UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the ~~calendar~~fiscal year ended December 31, ~~2004~~2008

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from to

Commission File No. 001-12995

CE CASECNAN WATER AND ENERGY COMPANY, INC.

(Exact name of registrant as specified in its charter)

Philippines		Not Applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
(State or other jurisdiction of		(I.R.S. Employer
24th Floor, 6750 Building, Ayala Avenue Makati, Metro Manila, Philippines		Not Applicable
incorporation or organization)		Identification No.)
24th Floor, 6750 Building, Ayala Avenue
Makati City, Metro Manila, Philippines		Not Applicable
(Address of principal executive offices)		(Zip Code)
011 63 2 892-0276
(Registrant’s telephone number, including area code)

~~011 63~~Securities 2registered ~~892-0276~~pursuant to Section 12(b) of the Act:

(Registrant’s telephone number, including area code)

Title of each class		Name of each exchange on which registered

11.95% Senior Secured Series B Bonds due November 15, 2010		New York Stock Exchange

Securities registered pursuant to Section 12(bg) of the Act: ~~N/A~~None

~~Securities~~Indicate ~~registered~~by ~~pursuant~~check tomark ~~Section~~if ~~12(g)~~the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:. ~~N/A~~Yes ¨ No T

Indicate by check mark ~~whether~~if the registrant: ~~(1)~~is ~~has~~not ~~filed~~required ~~all~~to file reports ~~required~~pursuant to be ~~filed by~~ Section 13 or Section 15(d) of the ~~Securities Exchange~~ Act ~~of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days~~. Yes ¨ No T

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to be the best of ~~each of the registrants~~registrant’s knowledge, in definitive proxy or information ~~statements~~ statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. T

10Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-Kaccelerated filer or a smaller reporting company. ~~[X]~~See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

~~Indicate by~~Large ~~check~~accelerated ~~mark~~filer ~~whether~~¨ ~~the~~Accelerated ~~registrant~~filer is¨ an Non-accelerated filer ~~(as~~T ~~defined~~Smaller byreporting ~~Rule 12b-2~~company ~~of the Act).~~¨

~~Yes~~Indicate by [check ]mark whether the registrant is a shell company (as defined in Rule No12b-2 ~~[X]~~of the Act). Yes ¨ No T

All of the shares of common equity of CE Casecnan Water and Energy Company, Inc. are privately held by a limited group of ~~private~~ investors. As of January 28 31, ~~2005~~2009, the number of outstanding shares of $0.038 par value common stock was 767,162~~, $0~~.~~038 par value.~~

TABLE OF CONTENTS

PART I	~~PART I~~
Item 1.	Business	4
Item 2.	Properties	11
Item 1A.	Risk Factors	5
Item 3.	Legal Proceedings	11
Item 1B.	Unresolved Staff Comments	6
Item 4.	Submission of Matters to a Vote of Security Holders	11
Item 2.	Properties	6
	PART II
Item 3.	Legal Proceedings	6
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	12
Item 4.	Submission of Matters to a Vote of Security Holders	6
Item 6.	Selected Financial Data	12
PART II
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	7
Item 7A.	Qualitative and Quantitative Disclosures about Market Risk	18
Item 6.	Selected Financial Data	7
Item 8.	Financial Statements and Supplementary Data	20
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	36
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	11
Item 9A.	Controls and Procedures	36
Item 8.	Financial Statements and Supplementary Data	13
Item 9B.	Other Information	36
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	28
	PART III
Item 9A(T).	Controls and Procedures	28
Item 10.	Directors and Executive Officers of the Registrant	37
Item 9B.	Other Information	28
Item 11.	Executive Compensation	38
PART III
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	39
Item 10.	Directors, Executive Officers and Corporate Governance	29
Item 13.	Certain Relationships and Related Transactions	39
Item 11.	Executive Compensation	30
Item 14.	Principal Accountant Fees and Services	40
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	30
	PART IV
Item 13.	Certain Relationships and Related Transactions, and Director Independence	31
Item 15.	Exhibits and Financial Statement Schedules	41
Item 14.	Principal Accountant Fees and Services	31
Signatures		42
PART IV
Exhibit Index		43
Item 15.	Exhibits and Financial Statement Schedules	33
Signatures		34
Exhibit Index		35

~~Disclosure Regarding~~ Forward-Looking Statements

This report contains statements that do not directly or exclusively relate to historical facts. These statements are "“forward-looking statements"” within the meaning of the Private Securities Litigation Reform Act of 1995. ~~You~~Forward-looking statements can typically ~~identify~~be ~~forward-looking~~identified ~~statements~~ by the use of forward-looking words, such as "“may,"” ~~"will," "~~“could,"” "“project,"” "“believe,"” "“anticipate,~~" "~~” “expect,"” "“estimate,~~" "~~” “continue,"” "“intend,” “potential,"” "“plan,"” "“forecast"” and similar terms. These statements ~~represent~~are based upon the Company’s current intentions, ~~plans~~assumptions, ~~expectations~~ expectations and beliefs and are subject to risks, uncertainties and other important factors. Many of these factors are outside the Company’s control and could cause actual results to differ materially from ~~such~~those expressed or implied by the Company’s forward-looking statements. These factors include, among others:

· changes in weather conditions that could affect operating revenue; · general economic, political and business conditions in the Philippines and throughout the world; · changes in governmental, legislative or regulatory requirements affecting the Company or the power generation industry; · availability of qualified personnel; · the impact of new accounting pronouncements or changes in current accounting estimates and assumptions on financial results; and · other business or investment considerations that may be disclosed from time to time in the Company’s filings with the United States Securities and Exchange Commission (“SEC”) or in other publicly disseminated written documents.

·Further details ~~governmental,~~of ~~statutory,~~the ~~regulatory~~potential orrisks ~~administrative~~and ~~initiatives~~uncertainties affecting the Company orare described in the ~~power~~Company’s ~~generation~~filings ~~industry;~~with the SEC, including Item 1A and other discussions contained in this Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors should not be construed as exclusive.

· weather effects on sales and revenues;

· general industry trends;

· increased competition in the power generation industry;

· availability of qualified personnel;

· financial or regulatory accounting principles or policies imposed by the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, the United States Securities and Exchange Commission (“SEC”) and similar entities with regulatory oversight; and

· other business or investment considerations that may be disclosed from time to time in the Company’s SEC filings or in other publicly disseminated written documents.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors should not be construed as exclusive.

PART I

Item 1.

Business

General

CE Casecnan Water and Energy Company, Inc. (the “Company” or “CE Casecnan”) is a privately held Philippine corporation formed indirectly by MidAmerican Energy Holdings Company (“~~MidAmerican~~MEHC”) in September of 1994 solely to develop, construct, own and operate ~~the~~a ~~Casecnan~~combined ~~Project~~irrigation and hydroelectric power generation facility (the “Casecnan Project”), ~~a multi-purpose irrigation and hydroelectric power facility~~ with a rated capacity of ~~approximately~~ 150 megawatts (“MW”) located on the island of Luzon in the Republic of the Philippines (the “ROP”). ~~The Casecnan Project commenced commercial operations on December 11, 2001.~~

~~The~~CE ~~Securities~~Casecnan’s ~~(described~~outstanding ~~herein)~~debt securities are recourse only to the Company. ~~MidAmerican has~~The Company’s owners have not guaranteed directly or indirectly the payment or performance of any Company obligations.

The Company’s principal executive office is located at 24th Floor, 6750 Building, Ayala Avenue, Makati City, Metro Manila, Philippines, and its telephone number is ~~(632)~~ 63 2 892-0276. The Company’s principal operations office is located at Pantabangan in the Province of Nueva Ecija, Philippines.

In this Annual Report, references to "U.S. dollars," "dollars," or "$" are to the currency of the United States and references to "pesos" are to the currency of the Philippines. References to kW means kilowatts, MW means megawatts, GW means gigawatts, kWh means kilowatt hours, MWh means megawatt hours, and GWh means gigawatt hours.

The Casecnan Project

The Casecnan Project is located in the central part of the island of Luzon. It consists generally of diversion structures in the Casecnan and Taan rivers that capture and divert excess water in the Casecnan watershed by means of concrete, in-stream diversion weirs, and transfer that water through a transbasin tunnel of approximately 23 kilometers in length. During the water transfer, the ~~elevation~~ elevation differences between the two watersheds allows ~~electrical~~electricity ~~energy~~ to be ~~generated~~ generated by ana ~~approximately~~ 150 MW ~~rated~~ capacity power plant, which is located in an underground powerhouse cavern at the end of the water tunnel. A tailrace discharge tunnel then delivers water to the existing ~~underutilized~~ water storage reservoir at Pantabangan, providing additional water for irrigation and increasing the potential electrical generation at two downstream ~~existing~~ hydroelectric facilities ofowned by the Philippine National Power Corporation (“NPC”), the government-owned and controlled corporation that is the primary supplier of electricity in the Philippines. Once in the reservoir at Pantabangan, the water is under the control of the Philippine National Irrigation Administration (“NIA”), a ROP-owned and controlled corporation.

The ~~Casecnan~~Company ~~Project~~has ~~was~~a ~~developed~~contract onwith athe ~~build-own-operate-transfer~~ROP, ~~basis~~through NIA, ~~that~~for isthe development, anconstruction ~~arrangement~~and ~~under~~operation ~~which~~of ~~the~~a ~~Company~~hydroelectric ~~agreed~~power toplant ~~build~~ and ~~thereafter~~related ~~own and~~facilities under a build-own-operate-transfer agreement, as amended by the ~~Casecnan~~Supplemental Agreement dated September 29, 2003 (the “Project ~~for~~Agreement”), acovering ~~twenty~~a 20-year cooperation period (~~the~~ “Cooperation Period”), ~~after~~with ~~which~~“take-or-pay” ~~ownership~~obligations for water and ~~operation~~electricity. At the end of the Cooperation Period, the Casecnan Project will be transferred to NIA at no cost on an “as- is” basis. ~~After conclusion~~Under ~~of a public solicitation for competing proposals, NIA and~~ the ~~Company~~ ~~entered~~terms ~~into~~of aits ~~project~~registration ~~agreement~~with ~~in June 1995 (~~the ~~“Project~~Philippine ~~Agreement”)~~Board ~~which set forth the terms~~ of ~~the arrangement. The~~ Investments, CE Casecnan ~~Project~~ was ~~subsequently designated~~entitled ato ~~high~~certain ~~priority~~incentives, ~~project~~including ~~under~~an ~~Republic~~income ~~Act No. 529 by the National~~tax ~~Economic~~holiday ~~and~~for ~~Development~~six ~~Authority~~years offrom the ~~Philippines.~~start ~~The~~of ~~twenty-year Cooperation~~commercial ~~Period~~operations, ~~under~~which ~~the~~expired ~~Project Agreement commenced~~ on December 11, ~~2001~~ 2007. Thereafter, the ~~start~~Company’s oftaxable ~~the~~income ~~Casecnan~~became subject ~~Project’s~~to ~~commercial~~income ~~operations.~~tax at the Philippine statutory rate.

Upon the occurrence and during the continuance of certain force majeure events, including those associated with Philippine political action, NIA may be obligated to buy the Casecnan Project from CE Casecnan at a buyout price expected to be in excess of the aggregate principal amount of the outstanding CE Casecnan debt securities, together with accrued but unpaid interest.

~~The ROP~~CE ~~has~~Casecnan ~~provided~~financed a ~~Performance~~portion ~~Undertaking~~of ~~under~~the ~~which~~costs ~~NIA’s~~of ~~obligations~~the ~~under~~Casecnan ~~the~~ Project ~~Agreement~~through ~~are~~the issuance ~~guaranteed~~of bylong-term ~~the~~debt. ~~full~~As ~~faith~~of ~~and~~January ~~credit~~31, of2009, the ~~ROP.~~outstanding ~~The~~long-term ~~Project~~debt ~~Agreement~~was ~~and~~rated ~~the~~BB- ~~Performance~~with ~~Undertaking~~stable ~~provide~~outlook ~~for~~by ~~the~~Standard ~~resolution~~and ~~of disputes~~Poor’s byand ~~binding~~B1 ~~arbitration~~with instable outlook ~~Singapore~~by ~~under~~Moody’s ~~international~~Investor ~~arbitration rules~~Service.

NIA’s payment obligations under the Project Agreement are the Company’s sole source of operating revenues. Because of the Company’s dependence on NIA, any material failure of NIA to fulfill its obligations under the Project Agreement and any material failure of the ROP to fulfill its obligations under the Performance Undertaking would significantly impair the ability of the Company to meet its obligations under the debt securities.

CE Casecnan financed a portion of the costs of the Casecnan Project through the issuance of $125.0 million of its 11.45% Senior Secured Series A Notes due 2005 (the “Series A Notes”), $171.5 million of its 11.95% Senior Secured Series B Bonds due 2010 (the “Series B Bonds”) and $75.0 million of its Senior Secured Floating Rate Notes due 2002 (“FRNs”), pursuant to an indenture dated November 27, 1995 (as amended to date, the “Trust Indenture”). During 2002, the Company repaid all amounts due under the FRNs.

The Casecnan Project Supplemental Agreement

On October 15, 2003, the Company closed a transaction settling an arbitral proceeding which the Company had initiated against NIA in August 2002. In connection with the settlement (the “NIA Arbitration Settlement”), the Company entered into an agreement (the “Supplemental Agreement”) with NIA which, in addition to providing for the dismissal with prejudice of all claims by CE Casecnan and counterclaims by NIA in the arbitral proceeding, supplements and amends the Project Agreement.

Payment in Cash and Delivery of Note

As part of the settlement, on October 15, 2003, NIA paid to CE Casecnan the sum of approximately $18.4 million and delivered to CE Casecnan a ROP $97.0 million 8.375% Note due 2013 (the "ROP Note"). The Company had the option, between January 14, 2004 and February 14, 2004 to put the ROP Note to the ROP, for a price of par plus accrued interest. The ROP Note was recorded as a note receivable in the accompanying balance sheet as of December 31, 2003. Also at closing, the Company paid to the Philippine Bureau of Internal Revenue (“BIR”) approximately $24.4 million in respect of Philippine income taxes on the foregoing consideration and paid to NIA $1.6 million in respect of alleged late completion of the Casecnan Project.

On January 14, 2004, CE Casecnan exercised its right to put the ROP Note to the ROP and, in accordance with the terms of the put, CE Casecnan received $99.2 million (representing $97.0 million par value plus accrued interest) from the ROP on January 21, 2004.

Modifications to Water Delivery Fee

Under the Project Agreement, the Water Delivery Rate increased by $0.00043 per cubic meter for each $1.0 million of certain taxes paid by CE Casecnan. The Supplemental Agreement amends the per cubic meter Water Delivery Fee calculation by eliminating the increase for taxes paid. Instead, the Water Delivery Rate remains at $0.029 per cubic meter, escalated at 7.5% annually from January 1, 1994 through the first five years of the Cooperation Period, extending through December 25, 2006. The Company will be reimbursed for certain taxes it pays during the remainder of the Cooperation Period.

Under the Project Agreement, the Water Delivery Fee payable monthly was a fixed monthly payment based on an average water delivery of 801.9 million cubic meters per year, pro-rated to approximately 66.8 million cubic meters per month, multiplied by the per cubic meter rate as described above. Under the Supplemental Agreement the Water Delivery Fee is equal to the Guaranteed Water Delivery Fee plus the Variable Delivered Water Delivery Fee minus the Water Delivery Fee Credit.

Guaranteed Water Delivery Fee. For the sixty-month period from December 25, 2003 through December 25, 2008, the Guaranteed Water Delivery Fee shall equal the Water Delivery Rate, as described above, multiplied by approximately 66.8 million cubic meters (corresponding to the 801.9 million cubic meters per year). For each month beginning after December 25, 2008 through the remainder of the Cooperation Period, the Guaranteed Water Delivery Fee shall equal the Water Delivery Rate multiplied by approximately 58.3 million cubic meters (corresponding to 700.0 million cubic meters per year).

Variable Delivered Water Delivery Fee. Variable Delivered Water Delivery Fees will be earned for months beginning after December 25, 2008. For each month beginning after December 25, 2008 through the end of the Cooperation Period, the Variable Delivered Water Delivery Fee shall be payable only from the date when the cumulative Total Available Water (total delivered water plus the water volume not delivered to NIA as a result of NIA’s failure to accept energy deliveries at a capacity up to 150 MW) for each contract year exceeds 700.0 million cubic meters. Variable Delivered Water Delivery Fees will be earned up to an aggregate maximum of 1,324.7 million cubic meters for the period from December 25, 2008 through the end of the Cooperation Period. No additional Variable Delivered Water Delivery Fees will be earned over the 1,324.7 million cubic meter threshold.

Water Delivery Fee Credit. The Water Delivery Fee Credit shall be applicable only for each of the sixty-months from December 25, 2008 through December 25, 2013 and shall equal the Water Delivery Rate as of December 25, 2008 multiplied by the sum of each Annual Water Credit divided by sixty. The Annual Water Credit for each contract year starting from December 25, 2003 and ending on December 25, 2008 shall equal 801.9 million cubic meters minus the Total Available Water for each contract year. The Total Available Water in any such year will equal actual deliveries with a minimum threshold of 700.0 million cubic meters.

Modifications to Excess Energy Delivery Fee

Under the Project Agreement, the Excess Energy Delivery Fee was a variable amount based on actual electrical energy delivered in each month in excess of 19.0 GWh, payable at a rate of $0.1509 per kWh. Under the Supplemental Agreement, the per kWh rate for energy deliveries in excess of 19.0 GWh per month has been reduced, commencing in 2009, to $0.1132 (escalating at 1% per annum thereafter), provided that any deliveries of energy in excess of 490.0 GWh but less than 550.0 GWh per year are paid for at a rate of 1.3 pesos per kWh and deliveries in excess of 550.0 GWh per year are at no cost to NIA.

For periods after September 28, 2003, the Supplemental Agreement provides that if the Casecnan Project is not dispatched up to 150 MW whenever water is available, NIA will pay for excess energy that could have been generated but was not as a result of such dispatch constraint.

Other Provisions of the Supplemental Agreement

The Company received an opinion from the Philippine Office of Government Corporate Counsel that the Supplemental Agreement has due authorization and is enforceable. The Company also received written confirmation from the Private Sector Assets and Liabilities Management Corporation that the issues with respect to the Casecnan Project that had been raised by the interagency review of independent power producers in the Philippines or that may have existed with respect to the Casecnan Project under certain provisions of the Electric Power Industry Reform Act of 2001 (“EPIRA”) calling for renegotiation of contracts such as the Project Agreement have been satisfactorily addressed by the Supplemental Agreement.

The Guaranteed Energy Delivery Fee, Force Majeure, Buyout and Dispute Resolution provisions of the Project Agreement, as well as the Performance Undertaking provided by the ROP, remain unaffected by the Supplemental Agreement and in full force and effect.

Concentration of Risk

NIA’s ~~payments of~~ obligations under the Project Agreement are ~~substantially denominated~~guaranteed inby ~~U.S. Dollars and are~~ the ~~Company’s~~full ~~sole~~faith ~~source of operating revenues. Because of the Company’s dependence on NIA, any material failure of NIA to fulfill its obligations under the Project Agreement~~ and ~~any material~~ ~~failure~~credit of the ROP ~~to fulfill its obligations under~~ (the “Performance Undertaking ~~would significantly impair the ability of the Company to meet its existing and future obligations~~”). NoThe ~~stockholders,~~Project ~~partners~~Agreement ~~or affiliates of the Company, including MidAmerican,~~ and ~~no directors, officers or employees of~~ the ~~Company~~ ~~will~~Performance ~~guarantee~~Undertaking orprovide ~~be in any way liable~~ for ~~payment of~~ the ~~Company’s~~resolution ~~obligations. As a result, payment~~ of ~~the~~disputes ~~Company’s~~by ~~obligations depends upon the availability~~binding ofarbitration ~~sufficient~~in ~~revenues~~Singapore ~~from~~under ~~the~~international ~~Company’s~~arbitration ~~business after the payment of operating expenses~~rules.

6 4

~~Terms~~NIA’s payment obligations under the Project Agreement are substantially denominated in U.S. dollars and are the Company’s sole source of operating revenue. Because of the ~~Securities~~Company’s dependence on NIA, any material failure of NIA to fulfill its obligations under the Project Agreement and any material failure of the ROP to fulfill its obligations under the Performance Undertaking would significantly impair the ability of the Company to meet its existing and future obligations, including obligations pertaining to its outstanding debt. No shareholders, partners or affiliates of the Company, including MEHC, and no directors, officers or employees of the Company have guaranteed or will be in any way liable for payment of the Company’s obligations. As a result, payment of the Company’s obligations depends upon the availability of sufficient revenue from the Company’s business after the payment of operating expenses.

General

In November 1995, the Company issued and sold (i) the Series A Notes, (ii) the Series B Bonds, and (iii) the FRNs (collectively, the “Securities”). During 2002, the Company repaid all amounts due under the FRNs.

Interest on the Series A Notes and the Series B Bonds is payable semiannually every May 15 and November 15 (the “Securities Interest Payment Date”), which commenced on May 15, 1996, to the registered Holders thereof at the close of business on May 1 and November 1, as the case may be, preceding each Securities Interest Payment Date. The initial average life of the Series A Notes was 8.84 years, and the initial average life of the Series B Bonds was 11.57 years.

