SALTON SEA FUNDING CORP
8-K, 2001-01-19
STEAM & AIR-CONDITIONING SUPPLY
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                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K

                                 Current Report

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

                         Date of Report January 17, 2001

                         -------------------------------
                        (Date of earliest event reported)

                          Commission File No. 33-95538

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

                         SALTON SEA FUNDING CORPORATION

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

                                   47-0790493

                                   ----------
                        (IRS Employer Identification No.)

                                      (State or other
                                        jurisdiction

(Exact name of Registrants            of incorporation        (I.R.S. Employer
as specified in their charters)       or organization)       Identification No.)
-------------------------------      ------------------      -------------------

Salton Sea Brine Processing L.P.          California             33-0601721
Salton Sea Power Generation L.P.          California             33-0567411
Fish Lake Power LLC                       Delaware               33-0453364
Vulcan Power Company                      Nevada                 95-3992087
CalEnergy Operating Corporation           Delaware               33-0268085
Salton Sea Royalty LLC                    Delaware               47-0790492
VPC Geothermal LLC                        Delaware               91-1244270
San Felipe Energy Company                 California             33-0315787
Conejo Energy Company                     California             33-0268500
Niguel Energy Company                     California             33-0268502
Vulcan/BN Geothermal Power Company        Nevada                 33-3992087
Leathers, L.P.                            California             33-0305342
Del Ranch, L.P.                           California             33-0278290
Elmore, L.P.                              California             33-0278294
Salton Sea Power LLC                      Delaware               47-0810713
CalEnergy Minerals LLC                    Delaware               47-0810718
CE Turbo LLC                              Delaware               47-0812159
CE Salton Sea Inc.                        Delaware               47-0810711
Salton Sea Minerals Corp.                 Delaware               47-0811261

 302 S. 36th Street, Suite 400-A, Omaha, NE     68131

                  (Address of principal executive offices and
                  Zip Code of Salton Sea Funding Corporation)

               Salton Sea Funding Corporation's Telephone Number,
                      including area code: (402) 341-4500

                                       N/A

--------------------------------------------------------------------------------
          (Former name or former address, if changed since last report)



Item 5.  Other Events.

         On  January  17,  2001  Moody's  Investors  Service,  Inc.  ("Moody's")
announced  that it had lowered its rating on the senior  secured bonds of Salton
Sea Funding Corporation  ("Salton Sea Funding") from Baa3 to Caa2. The basis for
this  decision  was Moody's  downgrade  of its ratings for  Southern  California
Edison Company ("Edison") announced earlier this week. According to Moody's, the
rating of the Salton Sea Funding  bonds  remains on review for possible  further
downgrade  reflecting the  possibility  that the ratings of Edison could decline
further.

         The  Salton  Sea bonds are  secured by the cash flows and assets of ten
operating  geothermal  power  plants in the  Imperial  Valley,  California  (the
"Projects")  with an  approximate  aggregate  capacity  of 326 MW.  Eight of the
Projects with an  approximate  aggregate net rated capacity of 267 MW sell their
capacity and energy to Edison under long-term power sales contracts.

         These eight  Projects  have not yet  received  payment  from Edison for
capacity and energy delivered during November 2000. These contracts  provide for
billing and payment on a schedule  where payment  would  normally be received in
early  January  2001.  Edison has  provided no assurance as to when it will make
these payments. A failure by Edison to make these payments as well as subsequent
monthly payments,  for a substantial  period of time after the payments are due,
could have a material  adverse  effect on the financial  condition of Salton Sea
Funding and the Projects and on their ability to make payments on the Salton Sea
Funding bonds.

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

Item 7.  Financial Statements and Exhibits

Exhibit 1 - Moody's Press Release dated January 17, 2001





<PAGE>

                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act  of  1934  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                                  SALTON SEA FUNDING CORPORATION


Date:  January 19, 2001                           By:    /s/  Paul J. Leighton
                                                        ------------------------
                                                            Paul J. Leighton
                                                            Secretary
<PAGE>

                                                     Fundamental Credit Research
                                                                   Rating Action
                                                           Published 17 Jan 2001

================================================================================
Salton Sea Funding Corporation

Parent: MIDAMERICAN ENERGY HOLDING CO.

