
Royalties .81 .62 .65
Depreciation and amortization 2.41 1.34 1.39
Interest, less amounts capitalized 3.40 3.33 1.82

Total 9.71 7.93 6.87

</TABLE>
The Company's expenses as a percentage of sales of electricity and steam
were as follows:
<TABLE>
<CAPTION>
1995 1994 1993

<S> <C> <C> <C>
Plant operations (net of Company's
management fees and Yuma fuel cost) 20.6 % 18.7 % 19.2 %
General and administration 7.0 8.4 10.0
Royalties 7.2 6.4 6.3
Depreciation and amortization 21.5 13.7 13.5
Interest, less amounts capitalized 30.4 34.2 17.7

Total 86.7 % 81.4 % 66.7 %

</TABLE>

The Company's expenses increased in 1995 as a general result of the
acquisition of Magma, the greater electricity production of the Coso Project
and the inclusion of the costs from the Yuma plant for an entire year which
operated for only seven months in 1994.

The cost of plant operations increased to $79,294 in 1995 from $33,015 in
1994, an increase of 140.2%. The addition of the Imperial Valley Project
operations and the full year of operations of the Yuma Project (including
fuel purchases) resulted in the additional plant operations costs. Plant
operations costs for the plants the Company owned in 1994, excluding Yuma,
decreased $2,250 or 8.4% in 1995. The cost per kWh excluding Magma and Yuma
fuel costs decreased to 1.61 cents in 1995 from 1.82 cents and 1.98 cents in
1994 and 1993 respectively. The cost of plant operations increased to $33,015
in 1994 from $25,362 in 1993, an increase of 30.2% as a result of the cost of
plant operations at Yuma.

General and administration costs increased to $23,376 in 1995 from $13,012 in
1994, an increase of 79.6%. This increase is a result of the Company's
acquisition of Magma. General and administration costs per kWh for 1995,
1994, and 1993, continue to decrease due to a proportionally greater increase
in electrical production than general and administration costs. General and
administration costs decreased to $13,012 in 1994 compared to $13,158 in
1993, a 1.1% decrease.

Royalty cost increased to $24,308 in 1995 from $9,888 in 1994, a 145.8%
increase. The increase was due to the addition of the Imperial Valley
Project, increased revenue from the plants the Company owned in 1994 and
scheduled royalty increases associated with such plants. Overall, the royalty
cost per kWh was 0.81 cents in 1995 compared to 0.62 cents in 1994 and 0.65
cents in 1993. Royalty costs increased to $9,888 in 1994 from $8,274 in 1993,
an increase of 19.5% due to higher electrical sales and effective royalty
rate.

Depreciation and amortization increased to $72,249 in 1995 from $21,197 in
1994, a 240.8% increase. The increase was due to depreciation and
amortization from the Imperial Valley Project and amortization of excess of
cost over fair value of net assets acquired in connection with the purchase
of Magma. Depreciation and amortization for the plants the Company owned in
1994 increased to $25,935 in 1995 from $21,197 in 1994, a 22.4% increase.
Depreciation and amortization expense for 1995 was 2.41 cents per kWh
compared to 1.34 cents per kWh in 1994. The cost per kWh excluding Magma was
1.49 cents in 1995. Depreciation and amortization expense increased to
$21,197 in 1994 from $17,812 in 1993 a 19.0% increase. The increase in 1994
was due to the completion of H2S abatement systems and vacuum pumps at the
Coso plants and an increased number of wells.

Interest expense, less amounts capitalized, increased to $102,083 in 1995
from $52,906 in 1994, a 93.0% increase or 3.40 cents per kWh in 1995
compared to 3.33 cents per kWh in 1994. The 1995 increase was primarily due
to the interest expense on the debt used to finance the acquisition of Magma,
the increase in the original issue discount amortization on the Senior
Discount Notes issued in March 1994 and interest expense on the convertible
debt, partially offset by the defeasance of the Senior Notes in March 1994.
Net interest expense in 1994 increased due primarily to the Company's
issuance of Senior Discount Notes in March of 1994. Net interest increased to
$52,906 in 1994 from $23,389 in 1993, an increase of 126.2%, or 3.33 cents
per kWh in 1994, compared to 1.82 cents per kWh in 1993.

The provision for income taxes increased to $30,631 in 1995 from $17,002 in
1994, and decreased to $17,002 in 1994 from $18,184 in 1993. The effective
tax rate was 31.6%, 30.5% and 29.7% in 1995, 1994, and 1993, respectively.

Income before the provision for income taxes increased to $97,051 in 1995
from $55,836 in 1994, a 73.8% increase. Net income available to common
shareholders increased to $62,335 or $1.25 per common share for the year
ended December 31, 1995 compared to $31,817 or $.89 per common share in 1994
and $42,544 or $1.11 per common share in 1993. Net income for the year ended
December 31, 1994 was reduced by $2,007 or $.06 per share due to an
extraordinary item. Net income for the year ended December 31, 1993 was
increased by $4,100 or $.11 per share due to a cumulative effect of a change
in accounting principle.

Earnings per share in 1995, 1994, and 1993 were favorably impacted by the
Company's stock repurchase plan.

Liquidity and Capital Resources

Cash and short-term investments were $106,304 at December 31, 1995 as
compared to $304,004 at December 31, 1994. In addition, the Coso Project and
Partnership Project retained cash and investments in project control accounts
of which the Company's share was $77,590 and $54,087 at December 31, 1995 and
1994, respectively. Distributions out of the project control accounts are
made monthly to the Company for operation and maintenance and capital costs
and semiannually to each Coso Project partner and Partnership Project partner
for profit sharing under a prescribed calculation subject to mutual agreement
by the partners. In addition to these liquid instruments, the Company
recorded separately restricted cash of $149,227 and $131,775 at December 31,
1995 and 1994, respectively. The restricted cash balances are comprised
primarily of amounts deposited in restricted accounts from which the Company
will provide its equity contribution requirements relating to the Salton Sea
Unit IV, Upper Mahiao, Mahanagdong, and Malitbog projects and the Company's
proportionate share of Coso Project and Partnership Project cash reserves for
the debt service reserve funds.

Accounts receivable normally represents two months of revenues, and
fluctuates with both production and price per kWh.

The balance due from/to the Joint Ventures relates to operations,
maintenance, and management fees for managing the Coso Project and the
Partnership Project as well as advances and deferred revenue on the
international projects. This amount fluctuates based on the timing of
billings and incurrence of costs.

The Company repurchased 102 common shares during 1995 for the aggregate
amount of $1,590. The Company repurchased 3,765 shares of common stock in
1994 at an aggregate amount of $65,119. As of December 31, 1995 the Company
holds 87 shares of treasury stock at a cost of $1,348 to provide shares for
issuance under the Company's employee stock option and share purchase plan
and other outstanding convertible securities. The repurchase plan attempts to
minimize the dilutive effect of the additional shares issued under these
plans.

The Company has acquired all of the outstanding equity interest in Magma
Power Company ("Magma") in a two-step transaction accounted for as a purchase
according to the terms of a merger agreement whereby on January 10, 1995, the
Company acquired approximately 51% of the outstanding shares of Magma common
stock (the "Magma Common Stock") through a cash tender offer (the "Magma
Tender Offer") and on February 24, 1995 the Company acquired the remaining
49% of Magma Common Stock not owned by the Company through a merger (the
"Merger"). Each outstanding share of Magma Common Stock (other than shares of
Magma Common Stock held by the Company, CE Acquisition Company, Inc., a
wholly owned subsidiary of the Company, or any other direct or indirect
subsidiary of the Company and shares of Magma Common Stock held in the
treasury of Magma) was converted into the right to receive an average of
approximately $38.75 per share of Magma Common Stock. The Company paid the
Merger consideration solely in cash, funded with the net proceeds of a public
common stock offering of 15,170 shares (the "Offering") and the proceeds of
a direct sale of 1,500 shares to Peter Kiewit Sons', Inc. (the "Direct Sale")
at $17.00 per share which together netted $275,653, over-allotment proceeds
of $24,735 on the sale of 1,500 shares, borrowings of $500,000 under bank
credit facilities ("Merger Facilities"), and general corporate funds of the
Company. Magma is engaged in independent geothermal power operations similar
to those of the Company.

In July 1995 the Company recapitalized Magma and the related Merger
Facilities with proceeds received through the issuance of notes and bonds as
described below.

On July 21, 1995 the Company issued $200,000 of 9 7/8% Limited Recourse
Senior Secured Notes Due 2003 (the "Notes"). The Notes are secured by an
assignment and pledge of 100% of the outstanding capital stock of Magma. On
or prior to June 30, 1998, the Company may, at its option, redeem up to an
aggregate of 35% of the principal amount of the Notes originally issued at a
redemption price equal to 109.875% of the principal amount thereof plus
accrued interest to the redemption date. The Notes are redeemable at the
option of the Company, in whole or in part, at the redemption prices of
104.9375%, 102.46875% and 100%, on or after June 30, 2000, 2001 and 2002,
respectively, plus accrued interest to the date of redemption.
Concurrent with the issuance of the Notes, the Company through its wholly
owned subsidiary, Salton Sea Funding Corporation ("Funding Corporation"),
completed a sale to institutional buyers of $475,000 principal amount of
Salton Sea Notes and Bonds, which are nonrecourse to the Company. The Funding
Corporation debt securities were offered in three tranches as follows:

$232,750 6.69% Senior Secured Series A Notes
Due May 30, 2000
$133,000 7.37% Senior Secured Series B Bonds
Due May 30, 2005
$109,250 7.84% Senior Secured Series C Bonds
Due May 30, 2010

The net proceeds of the Notes and the Salton Sea Notes and Bonds were used to
(a) recapitalize Magma and the related Merger Facilities (b) refinance
approximately $102,000 of existing indebtedness of the Salton Sea Project,
and (c) finance the Salton Sea Unit IV in the amount of $115,000. Pursuant to
the Depositary Agreement, Funding Corporation established a debt service
reserve fund in the form of a letter of credit in the initial amount of
$50,000 from which scheduled interest and principal payments can be made.

The Company is actively seeking to develop, construct, own and operate new
power and infrastructure projects utilizing geothermal and other
technologies, both domestically and internationally, the completion of any of
which is subject to substantial risk. Development can require the Company to
expend significant sums for preliminary engineering, field development,
permitting, legal and other financing related costs. The Company's future
growth is dependent, in large part, upon the demand for significant amounts
of additional electrical generating capacity and the Company's ability to
obtain contracts to supply portions of this capacity. There can be no
assurance that development, financing or construction efforts on any
particular project, or the Company's efforts generally, will be successful.

The Company believes that the international independent power market holds
the majority of new opportunities for financially attractive private power
development in the next several years. The financing, construction and
development of projects outside the United States entail significant
political and financial risks (including, without limitation, uncertainties
associated with first time privatization efforts in the countries involved,
currency exchange rate fluctuations, currency repatriation restrictions,
political instability, civil unrest and expropriation) and other structuring
issues that have the potential to cause substantial delays or material
impairment of value to the project being developed, which the Company may not
be fully capable of insuring against. The uncertainty of the legal
environment in certain foreign countries in which the Company may develop or
acquire projects could make it more difficult for the Company to enforce its
rights under agreements relating to such projects. In addition, the laws and
regulations of certain countries may limit the ability of the Company to hold
a majority interest in some of the projects that it may develop or acquire.
The Company's international projects may, in certain cases, be terminated by
a government.

In 1995, the Company has commenced development of and has obtained financing
for the Casecnan Project, a multipurpose irrigation and hydroelectric power
facility with a rated capacity of approximately 150 net MW located on the
island of Luzon in the Philippines. The total project cost for the facility
is approximately $495,000. The current capital structure consists of term
loans of $371,500 and $123,836 in equity contributions. The Company's portion
of the contributed equity is $61,918.

The project is structured as a 20 year BOOT, in which the Company's indirect
subsidiary CE Casecnan Water and Energy Company, Inc., a Philippine
corporation, will be responsible as the BOOT operator. The fixed price, date-
certain turnkey contractors consist of Hanbo Corporation and You One
Engineering & Construction Co., Ltd. of South Korea.