Priority of Payments

Except as otherwise provided for with respect to mandatory redemptions and loss proceeds, all revenues received by the Company from the Casecnan Project have been and will continue to be paid to the Revenue Fund maintained by the Depositary (other than payments required to be used for VAT payments to the ROP). Amounts paid to the Revenue Fund have been and will continue to be distributed in the following order of priority: (a) to pay operating and maintenance costs; (b) to pay certain administrative costs of the agents for the Secured Parties under the Financing Documents; (c) to pay principal of, premium (if any) and interest on the Securities (including any increased costs necessary to gross up such payments for certain withholding taxes and other assessments and charges), and principal and interest on other senior debt, if any; (d) to cause the Debt Service Reserve Fund to equal the Debt Service Reserve Fund Required Balance, as defined below; (e) to pay indemnification expenses and other expenses to the Secured Parties and certain other costs, and (f) to the Distribution Fund or Distribution Suspense Fund, as applicable.

Debt Service Reserve Fund

The Company established a Debt Service Reserve Fund for the benefit of the Holders of the Securities, which will be funded in cash from operating revenues, subject to cash being available, as described under “Priority of Payments” above. Such amounts will be deposited to the Debt Service Reserve Fund from time to time to the extent required to cause it to equal the Debt Service Reserve Fund Required Balance which is intended to approximate the highest amount of the payments of principal and interest to be made on the Securities during any semiannual period over the next three years from the last debt service payment.

Optional Redemption

The Series A Notes are subject to optional redemption by the Company, in whole and not in part, at par plus accrued interest to the Redemption Date.

The Series B Bonds are subject to optional redemption by the Company, at any time, in whole or in part, pro rata, at par plus accrued interest to the redemption date plus a premium, calculated to “make whole” to comparable U.S. treasury securities plus 150 basis points.

The Company also has the option to redeem the Securities, in whole or in part, at par plus accrued interest at any time if, as a result of any change in Philippine tax law or in the application or interpretation of Philippine tax law occurring after the date of issuance of the Securities, the Company is required to pay certain additional amounts described in the Trust Indenture.

Mandatory Redemption

The Securities are subject to mandatory redemption, pro rata, at par plus accrued interest to the redemption date; (a) upon the receipt by the Company of loss proceeds that exceed $15.0 million in respect of certain events of property or casualty loss or similar events, unless the funds are to be utilized by the Company for an Approved Restoration Plan; or (b) upon the receipt by the Company of proceeds realized in connection with a Project Agreement Buyout.

Change in Control Put

When a Change in Control occurs, each Holder will have the right to require the Company to repurchase all or any part of such Holder’s Securities at a cash purchase price equal to 101% of the principal amount thereof, plus accrued interest to the date of repurchase in accordance with the procedures set forth in the Trust Indenture. There is no assurance that upon a Change in Control the Company will have sufficient funds to repurchase the Securities.

Profit Distributions

Profit distributions may be made only from and to the extent of amounts on deposit in the Distribution Fund or Distribution Suspense Fund. Distributions are subject to the prior satisfaction of the following conditions:

(a) The amounts contained in the Principal Fund and the Interest Fund will be equal to or greater than the aggregate scheduled principal and interest payments next due on the Securities;

(b) No Default or Event of Default under the Trust Indenture shall have occurred and be continuing;

(c) The Debt Service Coverage Ratio for the preceding 12-month period is equal to or greater than 1.35 to 1 as certified by an officer of the Company;

(d) The projected Debt Service Coverage Ratio of the Securities for the succeeding 12-month period is equal to or greater than 1.35 to 1, as certified by an officer of the Company; and

(e) The Debt Service Reserve Fund has a balance equal to or greater than the Debt Service Reserve Fund Required Balance.

During 2004, the Company made profit distributions totaling $106.0 million. Due to the dispute between an initial shareholder as described in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Stockholder Litigation, 15% or $15.9 million of the distribution and the corresponding interest earned is being held in an account of the Company over which the holders of the Securities do not have a security interest.

Ranking and Security for the Securities

The Securities are senior debt of the Company and are secured by (a) an assignment of all revenues received by the Company from the Casecnan Project; (b) a collateral assignment of all material contracts; (c) a lien on any accounts and funds on deposit under the Depositary Agreement; (d) a pledge of approximately 100% of the capital stock of the Company, subject to release in certain circumstances relating to accessing political risk insurance for the benefit of the stockholders; and (e) a lien on all other material assets and property interests of the Company. The Securities will rank pari passu with and will share the Collateral on a pro rata basis with certain other senior secured debt, if any (provided that the Debt Service Reserve Fund shall be held as collateral solely for the obligations under the Securities). The proceeds of any political risk insurance covering the capital investment will not be part of the collateral for the Securities. While under the Trust Indenture the Company may incur certain permitted debt senior to the Securities, it has no present intention to do so.

Ratings

At December 31, 2004, CE Casecnan senior secured notes rating by Standard and Poors and Moody’s are B+ with positive outlook and B2 with positive outlook, respectively.

Nature of Recourse on the Securities

The Company’s obligations to make payments of principal, premium, if any, and interest on the Securities are obligations solely of the Company secured solely by the collateral. Neither the stockholders of the Company nor any affiliates (including MidAmerican), incorporators, officers, directors or employees thereof or of the Company, guaranteed the payment of, or have any obligation with respect to payment of, the Securities, except to the extent that stockholders of the Company have pledged their stockholdings in the Company as security for the notes and bonds issued by the Company. As a result, payment of the Company’s obligations depends upon the availability of sufficient revenues from the Company’s business after the payment of operating expenses.

Incurrence of Additional Debt

The Company shall not incur any debt other than “Permitted Debt.” “Permitted Debt” means:

(a) The Securities;

(b) Debt incurred to finance the construction of capital improvements to the Casecnan Project, which are required to ensure compliance with applicable law or anticipated changes therein; provided that no such debt may be incurred unless at the time of incurrence of such debt, an independent engineer confirms the reasonableness of (i) a certification by the Company (containing customary assumptions and qualifications) that the proposed capital improvements are reasonably expected to enable the Casecnan Project to comply with applicable or anticipated legal requirements and (ii) the calculations of the Company that demonstrate, after giving effect to the incurrence of such debt, that the minimum project Debt Service Coverage Ratio (x) for the next four consecutive fiscal quarters, commencing with the quarter in which such debt is incurred, taken as one annual period, and (y) for each subsequent fiscal year through the final maturity date, will not be less than 1.3 to 1;

(c) Debt incurred to finance the construction of capital improvements to the Casecnan Project not required by applicable law, so long as after giving effect to the incurrence of such debt (i) no default or event of default has occurred and is continuing, and (ii)(A) the independent engineer confirms the reasonableness of (I) a certification by the Company (containing customary assumptions and qualifications) that the proposed capital improvements are technically feasible and prudent and (II) the calculations of the Company that demonstrate, after giving effect to the incurrence of such debt, (x) the minimum project Debt Service Coverage Ratio for the next four consecutive fiscal quarters, commencing with the quarter in which such debt is incurred, taken as one annual period, and in every fiscal year thereafter, will not be less than 1.4 to 1 and (y) the average projected Debt Service Coverage Ratio for all succeeding fiscal years until the final maturity date will not be less than 1.7 to 1, or (B) the rating agencies confirm that the incurrence of such debt will not result in a rating downgrade;

(d) Working capital debt in an aggregate amount outstanding at any time not to exceed $5.0 million;

(e) Debt incurred in connection with certain permitted interest rate and currency hedging arrangements;

(f) Subordinated debt from affiliates in an aggregate amount not to exceed $100.0 million which shall be used to finance capital, operating or other costs with respect to the Casecnan Project;

(g) Debt incurred for purposes for which permitted liens may be incurred;

(h) Debt contemplated to be incurred pursuant to the Casecnan Project documents, including obligations in connection with any letter of credit in an aggregate amount outstanding at any time not to exceed $15.0 million;

(i) Purchase money debt and other debts in the ordinary course of business to support the operation and maintenance of the Casecnan Project, in an aggregate amount not to exceed $35.0 million at any time; and

(j) Permitted refinancing debt, if, as certified by an authorized officer of the Company at the time of incurrence, (A)(i) after giving effect to the incurrence of such debt, (x) the minimum projected Debt Service Coverage Ratio for the next four consecutive fiscal quarters in which such debt is incurred, taken as one annual period, and in every fiscal year thereafter, will not be less than 1.5 to 1, and (y) for each subsequent fiscal year through the final maturity date, the average project Debt Service Coverage Ratio will not be less than 2.0 to 1, and (ii) the final maturity and average life of the debt incurred each exceed those of the debt remaining, (B) each principal payment equals that of each corresponding principal payment of the debt being replaced or (C) the rating agencies confirm that the incurrence of such debt will not result in a rating downgrade.

Principal Covenants

Principal covenants under the Trust Indenture require the Company, subject to certain exceptions and qualifications, (a) not to incur (i) any debt except Permitted Debt or (ii) any lien upon any of its assets except permitted liens; (b) not to enter into any transaction of merger or consolidation, change its form of organization, liquidate, wind-up or dissolve itself; (c) not to enter into non-arm’s length transactions or agreements with affiliates; (d) not to engage in any business other than as contemplated by the Trust Indenture; (e) not to amend, terminate or otherwise modify any material Project Document to which it is a party, except as permitted under the Trust Indenture; (f) not to sell, lease or transfer any property or assets material to the Casecnan Project except in the ordinary course of business; (g) to operate and maintain the Casecnan Project in accordance with the Approved Operation and Maintenance Budget; (h) to maintain insurance as required under the Trust Indenture; and (i) to enter into an interest rate agreement for the Floating Rate Notes, within 30 days of Closing, at a LIBOR cap of up to 7.5%.

Insurance

The Company maintains insurance with respect to the Casecnan Project of a type and in such amounts as are generally carried by companies engaged in similar businesses and owning similar projects that are financed in a similar manner. This coverage includes casualty insurance, including flood and earthquake coverage, business interruption insurance, primary and excess liability insurance, automobile insurance and workers compensation insurance. ~~However,~~The ~~the~~ proceeds of such insurance may not be adequate to cover reduced ~~revenues~~revenue, ~~increased~~ increased expenses or other liabilities arising from the occurrence of ~~catastrophic~~ catastrophic events. ~~Moreover,~~There ~~there~~ can be no assurance that such insurance coverage will be available in the future at commercially reasonable rates or that the amounts for which the Company is insured will cover all losses. Nevertheless, the Company will not reduce or cancel the coverage if the ~~Insurance~~ ~~Consultant~~insurance consultant determines it is not reasonable to do so and insurance is available on commercially reasonable terms.

Regulatory and Legislative Matters

The Philippine Congress has passed the Electric Power Industry Reform Act of 2001 (“EPIRA”), which is aimed at restructuring the Philippine power industry, privatizing the ~~Philippine~~NPC ~~National Power Corporation~~ and introducing a competitive electricity market, among other initiatives. The implementation of the EPIRA may ~~have an~~ impact on the Company’s future operations in the Philippines and the Philippine power industry as a whole, the effect of which is not yet ~~determinable~~known oras ~~estimable.~~changes resulting from the EPIRA are ongoing.

In June 2004, Philippine President Gloria Macapagal-Arroyo was re-elected for a six-year term, through June 2010. President Macapagal-Arroyo has announced a plan to pursue policies targeting balanced economic growth, strong market-based industry, and poverty alleviation. In connection with these policies, the Philippine Department of Energy has announced an energy plan focused on attaining full electrification throughout the Philippines, further developing and utilizing renewable energy sources for power and electrification, and enhancing private sector participation in all energy activities. The implementation of this energy plan may have an impact on the Company’s future operations in the Philippines and the Philippine power industry as a whole, the effect of which is not yet determinable or estimable.

On December 6, 2004, the Municipality of Alfonso Castaneda, Province of Nueva Vizcaya (the "Municipality") purportedly passed an ordinance which required the submission of a tax clearance from each of the provincial treasurer and municipal treasurer as a condition to issuing to CE Casecnan the annual renewal of its license to operate and business permit. On January 17, 2005, the Office of the Treasurer of the Municipality provided CE Casecnan a copy of such ordinance and threatened to close the Casecnan Project pending submittal by CE Casecnan of the tax clearance certificate. On January 19, 2005, the Municipality accepted CE Casecnan's payment for the local business taxes, but the Municipality refused to renew CE Casecnan's license to operate and business permit, citing the lack of a tax clearance certificate. CE Casecnan cannot obtain a tax clearance certificate from the Province of Nueva Vizcaya until real property taxes due to the Province are paid. Pursuant to the Supplemental Agreement, CE Casecnan has withheld payment of real property taxes pending receipt of authorization from NIA and the Philippine Department of Finance. Such withheld amounts have been fully accrued as of December 31, 2004 as part of accounts payable and trade receivable- water delivery fee. CE Casecnan continues to seek such authorization but as of February 11, 2005, it has not been received. NIA has filed a protest seeking to nullify the unwarranted alleged real property tax assessments by the Municipality with the Local Board of Assessment Appeals and the case has been elevated to the Central Board of Assessment Appeals on January 12, 2005. CE Casecnan filed an action in the Regional Trial Court on January 21, 2005 against the Municipality and was granted a temporary restraining order barring the Municipality from closing the Casecnan Project. On February 7, 2005, the temporary restraining order was extended pending resolution by the Court which will not occur until after all pleadings are filed on March 11, 2005. CE Casecnan also has filed an appeal with the Department of Justice challenging the validity of the municipal ordinance. CE Casecnan has discussed and intends to continue discussing this matter with appropriate Philippine government officials in an effort to resolve the situation, and believes the risk of the Casecnan Project being closed is remote.

Employees

At December 31, ~~2004~~2008, the Company had 4443 full-time employees ~~consisting of operations, maintenance, logistics, compliance, and engineering personnel~~. At the powerhouse control room, personnel monitor, direct and control the operations and maintenance of the whole Casecnan Project. The control room is staffed 24 hours per day and is the contact point for the Casecnan Project’s customers and others. At the diversion structures, personnel are responsible to ensure that the trash racks at the tunnel intakes are kept clean and maintained and that excessive sediment build-up behind the structure is prevented.

Item 1A.

Risk Factors

The Company is subject to certain risks in its business operations which are described below. Careful consideration of these risks, together with all of the other information included in this annual report and the other public information filed by the Company, should be made before making an investment decision. The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties not presently known or that are currently deemed immaterial may also impair the Company’s business operations.

The Company is dependent upon a single customer for all of its operating revenue.

NIA’s payment obligations under the Project Agreement are the Company’s sole source of operating revenue. Because of the Company’s dependence on NIA, any material failure of NIA to fulfill its obligations under the Project Agreement and any material failure of the ROP to fulfill its obligations under the Performance Undertaking would materially adversely affect the Company’s financial results.

The Company’s assets are subject to significant operating uncertainties.

The Casecnan Project is a complex infrastructure project and power plant. Operation of the Casecnan Project may be adversely affected by a variety of operating uncertainties. For example, the breakdown or failure of equipment or processes or the performance of equipment at levels below those originally demonstrated, whether due to ordinary wear and tear, unexpected degradation or other events could increase the cost of operating the Casecnan Project or require substantial capital expenditures, thereby adversely affecting the Company’s financial results.

Variability in rainfall and water flows have a significant impact on the Company’s operating revenue.

A significant portion of the Casecnan Project’s revenue is required to be paid by NIA without regard to actual water flows. However, a significant component of revenue, approximately 29% in 2008, consists of variable energy delivery fees that are dependent upon water flow volumes. No assurance can be given that future rainfall and water flows will approach historical levels.

The Company’s assets are subject to potentially catastrophic geologic, natural or weather-related risks.

Earthquakes, floods, volcanic eruptions, fires or other similar catastrophic events could cause personal injury, loss of life, damage or destruction to the Casecnan Project, or suspension of operations. Although the Company maintains insurance coverage (including business interruption insurance) to protect against certain of these risks, the proceeds of such insurance may not be adequate to cover reduced revenue, increased expenses or other liabilities arising from the occurrence of any of the events described above. Moreover, there can be no assurance that such insurance coverage will be available in the future at commercially reasonable rates or that the amounts for which the Company is insured will cover all losses.

The Company is subject to risk of loss from civil strife, acts of war and terrorist activities.

The Casecnan Project is located in a remote region of the Philippines and is therefore subject to risks of war, civil strife, guerilla activity and terrorism. Armed groups opposing the Philippine government have attempted to exert control over the region in the past, and there can be no assurance that any such attempts in the future will not disrupt the Company’s operations or impair the Company’s assets.

The Company is subject to risk of loss from political and other risks arising from foreign sovereignty over areas in which the Company conducts operations.

The Company is subject to significant political and other uncertainties, including expropriation, nationalization, renegotiation or nullification of existing contracts, imposition of new taxes or changes in tax rates, currency availability and exchange restrictions, changing political conditions and international monetary fluctuations. The government of the Philippines exercises a significant influence over the Philippine economy. There can be no assurance that future developments in the Philippines will not impair the Casecnan Project’s operations or the Company’s revenue.

Changes in laws, policies, regulations, environmental standards and other mandates imposed by Philippine authorities have a significant impact on the Company’s operations.

The Company is subject to statutory and regulatory standards, including those related to energy and environmental laws. Business licenses and permits must be renewed annually to continue operating the Casecnan Project. Delay in receipt or failure to obtain these permits or to comply with applicable standards could restrict operation of the Casecnan Project or result in additional costs or taxes. The adoption of new laws, policies and regulations, or changes in the interpretation or application of existing laws, policies and regulations that modify the present regulatory environment could have a material adverse affect on the Company’s ability to operate the Casecnan Project.

Item 1B.

Unresolved Staff Comments

Not applicable.

Item 2.

Properties

CE Casecnan’s principal property is ~~the~~a ~~approximately~~ 150 MW hydroelectric power facility located ~~that~~on ~~was~~the ~~completed~~island of Luzon in ~~December~~the ~~2001~~ROP.

Item 3.

Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders.

Not ~~Applicable~~applicable.

116

PART II

Item 5. Market for Registrant'’s Common Equity, ~~and~~ Related Stockholder Matters. and Issuer Purchases of Equity Securities

Not ~~Applicable~~applicable.

Item 6. Selected Financial ~~Data. The following~~ table sets forth selected historical financial data, which should be read in conjunction with the Company’s financial statements and the related notes to those statements included in this Annual Report and with "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this Annual Report. The selected data as of and for the five years ended December 31, 2004, 2003, 2002, 2001 and 2000 have been derived from the Company’s audited historical financial statements. Selected Financial Data ~~(In thousands, except per share amounts)~~

	Year ended December 31,
	2004(2)		2003		2002		2001(1)		2000
Total revenue	$	106,847	$	129,921	$	138,264	$	8,174	$	-
Operating income		73,431		91,539		93,415		4,252		(451	)
Net income to common stockholders		45,302		59,765		44,956		2,867		4,857
Net income per common share		59.05		77.90		58.60		3.74		6.33
Dividends declared per common share		138.17		-		-		-		-
Total assets		477,479		565,313		541,507		515,192		482,373
Notes payable		51,263		51,263		51,263		40,763		-
Long-term debt, including current portion		197,098		246,458		287,925		323,125		352,750
Stockholders’ equity		150,988		211,686		151,921		106,965		104,098

The following table sets forth the Company’s selected historical financial data, which should be read in conjunction with the information included in Item 7 of this Form 10-K and with the Company’s historical Financial Statements and notes thereto included in Item 8 of this Form 10-K. The selected historical financial data has been derived from the Company’s audited historical Financial Statements and notes thereto (amounts in thousands).

(1) Commercial operations commenced on December 11, 2001.

	Years ended December 31,
	2008		2007		2006		2005		2004
Statement of Operations Data:
Revenue (1)	$	137,638	$	124,733	$	148,529	$	107,000	$	106,847
Operating income		104,202		93,319		117,433		75,674		73,431
Net income (2)		73,835		78,539		100,804		52,009		45,302
Electricity produced (Gigawatt-hours) (1)		517.3		433.6		538.5		406.5		404.5
Water delivered (million cubic meters) (1)		909.7		750.0		996.0		723.0		719.2

	As of December 31,
	2008		2007		2006		2005		2004
Balance Sheet Data:
Total assets	$	402,724	$	410,717	$	444,970	$	470,017	$	477,996
Notes payable		7,115		39,200		51,263		51,263		51,263
Long-term debt, including current portion		30,870		68,600		106,330		142,345		197,098
Total shareholders’ equity		340,556		271,840		193,301		191,997		150,988

(21) Revenue ~~decreased~~increased in ~~2003~~2008 and ~~2004~~2006 due to ~~the~~substantially ~~NIA~~higher ~~Arbitration~~water ~~Settlement~~flows inand ~~October~~accompanying ~~2003~~electricity generation.

~~Item~~(2) ~~7. Management's Discussion~~Net ~~and~~income ~~Analysis~~decreased ofin ~~Financial~~2008 ~~Condition~~due ~~and~~to ~~Results~~the expiration of ~~Operations~~ the income tax holiday on December 11, 2007.

