9405 Arrowpoint Boulevard
Charlotte, NC 28273
(704) 525-3800
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.      Yes [ Ö ]       No[   ]

PART I/ITEM 1.   CONDENSED FINANCIAL STATEMENTS

          The unaudited condensed financial statements contained herein have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "Commission"). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. While the management of LS Power Funding Corporation ("Funding"), LSP-Cottage Grove, L.P. ("Cottage Grove") and LSP-Whitewater Limited Partnership ("Whitewater"), (Cottage Grove and Whitewater sometimes referred to herein individually as a "Partnership" and collectively as the "Partnerships") believes that the disclosures made are adequate to make the information presented not misleading, these unaudited condensed financial statements should be read in conjunction with the audited financial statements included in the Annual Repor t on Form 10-K for the year ended December 31, 2001, filed by Funding, and the Partnerships.


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

          In addition to discussing and analyzing Funding and the Partnerships' recent historical financial results and conditions, the following "Management's Discussion and Analysis of Financial Condition and Results of Operations" includes statements concerning certain trends and other forward-looking information affecting or relating to Funding and the Partnerships which are intended to qualify for the protections afforded "Forward-Looking Statements" under the Private Securities Litigation Reform Act of 1995, Public Law 104-67. The forward-looking statements made herein are inherently subject to risks and uncertainties which could cause Funding's and the Partnerships' actual results to differ materially from the forward-looking statements.

General

          Cottage Grove is a single purpose Delaware limited partnership established in December 1993 to develop, finance, construct and own a gas-fired cogeneration facility located in Cottage Grove, Minnesota (the "Cottage Grove Facility"). The 1% general partner, LSP-Cottage Grove, Inc., and the 72% limited partner, Cogentrix Cottage Grove, LLC ("Cogentrix Cottage Grove"), are indirect subsidiaries of Cogentrix Energy, Inc. ("Cogentrix Energy"). On September 4, 2002, the other limited partner, TPC Cottage Grove, Inc., converted to a limited liability company and changed its name to FPP Cottage Grove, LLC in conjunction with the purchase of its parent company, TPC Funding, LLC by Fort Point Power, LLC. FPP Cottage Grove, LLC is not affiliated with Cogentrix Energy. Whitewater is a single purpose Delaware limited partnership established in December 1993 to develop, finance, construct and own a gas-fired cogeneration facility located in Whitewater, Wisconsin (the "Whitewater Facility", and collectively with the Cottage Grove Facility, the "Facilities"). The 1% general partner, LSP-Whitewater I, Inc., and the 73% limited partner, Cogentrix Whitewater, LLC ("Cogentrix Whitewater"), are indirect subsidiaries of Cogentrix Energy. On September 4, 2002, the other limited partner, TPC Whitewater, Inc., converted to a limited liability company and changed its name to FPP Whitewater, LLC in conjunction with the purchase of its parent company, TPC Funding, LLC, by Fort Point Power, LLC. FPP Whitewater, LLC is not affiliated with Cogentrix Energy. The Partnerships sell electric capacity and energy generated by their Facilities to two utilities under separate long-term power purchase agreements (individually, the "Power Purchase Agreement" and collectively, the "Power Purchase Agreements"). Whitewater sells up to 236.5 megawatts of electric capacity and associated energy generated by the Whitewater Facility to Wisconsin Electric Power Company ("WEPCO") pursua nt to a 25-year Power Purchase Agreement expiring in September 2022. Whitewater may also sell to third parties up to 12 megawatts of electric capacity and any energy not dispatched by WEPCO. All of the electric capacity and energy generated by the Cottage Grove Facility is sold to Northern States Power Company ("NSP") pursuant to a 30-year Power Purchase Agreement which runs through October 2027. The Partnerships also have long-term steam supply agreements with steam hosts to supply thermal energy produced by the Facilities.