Additionally in 1995, the Company has commenced construction of an additional
40 net MW electric generating facility (the "Salton Sea Unit IV") in the
Imperial Valley pursuant to an amended and restated 30-year power purchase
agreement with Edison. The Salton Sea Unit IV has a target completion date of
July 1996 and an estimated capital construction cost of $135,000. As of
December 31, 1995, the Company has invested $64,935 in the Salton Sea Unit
IV.

In April 1994, the Company closed the financing for the 119 net MW Upper
Mahiao geothermal power project located in the Philippines. The total project
cost for the facility is approximately $218,000. The Company will supply
approximately $56,000 of equity and project debt financing will constitute
the balance of approximately $162,000. A syndicate of international
commercial banks is providing the construction financing. The Export-Import
Bank of the U.S. ("Ex-Im Bank") is providing political risk insurance to the
commercial banks on the construction loan and will provide the preponderance
of project term financing upon satisfaction of conditions associated with
commercial operation. As of December 31, 1995, draws on the construction loan
totalled $134,619, and the Company has invested $51,137. The Overseas Private
Investment Corporation ("OPIC") is providing political risk insurance on the
equity investment by the Company in this project. The Upper Mahiao project
commenced construction in April of 1994, and is expected to be in service in
July of 1996. The project is structured as a ten year Build-Own-Operate-
Transfer ("BOOT"), in which the Company's subsidiary CE Cebu Geothermal Power
Company, Inc., the project company, will be responsible for implementing
construction of the geothermal power plant and, as owner, for providing
operations and maintenance during the ten year BOOT period. The electricity
generated by the Upper Mahiao geothermal power plant will be sold to the
Philippine National Oil Company-Energy Development Corporation ("PNOC-EDC"),
which is also responsible for supplying the facility with the geothermal
steam. After a ten year cooperation period, and the recovery by the Company
of its capital investment plus incremental return, the plant will be
transferred to PNOC-EDC at no cost. Ormat Inc. of Sparks, Nevada is the
turnkey contractor for the project.

PNOC-EDC will be obligated to pay for the electric capacity that is nominated
each year by CE Cebu, irrespective of whether PNOC-EDC is willing or able to
accept delivery of such capacity. PNOC-EDC will pay to CE Cebu a fee (the
"Capacity Fee") based on the plant capacity nominated to PNOC-EDC in any year
(which, at the plant's design capacity, is approximately 95% of total
contract revenues) and a fee (the "Energy Fee") based on the electricity
actually delivered to PNOC-EDC (approximately 5% of total contract revenues).
The Capacity Fee serves to recover the capital costs of the project, to
recover fixed operating costs and to cover return on investment. The Energy
Fee is designed to cover all variable operating and maintenance costs of the
power plant. Payments under the Upper Mahiao Energy Conversion Agreement
("ECA") will be denominated in U.S. dollars, or computed in U.S. dollars and
paid in Philippine pesos at the then-current exchange rate, except for the
Energy Fee, which will be used to pay Philippine peso-denominated expenses.
The convertibility of Philippine peso receipts into U.S. dollars is insured
by OPIC. Significant portions of the Capacity Fee and Energy Fee will be
indexed to U.S. and Philippine inflation rates, respectively. PNOC-EDC's
payment requirements, and its other obligations under the Upper Mahiao ECA
are supported by the Government of the Philippines through a performance
undertaking.

In August 1994, the Company closed the financing for the 165 net MW
Mahanagdong project located in the Philippines. The total project cost for
the facility is approximately $320 million. The capital structure consists of
a term loan of $240 million and approximately $80 million in equity
contributions. OPIC and a consortium of commercial lenders led by Bank of
America NT&SA is providing the construction debt financing facility. The debt
provided by the commercial lenders is insured against political risk by the
Ex-Im Bank. Ten-year term debt financing (which will replace the construction
debt) will be provided by Ex-Im Bank and by OPIC. The Mahanagdong project has
commenced construction and as of December 31, 1995, the Company's
proportionate share of draws on the construction loan totalled $39,716 and
equity investments made by a subsidiary of the Company totalled $29,604. OPIC
is providing political risk insurance on the equity. The Mahanagdong project
has begun construction and is targeted for service in July, 1997. As with the
Upper Mahiao project, the Mahanagdong project is structured as a ten-year
BOOT, in which the Company will be responsible for implementing construction
of the geothermal power plant and, as owner, for providing operations and
maintenance for the ten year BOOT period. After a ten year cooperation
period, and the recovery by the Company of its capital investment plus
incremental return, the plant will be transferred to PNOC-EDC at no cost. The
Mahanagdong project will be built, owned and operated by CE Luzon Geothermal
Power Company, Inc., a Philippine corporation, that is expected to be owned
post-completion as follows: 45% by the Company, 45% by Kiewit, and up to 10%
by another industrial company. The turnkey contractor consortium consists of
Kiewit Construction Group, Inc. (with an 80% interest) and CE Holt Co., a
wholly owned subsidiary of the Company (with a 20% interest).

The electricity generated by the Mahanagdong project will be sold to PNOC-
EDC, on a "take or pay" basis, which is also responsible for supplying the
facility with the geothermal steam. The terms of the Mahanagdong ECA are
substantially similar to those of the Upper Mahiao ECA. All of PNOC-EDC's
obligations under the Mahanagdong ECA are supported by the Government of the
Philippines through a performance undertaking. The Capacity Fees are expected
to be approximately 97% of total revenues at the design capacity levels and
the Energy Fees are expected to be approximately 3% of such total revenues.

In December 1994, financing was closed and construction commenced on the
Malitbog Project, a 216 net MW geothermal project, which will be located on
the island of Leyte. The Malitbog Project will be built, owned and operated
by Visayas Geothermal Power Company ("VGPC"), a Philippine general
partnership that is wholly owned, indirectly, by the Company. VGPC will sell
100% of its capacity on substantially the same basis as described above for
the Upper Mahiao Project to PNOC-EDC, which will in turn sell the power to
NAPOCOR.

The Malitbog Project has a total project cost of approximately $280 million,
including interest during construction and project contingency costs. Credit
Suisse and OPIC have provided a total of $210 million of construction and
term loan facilities, the $135 million international commercial bank portion
of which is supported by political risk insurance from OPIC. As of December
31, 1995, draws on the construction loan totalled $36,863, the equity
investments made by subsidiaries of the Company totalled $70,000 and advances
by subsidiaries of the Company totalled $2,820. The advances will be repaid
by draws on the construction loan. The Company's equity contribution to VGPC
of $70,000 is covered by political risk insurance from OPIC and the
Multilateral Investment Guarantee Agency ("MIGA"). As with the Upper Mahiao
project, the Malitbog project is structured as a BOOT, in which the Company
will be responsible for implementing construction of the geothermal power
plant and, as owner, for providing operations and maintenance for the ten
year BOOT period. After a ten year cooperation period, and the recovery by
the Company of its capital investment plus incremental return, the plant will
be transferred to PNOC-EDC at no cost.

The Malitbog Project is being constructed by Sumitomo Corporation pursuant to
a fixed-price, date-certain, turnkey supply and construction contract.
Construction of the facility has begun, with commercial operation of Unit 1
scheduled to commence in July 1996 and commercial operation of Unit 2 and
Unit 3 scheduled to commence in July 1997.

Magma is seeking new long-term final SO4 power purchase agreements in
southern California through the bidding process adopted by the CPUC under its
1992 Biennial Resource Plan Update ("BRPU"). In its 1992 BRPU, the CPUC cited
the need for an additional 9,600 MW of power production through 1999 among
California's three investor-owned utilities, Edison, SDG&E and Pacific Gas
and Electric Company (collectively, the "IOUs"). Of this amount, 275 MW was
set aside for bidding by independent power producers (such as Magma)
utilizing renewable resources. Pursuant to an order of the CPUC dated June
22, 1994 (confirmed on December 21, 1994), Magma was awarded 163 net MW for
sale to Edison (69 net MW) and SDG&E (94 net MW), with in-service dates in
1997 and 1998. However, the IOUs have to date challenged and may continue to
challenge the order and there can be no assurance that power sales contracts
will be executed or that any such projects will be completed.

In light of the regulatory uncertainty concerning the BRPU awards resulting
from such IOU challenges, in March 1995 Magma entered into a settlement
agreement with Edison relating to the 69 net MW of capacity awarded to Magma
as a winning bidder in the BRPU solicitation. The agreement (which is subject
to CPUC approval) provides for three lump sum termination payments in lieu of
signing a power sales contract with Edison for the 69 net MW of BRPU
capacity. The amount of the termination payments is subject to a
confidentiality agreement but provides Edison's ratepayers with very
significant savings when compared to payments that would otherwise be made to
Magma over the life of the proposed BRPU power sales contract.

The agreement also provides Edison with an option, which can be exercised
until February 1, 2002, to negotiate a power sales contract for 69 net MW of
geothermal capacity and energy on commercially reasonable prices and terms,
without giving effect to termination payments previously paid.

Inflation has not had a substantial impact on the Company's operating
revenues and costs; energy payments for electricity for the Coso Project,
Partnership Project, Salton Sea II and Salton Sea III will continue to be
based upon scheduled rates and are not adjusted for inflation through the
initial ten-year period of each power purchase agreement.

CONSOLIDATED BALANCE SHEETS
as of December 31, 1995 and December 31, 1994
dollars and shares in thousands, except per share amounts

ASSETS 1995 1994

<S> <C> <C>
Cash and investments $ 72,114 $254,004
Joint venture cash and investments (Note 9) 77,590 54,087
Restricted cash (Notes 3, 7, 9 and 10) 149,227 131,775
Short-term investments 34,190 50,000
Accounts receivable 57,909 28,272
Due from Joint Ventures 27,273 ---
Properties, plants, contracts and equipment,
net (Notes 5, 7, 9 and 10) 1,778,589 561,643
Notes receivable - Joint Ventures (Note 19) 14,254 12,627
Excess of cost over fair value of net assets
acquired, net (Note 3) 302,288 ---
Equity investment in Casecnan (Note 8) 60,815 ---
Deferred charges and other assets 79,789 38,737

Total assets $2,654,038 $1,131,145

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 6,638 $ 1,679
Other accrued liabilities 87,892 42,658
Project finance loans (Note 9) 257,933 233,080
Construction loans (Note 10) 211,198 31,503
Senior discount notes (Note 11) 477,355 431,946
Salton Sea notes and bonds (Note 5) 452,088 ---
Limited recourse senior securednotes (Note 5) 200,000 ---
Convertible subordinated debentures (Note 12) 100,000 100,000
Convertible debt (Note 13) 64,850 ---
Deferred income taxes (Note 14) 226,520 26,568
Due to Joint Venture --- 269

Total liabilities 2,084,474 867,703

Deferred income (Note 7) 26,032 19,851

Commitments and contingencies (Notes 6 and 18)
Redeemable preferred stock (Note 13) --- 63,600

Stockholders' equity (Notes 13, 15, 16, and 17):
Preferred stock - authorized 2,000 shares,
no par value (Note 15) --- ---
Common stock - par value $0.0675 per share,
authorized 80,000 and 60,000 shares, issued
50,680 and 35,649 shares, outstanding 50,593
and 31,849 shares 3,421 2,407
Additional paid in capital 343,406 100,421
Retained earnings 205,059 142,937
Treasury stock - 87 and 3,800 common shares at cost (1,348) (65,774)
Unearned compensation - restricted stock (Note 16) (7,006) ---

Total stockholders' equity 543,532 179,991

Total liabilities and stockholders' equity $2,654,038 $1,131,145

</TABLE>

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

CONSOLIDATED STATEMENTS OF OPERATIONS
for the three years ended December 31, 1995
dollars and shares in thousands, except per share amounts

<TABLE>
<CAPTION>
1995 1994 1993

<S> <C> <C> <C>
Revenue:
Sales of electricity and steam $335,630 $154,562 $132,059
Royalty income 19,482 --- ---
Interest and other income 43,611 31,292 17,194

Total revenues 398,723 185,854 149,253

Cost and expenses:
Plant operations 79,294 33,015 25,362
General and administration 23,376 13,012 13,158
Royalties 24,308 9,888 8,274
Depreciation and amortization 72,249 21,197 17,812
Loss on equity investment in Casecnan 362 --- ---
Interest 134,637 62,837 30,205
Less interest capitalized (32,554) (9,931) (6,816)