~~The following~~Item is7. ~~management'~~Management’s ~~discussion~~Discussion and ~~analysis~~Analysis of ~~certain~~Financial ~~significant~~Condition ~~factors which have affected the financial condition~~ and ~~results~~Results of operations of the Company during the periods included in the accompanying statements of operations. This discussion should be read in conjunction with "Selected Financial Data" in Item 6 and the Company's historical financial statements and the notes to those statements included elsewhere in this report. Operations

~~Factors~~The ~~Affecting~~following is management’s discussion and analysis of certain significant factors which have affected the ~~Results~~financial condition and results of ~~Operations~~operations of the Company during the periods included herein. Explanations include management’s best estimate of the impact of weather and other factors. This discussion should be read in conjunction with Item 6 of this Form 10-K and with the Company’s historical Financial Statements and notes thereto included in Item 8 of this Form 10-K. The Company’s actual results in the future could differ significantly from the historical results.

~~Seasonality~~Results of Operations

The Casecnan Project is ~~dependant~~dependent upon sufficient rainfall to generate electricity and deliver water. The seasonality of rainfall patterns and the variability of rainfall from year to year, all of which are outside the control of the Company, have a material impact on the amounts of electricity generated and water delivered by the Casecnan Project. Rainfall has historically been highest from June through December and lowest from January through May. The contractual terms for variable water ~~delivery fees~~ and ~~variable~~ energy delivery fees ~~(described below)~~ can produce significant variability in revenue between reporting periods.

12Prior to December 25, 2008, the water delivery fee was a fixed monthly payment based upon an assumed annual water delivery of 801.9 million cubic meters, prorated to 66.8 million cubic meters per month, multiplied by the water delivery fee rate of $0.07381 per cubic meter. For each contract year starting from December 25, 2003 and ending on December 25, 2008, a water delivery fee credit, or deferred revenue, was computed equal to 801.9 million cubic meters minus the greater of actual water deliveries or 700.0 million cubic meters - the annual minimum water delivery threshold. Accordingly, in recognizing revenue, the water delivery fees will be recorded each month pro rated to 58.3 million cubic meters until the minimum threshold has been reached for the current contract year. The water delivery fee credit at the end of each contract year, if any, was available to be earned in the succeeding contract year through December 25, 2008. All water delivery credits available under the contract were earned by the Company as of December 25, 2008.

Under the Supplemental Agreement, the water delivery fee is payable in a fixed monthly payment based upon an average annual water delivery of 801.9 million cubic meters, pro-rated to approximately 66.8 million cubic meters per month, multiplied by the applicable per cubic meter rate through December 25, 2008. For each contract year starting from December 25, 2003 and ending on December 25, 2008, a water delivery fee credit (deferred revenue) is computed equal to 801.9 million cubic meters minus the greater of actual water deliveries or 700.0 million cubic meters - the minimum threshold. The water delivery fee credit at the end of the contract year is available to be earned in the succeeding contract years ending December 25, 2008. The cumulative water delivery fee credit at December 25, 2008, if any, shall be amortized from December 25, 2008 through December 25, 2013. Accordingly, in recognizing revenue the water delivery fees are recorded each month pro-rated to approximately 58.3 million cubic meters per month until the minimum threshold has been reached for the contract year. Subsequent water delivery fees within the contract year are based on actual water delivered. 7

~~The~~For ~~Company~~contract ~~earns~~years ~~variable~~from ~~energy fees based upon actual energy delivered in each month in excess of 19.0 GWh~~December 25, ~~payable~~2008 atthrough athe ~~rate~~end of ~~$0.1509~~the ~~per kWh. Starting in~~Cooperation ~~2009~~Period, ~~the~~December ~~per kWh rate for energy deliveries in excess of 19.0 GWh per month is reduced to $0.1132 (escalating at 1% per annum thereafter)~~11, ~~provided that any deliveries of energy in excess of 490.0 GWh~~2021, ~~but~~guaranteed ~~less~~water ~~than~~delivery ~~550.0~~fees ~~GWh per year~~ are ~~paid at a rate of 1.3 pesos per kWh and deliveries in excess of 550.0 GWh~~ ~~per year are at no cost to NIA~~$51. ~~Within each contract year~~7 million, nocalculated ~~variable~~as ~~energy fees are payable until energy in excess of~~ the ~~cumulative~~annual ~~19.0~~minimum ~~GWh~~water ~~per~~delivery ~~month for~~threshold ~~the~~multiplied ~~contract~~by ~~year to date has been delivered~~$0.07381.

~~Results~~Variable ofwater ~~Operations~~delivery fees are earned for all water deliveries within the ~~Years~~contract year, ~~Ended~~if ~~December 31~~any, ~~2004~~exceeding ~~and~~the annual minimum water delivery threshold multiplied ~~2003~~by $0.07381, until a cumulative 1.324 billion cubic meters of water subject to variable water delivery fees have been delivered.

~~The~~Guaranteed ~~following~~energy ~~table~~delivery ~~provides~~fees ~~certain~~are ~~operating~~$36.4 ~~data~~million ofper ~~the~~year, ~~Casecnan~~calculated ~~Project~~as ~~for~~ the assumed ~~years~~annual ~~ended~~delivery ~~December~~of 228.0 31Gigawatt-hours (“GWh”), ~~2004~~prorated to 19.0 GWh per month and ~~2003:~~multiplied by $0.1596 per kilowatt-hour (“kWh”).

	2004	2003
Electricity produced (GWh)	404.5	382.2
Water delivered (million cubic meters)	719.2	620.6

The Company earns variable energy delivery fees in each contract year based upon actual energy delivered in excess of 228.0 GWh, multiplied by the applicable rate, until cumulative energy of 490.0 GWh per year are delivered. Prior to December 25, 2008, the rate was $0.1509 per kWh. Thereafter, the variable energy delivery rate is $0.1132 per kWh for the contract year ending December 25, 2009, escalating at 1% per annum. Energy deliveries between 490.0 GWh and 550.0 GWh within a contract year earn variable energy delivery fees at a rate of 1.3 Philippine pesos (“pesos”) per kWh prior to December 25, 2008 and 1.0 pesos per kWh thereafter, escalating at 1% per annum. Energy deliveries above 550.0 GWh per year are at no cost to NIA. Within each contract year, no variable energy delivery fees are payable until energy in excess of the cumulative 19.0 GWh per month for the contract year to date has been delivered.

~~For~~The ~~accounting~~following ~~purposes,~~table ~~the~~provides ~~Project~~certain ~~Agreement with NIA contains both an~~ operating ~~lease~~ ~~and~~data ~~a service contract, which the Company accounted for pursuant to provisions~~ of ~~Statement of Financial Accounting Standards, No. 13, "Accounting for Leases." However, pursuant to~~ the ~~provisions~~Casecnan ~~of the~~ Project ~~Agreement,~~for the ~~Company~~years ~~earned~~ended ~~water and energy fees as follows (in millions)~~December 31:

	2004			2003
	2008				2007		2006
Water delivery fees	$	49.6		$	71.5
Electricity produced (GWh)		517.3				433.6		538.5
Guaranteed energy fees		36.4			36.4
Water delivered (million cubic meters)		909.7				750.0		996.0
Variable energy fees		26.9			22.0
Deferred water delivery fees		(6.1	)		-
Total lease rentals and service contracts revenue	$	106.8		$	129.9

~~Revenue~~The ~~decreased~~Company’s bywater ~~$23.1~~and ~~million~~energy todelivery ~~$106.8~~fees ~~million~~ for the ~~year~~years ended ~~December 31,~~ ~~2004 from $129.9 million for the year ended~~ December 31, ~~2003.~~are ~~The~~as ~~decrease~~follows (in water delivery fees was primarily due to the impact of the elimination of the tax compensation portion of the water delivery fee pursuant to the Supplemental Agreement, partially offset by a 7.5% increase in the water delivery rate based on a contractual annual escalation factor. The increase in variable energy fees was due primarily to increased generation resulting from higher water flows in 2004. The deferred water delivery fees represent the difference between the actual water delivery fees earned and water delivery fees invoiced pursuant to the Supplemental Agreement.millions):

Operating expenses decreased by $5.0 million to $33.4 million for the year ended December 31, 2004 from $38.4 million for the year ended December 31, 2003. Depreciation expense decreased by $1.2 million due primarily to the lower depreciable base resulting from settlement of the construction contract arbitration in April 2004. Reductions in legal costs and doubtful accounts expense of $1.1 million and $2.0 million, respectively, were due to the NIA Arbitration Settlement in October 2003. Finally, the Company had lower property insurance costs of $0.9 million.

	2008		2007			2006
Water delivery fees	$	59.2	$	59.2		$	57.3
Guaranteed energy delivery fees		36.4		36.4			36.4
Variable energy delivery fees		40.2		30.9			41.0
Deferred water delivery fees		1.8		(1.8	)		13.8
Total lease rentals and service contracts revenue	$	137.6	$	124.7		$	148.5

13Revenue for 2008 increased $12.9 million to $137.6 million compared with 2007. The increase in variable energy delivery fees and recognition of deferred water delivery fees in 2008 were due to exceptionally high rainfall that resulted in higher water deliveries and related energy production when compared to the water flows in 2007. Revenue for 2007 decreased $23.8 million to $124.7 million compared with 2006. The increase in water delivery fees in 2007 was primarily due to a contractual escalation factor. The decrease in variable energy delivery fees in 2007 was due to lower rainfall and related energy production compared with 2006. Deferred water delivery fees represent the difference between the actual water delivery fees earned and water delivery fees invoiced pursuant to the Project Agreement. Water delivery fees were deferred in 2007 due to lower water flows that did not reach the contractual threshold. Accumulated deferred water delivery fees in prior years were fully earned in 2006 due to high water deliveries that exceeded the contractual threshold.

~~Interest~~Plant ~~expense~~operations ~~decreased~~and toother ~~$29.5~~operating ~~million~~expenses for ~~the~~2008 ~~year~~increased ~~ended December~~$1.7 ~~31, 2004~~million ~~from~~compared ~~$39.8~~with ~~million~~2007, ~~for~~due ~~the~~primarily ~~year~~to ~~ended~~the ~~December 31,~~favorable ~~2003~~resolution ~~due~~of ~~primarily~~a tovendor ~~lower~~disagreement ~~outstanding~~in ~~debt~~2007 ~~resulting~~and ~~from~~higher ~~the~~general ~~scheduled~~and ~~repayment~~administrative ofcosts ~~debt~~in ~~and~~2008. Plant ~~interest~~operations ~~expense~~and ~~incurred~~other inoperating ~~2003~~expenses ~~associated~~for ~~with~~2007 ~~BIR~~were ~~settlements~~relatively flat compared with 2006.

Tax expense decreased to $0.1 million for the year ended December 31, 2004 from $25.7 million for the year ended December 31, 2003. In 2003, the Company paid income taxes of $24.4 million in connection with the NIA Arbitration Settlement and made tax payments associated with BIR settlements. 8

~~Results~~Interest ofexpense ~~Operations~~decreased ~~for~~in ~~the~~2008 ~~Years~~$8.2 million ~~Ended~~to ~~December~~$8.6 31million compared with 2007 and decreased in 2007 $4.6 million to $16.8 million compared with 2006, ~~2003~~due primarily to lower outstanding debt balances resulting from the scheduled repayment of long-term debt and the repayment of notes ~~2002~~payable.

Income tax expense was $28.2 million, $4.6 million and $2.3 million in 2008, 2007 and 2006, respectively. The increase in income tax expense in 2008 ~~following~~and ~~table~~2007 ~~provides~~was ~~certain~~due ~~operating~~to ~~data~~the expiration of the ~~Casecnan~~income ~~Project~~tax ~~for~~holiday on December 11, 2007. Thereafter, the Company’s taxable income became subject ~~years~~to ~~ended~~income tax at the Philippine statutory rate. Prior to December 3111, ~~2003~~2007, income tax expense was limited to interest income and ~~2002:~~other income not subject to the income tax holiday.

	2003	2002
Electricity produced (GWh)	382.2	360.1
Water delivered (million cubic meters)	620.6	563.2

Pursuant to the provisions of the Project Agreement, the Company earned water and energy fees as follows (in millions):

	2003		2002
Water delivery fees	$	71.5	$	82.6
Guaranteed energy fees		36.4		36.4
Variable energy fees		22.0		19.3
Total lease rentals and service contracts revenue	$	129.9	$	138.3

Revenue decreased by $8.4 million to $129.9 million for the year ended December 31, 2003 from $138.3 million for the year ended December 31, 2002. The decrease in water delivery fees was primarily due to the elimination of the tax compensation portion of the water delivery fee pursuant to the Supplemental Agreement, partially offset by a 7.5% increase in the Water Delivery Fee rate as a result of the contractual annual escalation factor. The increase in electricity fees was due primarily to increased generation resulting from higher water flows in 2003.

Operating expenses decreased $6.4 million to $38.4 million for the year ended December 31, 2003 from $44.8 million for the year ended December 31, 2002. Doubtful accounts expense decreased by $9.5 million in connection with the NIA Arbitration Settlement. Plant operations expense increased by $3.1 million due to higher local business taxes, insurance and legal costs.

Settlement income of $31.9 million resulted from the NIA Arbitration Settlement.

Interest expense decreased to $39.8 million for the year ended December 31, 2003 from $42.5 million for the year ended December 31, 2002. The primary reason for the decrease was the scheduled repayment of debt.

Interest income increased to $1.9 million for the year ended December 31, 2003 from $0.2 million for the year ended December 31, 2002. The primary reason for the increase was interest earned on the ROP Note issued to the Company in connection with the NIA Arbitration Settlement.

Tax expense increased to $25.7 million for the year ended December 31, 2003 from $6.1 million for the year ended December 31, 2002. The increase in 2003 is a result of $24.4 million in taxes paid in connection with the NIA Arbitration Settlement and amounts paid to the BIR in settlement of audit assessments for the years 1996 to 1998 and 2000 to 2001. Tax expense in 2002 consisted of a payment to the BIR for the settlement of taxes related to interest income for the years 2001, 2000 and 1999.

Liquidity and Capital Resources

CE Casecnan constructed and operates the Casecnan Project, which was developed as an unsolicited proposal under the Philippine build-own-operate-transfer law, pursuant to the terms of the Project Agreement. CE Casecnan developed, financed and constructed the Casecnan Project over the construction period, and owns and operates the Casecnan Project for the term of the Cooperation Period. During the Cooperation Period, NIA is obligated to accept all deliveries of water and energy, and so long as the Casecnan Project is physically capable of operating and delivering in accordance with agreed levels set forth in the Project Agreement, NIA is obligated to pay CE Casecnan a fixed fee for the delivery of a threshold volume of water and a fixed fee for the delivery of a threshold amount of electricity. In addition, NIA is obligated to pay a fee for all electricity delivered in excess of the threshold amount up to a specified amount and will be obligated to pay a fee for all water delivered in excess of the threshold amount up to a specified amount beginning after December 25, 2008.

The ROP has provided a Performance Undertaking under which NIA’s obligations under the Project Agreement are guaranteed by the full faith and credit of the ROP. The Project Agreement and the Performance Undertaking provide for the resolution of disputes by binding arbitration in Singapore under international arbitration rules.

NIA’s obligations under the Project Agreement are substantially denominated in U.S. ~~Dollars~~dollars and are the Company’s sole source of operating ~~revenues~~revenue. Because of the Company’s dependence on NIA, any material failure of NIA to fulfill its obligations under the Project Agreement and any material failure of the ROP to fulfill its obligations under the Performance Undertaking would significantly impair the ability of the Company to meet its existing and future obligations, including obligations pertaining to its outstanding debt. No ~~stockholders~~shareholders, partners or affiliates of the Company, including ~~MidAmerican~~MEHC, and no directors, officers or employees of the Company ~~will guarantee~~ have guaranteed or will be in any way liable for payment of the Company’s obligations. As a result, payment of the Company’s obligations depends upon the availability of sufficient ~~revenues~~revenue from the Company’s business after the payment of operating expenses.

The Company'’s cash and cash equivalents were $1649.7 4 million and $431.5 1 million at December 31, ~~2004~~2008 and ~~2003~~2007, respectively.

The Company generated cash flows from operations of $7688.89 million and $6591.2 0 million for the years ended December 31, ~~2004~~2008 and ~~2003~~2007, respectively. The ~~increase from~~lower ~~2003~~cash ~~was~~generated ~~primarily~~in ~~due~~2008 towas ~~changes~~due inprimarily ~~working~~to ~~capital~~higher income ~~activities~~taxes paid of $2624.1 3 million, ~~net~~partially offset by lower interest payments of ~~the~~$10.7 million ~~decrease~~and inhigher ~~net~~variable ~~income~~energy ofdelivery fees of $149.5 3 million.

The Company ~~received~~used $~~111~~1.9 0 million and ~~used~~received $1018.3 2 million for investing ~~activities~~ activities for the years ended December 31, ~~2004~~2008 and ~~2003~~2007, respectively. At ~~December 31,~~Restricted ~~2003,~~cash ~~the~~for ~~Company~~debt ~~had~~service anobligations ~~outstanding~~and ~~$97.0~~dividends ~~million~~payable ~~ROP~~decreased ~~Note~~by ~~receivable obtained in connection with the NIA Arbitration Settlement which was put to the ROP on January 14, 2004. The collection of the~~ $9730.~~0 million ROP note is included in the cash flow from investing activities. Capital expenditures were $4.~~1 million ~~and $4.3 million for the years ended December 31, 2004 and 2003, respectively. Construction of the Casecnan Project was completed~~ in ~~December~~ ~~2001 under a fixed-price date certain~~2007, ~~turnkey~~primarily ~~engineering,~~as ~~procurement and construction contract by~~ a ~~consortium~~result ~~consisting~~ of ~~Cooperativa Muratori Cementisti CMC di Ravenna and Impresa Pizzarotti & C. Spa. (collectively,~~ the ~~"Contractor"),~~payment ~~working together with Siemens A.G., Sulzer Hydro Ltd., Black~~of ~~& Veatch and Colenco Power Engineering Ltd~~$25. ~~On February~~5 ~~12,~~million ~~2001, the Contractor filed a Request for Arbitration with the International Chamber~~ of ~~Commerce~~ ~~("ICC")~~dividends ~~seeking~~and ~~schedule~~accrued ~~relief~~interest ~~from~~previously ~~various~~held ~~alleged~~in ~~force majeure events~~escrow. ~~On April 7, 2004, the Company entered into an agreement with the~~ ~~Contractor~~Net ~~settling~~purchases ~~the~~of ~~ICC~~available-for-sale ~~arbitration.~~securities ~~Pursuant~~were ~~to the settlement agreement, the Contractor paid~~ $1811.9 3 million ~~to CE Casecnan on April 14, 2004, and the~~in ~~Contractor and CE Casecnan executed mutual releases and agreed to dismiss the arbitration~~2007.

The Company used $~~176~~69.4 6 million and $51110.1 0 million for financing activities for the years ended December 31, ~~2004~~2008 and ~~2003~~2007, respectively. ~~During~~The ~~2004, the~~ Company repaid ~~declared dividends totaling~~ $~~106~~37.0 7 million ~~(of~~on ~~which $15.9 million was set aside in a separate bank account in~~ the ~~name~~balance of ~~the~~its ~~Company~~outstanding ~~and~~project ~~shown as~~financing ~~restricted~~debt ~~cash~~in ~~and~~both ~~investments~~2008 and ~~dividends~~2007. ~~payable~~In in2008 ~~the~~and ~~balance~~2007, ~~sheet).~~CE Casecnan ~~The~~repaid ~~Company~~$32.1 million ~~also~~and ~~made a~~ $4912.4 1 million, ~~principal~~respectively, ~~payment~~ on the balance of ~~the Series~~notes Apayable ~~and~~to BCE ~~bonds~~Casecnan ~~and~~Ltd. ~~increased~~(the ~~restricted~~“Notes”). ~~cash~~On ~~related~~February 5, to2009, ~~debt~~CE ~~service obligations~~Casecnan byrepaid the remaining $377.4 1 million balance of the Notes. ~~During~~In ~~2003~~2007, the Company repaid ~~long-term debt of~~ $4138.5 million ~~and~~of ~~increased~~advances ~~restricted~~received ~~cash~~from ~~related~~its toaffiliates ~~debt service obligations by~~and released $1121.0 7 million of dividends held in escrow.

15Auction Rate Securities

~~NIA~~With the ~~Arbitration~~liquidity ~~Settlement~~issues experienced in global credit and capital markets, the $21.4 million par value of auction rate securities held by the Company at December 31, 2008, have experienced multiple failed auctions as the amount of securities submitted for sale has exceeded the amount of purchase orders. The securities are rated Baa1 by Moody’s Investors Service and AA by Standard & Poor’s at December 31, 2008. Although there is no current liquid market for the auction rate securities, the Company believes the underlying creditworthiness of the repayment sources for these securities’ principal and interest has not materially deteriorated. Further, the Company has the intent and ability to hold the auction rate securities for a period of time sufficient to allow for any anticipated recovery in the credit and capital markets that would facilitate the periodic auction and sale of these securities. At December 31, 2008, the Company’s pre-tax temporary impairment of the auction rate securities totaled $7.3 million. If the underlying assets and the guarantors of the auction rate securities experience credit deterioration, the Company may not ultimately realize the par value of the investments held at December 31, 2008.