          The Whitewater Facility commenced commercial operations on September 18, 1997, and the Cottage Grove Facility commenced commercial operations on October 1, 1997. The Whitewater and Cottage Grove Power Purchase Agreements meet the criteria of a "sales-type" capital lease as described in Statement of Financial Accounting Standards ("SFAS") No. 13, "Accounting for Leases." Cottage Grove and Whitewater each recognized a gain on sales-type capital lease for the difference between the estimated fair market value and the historical cost of the Facilities as of the commencement of each respective Power Purchase Agreement's terms (commencement of commercial operations). The Partnerships each recorded a net investment in lease that reflects the present value of future minimum lease payments. Future minimum lease payments represent the amount of capacity payments due from the utilities under the Power Purchase Agreements in excess of fixed operating costs (i.e., executory costs). The difference between the undiscounted future minimum lease payments due from the utilities and the net investment in lease represents unearned income. This unearned income will be recognized as lease revenue over the respective terms of the Power Purchase Agreements using the effective interest rate method. The Partnerships will also recognize service revenue related to the reimbursement of costs incurred in operating the Facilities and providing electricity and thermal energy. The amount of service revenue recognized by each Partnership will be directly related to the level of dispatch of the Facilities by the respective utilities and to a lesser extent the level of thermal energy required by the steam hosts.

          The Cottage Grove and Whitewater facilities each have a gas supply contract with two suppliers that collectively provide 100% of the expected gas requirements of each facility. One of the gas supply contracts at each facility is with Dynegy Marketing and Trade ("Dynegy Marketing"), an indirect wholly-owned subsidiary of Dynegy Holdings, Inc. ("Dynegy"). During 2002, a number of events negatively impacted Dynegy resulting in downgrades in Dynegy's credit ratings to non-investment grade by each of the major rating agencies and a reduction in available liquidity. Dynegy Marketing continues to meet its obligations under each facility's gas supply contracts, although future events effecting Dynegy or Dynegy Marketing may negatively impact or prevent Dynegy Marketing from meeting its obligations under the gas supply contracts. In the event Dynegy Marketing is unable to supply gas to the facilities, management believes that they will be able to obtain alternative natural gas or fuel oil supply to meet the supply needs of both facilities. However, management cannot provide any assurances that they will be able to obtain new fuel supply contracts at commercially equivalent terms.

     Funding

          Funding was organized in June 1995 as a special purpose Delaware corporation to issue debt securities in connection with financing the construction of the Facilities. Funding's sole business activities are limited to maintaining its organization and activities necessary pursuant to the offering of the Senior Secured Bonds (defined below) and its acquisition of the First Mortgage Bonds (defined below) from the Partnerships.

          Cottage Grove and Whitewater each own 50% of the outstanding stock of Funding.

          During November 2002, Moody's Investor Services ("Moody's") placed the Baa2 senior secured bond rating of Funding under review for possible downgrade. Moody's stated that the rating action reflected lower than anticipated financial coverage ratios driven in large part by increased operating expenses, particularly insurance, labor and maintenance costs. Moody's cited recent results being negatively impacted by unexpected outages. In addition, Moody's noted a downgrade of the Cottage Grove facility's principal customer.

Insurance

          The Company maintains an All Risk insurance program that renews annually each November. Recent events have adversely impacted all segments of the insurance industry in particular the type of equipment used at the Cottage Grove and Whitewater facilities. As a result, our insurance policy coverages will be at lower levels than we have historically procured, policy terms and conditions will be affected, levels of deductibles will increase and premiums will be significantly higher. The coverages obtained related to the November 2002 renewal have met the coverage levels as required under the indenture of the senior secured bonds.