Total expenses 301,672 130,018 87,995

Income before provision for income taxes 97,051 55,836 61,258
Provision for income taxes (Note 14) 30,631 17,002 18,184

Income before change in accounting principal
and extraordinary item 66,420 38,834 43,074
Cumulative effect of change in accounting
principal (Note 14) --- --- 4,100
Extraordinary item (Note 20) --- (2,007) ---

Income before minority interest and
preferred dividends 66,420 36,827 47,174
Minority interest 3,005 --- ---

Net Income 63,415 36,827 47,174
Preferred dividends 1,080 5,010 4,630

Net income available to common stockholders $62,335 $31,817 $42,544

Income per share before change in accounting
principal and extraordinary item $1.25 $.95 $ 1.00

Cumulative effect of change in accounting
principal (Note 14) --- --- .11

Extraordinary item (Note 20) --- (.06) ---

Net income per share - primary $1.25 $ .89 $ 1.11

Net income per share - fully diluted $1.18 $ .88 $1.09

Average number of shares outstanding - primary 49,971 35,721 38,485

Fully diluted shares 57,742 40,166 40,781

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the three years ended December 31, 1995
dollars and shares in thousands

</TABLE>
<TABLE>
<CAPTION>

Outstanding Additional
Common Common Paid-In Retained Treasury Unearned
Shares Stock Capital Earnings Stock Compensation Total

<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1992 35,258 $ 2,380 $ 97,977 $ 68,407 $ --- $ --- $168,764
Exercise of stock options 258 18 937 --- --- --- 955
Issuance of stock for purchase of
The Ben Holt Co. 87 6 1,551 --- --- --- 1,557
Purchase of treasury stock (157) --- --- --- (2,897) --- (2,897)
Preferred stock dividends, Series C,
including cash distributions of $100 --- --- --- (4,550) --- --- (4,550)
Tax benefit from stock plan --- --- 500 --- --- --- 500
Net income before preferred dividends --- --- --- 47,174 --- --- 47,174

Balance December 31, 1993 35,446 2,404 100,965 111,031 (2,897) --- 211,503
Exercise of stock options 46 3 379 --- --- --- 382
Purchase of treasury stock (3,765) --- --- --- (65,119) --- (65,119)
Exercise of stock options from
treasury stock 96 --- (1,473) --- 1,772 --- 299
Employee stock purchase plan issues
from treasury stock 26 --- (122) --- 470 --- 348
Preferred stock dividends, Series C,
including cash distribution of $121 --- --- --- (4,921) --- --- (4,921)
Tax benefit from stock plan --- --- 672 --- --- --- 672
Net income before preferred dividends --- --- --- 36,827 --- --- 36,827

Balance December 31, 1994 31,849 2,407 100,421 142,937 (65,774) --- 179,991
Equity offering 18,170 1,004 240,825 56,801 --- --- 298,630
Exercise of stock options 102 7 303 --- --- --- 310
Restricted stock 500 --- 848 --- 8,652 (9,500) ---
Amortization of unearned compensation --- --- --- --- --- 2,494 2,494
Employee stock purchase plan issues 41 3 559 --- --- --- 562
Exercise of stock options from
treasury stock 33 --- (416) --- 563 --- 147
Purchase of treasury stock (102) --- --- --- (1,590) --- (1,590)
Preferred stock dividends, Series C,
including cash distribution of $43 --- --- --- (1,293) --- --- (1,293)
Tax benefit from stock plan --- --- 866 --- --- --- 866
Net income before preferred dividends --- --- --- 63,415 --- --- 63,415

Balance December 31, 1995 50,593 $ 3,421 $343,406 $205,059 $(1,348) $(7,006) $543,532

</TABLE>

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

CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three years ended December 31, 1995
dollars in thousands
<TABLE>
<CAPTION>
1995 1994 1993

<S> <C> <C> <C>
Cash flows from operating activities:
Net incom $ 63,415 $ 36,827 $ 47,174
Adjustments to reconcile net cash flow from operating activities:
Depreciation and amortization 5,244 21,197 17,812
Amortization of excess of cost over fair value
of net assets acquired 7,005 --- ---
Amortization of original issue discount 45,409 31,946 ---
Amortization of deferred financing costs 8,979 1,687 1,013
Amortization of unearned compensation 2,494 --- ---
Provision for deferred income taxes 13,983 8,258 3,098
Loss on equity investment in Casecnan 362 --- ---
Expense of previously deferred financing costs --- 198 ---
Changes in other items:
Accounts receivable 213 (6,614) (5,486)
Accounts payable and other accrued liabilities 3,838 23,864 (784)
Deferred income 6,181 (437) (876)
Income tax payable 2,084 (4,500) 4,000
Other assets --- --- (177)

Net cash flows from operating activities 219,207 112,426 65,774

Cash flows from investing activities:
Capital expenditures relating to power plants
and development of existing projects (25,884) (37,717) (26,860)
Acquisition of equipment (1,236) (361) (1,104)
Purchase of Magma, net of cash acquired (907,614) (3,043) ---
Upper Mahiao - construction in progress (140,350) (48,554) ---
Mahanagdong - construction in progress (55,117) (21,443) ---
Malitbog - construction in progress (94,188) --- ---
Investment in Casecnan (61,177) --- ---
Other international development (8,973) (2,445) ---
Salton Sea Expansion (62,430) --- ---
Pacific Northwest, Nevada, and Utah exploration costs (10,445) (8,493) (19,060)
Decrease (increase) in short-term investment 80,565 (50,000) ---
Decrease (increase) in restricted cash (17,452) (83,670) 14,409
Decrease (increase) in other investments and assets 14,519 1,847 941
Yuma-construction in progress --- --- (40,167)
Tansmission line deposit --- --- 7,684

Net cash flows from investing activities (1,289,782) (253,879) (64,157)

Cash flows from financing activities:
Proceeds from sale of common and treasury stock
and exercise of stock options 299,649 1,580 2,912
Proceeds from Salton Sea notes and bonds 475,000 --- ---
Proceeds from limited recourse senior secured notes 200,000 --- ---
Proceeds from merger facility 500,000 --- ---
Recapitalization of merger facility (500,000) --- ---
Repayment of project loans (153,752) (13,800) (16,724)
Construction loans 179,695 31,503 ---
Repayment of Salton Sea notes and bonds (22,912) --- ---
Deferred charges relating to debt financing (34,733) (11,905) (2,582)
Decrease (increase) in amounts due from Joint Ventures (29,169) 316 (3,146)
Purchase of treasury stock (1,590) (65,119) (2,897)
Proceeds from issue of Senior Discount Note --- 400,000 ---
Proceeds from issue of convertible subordinated debentures --- --- 100,000
Defeasance of senior notes --- (35,730) ---

Net cash flows from financing activities 912,188 306,845 77,563

Net increase (decrease) in cash and investments (158,387) 165,392 79,180

Cash and investments at beginning of period 308,091 142,699 63,519

Cash and investments at end of period $149,704 $308,091 $142,699

Interest paid (net of amounts capitalized) $ 50,840 $ 12,624 $20,136

Income taxes paid $ 14,812 $ 4,926 $6,819

</TABLE>

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

NOTES to Consolidated Financial Statements
For the Three Years Ended December 31, 1995
Dollars and Shares in Thousands, Except Per Share Amounts

1. Business

CalEnergy Company, Inc. (the "Company"), formerly California Energy Company,
Inc., was formed in 1971. It is primarily engaged in the development of
geothermal resources and conversion of such resources into electrical power
and steam for sale to electric utilities, and the development and operation
of other environmentally responsible forms of power generation.

The Company has organized several partnerships and joint ventures (herein
referred to as Coso Joint Ventures) in order to develop geothermal energy at
the China Lake Naval Air Weapons Station, Coso Hot Springs, China Lake,
California. Collectively, the projects undertaken by these Coso Joint
Ventures are referred to as the Coso Project. The Company is the operator and
holds interests between 46.4% and 50% in the Coso Joint Ventures after
payout. Payout is achieved when a Coso Joint Venture has returned the initial
capital to the Coso Joint Venturers. In addition, the Company is developing
geothermal resources in Northern California and Oregon (collectively the
Pacific Northwest). In January 1991, the Company acquired a power plant and
an interest in steam fields in Nevada and Utah (See Note 7). In 1992, the
Company entered into the natural gas-fired electrical generation market
through the purchase of a development opportunity in Yuma, Arizona.
Commercial operation of the Yuma project commenced in late May 1994. In 1993,
the Company started developing a number of international power project
opportunities where private power generating programs have been initiated,
including the Philippines and Indonesia. In addition, in January 1995, the
Company acquired approximately 51% of Magma Power Company ("Magma") and
completed the acquisition in February 1995 by acquiring the remaining
percentage of approximately 49% of Magma Common Stock. Magma's operating
assets include four projects referred to as the Partnership Project of which
Magma has a 50% interest, the Salton Sea Project of which Magma owns 100% and
certain royalties received from the Partnership Project and other non related
projects (See Note 3).

2. Summary of Significant Accounting Policies

The consolidated financial statements include the accounts of the Company,
its wholly-owned subsidiaries, and its proportionate share of the joint
ventures in which it has invested. All significant inter-enterprise
transactions and accounts have been eliminated.

Investments and Restricted Cash

Investments other than restricted cash are primarily commercial paper and
money market securities. The restricted cash balance includes such securities
and mortgage backed securities, and is mainly composed of amounts deposited
in restricted accounts from which the Company will source its equity
contribution requirements relating to the Upper Mahiao, Mahanagdong,
Malitbog, Salton Sea Unit IV projects and of the Coso Joint Ventures' and
Partnership Project's debt service reserve funds. The debt service reserve
funds are legally restricted to their use and require the maintenance of
specific minimum balances.

Effective January 1, 1994, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 115 ("SFAS 115") "Accounting for Certain
Investments in Debt and Equity Securities." Adoption of SFAS 115 had no
material effect on the Company's individual or combined financial position or
results of operations. In accordance with the provisions of SFAS 115, the
Company classifies its investments, and accounts for changes in fair value,
as follows:

- - - Debt securities that the Company has the positive intent and ability to
hold to maturity are classified as held-to-maturity securities and
reported at amortized cost.

- - - Debt and equity securities that are bought and held principally for the
purpose of selling them in the near term are classified as trading
securities and reported at fair value, with unrealized gains and losses
included in earnings.

- - - Debt and equity securities not classified as either held-to-maturity
securities or trading securities are classified as available-for-sale
securities and reported at fair value, with unrealized gains and losses
excluded from earnings and reported as a separate component of
stockholders' equity.

At December 31, 1995, all of the Company's investments are classified as
held-to-maturity and are accounted for at their amortized cost basis. The
carrying amount of the investments approximates the fair value based on
quoted market prices as provided by the financial institution which holds the
investments.

Well, Resource Development and Exploration Costs

The Company 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 and the cost of drilling and
equipping production wells and directly attributable administrative and
interest costs, are capitalized and amortized over their estimated useful
lives when production commences. The estimated useful lives of production
wells are ten to twenty years depending on the characteristics of the
underlying resource; exploration costs and development costs, other than
production wells, are generally amortized over the weighted average remaining
term of the Company's power and steam purchase contracts. For purposes of
current period visibility and disclosure, all such costs are identified in
the Consolidated Statements of Cash Flows as they are incurred.

Deferred Well and Rework Costs

Well rework costs are deferred and amortized over the estimated period
between reworks. These deferred costs of $7,086 and $733 at December 31,
1995 and 1994, respectively, are included in other assets.

Properties, Plants, Contracts, Equipment and Depreciation

The cost of major additions and betterments are capitalized, while
replacements, maintenance, and repairs that do not improve or extend the
lives of the respective assets are expensed.

Depreciation of the operating power plant costs, net of salvage value, is
computed on the straight-line method over the estimated useful lives,
resulting in a composite rate of depreciation of approximately 2.67% per
annum. Depreciation of furniture, fixtures and equipment, which are recorded
at cost, is computed on the straight-line method over the estimated useful
lives of the related assets, which range from three to ten years.