New York                                        New York
Susan D. Abbott                                 A.J. Sabatelle
Managing Director Corporate Finance             Vice President - Senior Analyst
                                                  Corporate Finance
Moody's Investors Service                       Moody's Investors Service
Clients: 1.212.553.1653                         Clients: 1.212.553.1653



MOODY'S  LOWERS  DEBT  RATINGS  FOR  PROJECTS  EXPOSED TO  COUNTERPARTY  RISK OF
CALIFORNIA UTILITIES

Moody's Investors Service has lowered its debt ratings for the following project
financed issuers:

o Caithness  Coso Funding  Corp. notes  due 2001  to Caa2 from Ba1 and notes due
  2009 to Caa2 from Ba2;

o Edison Mission Energy Funding Corp. to Caa2 from Baa3;

o FPL Energy Caithness Funding Corp. to Caa2 from Baa3;

o Juniper Generation LLC to Caa2 from Baa3; and

o Salton Sea Funding Corp. to Caa2 from Baa3.

These rating  actions have been  precipitated  by Moody's  downgrade of Southern
California  Edison  Company  (SCE) and Pacific Gas and  Electric  Company  (PGE)
announced earlier this week. As previously mentioned, it is Moody's practice for
the credit rating of a project whose cash flow is largely  derived from a single
source to be capped by the unsecured  rating of the respective  source of funds.
All projects  noted above have  substantial  cash flow exposure to either SCE or
PGE and therefore have been lowered to reflect the further  deterioration of the
credit quality of those cash flows.

The ratings for each of these projects remain on review for downgrade to reflect
the possibility that the ratings of SCE and PGE could decline further.  In light
of the liquidity  issues at both of the utilities,  Moody's  believes that it is
increasingly  probable that additional payments to Qualifying  Facilities in the
state could be delayed or deferred.

(C) Copyright 2001 by Moody's Investors Service,  99 Church Street, New York, NY
10007. All rights reserved.

ALL INFORMATION CONTAINED HEREIN IS COPYRIGHTED IN THE NAME OF MOODY'S INVESTORS
SERVICE,  INC.  ("MOODY'S"),  AND  NONE OF SUCH  INFORMATION  MAY BE  COPIED  OR
OTHERWISE   REPRODUCED,    REPACKAGED,    FURTHER   TRANSMITTED,    TRANSFERRED,
DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH
PURPOSE,  IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER,
BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.  All information  contained
herein is obtained by MOODY'S  from  sources  believed by it to be accurate  and
reliable.  Because of the  possibility  of human or mechanical  error as well as
other factors, however, such information is provided "as is" without warranty of
any kind and  MOODY'S,  in  particular,  makes no  representation  or  warranty,
express   or   implied,   as  to   the   accuracy,   timeliness,   completeness,
merchantability  or fitness for any particular  purpose of any such information.
Under no circumstances  shall MOODY'S have any liability to any person or entity
for (a) any loss or damage in whole or in part  caused by,  resulting  from,  or
relating  to,  any error  (negligent  or  otherwise)  or other  circumstance  or
contingency  within or outside the  control of MOODY'S or any of its  directors,
officers,  employees or agents in connection with the  procurement,  collection,
compilation, analysis, interpretation, communication, publication or delivery of
any such  information,  or (b) any  direct,  indirect,  special,  consequential,
compensatory or incidental  damages whatsoever  (including  without  limitation,
lost profits),  even if MOODY'S is advised in advance of the possibility of such
damages,  resulting  from the use of or inability to use, any such  information.
The credit  ratings,  if any,  constituting  part of the  information  contained
herein  are,  and must be  construed  solely as,  statements  of opinion and not
statements of fact or recommendations to purchase,  sell or hold any securities.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY,  TIMELINESS,  COMPLETENESS,
MERCHANTABILITY  OR FITNESS  FOR ANY  PARTICULAR  PURPOSE OF ANY SUCH  RATING OR
OTHER OPINION OR  INFORMATION  IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER
WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in
any  investment  decision  made by or on behalf  of any user of the  information
contained  herein,  and each such user must  accordingly  make its own study and
evaluation  of each  security  and of each  issuer  and  guarantor  of, and each
provider of credit  support for, each security that it may consider  purchasing,
holding or selling.  Pursuant to Section  17(b) of the  Securities  Act of 1933,
MOODY'S  hereby  discloses  that  most  issuers  of debt  securities  (including
corporate and  municipal  bonds,  debentures,  notes and  commercial  paper) and
preferred stock rated by MOODY'S have, prior to assignment of any rating, agreed
to pay to MOODY'S for appraisal and rating services  rendered by it fees ranging
from $1,000 to $1,500,000. MADE IN U.S.A



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