Change in Control Termination

          On April 29, 2002, Cogentrix Cottage Grove, Cogentrix Whitewater, Cogentrix Energy and certain other wholly-owned subsidiaries of Cogentrix Energy (the "Affiliated Entities") entered into an asset purchase agreement with General Electric Capital Corporation ("GECC"), whereby GECC was expected to purchase a total of 23.22% direct and indirect interests in the Cottage Grove Partnership, a total of 24.17% direct and indirect interests in the Whitewater Partnership and other interests owned by the Affiliated Entities (the "Purchase Agreement"). During August 2002, Cogentrix Energy, Cogentrix Whitewater, Cogentrix Cottage Grove and the Affiliated Entities terminated the Purchase Agreement with GECC, pursuant to its terms.

Results of Operations

Cottage Grove

          Operating revenues increased approximately 5.8% to $12.7 million for the third quarter of 2002 as compared to $12.0 million for the corresponding period of 2001. This increase was primarily the result of an increase in commodity sales. The increase in commodity sales was attributable to a higher volume of sales of remarketed fuel to third party purchasers.

          Operating revenues decreased approximately 8.9% to $36.0 million for the nine months ended September 30, 2002 as compared to $39.5 million for the corresponding period of 2001. This decrease was primarily the result of decreases in service revenue. The decrease in service revenue resulted from a decrease in the variable energy rate charged to the purchasing utility and steam purchaser as a result of a decrease in natural gas prices.

          Operating expenses increased approximately 31.0% to $9.3 million for the third quarter of 2002 as compared to $7.1 million for the corresponding period of 2001. This increase was the result of an increase in cost of services and commodity sales expense. The increase in cost of services resulted primarily from an increase in maintenance costs, a component of cost of services, as a result of an unplanned outage which occurred during September 2002. See additional discussion under the heading "Liquidity and Capital Resources - Other Financial Information." Commodity cost of sales increased due to an increase in remarketed fuel sales to third party purchasers.

          Operating expenses decreased approximately 8.9% to $23.5 million for the nine-month period ended September 30, 2002 as compared to $25.8 million for the corresponding period of 2001. This decrease was primarily the result of a decrease in cost of services due to a decrease in fuel expense, a component of cost of services, as a result of decreased natural gas prices.

          Interest expense consists primarily of interest expense on the First Mortgage Bonds and amortization of the costs incurred to issue the bonds.

     Whitewater

          Operating revenues increased approximately 5.1% to $14.5 million for the third quarter of 2002 as compared to $13.8 million for the corresponding period of 2001. This increase was primarily the result of an increase in service revenue as a result of an increase in megawatt hours sold to the purchasing utility.

          Operating revenues remained stable for the nine months ended September 30, 2002 as compared to the corresponding period of 2001. An increase in the megawatt hours sold to the purchasing utility was offset by a decrease in the variable energy rate charged to the purchasing utility.

          Operating expenses increased approximately 8.5% to $8.9 million for the third quarter of 2002 as compared to $8.2 million for the corresponding period of 2001. This increase was the result of an increase in fuel expense, a component of cost of services, resulting from an increase in megawatt hours sold to the purchasing utility.

          Operating expenses increased approximately 4.0% to $28.7 million for the nine months ended September 30, 2002 as compared to $27.6 million for the same period of 2001. This increase was the result of maintenance costs, a component of cost of services, incurred during an unscheduled outage during February 2002. See additional discussion under the heading "Liquidity and Capital Resources - Other Financial Information." This increase was partially offset by a decrease in fuel expense, another component of cost of services, resulting from a decrease in natural gas prices.

          Interest expense consists primarily of interest expense on the First Mortgage Bonds and amortization of the costs incurred to issue the bonds.

Liquidity and Capital Resources

     Cottage Grove

          The principal components of operating cash flow for the nine-month period ending September 30, 2002 were net income of $3.5 million and a net $7.6 million of cash provided by changes in other working capital assets and liabilities. Cash flows provided by operating activities of $12.0 million were primarily used to make partner distributions of $4.5 million, repay $1.0 million of First Mortgage Bonds and fund $4.9 million of restricted cash.