The Magma acquisition by the Company has been accounted for as a purchase
business combination pursuant to the principles of APB Opinion No. 16
"Business Combinations." In applying APB No. 16, all identifiable assets
acquired and liabilities assumed were assigned a portion of the cost of
acquiring Magma, equal to their fair values at the date of the acquisition
and include the following:

Power sales agreements are amortized separately over (1) the remaining
portion (1 to 5 years) of the scheduled price periods of the power sales
agreements and (2) the 20 year avoided cost periods of the power sales
agreements using the straight-line method.

Mineral reserves are amortized on the units of production method.

Process licenses and related technologies are amortized using the straight-
line method over the estimated useful life of the license.

Total acquisition costs in excess of the fair values assigned to the net
assets acquired are amortized over a 40 year period using the straight line
method.

Capitalization of Interest and Deferred Financing Costs

Prior to the commencement of operations, interest is capitalized on the costs
of the plants and geothermal resource development to the extent incurred.
Capitalized interest and other deferred charges are amortized over the lives
of the related assets.

Deferred financing costs are amortized over the term of the related
financing. Loan fees are amortized using the implicit interest method; other
deferred financing costs are amortized using the straight-line method.

Revenue Recognition

Revenues are recorded based upon service rendered and electricity and steam
delivered to the end of the month. See Note 7 for contractual terms of power
sales agreements. Royalties contractually payable to the Company by the
Partnership Project are recorded on an accrual basis, net of the Company's
50% share of the corresponding partnership project expense. Royalties earned
from providing geothermal resources to power plants operated by other
geothermal power producers are recorded on an accrual basis.

Deferred Income Taxes

On January 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." The adoption
of SFAS 109 changes the Company's method of accounting for income taxes from
the deferred method as required by Accounting Principles Board Opinion No.
11 to an asset and liability approach.

Fair Values of Financial Instruments

The following methods and assumptions were used by the Company in estimating
fair values of financial instruments as discussed herein. Fair values have
been estimated based on quoted market prices for debt issues listed on
exchanges. Fair values of financial instruments that are not actively traded
are based on market prices of similar instruments and/or valuation techniques
using market assumptions. Although management uses its best judgement in
estimating the fair value of these financial instruments, there are inherent
limitations in any estimation technique. Therefore, the fair value estimates
presented herein are not necessarily indicative of the amounts which the
Company could realize in a current transaction.

The Company assumes that the carrying amount of short-term financial
instruments approximates their fair value. For these purposes, short-term is
defined as any item that matures, reprices, or represents a cash transaction
between willing parties within six months or less of the measurement date.

Net Income per Common Share

Primary and fully diluted earnings per common share are based on the weighted
average number of common and dilutive common equivalent shares outstanding
during the period computed using the treasury stock method. Fully diluted
earnings per share also assumes the conversion of the Convertible
Subordinated Debentures into 4,444 common shares at a conversion price of
$22.50 per share (even though the common share price was $19.50 at December
31, 1995) and the exercise of all dilutive stock options outstanding at their
option prices, with the option exercise proceeds used to repurchase shares of
common stock at the ending market price for fully diluted earnings per share.
For primary earnings per share, shares of common stock are assumed to be
repurchased at the average price for the period.

Cash Flows

The statement of cash flows classifies changes in cash according to
operating, investing, or financing activities. Investing activities include
capital expenditures incurred in connection with the power plants, wells,
resource development, and exploration costs. The Company considers all
investment instruments purchased with a maturity of three months or less to
be cash equivalents. Restricted cash is not considered a cash equivalent.

Reclassification

Certain amounts in the fiscal 1994 and 1993 financial statements and
supporting footnote disclosures have been reclassified to conform to the
fiscal 1995 presentation. Such reclassification did not impact previously
reported net income or retained earnings.

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 and liabilities 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.

3. Purchase of Magma Power Company

On January 10, 1995, the Company acquired approximately 51% of the
outstanding shares of common stock of Magma Power Company (the "Magma Common
Stock") through a cash tender offer (the "Magma Tender Offer") and completed
the Magma acquisition on February 24, 1995 by acquiring the approximately 49%
of the outstanding shares of Magma Common Stock not owned by the Company
through a merger. Magma is engaged in independent power operations similar to
those of the Company. The results of operations of the Company include the
results of operations of Magma from January 10, 1995, to December 31, 1995
adjusted for the Company's percentage ownership during that time period.

The Magma acquisition has been accounted for as a purchase business
combination pursuant to the principles of APB Opinion No. 16 "Business
Combinations." In applying APB No. 16, all identifiable assets acquired and
liabilities assumed were assigned a portion of the cost of acquiring Magma,
equal to their fair values at the date of the acquisition. The total cost of
the acquisition was allocated as follows:

Cash $ 62,116
Operating facilities and project cash 291,365
Power sales agreements 173,730
Mineral reserves 160,768
Construction in progress 93,174
Process license and other 39,304
Excess of cost over fair value of net assets
acquired, net of deferred taxes of $168,914 137,455

$957,912

The fair value of operating facilities, net of salvage value, and exploration
and development cost is depreciated using the straight-line method over the
remaining portion (approximately 24 years) of the original 30 year life.

Power sales agreements have been assigned values separately for each of (1)
the remaining portion (1 to 5 years) of the scheduled price periods of the
power sales agreements; (2) the 20 year avoided cost periods of the power
sales agreements, and are being amortized separately over such periods using
the straight line method; and (3) the 163 net MW BRPU Award for which the
related plants will either be constructed or the contract rights will be
bought out; amortization of such values has been deferred until the plants
have been constructed and production commences or the buyout proceeds have
been applied against such values.

The Salton Sea reservoir contains commercial quantities of extractable
minerals. The fair value has been allocated to mineral reserves which was
based on the estimated net cash flows generated from producing such minerals.
The fair value assigned to the mineral reserves will be amortized on the
units of production method upon commencement of commercial production.

Fair value has been assigned to contracts for which the plants are presently
under construction and energy production is not expected to commence before
1996. Accordingly, revenues, period operating costs, depreciation of the
remaining capital costs to be incurred for the completion of such facilities
and amortization of this acquisition cost are not presently included in the
Company's statements of operations.

A process license was allocated fair value which represents the economic
benefits expected to be realized from the installation of the license and
related technology at the Imperial Valley. The fair value assigned to the
process license is being amortized using the straight-line method over the
remaining estimated useful life of the license. Deferred finance costs are
being amortized using the level yield method over the term of the related
debt.

Total acquisition costs in excess of the fair values assigned to the net
assets acquired is amortized over a 40 year period using the straight-line
method.

The Magma Tender Offer was financed with a $245,600 facility from Credit
Suisse (the "Tender Facility"). Loans under the Tender Facility were made to
the Company on a nonrecourse basis, secured by the Magma stock acquired, and
the Company lent the proceeds of such loans to Magma in exchange for a
secured term note from Magma (the "Tender Note"). The loans under the Tender
Facility were repaid from funds received from the Merger Facilities,
described below.

Secured bank financing in the amount of $500,000 was provided by Credit
Suisse (the "Merger Facilities") on specified terms and subject to customary
conditions. Such funds, together with the net proceeds of a public equity
offering (see Note 4) and general corporate funds of the Company, were used
to complete the Magma acquisition.

In July 1995, the Company recapitalized Magma and the related Merger
Facilities from proceeds received through the issuance of notes and bonds as
described in Note 5.

Unaudited proforma combined revenue, net income and primary earnings per
share of the Company and Magma for the twelve months ended December 31, 1995
and 1994, as if the acquisition had occurred at the beginning of 1994 after
giving effect to certain proforma adjustments related to the acquisition were
$400,648, $62,367 and $1.18, compared to $368,276, $30,978 and $.57,
respectively.

4. Equity Offering

Simultaneous with the acquisition of the remaining equity interest of Magma
on February 24, 1995, the Company completed a public offering (the
"Offering") of 18,170 shares of common stock, which amount included a direct
sale by the Company to Peter Kiewit Sons, Inc. of 1,500 shares and the
exercise of underwriter over-allotment options for 1,500 shares, at a price
of $17.00 per share. The Company received net proceeds of $300,388 from the
Offering.

5. Debt Offerings

On July 21, 1995 the Company issued $200,000 of 9 7/8% Limited Recourse
Senior Secured Notes Due 2003 (the "Notes"). Interest on the Notes is payable
on June 30 and December 30 of each year, commencing December 1995. The Notes
are secured by an assignment and pledge of 100% of the outstanding capital
stock of Magma and are recourse only to such Magma capital stock, the
Company's interest in a secured Magma note and general assets of the Company
equal to the Restricted Payment Recourse Amount (as defined in the Note
Indenture).

At any time or from time to time on or prior to June 30, 1998, the Company
may, at its option, use all or a portion of the net cash proceeds of a
Company equity offering (as defined in the Note Indenture) and shall at any
time use all of the net cash proceeds of any Magma equity offering (as
defined in the Note Indenture) to redeem up to an aggregate of 35% of the
principal amount of the Notes originally issued at a redemption price equal
to 109.875% of the principal amount thereof plus accrued interest to the
redemption date. On or after June 30, 2000, the Notes are redeemable at the
option of the Company, in whole or in part, initially at a redemption price
of 104.9375% declining to 100% on June 30, 2002 and thereafter, plus accrued
interest to the date of redemption.

Concurrent with the issuance of the Notes, the Company through its wholly
owned subsidiary, Salton Sea Funding Corporation ("Funding Corporation"),
completed a sale to institutional buyers of $475,000 principal amount of
Salton Sea Notes and Bonds, which are nonrecourse to the Company. These debt
securities were rated Baa3 by Moody's and BBB- by Standard & Poor's. The
Funding Corporation debt securities were offered in three tranches as
follows:

$232,750 6.69% Senior Secured Series A Notes
Due May 30, 2000
$133,000 7.37% Senior Secured Series B Bonds
Due May 30, 2005
$109,250 7.84% Senior Secured Series C Bonds
Due May 30, 2010

The Salton Sea Notes and Bonds are secured by the Company's three existing
Salton Sea plants, the 40 net MW Salton Sea Unit IV plant as well as an
assignment of the right to receive various royalties payable to Magma in
connection with its Imperial Valley properties and distributions from the
Partnership Project. In connection with the Salton Sea debt issuance, the
Company has, subject to certain conditions, committed to fund any costs of
construction in connection with the construction of the Salton Sea Unit IV
project over and above the initial budgeted amount of $135,000 in the event
such budgeted amount is insufficient to cause substantial completion of the
expansion project prior to January 1, 1998.

Each of the Company's direct or indirect subsidiaries is organized as a legal
entity separate and apart from the Company and its other subsidiaries. It
should not be assumed that any asset of any such subsidiary will be available
to satisfy the obligations of the Company or any of its other such
subsidiaries; provided, however, that unrestricted cash or other assets which
are available for distribution may, subject to applicable law and the terms
of financing arrangements of such parties, be advanced, loaned, paid as
dividends or otherwise distributed or contributed to the Company or
affiliates thereof. Substantially all of the assets of each subsidiary listed
below (except Vulcan/BN Geothermal Power Company and certain other
subsidiaries involved in project financing activities) have been encumbered
to secure obligations owed to the creditors of such subsidiary:

Fish Lake Power Company
Salton Sea Brine Processing L.P.
Salton Sea Power Generation L.P.
Vulcan Power Company
CalEnergy Operating Company
Salton Sea Funding Corporation
Salton Sea Power Company
Salton Sea Royalty Company
Vulcan/BN Geothermal Power Company
Del Ranch, L.P.
Elmore, L.P.
Leathers, L.P.

The net proceeds of the Notes and the Salton Sea Notes and Bonds were used to
(a) recapitalize Magma and the related Merger Facilities (b) refinance
approximately $102,000 of existing indebtedness of the Salton Sea Projects,
and (c) provide funding for the Salton Sea Unit IV in the amount of $115,000.
Pursuant to the Depositary Agreement, Funding Corporation established a debt
service reserve fund in the form of a letter of credit in the initial amount
of $50,000 from which scheduled interest and principal payments can be made.