On October 15, 2003, the Company closed a transaction settling an arbitral proceeding which arose from a statement of claim made on August 19, 2002, by CE Casecnan against NIA. As a result of the NIA Arbitration Settlement, CE Casecnan recorded $31.9 million of settlement income and $24.4 million of associated income taxes in 2003. Under the terms of the settlement, CE Casecnan entered into the Supplemental Agreement which provided for the dismissal with prejudice of all claims by CE Casecnan and counterclaims by NIA in the arbitral proceeding. In connection with the NIA Arbitration Settlement, NIA delivered to CE Casecnan the ROP Note, which contained a put provision granting CE Casecnan the right to put the ROP Note to the ROP for a price of par plus accrued interest for a 30-day period commencing on January 14, 2004. The ROP Note was recorded as a note receivable in the accompanying balance sheet as of December 31, 2003. On January 14, 2004, CE Casecnan exercised its right to put the ROP Note to the ROP and, in accordance with the terms of the put, CE Casecnan received $99.2 million (representing $97.0 million par value plus accrued interest) from the ROP on January 21, 2004. In addition to providing for the dismissal with prejudice of all claims by CE Casecnan and counterclaims by NIA in the arbitral proceeding, the Supplemental Agreement supplements and amends the Project Agreement in certain respects as summarized below:

~~Modifications~~Supplemental toReal ~~Water~~Property ~~Delivery Fee~~Tax

~~Under the~~On ~~Project~~July 1, ~~Agreement~~2008, ~~the~~CE Casecnan ~~Water~~received ~~Delivery~~a ~~Rate~~supplemental ~~increased~~real byproperty tax assessment totaling $028.~~00043~~6 million ~~per~~from ~~cubic~~the ~~meter~~province of Nueva Ecija and the municipality of Pantabangan for ~~each~~the ~~$1.0~~years ~~million~~2002 ofthrough ~~certain~~the ~~taxes~~second ~~paid~~quarter byof 2008. CE Casecnan. ~~The~~forwarded ~~Supplemental Agreement~~the ~~amends~~assessment ~~the~~to ~~per~~NIA ~~cubic~~and ~~meter~~the ~~Water~~Philippine ~~Delivery~~Department of ~~Fee~~Finance ~~calculation~~(“DOF”), ~~by eliminating~~who ~~the~~must ~~increase~~authorize any payment for real property taxes ~~paid.~~and are ~~Instead,~~obligated to reimburse the ~~Water~~Company ~~Delivery~~pursuant ~~Rate remains~~to atthe $0Project Agreement.~~029~~ ~~per~~On December 19, ~~cubic meter~~2008, ~~escalated~~pursuant atto ~~7.5%~~written ~~annually~~authorization from NIA and the DOF, ~~January~~CE Casecnan tendered $6.8 1,million ~~1994~~as ~~through~~partial payment of the ~~first~~supplemental assessment ~~five~~and ~~years~~recorded a receivable of an equal amount for the ~~Cooperation~~expected ~~Period,~~full ~~extending~~reimbursement ~~through~~to ~~December~~CE Casecnan from NIA. On January 2516, ~~2006.~~2009, ~~The~~CE ~~Company~~Casecnan filed ~~will~~a beprotest ~~reimbursed~~on the supplemental assessment. No liability for supplemental ~~certain~~real ~~taxes~~property ittax ~~pays~~has ~~during~~been recognized as the ~~remainder~~Company ofbelieves that the ~~Cooperation~~claim is ~~Period~~without merit.

~~Under the~~National ~~Project~~Wealth Agreement, the Water Delivery Fee payable monthly was a fixed monthly payment based on an average water delivery of 801.9 million cubic meters per year, pro-rated to approximately 66.8 million cubic meters per month, multiplied by the per cubic meter rate as described above. Under the Supplemental Agreement the Water Delivery Fee is equal to the Guaranteed Water Delivery Fee plus the Variable Delivered Water Delivery Fee minus the Water Delivery Fee Credit. Tax

~~Guaranteed~~On ~~Water~~July 17, ~~Delivery~~2008, ~~Fee~~CE Casecnan received an assessment totaling $4.1 million ~~For~~from the ~~sixty-month~~ ~~period~~municipality ~~from~~of ~~December 25,~~Alfonso ~~2003~~Castaneda ~~through~~for ~~December 25,~~a ~~2008,~~share of national wealth tax it claims is owed by the ~~Guaranteed~~Company ~~Water~~for ~~Delivery~~the ~~Fee~~years ~~shall~~from ~~equal~~2002 through 2007. CE Casecnan forwarded the ~~Water~~assessment ~~Delivery~~to ~~Rate~~NIA and the DOF, aswho must ~~described~~authorize ~~above,~~any ~~multiplied~~payment byfor ~~approximately~~national ~~66.8~~wealth ~~million~~taxes ~~cubic~~and ~~meters (corresponding~~are obligated to reimburse the ~~801.9~~Company ~~million~~pursuant ~~cubic~~to ~~meters~~the ~~per~~Project ~~year)~~Agreement. ~~For~~On ~~each~~September 24, ~~month~~2008, CE ~~beginning~~Casecnan ~~after~~received ~~December 25,~~a ~~2008~~temporary ~~through~~restraining order to enjoin the ~~remainder~~municipality of Alfonso Castaneda from pursuing its collection efforts until the ~~Cooperation~~matter can be ~~Period,~~decided by the ~~Guaranteed~~court. ~~Water~~A ~~Delivery~~pre-trial ~~Fee~~hearing ~~shall~~was ~~equal~~held on December 11, 2008. The proceedings were suspended indefinitely to allow the ~~Water~~municipality ~~Delivery~~of ~~Rate~~Alfonso ~~multiplied~~Castaneda byto ~~approximately~~provide ~~58.3~~other ~~million~~local ~~cubic~~government ~~meters~~units ~~(corresponding~~the opportunity to ~~700~~intervene in the case.0 No liability for national wealth tax has been recognized as the ~~million~~Company ~~cubic~~believes ~~meters~~that ~~per~~the ~~year)~~claim is without merit.

~~Variable~~Franchise Delivered Water Delivery Fee. Variable Delivered Water Delivery Fees will be earned for months beginning after December 25, 2008. For each month beginning after December 25, 2008 through the end of the Cooperation Period, the Variable Delivered Water Delivery Fee shall be payable only from the date when the cumulative Total Available Water (total delivered water plus the water volume not delivered to NIA as a result of NIA’s failure to accept energy deliveries at a capacity up to 150 MW) for each contract year exceeds 700.0 million cubic meters. Variable Delivered Water Delivery Fees will be earned up to an aggregate maximum of 1,324.7 million cubic meters for the period from December 25, 2008 through the end of the Cooperation Period. No additional variable water delivery fees will be earned over the 1,324.7 million cubic meter threshold.Tax

~~Water~~In 2006, ~~Delivery~~CE Casecnan ~~Fee~~received ~~Credit.~~franchise ~~The Water~~tax ~~Delivery~~assessments ~~Fee~~for ~~Credit~~the ~~shall~~years be2001 ~~applicable~~to ~~only~~2006 totaling ~~for~~$2.2 million ~~each~~from of the ~~sixty-months from~~Province ~~December 25,~~of ~~2008~~Nueva ~~through~~Vizcaya. ~~December~~CE ~~25,~~Casecnan believes ~~2013~~that ~~and~~franchise ~~shall~~tax ~~equal~~is ~~the Water~~imposed ~~Delivery~~on ~~Rate~~companies aswhich ofhave ~~December 25,~~a ~~2008~~secondary ~~multiplied~~or special byfranchise from the ~~sum~~government. ofCE Casecnan ~~each~~is an independent power ~~Annual~~producer ~~Water~~and ~~Credit~~does ~~divided~~not byhave ~~sixty~~a government franchise. The ~~Annual~~EPIRA ~~Water~~provides ~~Credit~~that independent ~~for~~power ~~each~~generation ~~contract year~~is ~~starting~~not ~~from~~a ~~December 25,~~public ~~2003~~utility operation and ~~ending~~does ~~on December 25, 2008~~not ~~shall~~require ~~equal~~a ~~801~~franchise.9 ~~million~~Therefore, ~~cubic~~the ~~meters~~Company ~~minus~~has ~~the~~not ~~Total~~recognized ~~Available~~a ~~Water~~liability relating ~~for~~to ~~each contract~~these ~~year~~assessments. ~~The~~In ~~Total~~2006, ~~Available~~CE Casecnan ~~Water~~filed inappeals ~~any~~of ~~such~~the assessments ~~year~~which ~~will~~are ~~equal~~currently ~~actual deliveries~~pending ~~with~~before athe ~~minimum~~Supreme ~~threshold~~Court Office of ~~700.0~~the Court ~~million~~Administrator ~~cubic~~for ~~meters~~reassignment to another court to hear and decide these cases.

16Contractual Obligations

~~Deferred Revenue.~~ The Company ~~records~~has ~~deferred~~contractual ~~revenue~~obligations onthat ~~the~~may ~~difference~~affect ~~between~~its ~~the~~financial ~~actual water~~condition. ~~delivery~~Contractual ~~fees~~obligations ~~earned~~to ~~and~~make ~~water~~future ~~delivery~~payments ~~fees~~arise ~~invoiced~~from ~~pursuant~~long-term todebt ~~the~~and ~~Supplemental~~notes ~~Agreement~~payable. AsMaterial obligations as of December 31, ~~2004,~~2008 ~~cumulative~~are ~~deferred~~as ~~water~~follows ~~delivery revenue was $6.1 million. The deferred water delivery revenue at the end of the contract year is available to be earned~~ (in ~~the succeeding contract years ending on December 25, 2008.~~thousands):

Modifications to Excess Energy Delivery Fee

	Payments Due by Periods
	Total		2009		2010- 2011		2012- 2013		2014 and After

Contractual Cash Obligations:
Long-term debt	$	30,870	$	13,720	$	17,150	$	-	$	-
Notes payable (1)		7,115		7,115		-		-		-
Interest		7,477		5,940		1,537		-		-
Total contractual cash obligations	$	45,462	$	26,775	$	18,687	$	-	$	-

~~Under~~(1) ~~the Project~~On ~~Agreement,~~February ~~the Excess Energy Delivery Fee was a variable amount based on actual electrical energy delivered in each month in excess of 19.0 GWh~~5, ~~payable at a rate of $0.1509 per kWh. Under the Supplemental Agreement, the per kWh rate for energy deliveries in excess of 19.0 GWh per month has been reduced, commencing in~~ 2009, toCE ~~$0.1132~~Casecnan ~~(escalating~~repaid ~~at 1% per annum thereafter), provided that any deliveries of energy~~ in ~~excess~~full ofthe ~~490.0~~outstanding ~~GWh~~principal ~~but~~amount ~~less than 550.0 GWh per year are paid for at a rate~~ of ~~1.3~~the ~~pesos~~Notes ~~per kWh~~ and ~~deliveries~~related inaccrued ~~excess of 550~~interest.~~0 GWh per year are at no cost to NIA.~~

~~For periods after September~~ ~~28, 2003, the Supplemental Agreement provides that~~ ~~if the Casecnan Project is not dispatched up to 150 MW whenever water is available, NIA will pay for excess energy that could have been generated but was not as a result of such dispatch constraint.~~ 10

Other Provisions of the Supplemental Agreement

The Company received an opinion from the Philippine Office of Government Corporate Counsel that the Supplemental Agreement has due authorization and is enforceable. The Company also received written confirmation from the Private Sector Assets and Liabilities Management Corporation that the issues with respect to the Casecnan Project that had been raised by the interagency review of independent power producers in the Philippines or that may have existed with respect to the Project under certain provisions of the EPIRA calling for the renegotiation of contracts such as the Project Agreement have been satisfactorily addressed by the Supplemental Agreement.

Casecnan Stockholder Litigation

Pursuant to the share ownership adjustment mechanism in the CE Casecnan stockholder agreement, which is based upon pro forma financial projections of the Casecnan Project prepared following commencement of commercial operations, in February 2002, MidAmerican’s indirect wholly owned subsidiary CE Casecnan Ltd., advised the minority stockholder of the Company, LPG, that MidAmerican’s indirect ownership interest in CE Casecnan had increased to 100% effective from commencement of commercial operations. On July 8, 2002, LPG filed a complaint in the Superior Court of the State of California, City and County of San Francisco against, among others, CE Casecnan Ltd. and MidAmerican. The Company is not a defendant in the action. On January 21, 2004, CE Casecnan Ltd., LPG and the Company entered into a status quo agreement pursuant to which the parties agreed to set aside certain distributions related to the shares subject to the LPG dispute and CE Casecnan agreed not to take any further actions with respect to such distributions without at least 15 days’ prior notice to LPG. Accordingly, 15% of the dividend declarations in 2004, totaling $15.9 million, was set aside in a separate bank account in the name of the Company and is shown as restricted cash and investments and dividends payable in the accompanying balance sheet at December 31, 2004. The court is currently expected to rule on the first phase of the litigation before the end of the first quarter of 2005.

Obligations and Commitments

The Company has contractual obligations and commercial commitments that may affect its financial condition. Contractual obligations to make future payments arise from long-term debt and notes payable. Material obligations as of December 31, 2004 are as follows (in thousands):

	Payments Due by Period
			< 1		2-3		4-5		>5
	Total		Year		Years		Years		Years
Contractual cash obligations:
Long-term debt	$	197,098	$	54,753	$	73,745	$	51,450	$	17,150
Note payable		51,263		-		-		-		51,263
Interest		108,880		23,273		29,343		10,647		45,617
Total contractual cash obligations	$	357,241	$	78,026	$	103,088	$	62,097	$	114,030

Critical Accounting Policies

~~The~~Certain ~~preparation of financial statements and related disclosures in conformity with~~ accounting ~~principles~~policies ~~generally~~require ~~accepted~~management into ~~the~~make ~~United~~estimates ~~States~~and ~~of America~~judgments ~~requires~~concerning ~~management~~transactions tothat ~~make~~will ~~judgments,~~be ~~assumptions~~settled ~~and~~several ~~estimates~~years ~~that~~in ~~affect~~ the future. ~~amounts~~Amounts ~~reported~~recognized in the Financial Statements ~~and~~from ~~accompanying~~such ~~notes.~~estimates ~~Note 2 to~~are ~~the~~necessarily ~~Financial~~based ~~Statements~~on ~~describes~~numerous ~~the~~assumptions ~~significant~~involving ~~accounting~~varying ~~policies~~ and potentially ~~methods~~significant ~~used~~degrees ~~in the preparation~~ of ~~the~~judgment ~~financial~~and ~~statements~~uncertainty. ~~Estimates~~Accordingly, ~~are~~the ~~used~~amounts ~~for,~~currently ~~but~~reflected ~~not~~in ~~limited to,~~ the ~~accounting~~Financial ~~for~~Statements ~~the~~will ~~allowance~~likely ~~for~~increase ~~doubtful~~or ~~accounts.~~decrease ~~Actual~~in ~~results~~the ~~could~~future ~~differ~~as ~~from~~additional ~~these~~information ~~estimates~~becomes available. The following ~~critical~~ critical accounting policies are impacted significantly by judgments, assumptions and estimates used in the preparation of the ~~financial statements~~Financial Statements.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized whenever evidence exists that the carrying value is not recoverable.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is based on the Company’s assessment of the ~~collectibility~~collectability of payments from NIA. This assessment requires judgment regarding the outcome of disputes, arbitrations and the ability of the customer to pay the amounts owed to the Company. Any change in the Company’s assessment of the collectibility of accounts receivable that was not previously provided for could significantly impact the calculation of such allowance and the results of operations.

~~Item~~Auction ~~7A. Qualitative~~Rate ~~and~~Securities - ~~Quantitative~~Measurement ~~Disclosures about Market Risk.~~Principles

The ~~following~~Company ~~discussion~~has ofinvestments ~~the~~in ~~Company’s~~auction ~~exposure~~rate tosecurities ~~various~~that ~~market~~are ~~risks~~measured ~~contains~~at fair ~~“forward-looking~~value ~~statements”~~in ~~that~~the ~~involve~~Financial ~~risks~~Statements. ~~and~~With ~~uncertainties.~~the ~~These~~liquidity issues experienced in ~~projected~~global ~~results~~credit and capital markets, the auction rate securities held by the Company have ~~been~~experienced ~~prepared~~multiple ~~utilizing~~failed ~~certain~~auctions ~~assumptions~~as ~~considered~~the amount of securities ~~reasonable~~submitted infor sale has exceeded the ~~circumstances~~amount ~~and~~of inpurchase ~~light~~orders. The fair values of ~~information~~the ~~currently~~auction rate securities are determined using internally developed discounted cash flow models based on available observable market data and the toCompany’s judgment about the ~~Company.~~assumptions, ~~Actual~~including ~~results~~liquidity ~~could~~and ~~differ~~nonperformance risks, ~~materially~~which ~~from~~market ~~those~~participants ~~projected~~would use in ~~the~~ ~~forward-looking~~pricing ~~information~~the asset.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

The Company’s Balance Sheets include assets and liabilities whose fair values are subject to market risks. The Company’s significant market risks are primarily associated with interest rates and credit. The following sections address the significant market risks associated with the Company’s business activities.

Interest Rate Risk

AtAs of December 31, ~~2004~~2008, the Company had fixed-rate long-term debt of totaling $~~197~~30.1 9 million inwith ~~principal amount and having~~ a total fair value of $~~220~~31.0 4 million. ~~These~~Because of ~~instruments~~their ~~are~~ fixed~~-rate~~ ~~and~~interest ~~therefore~~rates, these instruments do not expose the Company to the ~~risk~~ risk of earnings loss due to changes in market interest rates. However, the fair value of these instruments would decrease by approximately $60.5 6 million if interest rates were to increase by 10% from their levels atas of December 31, ~~2004~~2008. Comparatively, as of December 31, 2007, the Company had fixed-rate long-term debt totaling $68.6 million with a total fair value of $73.8 million. The fair value of these instruments would have decreased by approximately $0.4 million if interest rates had increased by 10% from their levels at December 31, 2007. In general, such a decrease in fair value would impact earnings and cash flows only if the Company were to reacquire all or a portion of these instruments prior to their maturity.

18Credit Risk

~~Currency~~NIA’s ~~Risk~~obligations under the Project Agreement are substantially denominated in U.S. dollars and are the Company’s sole source of operating revenue. Because of the Company’s dependence on NIA, any material failure of NIA to fulfill its obligations under the Project Agreement and any material failure of the ROP to fulfill its obligations under the Performance Undertaking would significantly impair the ability of the Company to meet its existing and future obligations, including obligations pertaining to its outstanding debt. No shareholders, partners or affiliates of the Company, including MEHC, and no directors, officers or employees of the Company have guaranteed or will be in any way liable for payment of the Company’s obligations. As a result, payment of the Company’s obligations depends upon the availability of sufficient revenue from the Company’s business after the payment of operating expenses.

NIA’s payments of obligations under the Project Agreement are substantially denominated in U.S. Dollars and are the Company’s sole source of operating revenues. NIA must obtain U.S. Dollars to fund its payment obligations. Because of the Company’s dependence on NIA, any material failure of NIA to obtain U.S. Dollars and fulfill its obligations under the Project Agreement and any material failure of the ROP to fulfill its obligations under the Performance Undertaking would significantly impair the ability of the Company to meet its existing and future obligations. No stockholders, partners or affiliates of the Company, including MidAmerican, and no directors, officers or employees of the Company will guarantee or be in any way liable for payment of the Company’s obligations. As a result, payment of the Company’s obligations depends upon the availability of sufficient revenues from the Company’s business after the payment of operating expenses.11

19With the liquidity issues experienced in global credit and capital markets, the $21.4 million par value of auction rate securities held by the Company at December 31, 2008, have experienced multiple failed auctions as the amount of securities submitted for sale has exceeded the amount of purchase orders. The securities are rated Baa1 by Moody’s Investors Service and AA by Standard & Poor’s at December 31, 2008. Although there is no current liquid market for the auction rate securities, the Company believes the underlying creditworthiness of the repayment sources for these securities’ principal and interest has not materially deteriorated. Further, the Company has the intent and ability to hold the auction rate securities for a period of time sufficient to allow for any anticipated recovery in the credit and capital markets that would facilitate the periodic auction and sale of these securities. At December 31, 2008, the Company’s pre-tax temporary impairment of the auction rate securities totaled $7.3 million. If the underlying assets and the guarantors of the auction rate securities experience credit deterioration, the Company may not ultimately realize the par value of the investments held at December 31, 2008. The investments are classified as available-for-sale securities and are recorded in other investments and long-term restricted cash and investments on the Balance Sheets.

~~Item 8. Financial Statements~~12 ~~and Supplementary Data.~~

Report of Independent Registered Public Accounting Firm	21
Balance Sheets as of December 31, 2004 and 2003	22
Statements of Operations for the Years Ended December 31, 2004, 2003 and 2002	23
Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2004, 2003 and 2002	24
Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and 2002	25
Notes to Financial Statements	26

Item 8.