     Whitewater

          The principal components of operating cash flow for the nine-month period ended September 30, 2002 were net income of $4.4 million, $0.6 million for depreciation and amortization of debt issuance and financing costs, a net $4.2 million of cash provided by changes in other working capital assets and liabilities, and amortization of unearned lease income, net of minimum lease payments received of $1.4 million. Cash flows provided by operating activities of $10.6 million were primarily used to make partner distributions of $1.7 million, repay $1.2 million of First Mortgage Bonds and fund $8.1 million of restricted cash.

     Other Financial Information

          On February 4, 2002, Whitewater experienced an unplanned outage as a result of failure of certain components within the Facility's combustion turbine. Repairs to the components were made and operations restarted on February 17, 2002. The Partnership currently estimates the total cost of the outage to be approximately $7.7 million, of which $5.7 million has been covered under the Partnership's insurance policy. The Facility's portion of the cost of this unplanned outage was covered by cash flow from operations and management believes that this event will not adversely affect Whitewater's ability to meet its First Mortgage Bond obligations.

          On September 9, 2002, Cottage Grove experienced an unplanned outage as a result of failure of certain components within the Facility's combustion turbine. Repairs to the components were made and operations restarted on September 23, 2002. The Partnership currently estimates the total cost of the outage to be approximately $1.3 million, none of which will be covered under the Partnership's insurance policy. Management expects that the cost of this unplanned outage will be covered by cash flow from operations and does not believe that this event will adversely affect Cottage Grove's ability to meet its First Mortgage Bond obligations.

          Both Cottage Grove and Whitewater are required to maintain a debt service reserve fund as stipulated by certain financing documents. During 1999 and 1998, the Partnerships transferred the debt service reserve funds to Cogentrix Energy. The required debt service funds at September 30, 2002, equal to $7.2 million and $8.2 million for Cottage Grove and Whitewater, respectively, are included on the respective balance sheets as Note Receivable from Affiliate. The receivables are backed by an irrevocable letter of credit from Cogentrix Energy.

          Each partnership maintains a letter of credit facility which expires in July 2007. These facilities provide for letters of credit in a face amount not to exceed $5.0 million for Whitewater and $5.5 million for Cottage Grove that may be drawn on by the respective Partnership from time to time. Such letters of credit will satisfy certain requirements of the Partnerships under various project agreements. As of September 30, 2002, a $0.5 million letter of credit was outstanding under the Cottage Grove letter of credit facility to secure certain obligations of Cottage Grove under the Cottage Grove Power Purchase Agreement and there were no amounts outstanding under the Whitewater letter of credit facility.

          In order to provide for the Partnerships' working capital needs, each Partnership maintains a working capital facility which expires in July 2007. Each working capital facility will provide for working capital loans in an aggregate principal amount not to exceed $3.0 million for each Partnership. No amounts were outstanding under the working capital facilities as of September 30, 2002.

          The Partnerships expect that payments from the utilities under the Power Purchase Agreements will provide the substantial majority of the revenues of each of the Partnerships. Under and subject to the terms of the Power Purchase Agreements, each utility is obligated to purchase electric capacity made available to it and energy that it requests from the related Partnership. For additional information regarding NSP and WEPCO, reference is made to the respective Annual Reports filed on Form 10-K, the Quarterly Reports filed on Form 10-Q, proxy, and any other filings made by NSP and WEPCO with the Commission.

          The Power Purchase Agreements are dispatchable contracts that provide the utilities with the ability to suspend or reduce purchases of electricity from the Facilities. The Power Purchase Agreements are structured such that the Partnerships will continue to receive capacity payments during any period of dispatch. Each Partnership is dependent on capacity payments under its Power Purchase Agreement to meet its fixed obligations, including the payment of debt service under each Partnership's First Mortgage Bonds (which will be Funding's sole source of revenues for payment of debt service under the Senior Secured Bonds). Capacity payments by each of NSP and WEPCO are based on the tested capacity and availability of the Facilities and are unaffected by levels of dispatch. Each Facility's capacity is subject to semi-annual verification through testing. Capacity payments are subject to reduction if a Facility is operating at reduced or degraded capacity at the time of such test, although each Facility is permitted a retest subject to certain retest limitations. Also, capacity payments for each Facility are subject to rebate or reduction if the respective Facility does not maintain certain minimum levels of availability. Under the Cottage Grove Power Purchase Agreement, capacity payments are further adjusted by, among other things, the capacity loss factor, which is determined in accordance with procedures jointly agreed to by Cottage Grove and NSP. The Partnerships expect to achieve the minimum capacity and availability levels; however, any material shortfall in tested capacity or availability over a significant period could result in a shortage of funds to the Partnerships.