Annual repayment of the Notes and the Salton Sea Notes and Bonds for the
years beginning January 1, 1996 are as follows:

1996 $48,106
1997 64,378
1998 74,938
1999 35,108
2000 19,572
Thereafter 409,986

$652,088

6. Interest Rate Swap Agreements

In January 1993, the Coso Joint Ventures entered into five year deposit
interest rate swap agreements. The subject deposits represent debt service
reserves established in conjunction with refinancing the Coso Joint Ventures
loans through Coso Funding Corp. The deposit interest rate swaps effectively
convert interest earned on the debt service reserve deposits from a variable
rate to a fixed rate, in order to match the nature of the interest rate on
the borrowings used to fund the debt service reserve deposits. The Company's
proportion of the deposit amount of $25,056 included in restricted cash and
investments accretes annually to a maximum amount of approximately $29,300 in
1997. Under the agreements, which mature on January 11, 1998, the Coso Joint
Ventures make semi-annual payments to the counter party at variable rates
based on LIBOR, reset and compounded every three months, and in return
receive payments based on a fixed rate of 6.34%. The effective LIBOR rate
ranged from 5.6875% to 6.375% during 1995 and was 5.9375% at December 31,
1995. The counter party to these agreements is a large multi-national
financial institution.

In September 1993, the Company entered into a three year deposit interest
rate swap agreement, which effectively converts a notional deposit balance of
$75,000 from a variable rate to a fixed rate. The Company makes semi-annual
payments to the counter party at effectively the LIBOR rate, reset every six
months, and in return receives payments based on a fixed rate of 4.87%. The
counter party to this agreement is the same counter party to the Coso Joint
Ventures.

7. Properties, Plants, Contracts and Equipment

Properties, plants, contracts and equipment comprise the following at
December 31:
<TABLE>
<CAPTION>

1995 1994
<S> <C> <C>
Operating project costs:
Power plants $623,778 $314,027
Wells and resource development 271,242 174,651
Power sales agreements 185,749 ---
Licenses, equipment and other 58,052 9,674
Wells and resource development in progress 465 434
Total operating facilities 1,139,286 498,786
Less accumulated depreciation and amortization (162,970) (95,480)
Net operating facilities 976,316 403,306
Mineral reserves 211,576 39,275
Construction in progress:
Upper Mahiao 188,904 48,554
Malitbog 146,735 ---
Mahanagdong 76,560 21,443
Salton Sea Unit IV 108,769 ---
Pacific Northwest geothermal development costs 58,311 46,620
Other international development 11,418 2,445

Total $1,778,589 $561,643

Coso Project Operating Facilities

The Coso Project operating facilities comprise the Company's proportionate
share of the assets of three of its Joint Ventures; Coso Finance Partners
(Navy I Joint Venture), Coso Energy Developers (BLM Joint Venture), and Coso
Power Developers (Navy II Joint Venture).

Navy I Plant

The Navy I Plant consists of three turbines, of which one unit commenced
delivery of firm power in August 1987, and the second and third units in
December 1988. The 80 net MW Plant is located on land owned by and leased
from the U.S. Navy to December 2009, with a 10 year extension at the option
of the Navy. Under terms of the Navy I Joint Venture, profits and losses were
allocated approximately 49% before payout of Units 2 and 3 and approximately
46.4% thereafter to the Company. As of December 31, 1994, payout had been
reached on Units 2 and 3 of the Navy I Plant.

BLM Plant

The BLM Plant consists of two turbines at one site (BLM East), which
commenced delivery of firm power in March and May, 1989, respectively, and
one turbine at another site (BLM West) which commenced delivery of firm power
in August, 1989. The BLM Plant is situated on lands leased from the U.S.
Bureau of Land Management under a geothermal lease agreement that extends
until October 31, 2035. The lease may be extended to 2075 at the option of
the BLM. Under the terms of the BLM Joint Venture agreement, the Company's
share of profits and losses before and after payout is approximately 45% and
48%, respectively. The BLM Plant reached payout in June 1994.

Navy II Plant

The Navy II Plant consists of three turbines, of which two units commenced
delivery of firm power in January 1990, and the third in February 1990. The
80 net MW Plant is located on the southern portion of the Navy lands. Under
terms of the Joint Venture, all profits, losses and capital contributions for
Navy II are divided equally by the two partners.

Imperial Valley Project Operating Facilities

Magma currently operates seven geothermal power plants in the Imperial Valley
in California. Four of these plants were developed by Magma and are owned by
the partnerships in which Magma is the managing general partner and operator
and owns 50% interests. The Partnership Project consists of the Vulcan, Hoch
(Del Ranch), Elmore, and Leather Partnerships. The remaining three plants
which comprise the Salton Sea Project are wholly owned by subsidiaries of
Magma and were purchased on March 31, 1993 from Union Oil Company of
California. These geothermal power plants consist of the Salton Sea I, Salton
Sea II and the Salton Sea III. The Partnership Project and the Salton Sea
Project are collectively referred to as the
Imperial Valley Project. The Imperial Valley Project commencement dates and
contract nameplates are as follows:

Imperial Valley Commencement Contract
Plants Date Nameplate

Vulcan February 10, 1986 34 MW
Hoch (Del Ranch) January 2, 1989 38 MW
Elmore January 1, 1989 38 MW
Leathers January 1, 1990 38 MW
Salton Sea I July 1, 1987 10 MW
Salton Sea II April 5, 1990 20 MW
Salton Sea III February 13, 1989 49.8 MW

Significant Customer

All of the Company's sales of electricity from the Coso Project and Imperial
Valley Project, which comprise approximately 93% of 1995 electricity and
steam revenues, are to Edison and are under long-term power purchase
contracts.

The Coso Project and the Partnership Project sell all electricity generated
by the respective plants pursuant to seven long-term SO4 Agreements between
the project and Edison. These SO4 Agreements provide for capacity payments,
capacity bonus payments and energy payments. Edison makes fixed annual
capacity payments to the projects, and to the extent that capacity factors
exceed certain benchmarks is required to make capacity bonus payments. The
price for capacity and capacity bonus payments is fixed for the life of the
SO4 Agreements. Energy is sold at increasing fixed rates for the first ten
years of each contract and thereafter at Edison's Avoided Cost of Energy.

The Company's SO4 Agreements provide for rates ranging from 11.4 cents per
kWh in 1995 to 15.6 cents per kWh in 1999.

Salton Sea I sells electricity to Edison pursuant to a 30-year negotiated
power purchase agreement, as amended (the "Salton Sea I PPA"), which provides
for capacity and energy payments. The energy payment is calculated using a
Base Price which is subject to quarterly adjustments based on a basket of
indices. The time period weighted average energy payment for Unit 1 was 4.99
cents per kWh during 1995. As the Salton Sea I PPA is not an SO4 Agreement, the
energy payments do not revert to Edison's Avoided Cost of Energy.

Salton Sea II and Salton Sea III sell electricity to Edison pursuant to 30-
year modified SO4 Agreements that provide for capacity payments, capacity
bonus payments and energy payments. The price for contract capacity and
contract capacity bonus payments is fixed for the life of the modified SO4
Agreements. The energy payments for the first ten year period, which period
expires in April 2000 and February 1999 are levelized at a time period
weighted average of 10.6 cents per kWh and 9.8 cents per kWh for Salton Sea II
and Salton Sea III, respectively. Thereafter, the monthly energy payments will
be Edison's Avoided Cost of Energy. For Salton Sea II only, Edison is entitled
to receive, at no cost, 5% of all energy delivered in excess of 80% of
contract capacity through March 31, 2004.

Royalty Expense

Royalty expense comprises the following for the years ended:

1995 1994 1993

Navy I, Unit 1 $ 1,622 $1,641 $1,556
Navy I, Units 2 and 3 3,394 3,174 2,924
BLM 3,036 2,842 1,868
Navy II 5,571 1,963 1,717
WSG 287 268 209
Vulcan 1,207 --- ---
Leathers 1,968 --- ---
Elmore 1,713 --- ---
Hoch (Del Ranch) 1,932 --- ---
Salton Sea 1 & 2 1,147 --- ---
Salton Sea 3 2,431 --- ---

Total $24,308 $9,888 $8,274

The amount of royalties paid by Navy I to the U.S. Navy to develop geothermal
energy for Navy I, Unit 1 on the lands owned by the Navy comprises (i) a fee
payable during the term of the contract based on the difference between the
amounts paid by the Navy to Edison for specified quantities of electricity
and the price as determined under the contract (which currently approximates
73% of that paid by the Navy to Edison), and (ii) $25,000 payable in December
2009, of which the Company's share is $11,600. The $25,000 payment is secured
by funds placed on deposit monthly, which funds, plus accrued interest, will
aggregate $25,000. The monthly deposit is currently $50. As of December 31,
1995, the balance of funds deposited approximated $4,457, which amount is
included in restricted cash and accrued liabilities.

Units 2 and 3 of Navy I and the Navy II power plants are on Navy lands, for
which the Navy receives a royalty based on electric sales revenue at the
initial rate of 4% escalating to 22% by the end of the contract in December
2019. The BLM is paid a royalty of 10% of the value of steam produced by the
geothermal resource supplying the BLM Plant.

The Partnership Project pays royalties based on both energy revenues and
total electricity revenues. Hoch (Del Ranch) and Leathers pay royalties of 5%
of energy revenues and 1% of total electricity revenue. Elmore pays royalties
of 5% of energy revenues. Vulcan pays royalties of 4.167% of energy revenues.

The Salton Sea Project's weighted average royalty expense in 1995 was
approximately 3.4%. The royalties are paid to numerous recipients based on
varying percentages of electrical revenue or steam production multiplied by
published indices.

Yuma Project

During 1992, the Company acquired a development stage 50 net MW natural gas-
fired cogeneration project in Yuma, Arizona (the "Yuma Project"). The Yuma
Project is designed to be a Qualifying Facility ("QF") under PURPA and to
provide 50 net MW of electricity to San Diego Gas & Electric Company
("SDG&E") under an existing 30-year power purchase contract. The electricity
is sold at SDG&E's Avoided Cost of Energy. The power is wheeled to SDG&E over
transmission lines constructed and owned by Arizona Public Service Company
("APS"). An agreement for interconnection and a firm transmission service
agreement have been executed between APS and the Yuma Project entity and have
been accepted for filing by the Federal Energy Regulatory Commission.

The Yuma Project commenced commercial operation in May 1994. The project
entity has executed steam sales contracts with an adjacent industrial entity
to act as its thermal host in order to maintain its status as a QF, which is
a requirement of its SDG&E contract. Since the industrial entity has the
right under its contract to terminate the agreement upon one year's notice if
a change in its technology eliminates its need for steam, and in any case to
terminate the agreement at any time upon three years notice, there can be no
assurance that the Yuma Project will maintain its status as a QF. However, if
the industrial entity terminates the agreement, the Company anticipates that
it will be able to locate an alternative thermal host in order to maintain
its status as a QF or build a greenhouse at the site for which the Company
believes it would obtain QF status. A natural gas supply and transportation
agreement has been executed with Southwest Gas Corporation, terminable under
certain circumstances by the Company and Southwest Gas Corporation.

Mineral Reserves - Nevada and Utah Properties

On May 3, 1990, the Company entered into a definitive purchase agreement with
a subsidiary of Chevron Corporation ("Chevron") for the acquisition of
certain geothermal operations, including interests in approximately 83,750
acres of geothermal properties in Nevada and Utah, for an aggregate purchase
price of approximately $51,100. These property interests consist largely of
leasehold interests, including properties leased from the BLM and from
private landowners.

The property acquired from Chevron includes:

Roosevelt Hot Springs. The Company operates and owns an approximately 70%
interest in a geothermal steam field which supplies geothermal steam to a 23
net MW power plant owned by Utah Power & Light Company ("UP&L") located on
the Roosevelt Hot Springs property under a 30-year steam sales contract. The
Company obtained approximately $20,317 cash under a pre-sale agreement with
UP&L whereby UP&L paid in advance for the steam produced by the steam field.
The Company must make certain penalty payments to UP&L if the steam produced
does not meet certain quantity and quality requirements.