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firms	14

Balance Sheets as of December 31, 2008 and 2007	16

Statements of Operations for the Years Ended December 31, 2008, 2007 and 2006	17

Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2008, 2007 and 2006	18

Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006	19

Notes to Financial Statements	20

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and ~~Stockholders~~Shareholders of

CE Casecnan Water and Energy Company, Inc.

~~We have~~Makati ~~audited the accompanying balance sheets of CE Casecnan Water and Energy Company~~City, ~~Inc.~~ as of December 31, 2004 and 2003, and the related statements of operations, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2004. 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. Philippines

We have audited the accompanying balance sheet of CE Casecnan Water and Energy Company, Inc. (the “Company”) as of December 31, 2008, and the related statements of operations, changes in shareholders’ equity, and cash flows for the year ended December 31, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such 2008 financial statements present fairly, in all material respects, the financial position of CE Casecnan Water and Energy Company, Inc. as of December 31, 2008, and the results of its operations and its cash flows for the year ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

/s/ Manabat Delgado Amper & Co.

Manabat, Delgado, Amper & Co.

Deloitte & Touche

Makati City, Philippines

February 27, 2009

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

CE Casecnan Water and Energy Company, Inc.

We have audited the accompanying balance sheet of CE Casecnan Water and Energy Company, Inc. as of December 31, 2007 and the related statements of operations, of changes in shareholders’ equity and of cash flows for each of the two years in the period ended December 31, 2007. 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 the standards of the Public Company Accounting Oversight Board (United States). 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, the financial statements referred to above present fairly, in all material respects, the financial position of CE Casecnan Water and ~~Energy~~ Energy Company, Inc. as of December 31, ~~2004~~2007 and ~~2003, and~~ the results of its operations and its cash flows for each of the ~~three~~two years in the period ended December 31, ~~2004~~2007, in conformity with accounting principles generally accepted in the United States of America.

/s/ Isla ~~Joaquin~~Lipana ~~Cunanan~~ & Co.

~~JOAQUIN~~ISLA ~~CUNANAN~~LIPANA & CO.

A ~~PRICEWATERHOUSECOOPERS~~PricewaterhouseCoopers ~~MEMBER~~member ~~FIRM~~firm

Makati City, Philippines

February 1127, ~~2005~~2008

2115

CE CASECNAN WATER AND ENERGY COMPANY, INC.

BALANCE SHEETS

(Amounts in thousands ~~of U.S. Dollars~~, except share data)

	As of December 31,
	2004			2003
	2008				2007
ASSETS
Current assets:
Cash and cash equivalents	$	1649,~~732~~350		$	~~4,513~~$	31,083
Restricted cash and investments		3922,~~444~~881			~~18,121~~	22,414
Trade receivable, net		2520,~~242~~308			~~16,451~~	20,365
Note receivable		-			97,000
Other current assets		7,387				6,653
Accrued interest and other receivable		1,986			8,229
Total current assets		99,926				80,515
Prepaid insurance and other current assets		4,831			4,685
Property, plant and equipment, net		281,485				303,056
Total current assets		88,235			148,999
Other investments		14,096				7,503
Restricted cash and investments		16,063			-
Long-term restricted cash and investments		-				13,906
Bond issue costs, net		2,678			3,861
Deferred income taxes		6,995				5,198
Property, plant and equipment, net		365,132			407,082
Other		222				539
Deferred income tax		5,371			5,371
Total assets	$	402,724			$	410,717
Total assets	$	477,479		$	565,313
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current liabilities:
Accounts payable and other accrued liabilities	$	1,748			$	1,995
Accounts payable	$	12,185		$	7,395
Dividends payable		10,825				10,825
Dividends payable		15,900			-
Accrued interest		3,067				7,801
Accrued interest		8,482			7,368
Accrued income, property and other taxes		5,817				6,208
Accrued liquidated damages		-			3,800
Payable to affiliates		2,726				2,480
Other accrued expenses		295			1,702
Notes payable		7,115				39,200
Payable to affiliates		35,148			34,739
Current portion of long-term debt		13,720				37,730
Current portion of long-term debt		54,753			49,360
Total current liabilities		45,018				106,239
Total current liabilities		126,763			104,364
Deferred revenue		-				1,768
Notes payable		51,263			51,263
Long-term debt		17,150				30,870
Deferred revenue		6,120			902
Total liabilities		62,168				138,877
Long-term debt, net of current portion		142,345			197,098
Commitments and contingencies (Note 9)
Total liabilities		326,491			353,627
Shareholders’ equity:
Commitments and contingencies (Note 9)
Common shares - 2,148,000 shares authorized, one Philippine peso ($0.038) parvalue; 767,162 shares issued and outstanding		29				29
Stockholders’ equity:
Additional paid-in capital		123,807				123,807
Capital stock
Retained earnings		221,839				148,004
Authorized - 2,148,000 shares, one Philippine peso ($0.038) par value; 767,162 shares issued and outstanding		29			29
Accumulated other comprehensive loss, net		(5,119	)			-
Additional paid-in capital		123,807			123,807
Total shareholders’ equity		340,556				271,840
Retained earnings		27,152			87,850
Total liabilities and shareholders’ equity	$	402,724			$	410,717
Total stockholders’ equity		150,988			211,686
Total liabilities and stockholders’ equity	$	477,479		$	565,313

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

2216

CE CASECNAN WATER AND ENERGY COMPANY, INC.

STATEMENTS OF OPERATIONS

(Amounts in thousands ~~of U.S. Dollars, except share data~~)

	Year Ended December 31,
	Years Ended December 31,
	2004			2003			2002
	2008				2007				2006
Revenue:
Lease rentals and service contracts	$	~~106~~137,~~847~~638		$	~~129,921~~$	124,733	$	~~138,264~~	$	148,529
Operating expenses:
Depreciation		2122,~~972~~121			~~23,158~~	21,825		~~23,211~~		21,728
Plant operations and other operating expenses		11,~~444~~315			~~13,180~~	9,589		~~10,093~~		9,368
Doubtful accounts expense		-			2,044			11,545
Total operating expenses		33,436				31,414				31,096
Total operating expenses		33,416			38,382			44,849
Operating income		104,202				93,319				117,433
Operating income		73,431			91,539			93,415
Other income (expense):
Other income (expenses):
Interest expense		(8,639	)			(16,784	)			(21,355	)
Settlement revenue (Note 3)		-			31,887			-
Interest income		2,030				2,810				3,010
Interest expense		(29,468	)		(39,835	)		(42,508	)
Other, net		4,399				3,761				3,978
Interest income		1,539			1,949			236
Total other income (expense)		(2,210	)			(10,213	)			(14,367	)
Other		(98	)		(38	)		(105	)
Income before income tax expense		101,992				83,106				103,066
Total other expense, net		(28,027	)		(6,037	)		(42,377	)
Income tax expense		28,157				4,567				2,262
Income before provision for income tax		45,404			85,502			51,038
Net income	$	73,835			$	78,539			$	100,804
Provision for income tax		102			25,737			6,082
Net income	$	45,302		$	59,765		$	44,956
Net income per share	$	59.05		$	77.90		$	58.60
Weighted average number of common shares outstanding		767,162			767,162			767,162

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

23 17

CE CASECNAN WATER AND ENERGY COMPANY, INC.

STATEMENTS OF CHANGES IN ~~STOCKHOLDERS~~SHAREHOLDERS’ EQUITY

(Amounts in thousands ~~of U.S. Dollars~~, except ~~share data~~shares)

	Outstanding					Additional
												Accumulated
	Common		Common			Paid-in			Retained
				Additional								Other
	Shares		Stock			Capital			Earnings			Total
	Common			Paid-in				Retained				Comprehensive
Balance, January 1, 2002		767,162	$	29		$	123,807		$	(16,871	)	$	106,965
	Stock			Capital				Earnings				Loss, net			Total
Net income		-		-			-			44,956			44,956
Balance, January 1, 2006	$	29		$	123,807			$	68,161			$	-		$	191,997
Balance, December 31, 2002		767,162		29			123,807			28,085			151,921
Net income		-			-				100,804				-			100,804
Net income		-		-			-			59,765			59,765
Dividends declared		-			-				(99,500	)			-			(99,500	)
Balance, December 31, 2003		767,162		29			123,807			87,850			211,686
Balance, December 31, 2006		29			123,807				69,465				-			193,301
Net income		-		-	-		-		78,539	~~45,302~~			~~45,302~~-			78,539
Dividends declared		-		-			-			(106,000	)		(106,000	)
Balance, December 31, 2007		29			123,807				148,004				-			271,840
Balance, December 31, 2004		767,162	$	29		$	123,807		$	27,152		$	150,988
Net income		-			-				73,835				-			73,835
Other comprehensive loss		-			-				-				(5,119	)		(5,119	)
Balance, December 31, 2008	$	29		$	123,807			$	221,839			$	(5,119	)	$	340,556

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

24 18

CE CASECNAN WATER AND ENERGY COMPANY, INC.

STATEMENTS OF CASH FLOWS

(Amounts in thousands ~~of U.S. Dollars~~)

	Year Ended December 31,
	Years Ended December 31,
	2004			2003			2002
	2008				2007				2006
Cash flows from operating activities:
Net income	$	4573,~~302~~835		$	~~59,765~~$	78,539	$	~~44,956~~	$	100,804
Adjustments to reconcile net income to net cash flows from operating activities:
Adjustments to reconcile net income to cash flows from operations:
Depreciation		2122,~~972~~121			~~23,158~~	21,825		~~23,211~~		21,728
Amortization of bond issue costs		~~1,183~~317			~~1,356~~	518		~~1,494~~		688
Gain on settlement of arbitration, net of tax		-			(7,500	)		-
Provision for deferred income taxes		397				(103	)			-
Changes in other items:
Trade receivable, net		~~(8,791~~57	)		~~(20,132~~	)(6,363	)	~~(43,503~~	)	12,636
Accrued interest and other receivable		6,243			(1,534	)		(408	)
Other current assets		(734	)			(645	)			(792	)
Prepaid insurance and other current assets		(40	)		455			(2,277	)
Accounts payable and other accrued liabilities		(247	)			371				(1,414	)
Other assets		-			5,542			6,158
Accrued interest		(4,734	)			(7,525	)			4,733
Accounts payable		9,811			3,932			2,359
Accrued income, property and other taxes		(391	)			2,568				210
Accrued interest		1,114			1,097			1,065
Deferred revenue		(1,768	)			1,768				(13,756	)
Accrued liquidated damages		(3,800	)		(1,620	)		3,800
Net cash flows from operating activities		88,853				90,953				124,837
Other accrued expenses		(1,407	)		(200	)		-
Cash flows from investing activities:
Deferred revenue		5,218			902			-
Capital expenditures		(550	)			(678	)			(1,880	)
Net cash flows from operating activities		76,805			65,221			36,855
Purchases of available-for-sale securities		-				(71,809	)			(169,905	)
Cash flows from investing activities:
Proceeds from sale of available-for-sale securities		-				60,500				159,805
Additions to property, plant and equipment		(4,049	)		(4,335	)		(10,263	)
(Increase) decrease in restricted cash and investments		(467	)			30,145				(7,603	)
Arbitration settlement		-			(5,965	)		-
Net cash flows from investing activities		(1,017	)			18,158				(19,583	)
Liquidated damages received, net of amounts accrued		18,900			-			-
Cash flows from financing activities:
Collection of ROP Note		97,000			-			-
(Decrease) increase in payable to affiliates		246				(38,531	)			4,965
Increase in restricted cash and investments		-			-			(1,100	)
Repayment of long-term debt		(37,730	)			(37,730	)			(36,015	)
Net cash flows from investing activities		111,851			(10,300	)		(11,363	)
Repayment of notes payable		(32,085	)			(12,063	)			-
Cash flows from financing activities:
Dividends paid		-				(21,650	)			(84,575	)
Increase (decrease) in payable to affiliates		409			1,397			(1,165	)
Net cash flows from financing activities		(69,569	)			(109,974	)			(115,625	)
Increase in restricted cash and investments for debt service obligations and dividends payable		(37,386	)		(11,043	)		-
Net change in cash and cash equivalents		18,267				(863	)			(10,371	)
Payment of long-term debt		(49,360	)		(41,467	)		(35,200	)
Cash and cash equivalents at beginning of period		31,083				31,946				42,317
Cash dividends paid		(90,100	)		-			-
Cash and cash equivalents at end of period	$	49,350			$	31,083			$	31,946
Proceeds from notes payable		-			-			10,500
Supplemental disclosure:
Net cash flows from financing activities		(176,437	)		(51,113	)		(25,865	)
Interest paid	$	11,865			$	22,602			$	17,704
Net change in cash and cash equivalents		12,219			3,808			(373	)
Income taxes paid	$	26,555			$	2,264			$	2,440
Cash and cash equivalents at beginning of period		4,513			705			1,078
Cash and cash equivalents at end of period	$	16,732		$	4,513		$	705
Supplemental Disclosure:
Interest paid	$	30,638		$	36,205		$	39,949
Income taxes paid	$	102		$	24,387		$	6,080
Non-cash transaction - ROP note received under NIA Arbitration Settlement	$	-		$	97,000		$	-

In 2004, the investment in property, plant and equipment was reduced by $23.9 million involving receipt of cash of $18.9 million and reversal of liabilities of $5.0 million pursuant to settlement of a construction contract arbitration (Note 5).

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

2519

CE CASECNAN WATER AND ENERGY COMPANY, INC.

NOTES TO FINANCIAL STATEMENTS

(In U.S. ~~Dollars~~dollars, unless indicated otherwise)

1. Organization and Operations

CE Casecnan Water and Energy Company, Inc. (the “Company” or “CE Casecnan”) is a privately held Philippine corporation formed indirectly by MidAmerican Energy Holdings Company (“~~MidAmerican~~MEHC”) and was registered with the Philippine Securities and Exchange Commission on September 21, 1994. The ~~purpose of the~~ Company is to70% ~~develop,~~owned ~~construct~~by CE Casecnan II, Inc., ~~operate~~20% ~~and~~owned ~~own~~by aCE Casecnan Ltd., ~~hydroelectric power~~a ~~plant~~Bermuda-registered ~~and~~corporation, ~~the~~which ~~related~~are ~~facilities~~both ~~for~~indirectly ~~conversion~~wholly ~~into~~owned subsidiaries ~~electricity~~ of ~~water provided~~MEHC, by and ~~under~~10% ~~contract~~owned ~~with~~by ~~the~~a ~~Republic~~third ofparty. ~~the~~MEHC ~~Philippines~~is ~~(“ROP”)~~a orconsolidated ~~any~~subsidiary ~~ROP-owned~~of orBerkshire ~~controlled~~Hathaway ~~corporation~~Inc.

The Company has a contract with the Republic of the Philippines (“ROP”), through the Philippine National Irrigation Administration (“NIA”) (a ROP-owned and controlled corporation), for the development and construction of a hydroelectric power plant and related facilities under a build-own-operate-transfer agreement, as amended by the Supplemental Agreement dated September 29, 2003 (the “Project Agreement”), covering a 20-year cooperation period (“Cooperation Period”) ~~with~~ending ~~“take-or-pay”~~ December 11, 2021, with obligations for the delivery of water and electricity. At the end of the Cooperation Period, the combined irrigation and 150 megawatt MW hydroelectric power generation project (the “Casecnan Project”) will be transferred to the ROP at no cost on an “as is” basis. ~~The~~NIA’s ~~ROP~~obligations ~~also~~under ~~signed~~the aProject ~~Performance~~Agreement ~~Undertaking,~~are ~~which,~~guaranteed ~~among~~by ~~others,~~the full ~~affirms~~faith and ~~guarantees~~credit ~~the obligations~~ of ~~NIA~~the ~~under~~ROP (the ~~contract.~~“Performance Undertaking”).

~~Construction of~~Under the ~~Casecnan Project commenced in 1995. The Casecnan Project commenced~~ ~~commercial~~terms ~~operations~~of onits ~~December 11,~~registration ~~2001.~~with ~~Pursuant to~~ the ~~share~~Philippine ~~ownership adjustment~~Board ~~mechanism in the CE Casecnan stockholder agreement, which is based upon pro forma financial projections~~ of ~~the Casecnan Project prepared following commencement of commercial operations~~Investments, ~~in February 2002, MidAmerican’s indirect wholly owned subsidiary CE Casecnan Ltd., advised~~ the ~~minority stockholder of~~Company ~~the~~was ~~Company,~~entitled ~~LaPrairie~~to ~~Group~~certain ~~Contractors~~incentives ~~(International)~~which ~~Ltd.~~include ~~("LPG"),that MidAmerican’s~~an ~~indirect~~income ~~ownership~~tax ~~interest~~holiday infor ~~CE Casecnan had increased to 100%~~six ~~effective~~years from ~~commencement~~the start of commercial operations. OnThe ~~July 8,~~income ~~2002,~~tax ~~LPG filed~~holiday aexpired ~~complaint in the Superior Court of the State of California, City and~~on ~~County of San Francisco against~~December 11, ~~among others, CE Casecnan Ltd~~2007. ~~and MidAmerican.~~ The Company’s istaxable ~~not~~income ~~a defendant in the action. On January~~from December 2111, ~~2004~~2007, ~~CE Casecnan~~forward ~~Ltd.,~~is ~~LPG and the Company entered into a status quo agreement pursuant to which the parties agreed to set aside certain distributions related to the shares~~ subject to ~~the~~income ~~LPG~~tax ~~dispute and CE Casecnan agreed not to take any further actions with respect to such distributions without~~ at ~~least~~the ~~15 days’ prior~~Philippine ~~notice~~statutory ~~to LPG~~rate. ~~Accordingly,~~The ~~15%~~registration ofalso ~~the~~requires, ~~dividend~~among ~~declarations~~other ~~in 2004 totaling~~items, ~~$15.9~~ ~~million, was set aside in a separate bank account in~~ the maintenance ~~name~~ of ~~the Company~~a ~~and is shown as restricted cash and investments and dividends payable in the accompanying balance sheet at December 31, 2004. The court is currently expected~~ debt-to-equity ~~rule~~ratio onnot ~~the~~exceeding ~~first~~75:25 ~~phase~~during ~~of the litigation before the end of the~~commercial ~~first quarter of 2005~~operations.

The ~~Company~~Casecnan Project is ~~registered~~dependent ~~with~~upon ~~the~~sufficient ~~Philippine~~rainfall ~~Board~~to ofgenerate ~~Investments as a new operator~~electricity ofand ~~hydroelectric~~deliver ~~power~~water. ~~plant~~The ~~with~~seasonality ~~pioneer status under the Omnibus Investments Code~~ of ~~1987~~rainfall ~~(Executive~~patterns ~~Order~~and ~~No. 226). Under~~ the ~~terms~~variability of ~~its registration, the~~ ~~Company~~rainfall isfrom ~~entitled~~year to ~~certain~~year, ~~incentives~~all ~~which include an income tax holiday for a minimum~~ of ~~six~~which ~~years~~are ~~from~~outside the ~~start~~control of ~~commercial~~the ~~operations~~Company, ~~tax and~~ ~~duty-free~~have ~~importation~~a ofmaterial ~~capital~~impact ~~equipment, tax credits~~ on ~~domestic~~the ~~capital equipment,~~amounts ~~and~~of ~~exemption~~electricity ~~from~~generated ~~customs duties~~ and ~~national internal revenue taxes~~water ~~for~~delivered by the ~~importation~~Casecnan ~~and~~Project. ~~unrestricted~~Rainfall ~~use~~has ofhistorically ~~the~~been ~~consigned~~highest ~~equipment for the~~from ~~development,~~June ~~construction,~~through ~~start-up,~~December ~~testing~~ and ~~operation~~lowest offrom ~~the~~January ~~power~~through ~~plant~~May. The ~~registration~~contractual ~~also~~terms for ~~requires,~~variable ~~among~~water ~~others,~~and ~~the~~energy ~~maintenance~~delivery offees ~~a debt-to-equity~~can ~~ratio~~produce ~~not~~significant ~~exceeding~~variability in ~~75:25~~revenue ~~upon~~between ~~commencement~~reporting ~~of commercial operations~~periods.

In April 2003, CE Casecnan Ltd. assigned a 70% stockholding in the Company to CE Casecnan II, Inc., a Philippine company, in exchange for the latter’s shares of stock. Consequently, the Company became 70% owned by CE Casecnan II, Inc.

References to "U.S. dollars," "dollars," or "$" are to the currency of the United States and references to "pesos" are to the currency of the Philippines. References to kW means kilowatts, MW means megawatts, GW means gigawatts, kWh means kilowatt hours, MWh means megawatt hours, and GWh means gigawatt hours.

2. Summary of Significant Accounting Policies

The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The more significant accounting policies and practices of the Company are set forth below:

Basis of Presentation

The functional and reporting currency of the Company is the ~~United~~U.S. ~~States~~ dollar. Transactions in foreign currencies, ~~(Philippines~~principally Philippine pesos (“pesos”), are recorded based on the prevailing rates of exchange at transaction dates. Foreign currency denominated monetary assets and liabilities are translated at the exchange rate prevailing at the balance sheet date. The resulting exchange differences from settlements of foreign currency transactions and translations of monetary assets and liabilities are credited or charged to operations.

The Company’s operations are in one reportable segment, the water ~~and~~delivery ~~electricity~~and electricity generation ~~industry~~business.