          Each Partnership presently believes that funds available from cash and investments on hand, restricted funds, operations and letter of credit and working capital facilities will be more than sufficient to liquidate each partnership's obligations as they come due, pay project debt service and make required contributions to project reserve accounts.

          As with any power generation facility, operation of the Facilities involves certain risks, including the performance of a Facility below expected levels of output or efficiency, interruptions in fuel supply, pipeline disruptions, disruptions in the supply of thermal or electrical energy, power shut-downs due to the breakdown or failure of equipment or processes, violation of permit requirements (whether through operation or change in law), operator error, labor disputes or catastrophic events such as fires, earthquakes, explosions, floods or other similar occurrences affecting a Facility or its power purchasers, thermal energy purchasers, fuel suppliers or fuel transporters. The occurrence of any of these events could significantly reduce or eliminate revenues generated by a Facility or significantly increase the expenses of that Facility, thereby impacting the ability of a Partnership to make payments of the amounts necessary to fund principal of a nd interest on its First Mortgage Bonds, and consequently Funding's ability to make payments of principal and interest on the Senior Secured Bonds. Not all risks are insured and the proceeds of such insurance applicable to covered risks may not be adequate to cover a Facility's lost revenues or increased expenses. In addition, extended unavailability under the Power Purchase Agreements, which may result from one or more of such events, may entitle the respective Power Purchaser to terminate its Power Purchase Agreement.

Impact of Energy Price Changes, Interest Rates and Inflation

          The Partnerships have attempted to mitigate the risk of increases in fuel and transportation costs by providing contractually for matching increases in the energy payments the Partnerships receive from the utilities purchasing electricity generated by the Facilities. In addition, the Partnerships have hedged against the risk of fluctuations in interest rates by arranging fixed-rate financing.


PART I/ITEM 4.   CONTROLS AND PROCEDURES

          Our President and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in rule 13a-14 (c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Partnership's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to Funding, Cottage Grove and Whitewater required to be included in our periodic filings under the Exchange Act.

          Since the Evaluation Date, there have not been any significant changes in our internal controls or in other factors that could significantly affect such controls.

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


LS POWER FUNDING CORPORATION

Date:     November 14, 2002



LSP-COTTAGE GROVE, L.P.


By:       LSP-Cottage Grove, Inc.
Its:        General Partner

Date:     November 14, 2002




LSP-WHITEWATER LIMITED PARTNERSHIP

By:        LSP-Whitewater I, Inc.
Its:         General Partner

Date:     November 14, 2002

          I, Mark F. Miller, certify that:

          I, Thomas F. Schwartz, certify that:

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

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

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

1.     FINANCIAL STATEMENTS

          The balance sheet as of September 30, 2002, the statements of income for the three-month and nine-month periods ended September 30, 2002 and 2001 and cash flows for the nine-month periods ended September 30, 2002 and 2001 have been prepared by LS Power Funding Corporation ("Funding"), without audit. In the opinion of management, these unaudited condensed financial statements include all adjustments (consisting of normal recurring adjustments) necessary to present fairly Funding's financial position as of September 30, 2002, and the results of its operations for the three-month and nine-month periods ended September 30, 2002 and 2001 and its cash flows for the nine-month periods ended September 30, 2002 and 2001.