Desert Peak. The Company is the owner and operator of a 10 net MW geothermal
plant at Desert Peak, Nevada that is currently selling electricity to Sierra
Pacific Power Company ("Sierra") under a power sales agreement that expires
December 31, 1995 and that may be extended on a year-to-year basis as agreed
by the parties. The December 31, 1995 price for electricity under this
contract was 6.6 cents per kWh, comprising an energy payment of 2.1 cents per
kWh (which is adjustable pursuant to an inflation-based index) and a capacity
payment of 4.5 cents per kWh. The Company is currently selling power to Sierra
at Sierra's Avoided Cost.

Pacific Northwest Geothermal Development Costs

In the Pacific Northwest, the Company has acquired leasehold rights and has
performed certain geological evaluations to determine the resource potential
of the underlying properties. Recovery of those costs is ultimately dependent
upon the Company's ability to prove geothermal reserves and sell geothermal
steam, or to obtain financing, build power plants, gain access to high
voltage transmission lines, and sell the resultant electricity at favorable
prices or, sell its leaseholds. In the opinion of management, the Company
will be able to recover its development costs through the generation of
electricity for sale. In September 1994, the Company executed the final Power
Purchase Agreements with Bonneville Power Administration ("BPA") and Eugene
Water and Electric Board ("EWEB") for a 30 MW geothermal pilot project
planned to be constructed at the Newberry site near Bend, Oregon. The Company
agreed to sell 20 net MW to BPA and 10 net MW to Eugene Water and Electric
Board ("EWEB") from the Newberry Project. In addition, BPA and EWEB together
have an option to purchase up to an additional 100 net MW of production from
the Newberry Project under certain circumstances. In a public-private
development effort, the Company is responsible for development, permitting,
financing, construction and operation of the project (which will be 100%
owned by the Company), while EWEB will cooperate in the development efforts
by providing assistance with government and community affairs and sharing in
the development costs (up to 30%). The Newberry Project is currently expected
to commence commercial operation in 1998. The power sales agreements provide
that under certain circumstances the contracts may be utilized at an
alternative location. Completion of the Newberry Project is subject to a
number of significant uncertainties and cannot be assured.

SFAS 121

On January 1, 1996, the Company intends to adopt Statement of Financial
Accounting Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." Management
anticipates that the adoption of SFAS 121 will not have a material effect on
the Company's financial statements.

8. Equity Investment in Casecnan

The Company has a 35% ownership interest in the Casecnan Project, a
multipurpose irrigation and hydroelectric power facility with a rated
capacity of approximately 150 net MW located on the island of Luzon in the
Philippines. The assets and liabilities of the Casecnan Project as of
December 31, 1995 were $500,672 and $378,299 respectively.

9. Project Loans

Project loans, which are nonrecourse to the Company, comprise the following
at December 31:

</TABLE>
<TABLE>
<CAPTION>
1995 1994

<S> <C> <C>
Coso Funding Corp. project loans with fixed interest rates
(weighted average interest rates of 8.29% and 8.13% at
December 31, 1995 and 1994, respectively) with scheduled
repayments through December 2001 $203,226 $233,080

Partnership Project loans with variable interest rates
(weighted average interest rates of 6.44% at December 31,
1995) and scheduled repayments through September 2002 54,707 ---

Total Project Loans $257,933 $233,080

</TABLE>

The Coso Funding Corp. project loans are from Coso Funding Corp. ("Funding
Corp."). Funding Corp. is a single-purpose corporation formed to issue notes
for its own account and as an agent acting on behalf of the Coso Project. On
December 16, 1992, pursuant to separate credit agreements executed between
Funding Corp. and each Coso Joint Venture the proceeds from Funding Corp.'s
note offering were loaned to the Coso Project. The proceeds of $560,245 were
used by the Coso Project to (i) purchase and retire project finance debt
comprised of the term loans and construction loans in the amount of $424,500,
(ii) fund contingency funds in the amount of $68,400, (iii) fund debt service
reserve funds in the amount of $40,000, and (iv) finance $27,345 of capital
expenditures and transaction costs. The contingency fund and debt service
reserve fund were required by the project loan agreements.

The contingency fund represented the approximate maximum amount, if any,
which could theoretically have been payable by the Coso Project to third
parties to discharge all liens of record and other contract claims
encumbering the Coso Project's plants at the time of the project loans. The
contingency fund was established in order to obtain investment-grade ratings
to facilitate the offer and sale of the notes by Funding Corp., and such
establishment did not reflect the Coso Project's view as to the merits or
likely disposition of such litigation or other contingencies. On June 9,
1993, MPE and the Mission Power Group, subsidiaries of Edison Corp., and the
Coso Project reached a final settlement of all of their outstanding disputes
and claims relating to the construction of the Coso Project. As a result of
the various payments and releases involved in such settlement, the Coso
Project agreed to make a net payment of $20,000 to MPE from the cash reserves
of the Coso Project contingency fund and MPE agreed to release its mechanics'
liens on the Coso Project. After making the $20,000 payment, the remaining
balance of the Coso Project contingency fund (approximately $49,300) was used
to increase the Coso Project debt reserve fund from approximately $43,000 to
its maximum fully-funded requirement of $67,900. The remaining $24,400
balance of contingency fund was retained within the Coso Project for future
capital expenditures and for Coso Project debt service payments. Since the
Coso Project debt service reserve is fully funded in advance, Coso Project
cash flows otherwise intended to fund the Coso Project debt service reserve
fund, subject to satisfaction of certain covenants and conditions contained
in the Coso Joint Ventures' refinancing documents, may be available for
distribution to the Company in its proportionate share.

The Funding Corp. project loans are collateralized by, among other things,
the power plants, geothermal resource, debt service reserve funds,
contingency funds, pledge of contracts, and an assignment of all such Coso
Project's revenues which will be applied against the payment of obligations
of each Coso Joint Venture, including the project loans. Each Coso Joint
Venture's assets will secure only its own project loan, and will not be
cross-collateralized with assets pledged under other Coso Joint Venture's
credit agreements. The project loans are nonrecourse to any partner in the
Coso Joint Ventures and Funding Corp. shall solely look to such Coso Joint
Venture's pledged assets for satisfaction of such project loans. However, the
loans are cross-collateralized by the available cash flow of each Coso Joint
Venture. Each Coso Joint Venture after satisfying a series of its own
obligations has agreed to advance support loans (to the extent of available
cash flow and, under certain conditions, its debt service reserve funds) in
the event revenues from the supporting Coso Joint Ventures are insufficient
to meet scheduled principal and interest on their separate project loans.

Partnership Project loans include the Company's pro-rata share of the debt of
the Del Ranch, Elmore, and Leathers partnerships and is nonrecourse to the
Company and subsidiaries, however, it is collateralized by substantially all
of the assets of these partnerships. A Secured Credit Agreement with a group
of international banks, with Morgan Guaranty Trust Company ("Morgan") as the
agent bank provides for direct bank loans at specified premiums over a choice
of either the bank's prime rate, the London Interbank Offered Rate ("LIBOR")
or the CD Base rate. As an alternative, each partnership may elect to issue
commercial paper and medium-term notes supported by letters of credit issued
by Fuji Bank, Limited, which are secured, in turn, by the project debt
facility with the Company. The partnerships had no direct bank borrowings at
December 31, 1995. The loans of each partnership are reduced by semiannual
principal payments in March and September of each year. The last principal
payment is scheduled for September 15, 2001 for the Del Ranch and Elmore
loans and September 15, 2002 for the Leathers loan.

The annual repayments of the project loans for the years beginning January 1,
1996 and thereafter are as follows:

Coso Partnership
Funding Corp. Project Total

1996 $54,881 $12,831 $67,712
1997 41,729 13,347 55,076
1998 38,912 13,347 52,259
1999 31,717 8,578 40,295
2000 4,080 2,953 7,033
Thereafter 31,907 3,651 35,558

$203,226 $54,707 $257,933

10. Construction Loans

The Construction Loans which are nonrecourse to the Company, comprise the
following at December 31:

1995 1994

<S> <C> <C>
Upper Mahiao Construction Loan with variable interest
rates (weighted average interest rate of 8.31%) with
scheduled project term repayments through 2006 $134,619 $24,508

Mahanagdong Construction Loan with variable interest
rates (weighted average interest rate of 8.02%) with
scheduled project term repayments through 2007 39,716 6,995

Malitbog Construction Loan with variable interest
rates (weighted average interest rate of 8.42%) with
scheduled project term repayments through 2005 36,863 ---

$211,198 $31,503

</TABLE>

Draws on the construction loan and accrued liabilities for the Upper Mahiao
geothermal power project at December 31, 1995 totalled $134,619 and $2,313,
respectively. A syndicate of international commercial banks is providing the
construction financing with interest rates at LIBOR or "Prime" with interest
payments due every quarter and at LIBOR maturity. The weighted average
interest rate at December 31, 1995 is approximately 8.31%. The Export-Import
Bank of the U.S. ("Ex-Im Bank") is providing political risk insurance to
commercial banks on the construction loan and will provide the majority of
the project term financing of approximately $162,000 upon satisfaction of the
conditions associated with commercial operation. The term financing for the
Ex-Im Bank loan will be for a ten-year term at a fixed interest rate of
5.95%. The accrued liabilities represent invoices which were received, but
not paid, by December 31, 1995 and retention on the construction and supply
contracts.

The Company's share of draws on the construction loan and accrued liabilities
for the Mahanagdong geothermal power project at December 31, 1995 totalled
$39,716 and $6,592 respectively. The construction debt financing is provided
by the Overseas Private Investment Corporation ("OPIC") and a consortium of
commercial lenders led by Bank of America NT&SA. The construction loan
interest rates are at LIBOR or "Prime" with interest payments due quarterly
and at LIBOR maturity. The debt provided by the commercial lenders will be
insured by Ex-Im Bank against political risks. Ten-year project term debt
financing of approximately $120,000 will be provided by Ex-Im Bank (which
will replace the bank construction debt) and by OPIC. The majority of the
term financing is expected to be provided by the Ex-Im Bank at a fixed
interest rate of 6.92%. The accrued liabilities represent invoices which were
received, but not paid, by December 31, 1995 and retention on the
construction and supply contracts.

Draws on the construction loan and accrued liabilities for the Malitbog
Geothermal Power Project at December 31, 1995 totalled $36,863 and $18,678,
respectively. Credit Suisse and OPIC have provided the construction and term
loan facilities. The eight year project term loan facilities will be at
variable interest rates. The international bank portion of the debt will be
insured by OPIC against political risks and the Company's equity contribution
to Visayas Geothermal Power Company ("VGPC") is covered by political risk
insurance from the Multilateral Investment Guarantee Agency and OPIC.

11. Senior Discount Notes

In March 1994, the Company issued $400,000 of 10 1/4% Senior Discount Notes
which accrete to an aggregate principal amount of $529,640 at maturity in
2004. The original issue discount (the difference between $400,000 and
$529,640) will be amortized from issue date through January 15, 1997, during
which time no cash interest will be paid on the Senior Discount Notes.
Commencing July 15, 1997, cash interest on the Senior Discount Notes will be
payable semiannually on January 15 and July 15 of each year. The Senior
Discount Notes are redeemable at any time on or after January 15, 1999. The
redemption prices commencing in the twelve month period beginning January 15,
1999 (expressed in percentages of the principal amount) are 105.125%,
103.417%, 101.708%, and 100% for 1999, 2000, 2001, and 2002, respectively,
plus accrued interest through the redemption date in each case.
The Senior Discount Notes are unsecured senior obligations of the Company.

The Senior Discount Notes prohibit payment of cash dividends unless certain
financial ratios are met and the dividends do not exceed 50% of the Company's
accumulated adjusted consolidated net income as defined, subsequent to April
1, 1994, plus the proceeds of any stock issuance.

12. Convertible Subordinated Debentures

In June of 1993, the Company issued $100,000 principal amount of 5%
convertible subordinated debentures ("debentures") due July 31, 2000. The
debentures are convertible into shares of the Company's common stock at any
time prior to redemption or maturity at a conversion price of $22.50 per
share, subject to adjustment in certain circumstances. Interest on the
debentures is payable semi-annually in arrears on July 31 and January 31 of
each year, commencing on July 31, 1993. The debentures are redeemable for
cash at any time on or after July 31, 1996 at the option of the Company. The
redemption prices commencing in the twelve month period beginning July 31,
1996 (expressed in percentages of the principal amount) are 102%, 101%, 100%
and 100% in 1996, 1997, 1998 and 1999, respectively. The debentures are
unsecured general obligations of the Company and subordinated to all existing
and future senior indebtedness of the Company.