~~Reclassifications~~Use of Estimates in Preparation of Financial Statements

~~Certain~~The ~~amounts~~preparation of ~~restricted~~the ~~cash~~Financial ~~and~~Statements ~~investments~~ in ~~the~~conformity ~~2003 balance~~with ~~sheet~~generally ~~have~~accepted ~~been~~accounting ~~reclassified~~principles requires management to ~~current~~make estimates and assumptions that affect the reported amounts of assets toand ~~conform~~liabilities ~~with~~at the ~~fiscal~~ ~~2004~~date of the ~~presentation~~financial statements and the reported amounts of revenue and expenses during the period. ~~Such~~ ~~reclassification~~These ~~did~~estimates include, but are not ~~impact~~limited ~~previously~~to, ~~reported~~valuation ~~net~~of certain ~~income~~financial orassets ~~retained~~and ~~earnings~~liabilities, long-lived asset recovery, and accounting for contingencies, including environmental, regulatory and income tax matters. Actual results may differ from the estimates used in preparing the Financial Statements.

~~Use of~~20 ~~Estimates~~

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

Cash equivalents ~~are~~consist ~~short-term,~~of ~~highly~~funds ~~liquid~~invested ~~investments~~in ~~that~~commercial ~~are~~paper, ~~readily convertible~~money tomarket ~~known~~accounts and ~~amounts~~in ofother ~~cash~~investments with ~~original~~a ~~maturities~~maturity of three months or less when purchased. Cash and ~~that~~cash ~~are~~equivalents ~~subject~~exclude toamounts anwhere ~~insignificant~~availability ~~risk~~is ofrestricted ~~change~~by legal inrequirements, loan agreements or other contractual ~~value~~provisions.

Restricted Cash and Investments and Other Investments

Restricted cash and investments are composed of debt service funds and undistributed dividends that are contractually restricted as to their use and require the maintenance of specific minimum balances. ~~Such cash~~The undistributed dividends and ~~investments~~the debt service funds are ~~primarily~~invested in ~~the~~money-market ~~form~~instruments. Other investments consist of ~~commercial~~auction ~~paper~~rate ~~and~~securities. ~~money~~The auction rate securities are measured at ~~market~~fair value, and classified as available-for-sale securities, with unrealized gains and losses reported as a component of accumulated other comprehensive loss in shareholders’ equity. Realized gains and losses and other-than-temporary impairments are included in other income (expense).

Since the Company has the positive intent and ability to hold all of its investments to maturity, these are classified as held to maturity and recorded at amortized cost. The carrying amount of investments as of December 31, 2004 approximates their fair value, which is based on quoted market prices as provided by the financial institution holding the investments.

Bond Issue Costs

Bond issue costs consist of costs incurred in the issuance of senior secured notes and bonds and are deferred and amortized over the term of the notes and bonds using the effective interest rate method. Amortization of bond issue costs is capitalized during the construction period and charged to operations, as an interest expense, upon commercial operations of the Casecnan Project.

Property, Plant and Equipment, Net

Property, plant and equipment ~~are~~is ~~stated~~recorded at historical cost (including capitalized interest costs) less accumulated depreciation. Depreciation is computed on the straight-line method based on the ~~twenty~~20-year Cooperation Period for the hydroelectric power plant and office and building structure, and on the estimated useful life of five years for other equipment. ~~Minor~~The ~~expenditures~~cost ~~for~~of major ~~repairs~~additions and ~~maintenance~~betterments are ~~charged~~capitalized, towhile ~~operations~~costs asfor ~~incurred~~replacements, ~~while significant~~ ~~renewals~~maintenance and ~~improvements~~repairs ~~are~~that ~~capitalized.~~do ~~Liquidated~~not ~~damages~~improve ~~received~~or ~~relative to~~extend the ~~Casecnan~~lives ~~Project~~of ~~construction~~the respective assets are ~~recorded~~charged ~~as reduction~~ to ~~the cost of the Project~~operations. When an asset is sold or otherwise disposed of, its cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is credited or charged to operations.

Deferred Income Taxes

Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial reporting bases of assets and liabilities and their related tax bases. Deferred income tax assets and liabilities are measured using the tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for deferred income tax assets if it is more likely than not that a tax benefit will not be realized.

Allowance for Doubtful Accounts

Allowance for doubtful accounts is based on the Company’s assessment of the collectibility of payments from NIA. This assessment requires judgment regarding the outcome of pending disputes and the ability of the customer to pay the amounts owed to the Company. Any change in the Company’s assessment of the collectibility of accounts receivable that was not previously provided for could significantly impact the calculation of such allowance and the results of operations.

Net Income per Share

Net income per share is based on the weighted average number of common shares outstanding during the period. As the Company does not have any potential common shares outstanding such as stock options, warrants or convertible debt, there is no calculation of diluted earnings per share.

Impairment of Long-Lived Assets

~~Long-lived~~The ~~assets~~Company ~~are~~evaluates ~~reviewed~~long-lived assets for impairment, ~~whenever~~including property, plant and equipment, when events or changes in circumstances indicate that the carrying ~~amount~~value of anthese ~~asset~~assets may not be recoverable. AnUpon the occurrence of a ~~impairment~~triggering ~~loss~~event, ~~would~~the beasset ~~recognized~~is ~~whenever~~reviewed ~~evidence~~to ~~exists~~assess ~~that~~whether the estimated undiscounted cash flows expected from the use of the asset plus the residual value from the ultimate disposal exceeds the carrying value of the asset. If the carrying value isexceeds ~~not~~the estimated recoverable amounts, the asset is written down to the estimated discounted present value of the expected future cash flows from using the asset. Any resulting impairment loss is reflected in the Statements of Operations.

Income Taxes

Deferred tax assets and liabilities are based on differences between the financial statements and tax bases of assets and liabilities using the estimated tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred income tax assets and liabilities that are associated with components of other comprehensive income are charged or credited directly to other comprehensive income. Other changes in deferred income tax assets and liabilities are included as a component of income tax expense. Valuation allowances are established for certain deferred income tax assets where management has judged that realization is not likely.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is based on the Company’s assessment of the collectability of payments from NIA. This assessment requires judgment regarding the ability of NIA to pay the amounts owed to the Company and the outcome of pending disputes and arbitrations. Based on the Company’s assessment, no provision was required as of December 31, 2008 and 2007. The activity in the Company’s allowance for doubtful accounts for the years ended December 31 was as follows (in thousands):

	2008		2007			2006

Balance, January 1	$	-	$	(637	)	$	(654	)
Recoveries		-		637			17
Balance, December 31	$	-	$	-		$	(637	)

Revenue

Pursuant to the Project Agreement, the Company ~~bills~~invoices on a monthly basis for the ~~delivery~~ delivery of water and electricity. ~~However,~~The ~~for accounting purposes the~~ Project Agreement is treated for accounting purposes as an arrangement that contains both ~~an operating lease and~~ a service contract to operate the plant and an operating lease. ~~Both~~Minimum lease payments under the operating lease ~~rentals~~ and service ~~fees~~contract are recognized ~~straight~~as revenue on a straight-line basis over the lease term. ofThe Company reduces such minimum lease revenues by an amount which is not reasonably assured to be collected due to the uncertain ~~Project~~political ~~Agreement~~and economic events in the Philippines. The reduction in the minimum lease revenues is recovered when its collectability becomes reasonably assured. Variable lease payments are earned in each contract year for deliveries of water and electricity which exceed specified minimum thresholds. Water delivery revenues do not include value added taxes.

~~The annual water delivery revenue is recorded on the basis of the contractual minimum guaranteed water delivery threshold for the respective contract year~~3. If New ~~and~~Accounting when actual cumulative deliveries within a contract year exceed the minimum threshold, additional revenue is recognized and calculated as the product of the water deliveries in excess of the minimum threshold and the applicable unit price up to the maximum contractually allowed water delivery volume. The Company defers revenue on the difference between the actual water delivery fees earned and water delivery fees invoiced pursuant to the Supplemental Agreement. As of December 31, 2004, cumulative deferred water delivery revenue was $6.1 million. The deferred water delivery revenue at the end of the contract year is available to be earned in the succeeding contract years ending December 25, 2008.Pronouncements

28In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 does not impose fair value measurements on items not already accounted for at fair value; rather it applies, with certain exceptions, to other accounting pronouncements that either require or permit fair value measurements. Under SFAS No. 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market. The standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In February 2008, the FASB issued Staff Position (“FSP”) No. 157-2, “Effective Date of FASB Statement No. 157”, which delays the effective date of SFAS No. 157 for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until fiscal years beginning after November 15, 2008. In October 2008, the FASB issued FSP No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP FAS 157-3”), which clarifies the application of SFAS No. 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued. The Company applied the guidance of FSP FAS 157-3 when determining the fair value of its auction rate securities. The Company adopted the provisions of SFAS No. 157 for assets and liabilities recognized at fair value on a recurring basis effective January 1, 2008. The partial adoption of SFAS No. 157 did not have a material impact on the Company’s Financial Statements. Refer to Note 10 for additional discussion.

~~Revenue~~4. Restricted ~~from~~Cash ~~electricity~~and ~~consists~~Investments ~~of guaranteed energy fees with fixed monthly amounts~~ and isOther recognized based on the contractually guaranteed energy deliveries. Actual deliveries of energy less than the fixed, monthly contractual amounts will not result in any reduction of the guaranteed energy fee. The variable energy fee is recognized when deliveries of energy exceed the guaranteed energy in any contract year. The variable energy fee will not be recognized until all cumulative electrical energy shortfalls in previous months have been made up. At December 31, 2004, there was no cumulative electrical energy shortfall. Investments

3.Restricted cash ~~NIA~~and ~~Settlement~~investments ~~Agreement~~consist of the following as of December 31 (in thousands):

On October 15, 2003, the Company closed a transaction settling an arbitral proceeding which the Company had initiated against NIA in August 2002. As a result of the settlement, in 2003 CE Casecnan recorded $31.9 million of settlement income and $24.4 million of associated income taxes. The settlement income consisted of $115.4 million of consideration pursuant to the settlement agreement, less $30.8 million of recoverable taxes previously capitalized during the construction period, less $8.4 million of taxes paid during operations and less $44.3 million of net trade receivables and other adjustments pertaining to the disputed amounts. In connection with the settlement, the Company entered into an agreement (the “Supplemental Agreement”) with NIA which, in addition to providing for the dismissal with prejudice of all claims by CE Casecnan and counterclaims by NIA in the NIA Arbitration, supplements and amends the Project Agreement in certain respects as summarized below.

	2008		2007
Current:
Dividend set aside account	$	13,279	$	13,054
Debt service reserve fund		9,602		9,360
	$	22,881	$	22,414

Noncurrent - Debt service reserve fund	$	-	$	13,906

~~Payment~~The individend ~~Cash~~set aside account and ~~Delivery~~the current debt service reserve fund are invested in U.S. government money-market accounts. The non-current debt service reserve fund was invested in auction rate securities that had a remaining weighted average maturity of ~~Note~~26 years and earned interest at 6.1% at December 31, 2007. In 2008, these auction rate securities were transferred from the non-current debt service reserve fund, found in long-term restricted cash and investments on the Balance Sheets, to other investments.

~~As part~~Other ofinvestments ~~the~~consist ~~settlement,~~of onauction ~~October 15,~~rate ~~2003,~~securities ~~NIA~~with ~~paid~~a tocarrying CEvalue ~~Casecnan the sum~~ of ~~approximately~~ $1814.4 1 million and ~~delivered to CE Casecnan a ROP~~ $977.0 5 million ~~8.375%~~ ~~Note~~at ~~due 2013 (the "ROP Note"). The Company had the option, between January~~December 1431, ~~2004~~2008 and ~~February 14~~2007, ~~2004 to put the ROP Note to the ROP,~~ ~~for a price of par plus accrued interest~~respectively. The ~~ROP~~investments ~~Note~~earned ~~was~~interest ~~recorded~~at as2.51% aand ~~note receivable~~6.1% ~~in the accompanying balance sheet as of~~ at December 31, ~~2003.~~2008 ~~Also at~~and ~~closing~~2007, ~~the~~respectively. ~~Company~~The ~~paid~~investments tohad ~~the~~remaining weighted ~~Philippine~~average ~~Bureau~~maturities of ~~Internal~~22 ~~Revenue (“BIR”)~~and ~~approximately~~17 ~~$24.4~~years ~~million~~at inDecember 31, ~~respect~~2008 ~~of Philippine income taxes on the~~and ~~foregoing~~2007, ~~consideration and paid to NIA $1~~respectively.6 ~~million~~The ininvestments ~~respect~~are ofclassified ~~alleged~~as ~~late~~available-for-sale ~~completion of the Casecnan Project~~securities.

~~Modifications~~With the liquidity issues experienced in global credit and capital markets, the $21.4 million par value of auction rate securities held by the Company at December 31, 2008, have experienced multiple failed auctions as the amount of securities submitted for sale has exceeded the amount of purchase orders. The securities are rated Baa1 by Moody’s Investors Service and AA by Standard & Poor’s at December 31, 2008. Although there is no current liquid market for the auction rate securities, the Company believes the underlying creditworthiness of the repayment sources for these securities’ principal and interest has not materially deteriorated. Further, the Company has the intent and ability to ~~Water~~hold ~~Delivery~~the ~~Fee~~auction rate securities for a period of time sufficient to allow for any anticipated recovery in the credit and capital markets that would facilitate the periodic auction and sale of these securities. Therefore, the Company considers the auction rate securities to be temporarily impaired. At December 31, 2008, the Company’s pre-tax temporary impairment of the auction rate securities totaled $7.3 million. If the underlying assets and the guarantors of the auction rate securities experience credit deterioration, the Company may not ultimately realize the par value of the investments held at December 31, 2008. Given the failed auctions, it is uncertain if the auction rate securities will be sold within the next twelve months. Accordingly, the Company’s investments in auction rate securities are classified as non-current on the Balance Sheets.

Variable Delivered Water Delivery Fee. Variable Delivered Water Delivery Fees will be earned for months beginning after December 25, 2008. For each month beginning after December 25, 2008 through the end of the Cooperation Period, the Variable Delivered Water Delivery Fee shall be payable only from the date when the cumulative Total Available Water (total delivered water plus the water volume not delivered to NIA as a result of NIA’s failure to accept energy deliveries at a capacity up to 150 MW) for each contract year exceeds 700.0 million cubic meters. Variable Delivered Water Delivery Fees will be earned up to an aggregate maximum of 1,324.7 million cubic meters for the period from December 25, 2008 through the end of the Cooperation Period. No additional variable water delivery fees will be earned over the 1,324.7 million cubic meter threshold.

Modifications to Excess Energy Delivery Fee

Under the Project Agreement, the Excess Energy Delivery Fee was a variable amount based on actual electrical energy delivered in each month in excess of 19.0 GWh, payable at a rate of $0.1509 per kWh. Under the Supplemental Agreement, the per kWh rate for energy deliveries in excess of 19 GWh per month has been reduced, commencing in 2009, to $0.1132 (escalating at 1% per annum thereafter), provided that any deliveries of energy in excess of 490.0 GWh but less than 550.0 GWh per year are paid for at a rate of 1.3 pesos per kWh and deliveries in excess of 550.0 GWh per year are at no cost to NIA.

Other Provisions of the Supplemental Agreement

The Company received an opinion from the Philippine Office of Government Corporate Counsel that the Supplemental Agreement has due authorization and is enforceable. The Company also received written confirmation from the Private Sector Assets and Liabilities Management Corporation that the issues with respect to the Casecnan Project that had been raised by the interagency review of independent power producers in the Philippines or that may have existed with respect to the Casecnan Project under certain provisions of the Electric Power Industry Reform Act of 2001 (“EPIRA”) calling for the renegotiation of contracts such as the Project Agreement have been satisfactorily addressed by the Supplemental Agreement.

4. Trade Receivable, Net

Trade receivable pertains to the receivable due for lease rentals, service income and recoverable taxes billed pursuant to the provisions of the Project Agreement with NIA, as follows (in thousands):

	December 31,
	2004			2003
Water delivery fee	$	14,406		$	11,988
Guaranteed energy delivery fee		3,676			3,676
Variable energy delivery fee		7,979			2,831
Total trade receivable		26,061			18,495
Allowance for doubtful accounts		(819	)		(2,044	)
Trade receivable, net	$	25,242		$	16,451

The water delivery fee includes claims for tax reimbursement from NIA pursuant to the Supplemental Agreement amounting to $8.7 million and $4.6 million as of December 31, 2004 and 2003, respectively. The allowance for doubtful accounts as of December 31, 2004 and 2003 represents the Company’s estimate of the uncollectible portion of the receivable balance.

5. Property, Plant and Equipment, Net

Property, plant and equipment, net at December 31 consists of the following (in thousands):

	December 31,
	2008				2007
		2004			2003
Hydroelectric power facility	$	431,666			$	431,382
Hydroelectric power facility	$	429,805		$	450,174
Office and building structures		1,222				1,199
Office and building structures		1,149			1,090
Transportation and other equipment		2,511				2,350
Transportation and other equipment		990			640
Total operating assets		435,399				434,931
Total operating assets		431,944			451,904
Accumulated depreciation		(153,914	)			(131,875	)
Accumulated depreciation		(66,812	)		(44,840	)
Property, plant and equipment, net	$	281,485			$	303,056
Net operating assets		365,132			407,064
Construction in progress		-			18
Property, plant and equipment, net	$	365,132		$	407,082

Construction of the Casecnan Project was completed under a fixed-price, date certain, turnkey engineering, procurement and construction contract (the "Replacement Contract") dated May 7, 1997 and amended on November 20, 1999. The work under the Replacement Contract was conducted by a consortium consisting of Cooperativa Muratori Cementisti CMC di Ravenna and Impresa Pizzarotti & C. Spa. (collectively, the "Contractor"), working together with Siemens A.G., Sulzer Hydro Ltd., Black & Veatch and Colenco Power Engineering Ltd. On February 12, 2001, the Contractor filed a Request for Arbitration with the International Chamber of Commerce ("ICC") seeking schedule relief from various alleged force majeure events. On April 7, 2004, the Company entered into an agreement with the Contractor settling the ICC arbitration. Pursuant to the settlement agreement, as amended, the Contractor paid $18.9 million to CE Casecnan on April 14, 2004, and the Contractor and CE Casecnan executed mutual releases and agreed to dismiss the arbitration. A total of $23.9 million (the $18.9 million receipt along with $3.8 million originally recorded for liquidated damages and $1.2 million accrual for the unpaid portion of the Replacement Contract) was recorded as a reduction to property, plant and equipment in 2004.

6. Long-Term Debt

OnCE ~~November 27,~~Casecnan ~~1995,~~financed ~~the~~a ~~Company~~portion ~~issued $371.5 million~~ of ~~notes and bonds (~~the ~~“Securities”)~~costs ~~to finance the construction~~ of the Casecnan Project. ~~These~~through the ~~debts~~issuance ~~consisted~~ of ~~$75~~long-term debt.0 ~~million~~At ~~Senior~~December ~~Secured~~31, ~~Floating~~2008 ~~Rate~~and ~~Notes (“FRNs”) bearing interest at LIBOR plus 3.00%~~2007, ~~which~~long-term ~~were paid in installments through~~debt ~~November 15,~~outstanding ~~2002;~~was $~~125~~30.09 million ~~Senior~~and ~~Secured~~$68.6 ~~Series~~million, Arespectively. ~~Notes~~The ~~(“Series A~~annual ~~Notes”)~~maturities ~~with~~of ~~interest~~the atCompany’s ~~11.45%~~long-term ~~payable~~debt inare ~~semiannual installments up to 2005; and~~ $~~171~~13.57 million ~~Senior~~in ~~Secured~~2009, ~~Series B Bonds (“Series B Bonds”) with~~$17.2 ~~interest~~million ~~at 11.95% payable~~ in ~~semiannual~~2010 ~~installments~~and up$- ~~to 2010~~thereafter. For the year ended December 31, ~~2004~~2008, the ~~Series~~long-term Adebt ~~Notes~~had ~~and~~an ~~Series B Bonds had~~ effective interest ~~rates~~rate of 1314.723% ~~and 13.72%~~, ~~respectively,~~ inclusive of bond issue cost amortization.

The ~~repayment~~long-term ~~schedule~~debt is assecured ~~follows~~by ~~(in~~an ~~thousands):~~assignment of all revenue that will be received from the Casecnan Project, a collateral assignment of all material contracts, a pledge of 100% of the capital stock of the Company and a lien on all other material assets and property interests of the Company.

	Series A Notes		Series B Notes		Total
2005	$	48,750		6,003		54,753
2006		-		36,015		36,015
2007		-		37,730		37,730
2008		-		37,730		37,730
2009		-		13,720		13,720
2010		-		17,150		17,150
	$	48,750	$	148,348	$	197,098

The Securities are senior debt of the Company and are secured by an assignment of all revenues that will be received from the Casecnan Project, a collateral assignment of all material contracts, a lien on any accounts and funds on deposit under a Deposit and Disbursement Agreement, a pledge of 100% of the capital stock of the Company and a lien on all other material assets and property interests of the Company. The Securities rank pari passu with and will share the collateral on a pro rata basis with other senior secured debt, if any.