          The unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. While management believes that the disclosures made are adequate to make the information presented not misleading, these unaudited condensed financial statements should be read in conjunction with Funding's audited financial statements included in Funding's Annual Report on Form 10-K for the fiscal year ended December 31, 2001.

2.     ORGANIZATION

          Funding was established on June 23, 1995 as a special purpose Delaware corporation to issue debt securities in connection with financing construction of two gas-fired cogeneration facilities, one located in Cottage Grove, Minnesota and the other located in Whitewater, Wisconsin. LSP-Cottage Grove, L.P. ("Cottage Grove") and LSP-Whitewater Limited Partnership ("Whitewater") are single purpose Delaware limited partnerships established to develop, finance, construct and own the facilities at Cottage Grove and Whitewater, respectively. Cottage Grove and Whitewater each own 50% of the outstanding stock of Funding. Funding's sole business activities are limited to maintaining its organization, the offering of the Senior Secured Bonds and its acquisition of the First Mortgage Bonds issued by Cottage Grove and Whitewater.

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

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

1.     FINANCIAL STATEMENTS

          The balance sheet as of September 30, 2002 and the statements of income for the three-month and nine-month periods ended September 30, 2002 and 2001 and the statements of cash flows for the nine-month periods ended September 30, 2002 and 2001 have been prepared by LSP-Cottage Grove, L.P. (the "Partnership"), without audit. In the opinion of management, these unaudited condensed financial statements include all adjustments (consisting of normal recurring adjustments) necessary to present fairly the Partnership's financial position as of September 30, 2002, and the results of its operations for the three-month and nine-month periods ended September 30, 2002 and 2001 and its cash flows for the nine-month periods ended September 30, 2002 and 2001.

          The unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. While management believes that the disclosures made are adequate to make the information presented not misleading, these unaudited condensed financial statements should be read in conjunction with the Partnership's audited financial statements included in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2001.

2.     ORGANIZATION

          The Partnership is a Delaware limited partnership that was formed on December 14, 1993, to develop, finance, construct and own a gas-fired cogeneration facility with a design capacity of approximately 245 megawatts located in Cottage Grove, Minnesota (the "Facility"). Construction and start-up of the Facility was substantially completed and commercial operation commenced October 1, 1997. The 1% general partner of the Partnership is LSP-Cottage Grove, Inc. ("Cottage Grove"), a wholly-owned subsidiary of Cogentrix Cottage Grove, LLC ("Cogentrix Cottage Grove"). Cogentrix Cottage Grove and TPC Cottage Grove, Inc., are the sole limited partners of the Partnership, owning approximately 72% and 27% limited partnership interests, respectively. The ultimate parent of Cogentrix Cottage Grove is Cogentrix Energy, Inc. ("Cogentrix Energy"), a North Carolina corporation.

          On April 29, 2002, Cogentrix Cottage Grove, Cogentrix Energy and certain other wholly-owned subsidiaries of Cogentrix Energy (the "Affiliated Entities") entered into an asset purchase agreement with General Electric Capital Corporation ("GECC"), whereby GECC was expected to purchase a total of 23.22% direct and indirect interest in the Partnership and other interests owned by the Affiliated Entities (the "Purchase Agreement"). Concurrently with the execution of this Purchase Agreement, Cogentrix Energy entered into a definitive agreement with certain subsidiaries of Aquila, Inc. (formerly Utilicorp United) for those subsidiaries to acquire all of the outstanding common stock of Cogentrix Energy (the "Merger"). The closing of the Purchase Agreement transaction was expected to occur immediately prior to the closing of the Merger transaction. During August 2002, Cogentrix Cottage Grove, Cogentrix Energy and the Affiliated Entities terminated the Purc hase Agreement with GECC, pursuant to its terms in conjunction with Cogentrix Energy and Aquila, Inc. agreeing to terminate the Merger.