13. Exchange of Preferred Stock to Convertible Debt

On November 19, 1991, the Company sold one thousand shares of convertible
preferred stock, Series C, at $50,000 per share to Kiewit Energy Company, in
a private placement. Each share of the Series C preferred stock was
convertible at any time at $18.375 per common share into two thousand seven
hundred and twenty-one shares of common stock subject to customary
adjustments. The Series C preferred stock had a dividend rate of 8.125%,
commencing March 15, 1992 through conversion date or December 15, 2003. The
dividends, which were cumulative, were payable quarterly in convertible
preferred stock, Series C, through March 15, 1995 and in cash on subsequent
dividend dates.

Pursuant to the terms of the Securities Purchase Agreement, the Company
exercised its rights to exchange the preferred stock, Series C, on March 15,
1995 for $64,850 principal amount 9.5% convertible subordinated debenture of
the Company due 2003, with the same conversion features of the preferred
stock, Series C.

The Company is obligated to redeem 20% of the outstanding debt each December
15, commencing 1999 through 2003, plus accrued interest.

At any time after March 15, 1995, upon 20 days notice, the Company may redeem
all, or any portion consisting of at least $5,000, of the convertible debt,
then outstanding, provided that the Company's common stock has traded at or
above 150% of the then effective conversion price, for any 20 trading days
out of 30 consecutive trading days ending not more than five trading days
prior to notice of redemption.

14. Income Taxes

On January 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." The adoption
of SFAS 109 changed the Company's method of accounting for income taxes from
the deferred method as required by Accounting Principles Board Opinion No. 11
to an asset and liability approach. Under SFAS 109, the net excess deferred
tax liability as of January 1, 1993 was determined to be $4,100. This amount
was reflected in 1993 income as the cumulative effect of a change in
accounting principle. It primarily represents the recognition of the
Company's tax credit carryforwards as a deferred tax asset. There was no cash
impact to the Company upon the required adoption of SFAS 109. Under SFAS 109,
the effective tax rate increased to approximately 30% in 1993 from 23.5% in
1992. This increase was due to the Company's tax credit carryforward being
recognized as an asset and unavailable to reduce the current period's
effective tax rate for computing the Company's provision for income taxes.

Provision for income tax is comprised of the following at December 31:

1995 1994 1993

Currently payable:
State $ 5,510 $ 1,970 $ 3,300
Federal 11,138 5,829 7,686

16,648 7,799 10,986

Deferred:
State 921 1,017 385
Federal 13,062 7,241 6,813

13,983 8,258 7,198

Total after benefit of
extraordinary item 30,631 16,057 18,184

Tax benefit attributable to
extraordinary item --- 945 ---

Total before benefit of
extraordinary item $30,631 $17,002 $18,184

The deferred expense is primarily temporary differences associated with
depreciation and amortization of certain assets.

A reconciliation of the federal statutory tax rate to the effective tax rate
applicable to income before provision for income taxes follows:

<TABLE>
<CAPTION>
1995 1994 1993

<S> <C> <C> <C>
Federal statutory rate 35.00 % 35.00 % 35.00 %
Percentage depletion in excess
of cost depletion (7.38) (6.85) (6.70)
Investment and energy tax credits (1.80) (3.04) (4.62)
State taxes, net of federal tax effect 4.09 4.48 3.90
Cumulative effect of change in
federal tax rate --- --- 1.90
Goodwill amortization 2.53 --- ---
Non-Deductible Expense 1.10 --- ---
Lease investment (2.18) --- ---
Other .20 .86 .20

31.56 % 30.45 % 29.68 %

</TABLE>

Deferred tax liabilities (assets) are comprised of the following at December
31:

1995 1994

Depreciation and amortization, net $349,079 $119,947
Other 4,043 3,590

353,122 123,537

Deferred income (7,709) (2,190)
Loss carryforwards (3,050) (31,592)
Energy and investment tax credits (52,857) (40,748)
Alternative minimum tax credits (52,480) (22,379)
Jr. SO4 royalty receivable (5,865) ---
Other (4,641) (60)

(126,602) (96,969)

Net deferred taxes $226,520 $26,568

As of December 31, 1995, the Company has an unused net operating loss (NOL)
carryover of approximately $8,714 for regular federal tax return purposes
which expires in 2007. In addition, the Company has unused investment and
geothermal energy tax credit carryforwards of approximately $52,857 expiring
between 2002 and 2010. The Company also has approximately $52,480 of
alternative minimum tax credit carryforwards which have no expiration date.

15. Preferred Stock

Series A:

On December 1, 1988, the Company distributed a dividend of one preferred
share purchase right ("right") for each outstanding share of common stock.
The rights are not exercisable until ten days after a person or group
acquires or has the right to acquire, beneficial ownership of 20% or more of
the Company's common stock or announces a tender or exchange offer for 30% or
more of the Company's common stock. Each right entitles the holder to
purchase one one-hundredth of a share of Series A junior preferred stock for
$52. The rights may be redeemed by the Board of Directors up to ten days
after an event triggering the distribution of certificates for the rights.
The rights plan was amended in February 1991 so that the agreement with
Kiewit Energy (see Note 12) would not trigger the exercise of the rights. The
rights will expire, unless previously redeemed or exercised, on November 30,
1998. The rights are automatically attached to, and trade with, each share of
common stock.

16. Stock Options and Restricted Stock

The Company has issued various stock options. As of December 31, 1995, a
total of 9,552 shares are reserved for stock options, of which 9,291 shares
have been granted and remain outstanding at prices of $3.00 to $19.00 per
share.

The Company has stock option plans under which shares were reserved for grant
as incentive or non-qualified stock options, as determined by the Board of
Directors. The plans allow options to be granted at 85% of their fair market
value at the date of grant. Generally, options are issued at 100% of fair
market value at the date of grant. Options granted under the 1986 Plan become
exercisable over a period of three to five years and expire if not exercised
within ten years from the date of grant or, in some instances a lesser term.
Prior to the 1986 Plan, the Company granted 256 options at fair market value
at date of grant which had terms of ten years and were exercisable at date of
grant. In addition, the Company had issued approximately 138 options to
consultants on terms similar to those issued under the 1986 Plan. The non-
1986 plan options are primarily options granted to Kiewit Energy; see Note
17.

On January 1, 1996, the Company intends to adopt the disclosure requirements
of Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation." Management anticipates that
adoption of SFAS 123 will not have a material effect on the Company's
financial statements.

The Company granted 500 shares of restricted common stock with an aggregate
market value of $9,500 in exchange for the relinquishment of 500 stock
options which were cancelled by the Company. The shares have all rights of a
shareholder, subject to certain restrictions on transferability and risk of
forfeiture. Unearned compensation equivalent to the market value of the
shares at the date of issuance was charged to Stockholders' equity. Such
unearned compensation is being amortized over the vesting period of which 125
shares were immediately vested and the remaining 375 shares vest straight-
line over five years. Accordingly, $2,494 of unearned compensation was
charged to general and administrative expense in 1995.

Transactions in Stock Options

<TABLE>
<CAPTION>
Options Outstanding
Shares Available
for Grant Under Option Price
1986 Option Plan Shares Per Shares Total

<S> <C> <C> <C> <C>
Balance December 31, 1992 816 7,397* $3.00 - $ 15.938 $ 80,021
Options granted (1,396) 1,396 $17.75 - $ 19.00 26,209
Options terminated 19 (20) $3.00 - $ 14.875 (114)
Options exercised --- (259) $3.00 - $ 14.875 (1,185)
Additional shares reserved
under 1986 Option Plan 1,000 --- --- ---

Balance December 31, 1993 439 8,514* $3.00 - $19.00 104,931

Options granted (954) 1,243 $16.00 - $17.25 19,260
Options terminated 15 (15) $3.00 - $15.938 (205)
Options exercised --- (141) $3.00 - $15.938 (709)
Additional shares reserved
under 1986 Option Plan 586 --- --- ---

Balance December 31, 1994 86 9,601* $3.00 - $19.00 123,277

Options granted (396) 396 $15.81 - $19.00 17,188
Options terminated 571 (571) $14.875 - $19.00 (10,673)
Options exercised --- (135) $3.00 - $15.938 (460)

Balance December 31, 1995 261 9,291* $3.00 - $19.00 $119,332

Options which became exercisable during:
Year ended December 31, 1995 985 $12.63 - $ 19.00 $17,512
Year ended December 31, 1994 1,015 $11.625 - $ 19.00 $15,776
Year ended December 31, 1993 592 $ 3.00 - $ 19.00 $10,180
Option exercisable at:
December 31, 1995 8,229* $ 3.00 - $ 19.00 $100,886
December 31, 1994 7,897* $ 3.00 - $ 19.00 $ 93,705
December 31, 1993 7,026* $ 3.00 - $ 19.00 $ 78,644

</TABLE>

*Includes Kiewit Energy options. See Note 17.

17. Common Stock Sales & Related Options

The Company and Kiewit Energy Company, Inc. ("Kiewit") signed a Stock Purchase
Agreement and related agreements, dated as of February 18, 1991. Kiewit is a
subsidiary of Peter Kiewit Sons', Inc. of Omaha, Nebraska, a large construction,
mining, and telecommunications company with diversified operations. Under the
terms of the agreements, Kiewit purchased 4,000 shares of common stock at $7.25
per share and received options to buy 3,000 shares at a price of $9 per share
exercisable over three years and an additional 3,000 shares at a price of $12
per share exercisable over five years (subject to customary adjustments).

In May 1994, pursuant to a special antidilution provision of the 1991 Stock
Purchase Agreement between the Company and Kiewit, the Company increased
Kiewit's existing option (granted in 1991) to purchase 3,000 shares at $12 per
share by an additional 289 shares as a final adjustment under such provisions.

In connection with this initial stock purchase, the Company and Kiewit also
entered into certain other agreements pursuant to which (i) Kiewit and its
affiliates agreed not to acquire more than 34% of the outstanding common stock
(the "Standstill Percentage") for a five-year period, (ii) Kiewit became
entitled to nominate at least three of the Company's directors, and (iii) the
Company and Kiewit agreed to use their best efforts to negotiate and execute a
joint venture agreement relating to the development of certain geothermal
properties in Nevada and Utah.

On June 19, 1991, the board approved a number of amendments to the Stock
Purchase Agreement and the related agreements. Pursuant to those amendments, the
Company reacquired from Kiewit the rights to develop the Nevada and Utah
properties, and Kiewit agreed to exercise options to acquire 1,500 shares of
common stock at $9.00 per share, providing the Company with $13,500 in cash.
The Company also extended the term of the $9.00 and $12.00 options to seven
years; modified certain of the other terms of these options; granted to Kiewit
an option to acquire an additional 1,000 shares of the common stock at $11.625
per share (closing price for the shares on the American Stock Exchange on June
18, 1991) for a ten year term; and increased the Standstill Percentage from 34%
to 49%.

On November 19, 1991, the Board approved the issuance by the Company to Kiewit
of one thousand shares of Series C preferred stock for $50,000, as described in
Note 13. In connection with the sale of the Series C preferred stock to Kiewit,
the Standstill Agreement was amended so that the 49% Standstill Percentage
restriction would apply to voting stock rather than just common stock.

18. Litigation

As of December 31, 1995 there were no material outstanding lawsuits.

19. Related Party Transactions

The Company charged and recognized a management fee and interest on advances to
its Coso Joint Ventures, which aggregated approximately $6,075, $5,569 and
$5,354 in the years ended December 31, 1995, 1994 and 1993. The Company's note
receivable from the Coso Joint Ventures bears a fixed interest rate of 12.5% and
is payable on or before March 19, 2002. This note is subordinated to the senior
project loan on the project.

The Company's wholly owned subsidiaries charge and recognize a management,
operator, guaranteed capacity and brine fee to its Partnership Project. A
management and operator fee is also charged to the Salton Sea Project. These
fees aggregated approximately $50,793 for the year ended December 31, 1995.