The Securities are subject to certain optional and mandatory redemption schemes as provided for in the Trust Indenture. The Series A Notes are subject to optional redemption by the Company, in whole and not in part, at par plus accrued interest to the Redemption Date. The Series B Bonds are subject to optional redemption by the Company, at any time, in whole or in part, pro rata, at par plus accrued interest to the redemption date plus a premium, calculated to “make whole” to comparable U.S. Treasury Securities plus 150 basis points. The Company also had the option to redeem the securities, in whole or in part, at par plus accrued interest at any time if, as a result of any change in Philippine tax law or in the application or interpretation of Philippine tax law occurring after the date of issuance of the Securities, the Company is required to pay certain additional amounts described in the Trust Indenture. The Securities are subject to mandatory redemption, pro rata, at par plus accrued interest to the redemption date; (a) upon the receipt by the Company of loss proceeds that exceed $15.0 million in respect of certain events of property or casualty loss or similar events, unless the funds are to be utilized by the Company for an Approved Restoration Plan; or (b) upon the receipt by the Company of proceeds realized in connection with a Project Agreement Buyout.

When a Change in Control occurs, each holder of the Securities (“Holder”) will have the right to require the Company to repurchase all or any part of such Holder’s Securities at a cash purchase price equal to 101% of the principal amount thereof, plus accrued interest to the date of repurchase in accordance with the procedures set forth in the Trust Indenture. There is no assurance that upon a Change in Control the Company will have sufficient funds to repurchase the Securities.

The debt covenants contain certain restrictions as to incurrence of additional indebtedness; merger, consolidation, dissolution, or any significant change in corporate structure; non-arm’s length transactions or agreements with affiliates; sale, lease, or transfer of properties material to the Casecnan Project, among others. In connection with the foregoing secured indebtedness, the Company, on November 27, 1995, entered into a Deposit and Disbursement Agreement whereby JPMorgan Chase Bank, N.A. (formerly known as Chemical Trust Company of California) acts as a depositary and a collateral agent. As a depositary agent, it will hold monies, instruments and Securities pledged by the Company to the collateral agent. The terms of this agreement require the establishment of several funds, which include a Capital Contribution Fund. Pursuant to this requirement, the Company’s stockholders deposited an aggregate capital contribution of approximately $123.3 million to the fund, which was strictly used to fund the construction of the Casecnan Project when the proceeds from the Series A Notes and Series B Bonds were fully utilized. The contributions are included in the “Additional paid-in capital” account in the accompanying balance sheets.

7. Income Taxes

~~Tax~~During ~~expense~~the inyears ~~2003~~ended ofDecember 31, ~~$25.7~~2008, ~~million~~2007 ~~consists~~and ~~primarily~~2006, ofCE ~~the~~Casecnan incurred $2428.2 million, $4.6 million and $2.3 million, respectively, of income taxes. ~~paid~~Prior into ~~connection with~~ the ~~NIA~~December 11, ~~Arbitration~~2007, ~~Settlement~~expiration ~~and the settlement~~ of the ~~BIR~~income ~~audits~~tax holiday ~~for~~granted ~~1996~~ to ~~1998~~the ~~and~~Company ~~2000~~by tothe ~~2001.~~Philippine ~~Since~~Board ~~commencing~~of ~~commercial operations in December 2001~~Investments, ~~the~~income taxes ~~Company~~were ~~has~~ incurred noonly ~~income tax expense~~ on ~~its~~ ~~results~~interest ~~from~~income ~~operations~~earned ~~due~~outside tothe aPhilippines ~~six~~and on ~~year~~other income ~~tax~~not ~~holiday~~covered ~~received~~by ~~from~~ the ~~Philippine Board of Investments. The Company’s deferred~~ income tax ~~asset of $5~~holiday.4 ~~million~~After ~~as of~~ December 31, 2007, ~~2004~~the ~~and~~Company’s ~~2003~~taxable ~~(net~~income ofis asubject ~~valuation~~to ~~allowance of~~income ~~$2.4~~tax ~~million)~~at ~~consists mainly of~~ the ~~difference between the financial~~Philippine ~~reporting~~statutory ~~basis~~rate ~~and~~of ~~the~~35% ~~tax~~in ~~reporting~~2008 ~~basis for development~~ and ~~construction costs~~30% thereafter. The ~~valuation~~following ~~allowance~~table ~~is recognized for~~ reconciles the ~~portion~~Philippine ofstatutory ~~the deferred income~~ tax ~~asset~~rate ~~for~~to ~~which~~ the effective tax ~~benefit~~rate ~~will~~applicable ~~not~~to beincome before ~~realized~~income ~~due~~tax toexpense for the ~~income~~ ~~tax~~years ~~holiday.~~ended December 31:

	2008			2007			2006

Philippine statutory rate		35	%		35	%		35	%
Income tax holiday		-			(30	)		(33	)
Optional standard deduction		(7	)		-			-
Effective tax rate		28	%		5	%		2	%

The Company’s deferred income tax asset of $7.0 million and $5.2 million as of December 31, 2008 and 2007, respectively, consists mainly of the difference between the financial reporting basis and the tax reporting basis for development and construction costs.

8. Related Party Transactions

In the normal course of business, the Company transacts with ~~its~~related ~~affiliates~~parties ~~in the form~~on ofcommercial ~~advances~~terms ~~for~~comparable ~~construction~~to ~~related~~transactions ~~and~~with ~~operating~~third ~~expenses~~parties. The payable to affiliates was $352.1 7 million and $342.7 5 million at December 31, ~~2004 and~~2008 ~~2003~~and 2007, respectively. Costs incurred by the Company in transactions with ~~related~~ related parties amounted to $1.5 8 million, $21.3 4 million and $13.3 million infor ~~2004~~the years ended December 31, ~~2003~~ 2008, 2007 and ~~2002~~2006, respectively, and consist primarily of ~~reimbursement~~cost ~~for costs paid by affiliates on behalf of the Company~~allocations.

32As of December 31, 2008 and 2007, the Company had outstanding $7.1 million and $39.2 million, respectively, of unsecured subordinated notes payable (the “Notes”) to CE Casecnan Ltd., a shareholder. The Notes had a maturity of November 1, 2015, and bore an interest rate consisting of London Interbank Offer Rate plus 5.25%. However, the Notes were redeemable at any time prior to maturity upon demand from CE Casecnan Ltd. Interest expense on the Notes was $1.8 million, $5.3 million and $5.3 million for the years ended December 31, 2008, 2007 and 2006, respectively. As of December 31, 2008, the effective interest rate on the Notes was 7.85%.

~~As of~~On ~~December~~May 3115, ~~2004 and 2003~~2007, ~~the Company had outstanding $51.3 million of unsecured subordinated notes payable to~~ CE Casecnan Ltd., ademanded ~~stockholder,~~payment ~~due November 15,~~of ~~2005.~~the ~~The unsecured notes bear interest at LIBOR plus two (2%) percent which is payable every May 15 and November 15~~Notes. ~~Interest~~To ~~expense on~~ the ~~unsecured~~extent ~~notes~~that ~~was $1.8 million, $1.7 million and $1.9 million for~~ the ~~years~~Company ~~ended~~does ~~December 31,~~not ~~2004,~~have ~~2003~~available ~~and~~cash ~~2002,~~from ~~respectively.~~distributions ~~Any~~to ~~overdue~~pay ~~payment~~such ofamount ~~principal~~in orfull, ~~interest payable on~~ the ~~notes~~Company shall ~~increase~~be ~~the annual~~deemed ~~interest~~to byhave ~~two~~satisfied ~~(2%)~~this demand ~~percent.~~by ~~At December 31~~paying, ~~2004,~~to the ~~effective interest~~extent ~~rate~~of onsuch ~~the~~available ~~notes~~cash, ~~was~~first ~~4.49%.~~accrued ~~The notes may be prepaid at any time without premium or penalty~~ but ~~with accrued~~ unpaid interest, ifon ~~any.~~the ~~The~~outstanding ~~unsecured subordinated notes and any and all payments, whether of~~ principal, ~~interest~~amount ~~or otherwise are subject in all respects to the terms~~ of the ~~Subordination Agreement dated November 15~~Notes, ~~2001 between CE Casecnan Ltd.~~ and ~~the~~then ~~Company~~the inoutstanding ~~favor~~principal amount of the ~~Trustee,~~Notes. ~~the~~To ~~Collateral Agent,~~ the ~~co-collateral~~extent ~~agent,~~that ~~the~~such available ~~Depositary,~~cash ~~any~~is ~~party~~insufficient ~~that~~to ~~becomes~~pay aany ~~Permitted~~accrued ~~Counterparty~~interest ~~under an Interest Rate~~and/~~Currency~~or ~~Protection~~outstanding ~~Agreement~~principal, the ~~and~~Company ~~any~~shall ~~party~~not ~~that~~be ~~becomes~~deemed ain ~~working~~default ~~capital facility agent~~ and ~~any~~such ~~other~~amounts ~~Person~~shall ~~that becomes a secured party under the~~remain ~~Intercreditor~~outstanding ~~Agreement.~~and ~~The~~payable ~~Company~~pursuant ~~intends~~ to ~~extend~~ the ~~term~~terms of the ~~notes~~Notes. On orFebruary 5, to2009, ~~convert~~CE Casecnan ~~them~~repaid ~~into some form of capital such that no current assets will be used or current liabilities created to retire~~ the ~~notes.~~outstanding Notes.

9. Commitments and Contingencies

~~Stockholder~~Shareholder Litigation

~~Pursuant~~In February 2002, pursuant to the share ownership adjustment mechanism in the CE Casecnan ~~stockholder~~ shareholder agreement, ~~which is based upon pro forma financial projections of the Casecnan Project prepared following commencement of commercial operations, in February 2002, MidAmerican~~MEHC’s indirect wholly owned subsidiary , CE Casecnan Ltd., advised the minority ~~stockholder~~shareholder of the Company, LaPrairie Group Contractors (International) Ltd. (“LPG,”) that ~~MidAmerican~~MEHC’s indirect ownership interest in CE Casecnan had increased to 100% effective from commencement of commercial operations. On July 8, 2002, LPG filed a complaint in the Superior Court of the State of California, City and County of San Francisco, against, ~~among others,~~ CE Casecnan Ltd. and ~~MidAmerican~~MEHC. ~~The~~On ~~Company~~January 3, 2006, isthe ~~not~~Superior aCourt ~~defendant~~of in the ~~action.~~State Onof ~~January 21,~~California ~~2004, CE Casecnan~~entered ~~Ltd.,~~a ~~LPG~~judgment ~~and~~in ~~the~~favor ~~Company~~of ~~entered~~LPG ~~into~~against aCE ~~status~~Casecnan ~~quo~~Ltd. ~~agreement~~Pursuant ~~pursuant~~ to ~~which~~ the ~~parties~~judgment, 15% ~~agreed~~of tothe ~~set~~distributions ~~aside~~of ~~certain~~the ~~distributions~~Company ~~related~~was todeposited ~~the~~into ~~shares~~escrow plus interest ~~subject~~at to9% ~~the~~per ~~LPG~~annum. ~~dispute~~The ~~and~~judgment CEwas ~~Casecnan~~appealed, ~~agreed~~and ~~not~~as toa ~~take~~result ~~any~~of ~~further~~the appellate ~~actions~~decision, ~~with~~CE ~~respect~~Casecnan toLtd. ~~such~~determined ~~distributions~~that ~~without~~LPG atwould ~~least~~retain 15ownership ~~days’~~of ~~prior~~10% of ~~notice~~the toshares ~~LPG.~~of ~~Accordingly~~the Company, ~~15%~~with of the ~~dividend~~remaining ~~declarations~~5% inshare ~~2004,~~to ~~totaling $15.9~~be ~~million,~~transferred ~~was~~to ~~set~~CE Casecnan ~~aside~~Ltd. insubject ato ~~separate~~certain ~~bank~~buy-up ~~account~~rights inunder the ~~name~~shareholder ~~of the~~agreement, ~~Company~~which ~~and~~are isalso ~~shown~~being aslitigated. ~~restricted~~The ~~cash~~remaining ~~and~~issues ~~investments~~are ~~and~~fully ~~dividends~~briefed ~~payable in~~and ~~the~~pending ~~accompanying~~before ~~balance~~the ~~sheet~~court. atExercise ~~December 31,~~of ~~2004.~~the ~~The~~buy-up ~~court~~rights is ~~currently expected~~a totransaction ~~rule~~between shareholders onand ~~the~~is ~~first~~not ~~phase~~expected ofto ~~the~~have ~~litigation~~any ~~before~~impact ~~the~~on ~~end of~~ the ~~first~~ ~~quarter~~Company’s ofresults ~~2005~~of operations.

On July 1, 2005, MEHC and CE Casecnan Ltd. commenced an action against San Lorenzo Ruiz Builders and Developers Group, Inc. (“San Lorenzo”) in the District Court of Douglas County, Nebraska, seeking a declaratory judgment as to San Lorenzo’s right to repurchase 15% of the shares in the Company. On January 30, 2006, San Lorenzo filed a counterclaim against MEHC and CE Casecnan Ltd. seeking declaratory relief that it has effectively exercised its option to purchase 15% of the shares of the Company, that it is the rightful owner of such shares and that it is due all dividends paid on such shares. Currently, the action is in the discovery phase, and a trial has been set to begin in October 2009. The impact, if any, of this litigation on the Company cannot be determined at this time.

Supplemental Real Property Tax

On July 1, 2008, CE Casecnan received a supplemental real property tax assessment totaling $28.6 million from the province of Nueva Ecija and the municipality of Pantabangan for the years 2002 through the second quarter of 2008. CE Casecnan forwarded the assessment to NIA and the Philippine Department of Finance (“DOF”), who must authorize any payment for real property taxes and are obligated to reimburse the Company pursuant to the Project Agreement. On December 19, 2008, pursuant to written authorization from NIA and the DOF, CE Casecnan tendered $6.8 million as partial payment of the supplemental assessment and recorded a receivable of an equal amount for the expected full reimbursement to CE Casecnan from NIA. On January 16, 2009, CE Casecnan filed a protest on the supplemental assessment. No liability for supplemental real property tax has been recognized as the Company believes that the claim is without merit.

National Wealth Tax

On July 17, 2008, CE Casecnan received an assessment totaling $4.1 million from the municipality of Alfonso Castaneda for a share of national wealth tax it claims is owed by the Company for the years from 2002 through 2007. CE Casecnan forwarded the assessment to NIA and the DOF, who must authorize any payment for national wealth taxes and are obligated to reimburse the Company pursuant to the Project Agreement. On September 24, 2008, CE Casecnan received a temporary restraining order to enjoin the municipality of Alfonso Castaneda from pursuing its collection efforts until the matter can be decided by the court. A pre-trial hearing was held on December 11, 2008. The proceedings were suspended indefinitely to allow the municipality of Alfonso Castaneda to provide other local government units the opportunity to intervene in the case. No liability for national wealth tax has been recognized as the Company believes that the claim is without merit.

Franchise Tax

In 2006, CE Casecnan received franchise tax assessments for the years 2001 to 2006 totaling $2.2 million from the Province of Nueva Vizcaya. CE Casecnan believes that franchise tax is imposed on companies which have a secondary or special franchise from the government. CE Casecnan is an independent power producer and does not have a government franchise. The EPIRA provides that independent power generation is not a public utility operation and does not require a franchise. Therefore, the Company has not recognized a liability relating to these assessments. In 2006, CE Casecnan filed appeals of the assessments which are currently pending before the Supreme Court Office of the Court Administrator for reassignment to another court to hear and decide the cases.

Concentration of Risk

NIA’s ~~payments of~~ obligations under the Project Agreement are substantially denominated in U.S. Dollars and are the Company’s sole source of operating ~~revenues~~ revenue. Because of the Company’s dependence on NIA, any material failure of NIA to fulfill its obligations under the Project Agreement and any material failure of the ROP to fulfill its obligations under the Performance Undertaking would significantly impair the ability of the Company to meet its existing and future obligations, including obligations pertaining to its outstanding debt. No ~~stockholders~~shareholders, partners or affiliates of the Company, including ~~MidAmerican~~MEHC, and no directors, officers or employees of the Company ~~will~~ ~~guarantee~~have guaranteed or will be in any way liable for payment of the Company’s obligations. As a result, payment of the Company’s obligations depends upon the availability of sufficient ~~revenues~~revenue from the Company’s business after the payment of operating expenses.

~~Regulatory~~ ~~Environment~~25

The Philippine Congress has passed EPIRA which is aimed at restructuring the Philippine power industry, privatization of the Philippine National Power Corporation and introduction of a competitive electricity market, among other initiatives10. ~~The~~ Fair ~~implementation~~Value ~~of EPIRA may have an impact on the Company's future operations in the Philippines and the Philippines power industry as a whole, the effect of which is not yet determinable and estimable.~~Measurements

InThe carrying ~~June~~amounts of cash and cash equivalents, trade receivables and accounts ~~2004,~~payable ~~Philippine~~and ~~President~~other ~~Gloria~~accrued ~~Macapagal-Arroyo~~liabilities ~~was~~approximate ~~re-elected~~fair ~~for~~value abecause ~~six-year~~of the short-term, ~~through~~maturity ~~June~~of ~~2010~~these instruments. ~~President~~The ~~Macapagal-Arroyo~~Company has ~~announced~~auction arate securities ~~plan~~that ~~to pursue~~are ~~policies~~measured ~~targeting~~at ~~balanced~~fair ~~economic~~value ~~growth,~~in ~~strong~~the ~~market-based~~Financial Statements. The ~~industry,~~Company ~~and~~uses ~~poverty~~a ~~alleviation.~~three Inlevel ~~connection~~hierarchy ~~with~~for ~~these~~determining ~~policies,~~fair ~~the~~value and a financial ~~Philippine~~asset ~~Department~~or ofliability ~~Energy~~classification ~~has~~within ~~announced~~the anhierarchy ~~energy~~is ~~plan~~determined ~~focused~~based on ~~attaining~~the ~~full~~lowest ~~electrification~~level ~~throughout~~input that is significant to the ~~Philippines,~~fair ~~further~~value ~~developing~~measurement. The ~~and~~auction ~~utilizing~~rate ~~renewable~~securities ~~energy~~were ~~sources~~valued ~~for~~using ~~power~~internally developed discounted cash flow models based on available observable market data and ~~electrification~~the Company’s judgment about the assumptions, including liquidity and nonperformance risks, which ~~enhancing~~market ~~private~~participants ~~sector~~would ~~participation~~use in ~~all~~pricing ~~energy~~the ~~activities~~asset. ~~The implementation~~As ofsuch, ~~this~~the ~~energy~~Company considers ~~plan~~these ~~may~~securities ~~have~~to anbe ~~impact~~valued onusing ~~the~~Level ~~Company’s~~3 ~~future~~inputs. The following ~~operations~~table inreconciles the ~~Philippines~~beginning and ending balance of the ~~Philippine~~Company’s ~~power~~auction ~~industry~~rate securities asmeasured aat ~~whole,~~fair ~~the effect~~value ofon ~~which~~a isrecurring ~~not~~basis ~~yet~~for ~~determinable~~the oryear ~~estimable.~~ended December 31, 2008 (in thousands):


Beginning balance	$	21,409
Unrealized losses included in other comprehensive loss, net		(7,313	)
Ending balance	$	14,096

~~On December 6,~~The ~~2004, the Municipality of Alfonso Castaneda, Province of Nueva~~fair ~~Vizcaya~~value ~~(the "Municipality") purportedly passed an ordinance which required the submission~~ of ~~a tax clearance from each of~~ the provincial treasurer and municipal treasurer as a condition to issuing to CE Casecnan the annual renewal of its license to operate and business permit. On January 17, 2005, the Office of the Treasurer of the Municipality provided CE Casecnan a copy of such ordinance and threatened to close the Casecnan Project pending submittal by CE Casecnan of the tax clearance certificate. On January 19, 2005, the Municipality accepted CE Casecnan'Company’s ~~payment~~long-term ~~for~~debt the local business taxes, but the Municipality refused to renew CE Casecnan's license to operate and business permit, citing the lack of a tax clearance certificate. CE Casecnan cannot obtain a tax clearance certificate from the Province of Nueva Vizcaya until real property taxes due to the Province are paid. Pursuant to the Supplemental Agreement, CE Casecnan has ~~withheld~~ ~~payment~~been ofestimated ~~real~~based ~~property~~upon ~~taxes pending receipt of~~quoted ~~authorization~~market ~~from NIA~~prices ~~and the Philippine Department~~ of ~~Finance. Such withheld~~similar ~~amounts~~types ~~have been fully accrued as~~ of ~~December 31,~~arrangements ~~2004~~ as ~~part~~supplied ~~of accouts~~by ~~payable and trade receivable~~third-party ~~water delivery fee. CE Casecnan~~broker ~~continues to seek such authorization but as of February 11, 2005, it has not been received~~dealers. ~~NIA~~ ~~has~~The ~~filed~~following atable ~~protest~~presents ~~seeking to nullify~~ the ~~unwarranted~~ ~~alleged~~carrying ~~real~~amount ~~property tax assessments by the Municipality with the Local Board of Assessment Appeals~~ and ~~the~~estimated ~~case has been elevated to the Central~~fair ~~Board~~value of ~~Assessment Appeals on January 12, 2005. CE Casecnan filed an action in~~ the ~~Regional~~Company’s ~~Trial~~long-term ~~Court on January 21~~debt, ~~2005~~including ~~against~~ the ~~Municipality~~ ~~and~~current ~~was granted a temporary restraining order barring the Municipality from closing the Casecnan Project. On February 7~~portion, ~~2005,~~as ~~the~~of ~~temporary restraining order was extended pending resolution by the Court which will not occur until after all pleadings are filed on~~December ~~March 11, 2005. CE~~31 Casecnan also has filed an appeal with the Department of Justice challenging the validity of the municipal ordinance. CE Casecnan has discussed and intends to continue discussing this matter with appropriate Philippine government officials (in ~~an effort to resolve the situation, and believes the risk of the Casecnan Project being closed is remote.~~ thousands):

10. Fair Value of Financial Instruments

	2008				2007
	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Long-term debt	$	30,870	$	31,372	$	68,600	$	73,814

~~Statement of Financial Accounting Standards No~~11. ~~107, "Disclosures About Fair Value of~~ Comprehensive ~~Financial~~Income ~~Instruments,”~~and ~~defines~~Components ~~the fair value~~ of ~~financial~~Accumulated ~~instruments~~Other asComprehensive the amount at which the instruments could be exchanged in a current transaction between willing parties. Although management uses its best judgment in estimating the fair value of these financial instrumentsLoss, there are inherent limitations in any estimation technique. Therefore, the fair value estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current transaction. Net

The ~~methods~~components ~~and~~of ~~assumptions~~comprehensive ~~used~~income toare ~~estimate~~as ~~fair~~follows ~~value~~for ~~are~~the asyears ~~follows~~ended December 31 (in thousands):

Cash, trade receivable, note receivable, accounts payable and accrued expenses

	2008			2007		2006

Net income	$	73,835		$	78,539	$	100,804
Other comprehensive loss – unrealized losses on marketable securities, net of tax of $(2,194); $-; and $-		(5,119	)		-		-

Comprehensive income	$	68,716		$	78,539	$	100,804

~~The~~Accumulated ~~carrying~~other ~~amounts~~comprehensive ~~reported~~loss, net is included in the ~~balance~~Balance ~~sheets~~Sheets ~~approximate~~in ~~fair~~the shareholders’ ~~value~~equity ~~due~~section, toand consists of unrealized losses on marketable ~~the~~securities ~~liquidity~~totaling $5.1 million, ~~the~~net ~~short~~of ~~maturity~~tax ~~and~~of ~~nature~~$2.2 million, as of December ~~such~~31, ~~items~~2008.