          The Partnership holds a 50% equity ownership interest in LS Power Funding Corporation ("Funding"), which was established on June 23, 1995, as a special purpose funding corporation to issue debt securities (the "Senior Secured Bonds") in connection with financing construction of the Facility and a similar gas-fired cogeneration facility located in Whitewater, Wisconsin. On June 30, 1995, a portion of the proceeds from the offering and sale of the Senior Secured Bonds issued by Funding was used to purchase $155 million of First Mortgage Bonds issued simultaneously by the Partnership.

          All of the electric capacity and energy generated by the Facility is sold to Northern States Power Company ("NSP") under a 30-year power purchase agreement (the "Power Purchase Agreement"). The thermal energy generated by the Facility is sold in the form of steam to 3M Company (formerly Minnesota Mining and Manufacturing Company, "3M") under a 30-year thermal energy sales agreement.

3.     SALES-TYPE CAPITAL LEASE

          The components of the net investment in lease at September 30, 2002, are as follows (dollars in thousands):

          Gross investment in lease represents total capacity payments receivable over the term of the Power Purchase Agreement, net of executory costs, which are considered minimum lease payments in accordance with Statement of Financial Accounting Standards No. 13, "Accounting for Leases".

4.     CREDIT AGREEMENT

          The Partnership's original credit agreement, which was to have expired on its terms in June 2002, was extended through July 2007 with a new bank. The agreement provides for working capital loans of up to $3,000,000 and letter of credit commitments of up to $5,500,000 (the "Credit Agreement"). The interest rate for loans made under the Credit Agreement is based upon various short-term indices at the Partnership's option and is determined separately for each draw. The Credit Agreement includes commitment fees, payable quarterly in arrears, at 0.5% on the daily average unused amount of the commitment until the Credit Agreement is terminated. For all periods through September 30, 2002, no working capital loans had been issued under the Credit Agreement. The Partnership has issued a $500,000 letter of credit under the Credit Agreement to secure certain obligations of the Partnership under the Power Purchase Agreement.

5.     UNSCHEDULED OUTAGE

          On September 9, 2002, the Partnership experienced an unplanned outage as a result of failure of certain components within the Facility's combustion turbine. Repairs to the components were made and operations restarted September 23, 2002. The Partnership currently estimates the total cost of the outage to be approximately $1,300,000, which is included in cost of services in the statements of income. A portion of these costs may be covered by the turbine vendor. Management expects that the Partnership's portion of the cost of this unplanned outage will be covered by cash flow from operations and does not believe that this event will adversely affect Cottage Grove's ability to meet its First Mortgage Bonds obligations.

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

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

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

       Gross investment in lease represents total capacity payments receivable over the term of the Power Purchase Agreement, net of executory costs, which are considered minimum lease payments in accordance with Statement of Financial Accounting Standards No. 13, "Accounting for Leases".

4.     CREDIT AGREEMENT

          The Partnership's original credit agreement, which was to have expired on its terms in June 2002, was extended through July 2007 with a new bank. The agreement provides for working capital loans of up to $3,000,000 and letter of credit commitments of up to $5,000,000 (the "Credit Agreement"). The interest rate for loans made under the Credit Agreement is based upon various short-term indices at the Partnership's option and is determined separately for each draw. The Credit Agreement includes commitments fees, payable quarterly in arrears, at 0.5% on the daily average unused amount of the commitment until the Credit Agreement is terminated. There were no advances or letters of credit outstanding under the Credit Agreement at September 30, 2002.

5.     UNSCHEDULED OUTAGE

          On February 4, 2002, the Partnership experienced an unplanned outage as a result of failure of certain components within the Facility's combustion turbine. Repairs to the components were made and operations restarted on February 17, 2002. The total cost of the outage was approximately $7,700,000 of which approximately $5,650,000 was covered under the Partnership's insurance policy. Prior to September 30, 2002, all insurance proceeds were received. The uninsured portion of the unplanned outage was covered by cash flow from operations and management does not believe this event will adversely affect Whitewater's ability to meet its First Mortgage Bond obligations.