The Mahanagdong Project is being constructed by a consortium (the "EPC
Consortium") of Kiewit Construction Group, Inc. ("KCG") and the CE Holt Company,
a wholly owned subsidiary of the Company, pursuant to fixed-price, date-certain,
turnkey supply and construction contracts (collectively, the "Mahanagdong EPC").
The obligations of the EPC Consortium under the Mahanagdong EPC are supported by
a guaranty of KCG at an aggregate amount equal to approximately 50% of the
Mahanagdong EPC price. The Mahanagdong EPC provides for maximum liability for
liquidated damages of up to $100,500 and total liability of up to $201,000. KCG,
a wholly owned subsidiary of Peter Kiewit Sons', Inc. ("PKS"), is the lead
member of the EPC Consortium, with an 80% interest, KCG performs construction
services for a wide range of public and private customers in the U.S. and
internationally. CE Holt Company will provide design and engineering services
for the EPC Consortium, and holds a 20% interest. The Company has provided a
guaranty of CE Holt Company's obligations under the Mahanagdong EPC Contract.

The Company participates in an international joint venture agreement with PKS
which the Company believes enhances its capabilities in foreign power markets.
The joint venture agreement is limited to international activities and provides
that if both the Company and PKS agree to participate in a project, they will
share all development costs equally. Each of the Company and PKS will provide
50% of the equity required for financing a project developed by the joint
venture and the Company will operate and manage such project. The agreement
creates a joint development structure under which, on a project by project
basis, the Company will be the development manager, managing partner and/or
project operator, and equal equity participant and PKS will be the preferred
turnkey construction contractor. The joint venture agreement may be terminated
by either party on 15 days written notice, provided that such termination cannot
affect the pre-existing contractual obligations of either party.

20. Extraordinary Item

In conjunction with the Company's Senior Discount Note offering in 1994 (See
Note 11), the 12% Senior Notes were defeased. This resulted in an extraordinary
item in the amount of $2,007, after the income tax effect of $945. The extra-
ordinary item represents the amount necessary to defease the interest payments
and the unamortized portion of the deferred financing costs on the $35,730
Senior Notes.

21. Fair Value of Financial Instruments

Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about
Fair Value of Financial Instruments," requires disclosure of the following
information about the fair value of certain financial instruments for which it
is practicable to estimate that value. For purposes of the following disclosure,
the fair value of a financial instrument is the amount at which the instrument
could be exchanged in a current transaction between willing parties, other than
in a forced sale or liquidation. Although management uses its best judgement in
estimating the fair value of these financial instruments, there are inherent
limitations in any estimation techniques. Therefore, the fair value estimates
presented herein are not necessarily indicative of the amounts which the Company
could realize in a current transaction.

The methods and assumptions used to estimate fair value are as follows:

Debt instruments - The fair value of all debt issues listed on exchanges has
been estimated based on the quoted market prices. The fair value of convertible
debt (see Note 13) is not practicable to estimate due to the convertible
features of the debt.

Interest rate swap agreements - The fair value of interest rate swap agreements
is estimated based on quotes from the counter party to these instruments and
represents the estimated amounts that the Company would expect to receive or pay
to terminate the agreements. It is the Company's intention to hold the swap
agreements to their intended maturity.

Other financial instruments - All other financial instruments of a material
nature fall into the definition of short-term and fair value is estimated as the
carrying amount.

The carrying amounts in the table below are included in the consolidated balance
sheets under the indicated captions except for the interest rate swaps which are
discussed in Note 6.

22. QUARTERLY FINANCIAL DATA (UNAUDITED)

Following is a summary of the Company's quarterly results of operations for the
years ended December 31, 1995 and December 31, 1994.

Three Months Ended *
1995: (1) March 31 June 30 September 30 December 31
<S> <C> <C> <C> <C>
Revenue:
Sales of electricity and steam $72,978 $81,756 $102,423 $78,473
Royalties 3,917 4,912 5,372 5,281
Other income 9,790 10,428 11,922 11,471

Total revenue 86,685 97,096 119,717 95,225
Total costs and expenses 68,527 76,957 79,898 76,290

Income before provision for income
taxes and monority interestm 18,158 20,139 39,819 18,935
Provision for income taxes 5,540 6,248 12,457 6,386

Net incoe before minority interest 12,618 13,891 27,362 12,549

Minority interest 3,005 --- --- ---
Net income 9,613 13,891 27,362 12,549
Preferred dividends 1,080 --- --- ---

Net income attributable to common
shares $ 8,533 $13,891 $27,362 $12,549

Net income per share - primary $ .21 $ .27 $ .52 $ .24

Net income per share - fully diluted $ .21 $ .27 $ .48 $ .18

1994: March 31 June 30 September 30 December 31

Revenue:
Sales of electricity and steam $30,819 $36,850 $49,498 $37,395
Other income 4,591 8,404 9,026 9,271

Total revenue 35,410 45,254 58,524 46,666
Total costs and expenses 22,753 33,198 37,771 36,296

Income before provision for income
taxes 12,657 12,056 20,753 10,370
Provision for income taxes 4,050 3,677 6,340 2,935

Net income before extraordinary item 8,607 8,379 14,413 7,435
Extraordinary item (2) (2,007) --- --- ---

Net income 6,600 8,379 14,413 7,435
Preferred dividends 1,200 1,236 1,275 1,299

Net income attributable to common
shares $ 5,400 $ 7,143 $13,138 $ 6,136

Net income per share before
extraordinary item $ .20 $ .20 $ .38 $ .18
Net income per share-extraordinary
item (2) (.06) --- --- ---

Net income per share - primary $ .14 $ .20 $ .38 $ .18

Net income per share - fully diluted $ .14 $ .20 $ .36 $ .18

</TABLE>
* percentage of income earned in the second and third quarters.
(1) Reflects acquisition of Magma, see Note 3.
(2) See Note 20.

INDEPENDENT Auditors' Report

Board of Directors and Shareholders
CalEnergy Company, Inc.
Omaha, Nebraska

We have audited the accompanying consolidated balance sheets of CalEnergy
Company, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with 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 audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of CalEnergy Company, Inc. and
subsidiaries at December 31, 1995 and 1994 and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.

As discussed in Note 14, the consolidated financial statements give effect to
the Company's adoption, effective January 1, 1993, of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."

Deloitte & Touche LLP
Omaha, Nebraska
January 26, 1996

CALENERGY COMPANY, INC.
SUBSIDIARIES AND JOINT VENTURES

Corporations

American Pacific Finance Company (APFC) Delaware
Bali Energy Ltd. Bermuda
The Ben Holt International Co., Inc. Delaware
CalEnergy International Services, Inc. (CEISI) Delaware
CalEnergy Development Corporation (CEDC) Delaware
CalEnergy Imperial Valley Company, Inc. Delaware
CalEnergy International Ltd. Bermuda
CalEnergy International Services, Inc. Delaware
California Energy General Corporation (CEGC) Delaware
CalEnergy Operating Company Delaware
California Energy Retail Company, Inc. Delaware
California Energy Yuma Corporation (CEYC) Utah
CBE Engineering Co. California
CE Asia Ltd. Bermuda
CE Bali Ltd. Bermuda
CE Casecnan Ltd. Bermuda
CE Casecnan Water and Energy Company, Inc. Philippines
CE Cebu Geothermal Power Company, Inc. Philippines
CE Exploration Company (CEX) Delaware
CE Geothermal, Inc. (CEG) Delaware
CE Holt Company California
CE Humboldt, Inc. (CEH) Delaware
CE Ijen Ltd. Bermuda
CE Indonesia Ltd. Bermuda
CE International Investments Ltd. Bermuda
CE Luzon Geothermal Power Company, Ltd. Philippines
CE Mahanagdong Ltd. Bermuda
CE Newberry, Inc. (CEN) Delaware
CE Philippines Ltd. Bermuda
China Lake Geothermal Management Company (CLGMC) Delaware
China Lake Operating Company (CLOC) Delaware
China Lake Plant Services, Inc. (CLPSI) California
Coso Funding Corp. (CFC) Delaware
Coso Hotsprings Intermountain Power, Inc. (CHIP) Delaware
Coso Hotsprings Overland Power, Inc. (CHOP) Delaware
Coso Technology Corporation (CTC) Delaware
Desert Valley Corporation California
Fish Lake Power Company Delaware
Gilbert/CBE Indonesia L.L.C. Nebraska
Himpurna California Energy Ltd. Bermuda
Imperial Magma Nevada
Intermountain Geothermal Company (IGC) Delaware
Kiewit/Holt Indonesia L.L.C. Nebraska
Magma Generating Company I Nevada
Magma Generating Company II Nevada
Magma Land Company I Nevada
Magma Netherlands B.V. Netherlands
Magma Power Company Nevada
Norming Investments B.V. Netherlands
Ormoc Cebu Ltd. Bermuda
PT Kiewit Holt Indonesia Indonesia
Patuha Power, Ltd. Bermuda
Rose Valley Properties, Inc. (RVP) Delaware
Salton Sea Funding Corporation Delaware
Salton Sea Power Company Nevada
Salton Sea Royalty Company Delaware
Tongonan Power Investment, Inc. Philippines
Vulcan Power Company Nevada
Western States Geothermal Company (WSG) Delaware

JOINT VENTURES/PARTNERSHIPS

Alto Peak Power Company Philippines
China Lake Joint Venture California
Coso Energy Developers California
Coso Finance Partners California
Coso Finance Partners II California
Coso Land Company California
Coso Power Developers California
Coso Transmission Line Partners California
Del Ranch, L.P. California
Elmore, L.P. California
Gilbert/CBE L.P. Nebraska
Kiewit/Holt Philippines, L.P. Nebraska
Leathers, L.P. California
Salton Sea Brine Processing, L.P. California
Salton Sea Power Generation, L.P. California
Visayas Geothermal Power Company Philippines
Vulcan/BN Geothermal Power Company Nevada
Yuma Cogenration Associates Utah

Exhibit 23.0

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by refernce in Registration Statements No.
33-41152 and No. 33-52147 on Form S-8 and Registration Statement No. 33-51363
on Form S-3 of CalEnergy Company, Inc. of our reports dated January 26, 1996
(which reports express an unqualified opinion and include an explanatory
paragraph referring to CalEnergy Company, Inc.'s adoption, effective January
1, 1993, of Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes), appearing in and incorprated by reference in the Annual
Report on Form 10-K of CalEnergy Company, Inc. for the year ended December
31, 1995.

DELOITTE & TOUCHE LLP

Omaha, Nebraska
March 27, 1996

POWER OF ATTORNEY

The undersigned, a member of the Board of Directors of CalEnergy
Company, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Steven A. McArthur and Douglas L. Anderson and each of them, as
his/her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for and in his/her stead, in any and all
capacities, to sign on his/her behalf the Company's Form 10-K Annual Report
for the fiscal year ending December 31, 1995 and to execute any amendments
thereto and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange
Commission and applicable stock exchanges, with the full power and authority
to do and perform each and every act and thing necessary or advisable to all
intents and purposes as he/she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or his/her
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

POWER OF ATTORNEY

DATE:

DAVID L. SOKOL RICHARD R. JAROS

EDGAR D. ARONSON BERNARD W. REZNICEK

JUDITH E. AYRES WALTER SCOTT, JR.

JAMES Q. CROWE JOHN R. SHINER

RICHARD K. DAVIDSON DAVID E. WIT

BEN HOLT

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 298,931
<SECURITIES> 34,190
<RECEIVABLES> 57,909
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,941,559
<DEPRECIATION> 162,970
<TOTAL-ASSETS> 2,654,038
<CURRENT-LIABILITIES> 0
<BONDS> 1,763,424
0
0
<COMMON> 3,421
<OTHER-SE> 548,465
<TOTAL-LIABILITY-AND-EQUITY> 2,654,038
<SALES> 335,630
<TOTAL-REVENUES> 398,723
<CGS> 0
<TOTAL-COSTS> 79,294
<OTHER-EXPENSES> 47,684
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102,083
<INCOME-PRETAX> 97,051
<INCOME-TAX> 30,631
<INCOME-CONTINUING> 66,420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,415
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.18

</TABLE>