~~Notes~~26 ~~payable~~

~~The Company has outstanding $51~~12.~~3 million of unsecured subordinated notes payable to~~ Operating CELease ~~Casecnan~~Rentals ~~Ltd., an affiliate, due November 15, 2005. The unsecured notes bear interest at LIBOR plus two (2%) percent which is payable every May 15~~ and ~~November 15.~~ ~~Interest~~Service expense on the unsecured notes was $1.7 million, $1.9 million and $0.2 million for the years ended December 31, 2003, 2002 and 2001, respectively. At December 31, 2004, the effective interest rate on the notes was 4.49%. It is not practicable to estimate the fair value of the notes payable for a variety of reasons, including the absence of quoted market prices for the notes and their subordination provisions to the existing senior debt of the Company.Income

~~Long-term~~The ~~debt~~following is the minimum lease rentals and service income to be received in the next five years and thereafter on the noncancelable operating lease as of December 31, 2008 (in thousands):

The fair value of the Company’s long-term debt is estimated based on quoted market prices of similar types of arrangements. At December 31, 2004, the Company had fixed-rate long-term debt of $197.1 million in principal amount and having a fair value of $220.0 million. At December 31, 2003, the Company had fixed-rate long-term debt of $246.5 million in principal amount and having a fair value of $255.5 million. These instruments are fixed-rate and, therefore, do not expose the Company to the risk of earnings loss due to changes in market interest rates. However, the fair value of these instruments would decrease by approximately $6.5 million if interest rates were to increase by 10% from their levels at December 31, 2004. In general, such a decrease in fair value would impact earnings and cash flows only if the Company were to reacquire all or a portion of these instruments prior to their maturity.

Years Ended December 31,	Amount

2009	$	88,049
2010		88,049
2011		88,049
2012		88,049
2013		88,049
2014 - 2021		704,392

34Total lease rentals and service income received was $137.6 million, $124.7 million and $148.5 million in 2008, 2007 and 2006, respectively, including variable lease rentals and service income of $49.6 million, $36.7 million and $62.1 million, respectively.

1113. Unaudited Quarterly Operating ~~lease rentals and service income~~Results

The following is the minimum lease rentals and service income in the next five years on the noncancelable operating lease as of December 31, 2004:

	2008
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
	(In thousands)
Revenue	$	28,894	$	28,757	$	38,685	$	41,302
Operating income		21,273		20,819		30,278		31,832
Net income		12,861		13,346		19,848		27,780

	2007
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
	(In thousands)
Revenue	$	24,338	$	22,014	$	27,501	$	50,880
Operating income		17,109		14,510		19,468		42,232
Net income		13,674		11,142		16,291		37,432

Year Ended December 31,		Amount
2005		82,140
2006		86,136
2007		88,053
2008		88,053
2009		88,053

Operating results reflect seasonal variations in rainfall and resulting water delivery and energy production.

~~Variable lease rentals and service income amounted to $26.9 million in 2004, $22.0 million in 2003 and $19.3 million in 2002.~~27

35Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

~~Item 9~~None. ~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.~~

~~None~~Item 9A (T). Controls and Procedures

~~Item 9A.~~ Disclosure Controls and Procedures.

AnAt the ~~evaluation~~end ~~was~~of ~~performed~~the period covered by this Annual Report on Form 10-K, the Company carried out an evaluation, under the supervision and with the participation of ~~the~~ the Company’s management, including the ~~respective~~President ~~persons~~(principal ~~acting~~executive asofficer) and ~~chief~~the ~~executive officer~~Chief ~~and~~Financial ~~chief~~Officer (principal financial officer), ~~regarding~~of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) ~~as of December 31, 2004~~. Based onupon that evaluation, the Company’s management, including the ~~respective~~President ~~persons~~(principal ~~acting~~executive asofficer) ~~chief~~and ~~executive~~the ~~officer~~Chief ~~and~~Financial ~~chief~~Officer (principal financial officer), concluded that the Company’s disclosure controls and procedures ~~were~~are effective in timely alerting them to material information relating to the Company required to be included in the Company’s periodic SEC filings. There ~~have~~has been no ~~significant~~change ~~changes~~ in the Company’s internal ~~controls~~control orover infinancial ~~other~~reporting ~~factors~~during the quarter ended December 31, 2008, that ~~could~~has ~~significantly~~materially ~~affect~~affected, or is reasonably likely to materially affect, the Company’s internal ~~controls~~control over financial reporting.

~~Item 9B. Other~~Management’s ~~Information.~~Report on Internal Control over Financial Reporting

~~None~~Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Under the supervision and with the participation of the Company’s management, including the President (principal executive officer) and the Chief Financial Officer (principal financial officer), the Company’s management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008, as required by the Securities Exchange Act of 1934 Rule 13a-15(c). In making this assessment, the Company’s management used the criteria set forth in the framework in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation conducted under the framework in “Internal Control - Integrated Framework,” the Company’s management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2008.

36This report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this Annual Report on Form 10-K.

CE Casecnan Water and Energy Company, Inc.

February 25, 2009

Item 9B.

Other Information

None.

PART III

Item 10. Directors, ~~and~~ Executive Officers ofand ~~the~~Corporate ~~Registrant.~~Governance

The following table sets forth the names, ages, and positions of the directors and executive officers of the Company as of December 31, 2008:

David L. Sokol	48	Director and Chairman
Douglas L. Anderson	50	Director and Chairman
Gregory E. Abel	42	Vice Chairman
Joseph L. Sullivan	54	Director, President and General Manager
Joseph L. Sullivan	50	Director, President and General Manager
Patrick J. Goodman	42	Director, Senior Vice President and Chief Financial Officer
James D. Stallmeyer	47	Vice President
P. Eric Connor	60	Director
Patrick J. Goodman	38	Director, Senior Vice President and Chief Financial Officer
Brian K. Hankel	46	Vice President and Treasurer
Douglas L. Anderson	46	Director, Senior Vice President, General Counsel and Assistant Secretary
Scott LaPrairie	51	Director
Brian K. Hankel	42	Vice President and Treasurer
Mitchell L. Pirnie	50	Vice President and General Counsel
Jose R. Sandejas	68	Director and Corporate Secretary
Eulogio Wilfredo G. Sarmago	47	Director
Jose Jaime Cruz	34	Director and Assistant Corporate Secretary
Trinity S. Gatuz	42	Director and Vice President
David A. Baldwin	40	Director
Belinda E. Dugan	40	Director and Corporate Counsel
Scott LaPrairie	47	Director
Suzy Lyn A. Bayona-Salova	33	Director and Head of Accounting
Linda B. Castillo	45	Director
Pearl T. Liu	53	Corporate Secretary

Directors of the Company are elected annually and hold office until a successor is elected. Executive officers are chosen from time to time by vote of the Board of Directors. Pursuant to the terms of the ~~Stockholders~~Shareholders Agreement, CE Casecnan Ltd. is entitled to elect seven of the directors, and each minority investor is entitled to elect one director.

~~David~~ Douglas L. ~~Sokol~~Anderson. In addition to serving as a Director and Chairman offor the Company, Mr. ~~Sokol~~Anderson has been ~~Chief~~Senior ~~Executive~~Vice ~~Officer of MidAmerican since April 19, 1993 and served as~~ President ~~of MidAmerican from April 19~~, ~~1993~~General ~~until~~Counsel ~~January 21, 1995.~~and ~~Mr.~~Corporate ~~Sokol~~Secretary ~~has been Chairman~~ of ~~the Board of Directors since May 1994 and a~~MEHC ~~director of MidAmerican~~ since ~~March~~2001. ~~1991~~Mr. ~~Formerly,~~Anderson ~~among~~joined ~~other~~MEHC ~~positions held~~ in ~~the~~1993. ~~independent power industry,~~ Mr. ~~Sokol~~Anderson ~~served~~is asalso ~~the~~a ~~President~~director ~~and Chief Executive Officer~~ of ~~Kiewit Energy Company~~ PacifiCorp, ~~which~~an ataffiliate ~~that time was a wholly owned subsidiary~~ of ~~Peter~~the ~~Kiewit Sons’, Inc~~Company. ~~and Ogden Projects, Inc.~~

~~Gregory E~~Joseph L. ~~Abel~~Sullivan. In addition to serving as ~~Vice Chairman of the Company~~Director, ~~Mr. Abel is~~ President and ~~Chief~~ ~~Operating~~General ~~Officer~~Manager offor ~~MidAmerican.~~the Company, Mr. ~~Abel~~Sullivan ~~joined MidAmerican in 1992. Mr. Abel~~ is aPresident ~~Chartered Accountant~~ and ~~from~~General ~~1984~~Manager tofor ~~1992~~certain ~~was~~affiliates ~~employed~~of ~~by Price~~the ~~Waterhouse~~Company. AsFrom a2002 ~~Manager~~to in2004, ~~the~~Mr. ~~San~~Sullivan ~~Francisco~~served ~~office~~as ofExecutive ~~Price~~Vice ~~Waterhouse,~~President ~~he was~~for ~~responsible~~Operations ~~for~~of ~~clients~~Mirant ~~in the energy industry~~Philippines.

~~Joseph L~~Patrick J. ~~Sullivan~~Goodman. In addition to serving as Director, ~~President~~Senior ~~and~~Vice ~~General Manager for the Company, Mr. Sullivan is~~ President and ~~General~~Chief ~~Manager,~~Financial Officer ~~Philippines~~ for ~~affiliates of~~ the ~~Company.~~ ~~From 2002 to 2004~~Company, Mr. Goodman ~~Sullivan~~has ~~served~~been asSenior ~~Executive~~ Vice President ~~for~~and ~~Operations~~Chief ofFinancial ~~Mirant~~Officer ~~Philippines.~~of ~~From~~MEHC ~~2001~~since to1999. ~~2002,~~ Mr. Goodman ~~Sullivan~~joined ~~served~~MEHC asin ~~Station~~1995. ~~Manager of Mirant Sual Power Corporation~~Mr. ~~Prior~~Goodman tois ~~2001,~~also ~~he held~~ a ~~series~~ director of ~~management and engineering positions at Cajun Electric Power Cooperative, Inc~~PacifiCorp. ~~and Alabama Power Company.~~

~~James D~~P. ~~Stallmeyer~~Eric Connor. In addition to serving as ~~Vice~~a ~~President~~Director of the Company, Mr. ~~Stallmeyer~~Connor ~~is Commercial~~has ~~Director~~been ~~and~~Senior ~~General~~Vice ~~Counsel~~President and ofChief ~~Northern~~Procurement ~~Electric.~~Officer ~~Mr. Stallmeyer joined affiliates~~ of ~~the~~MEHC ~~Company~~since ~~in 1993~~2003. ~~Mr.~~From ~~Stallmeyer~~1999 ~~practiced in the public finance and banking areas at Chapman and Cutler LLP in Chicago from 1984~~ to ~~1987 and~~2003, ~~in the corporate finance department from 1989 to 1993.~~ Mr. ~~Stallmeyer was an~~Connor ~~attorney~~served inas ~~the~~President ~~public~~and ~~finance~~Chief ~~department~~Operating ofOfficer ~~the Chicago office~~ of ~~Skadden~~Northern Electric, ~~Arps,~~ ~~Slate~~plc, ~~Meagher & Flom LLP in 1987 and 1988 and was a legal writing~~an ~~instructor~~affiliate atof the ~~University~~Company. ofMr. ~~Illinois~~Connor ~~College~~joined ofMEHC ~~Law~~ in ~~1988 and 1989~~1992.

~~Patrick J~~Brian K. ~~Goodman~~Hankel. In ~~addition~~ addition to serving as ~~Director, Senior~~ Vice President and ~~Chief~~Treasurer ~~Financial Officer~~ for the Company, Mr. ~~Goodman~~Hankel ishas ~~Senior~~ been Vice President and ~~Chief Financial~~Treasurer ~~Officer~~ for ~~MidAmerican~~MEHC since 1997. Mr. ~~Goodman~~Hankel joined ~~MidAmerican~~MEHC in ~~June 1995,~~ ~~and served as in various accounting positions, including Senior Vice President and Chief Accounting Officer~~1992. ~~Prior to joining MidAmerican, Mr. Goodman was a financial manager for National Indemnity Company and a senior associate at Coopers & Lybrand LLP.~~

Douglas L. Anderson. In addition to serving as Director, Senior Vice President, General Counsel and Assistant Secretary for the Company, Mr. Anderson is Senior Vice President, General Counsel and Corporate Secretary of MidAmerican. Mr. Anderson joined MidAmerican in February 1993. Prior to that, Mr. Anderson was in private practice.

Brian K. Hankel. In addition to serving as Vice President and Treasurer for the Company, Mr. Hankel is Vice President and Treasurer for MidAmerican. Mr. Hankel joined MidAmerican in February 1992 as a Treasury Analyst and served in that position to December 1995. Mr. Hankel was appointed Assistant Treasurer in January 1996 and was appointed Treasurer in January 1997. Prior to joining the Company, Mr. Hankel was a Money Position Analyst at FirsTier Bank of Lincoln from 1988 to 1992.

Jose R. Sandejas. In addition to serving as a Director and Corporate Secretary of the Company, Mr. Sandejas is a partner with the law firm of Quisumbing Torres.

Jose Jaime Cruz. In addition to serving as a Director and Assistant Corporate Secretary of the Company, Mr. Cruz is an attorney with the law firm of Quisumbing Torres.

David A. Baldwin. In addition to serving as Director, Mr. Baldwin is Senior Vice President of Development for MidAmerican. From 1998 to March 2004, Mr. Baldwin served as President and General Manager of MidAmerican affiliates in the Philippines. From December 1996 to June 1997, Mr. Baldwin served as Vice President, Project Development for Asia Power Ltd. in Hong Kong. From October 1994 to December 1996, Mr. Baldwin was Project Director at SouthPac Corporation Ltd. in New Zealand and, prior to that, he held a series of project management and engineering positions at Shell International in the Netherlands and New Zealand.

Marivic Punzalan-Espiritu. In addition to serving as a Director of the Company, Ms. Punzalan-Espiritu is a partner with the law firm of Quisumbing Torres.

Scott LaPrairie. In addition to serving as a Director of the Company, Mr. LaPrairie is President and Chief Executive Officer of the LaPrairie Group of Companies.

~~Linda B~~Mitchell L. ~~Castillo~~Pirnie. In addition to serving as aVice ~~Director~~President ofand General Counsel for the Company, MsMr. Pirnie ~~Castillo~~also isserves ~~corporate~~as Vice President, General Counsel and Director of CE ~~counsel~~Generation, ~~for~~LLC, an affiliate of the Company. ~~and~~Mr. ~~certain~~Pirnie ofjoined ~~its~~MEHC ~~affiliates~~in 1997.

Eulogio Wilfredo G. Sarmago. In addition to serving as a Director of the Company, Mr. Sarmago has been Plant Manager of the Company since September 2005. Prior to his assignment at CE Casecnan, Mr. Sarmago was plant manager of Visayas Geothermal Power Company, an affiliated company.

Trinity S. Gatuz. In addition to serving as a Director of the Company, Ms. Gatuz has been Vice President for the Company and certain affiliates since 2004. Ms. Gatuz served as Vice President – Finance and Accounting for the Company and certain affiliates since 2001.

Belinda E. Dugan. In addition to serving as a Director of the Company, Ms. Dugan has been Corporate Counsel for the Company since January 1, 2008. Ms. Dugan served as Legal Counsel for the Company and certain affiliates since 2003.

Suzy Lyn A. Bayona-Salova. In addition to serving as a Director of the Company, Ms. Bayona-Salova has served as Head of Accounting since 2008 and as Senior Accountant to the Company and certain affiliates since 2002.

Pearl T. Liu. In addition to serving as Corporate Secretary for the Company since May 13, 2005, Ms. Liu heads the Corporate and Commercial Practice Group of Quisumbing Torres.

Audit Committee Matters

During the ~~fiscal~~ year ended December 31, ~~2004~~2008, and as of the date of this Annual Report, on Form 10-K, the Company’s Board of Directors had no committees, including any ~~audit committee. The~~ ~~Company is not an issuer as defined in the Sarbanes-Oxley Act of 2002, it does not have a class of securities listed on any securities exchange, and it is not required to have an~~ audit committee. ~~Patrick J. Goodman qualifies as an "audit committee financial expert." Mr. Goodman is not independent within the meaning of Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.~~

Code of Ethics

The Company has adopted a code of ethics that applies to its principal executive officer, its principal financial and accounting officer, or persons acting in such capacities, and tocertain ~~its~~other ~~controller~~covered officers. The code of ethics is incorporated ~~filed~~by asreference anin ~~exhibit~~the exhibits to this Annual Report on Form 10-K.

Item 11. Executive Compensation.

None of the executive officers or directors of the Company receives compensation from the Company for services as officers or directors of the Company. All directors are reimbursed for their expenses in attending board and committee meetings.

38 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Description of Capital Stock

As of December 31, ~~2004~~2008, the authorized capital stock of the Company consisted of 2,148,000 shares of common stock, par value ~~1.00~~one Philippine peso ($0.038) per share (the “Common Stock”), of which 767,162 shares were outstanding. There is no public trading market for the Common Stock. As of December 31, ~~2004~~2008, there were 11 holders of record of the Common Stock. Holders of Common Stock are entitled to one vote per share on any matter coming before the ~~stockholders~~shareholders for a vote.

The Trust Indenture contains certain restrictions on the payment of dividends with respect to the Common Stock.

Principal ~~Stockholders~~Shareholders

The following table sets forth certain information ~~with~~regarding ~~respect~~beneficial toownership ~~all~~of the ~~persons~~Company’s ~~who~~shares ~~own beneficially~~of ~~more~~common ~~than~~stock 5%held by each of the ~~common~~Company’s ~~stock~~directors, executive officers and by all directors and executive officers of the Company as a group. as of January 31, 2009:

	Number of
Name and Address of Beneficial Owner	Number of Shares Beneficially Owned*	Percentage of Class
Name and Address of Owner	Shares Owned*	% of Common
CE Casecnan II, Inc.	537,005	70% (1)
1. CE Casecnan II, Inc. (1)	537,005	70% (1)
CE Casecnan Ltd.	153,432	20% (2) (3)
2. CE Casecnan Ltd.	230,148	30% (2) (3)
LaPrairie Group Contractors	76,716	10% (2)

* In addition, each director of the Company owns one share in the Company as required by Philippine law.

*	In addition, each director of the Company owns one share in the Company as required by Philippine law.

(1)	In April 2003, CE Casecnan Ltd., a Bermuda registered corporation assigned shares in CE Casecnan to CE Casecnan II, Inc., a Philippine corporation. CE Casecnan Ltd. and CE Casecnan II, Inc. are indirect, wholly-owned subsidiaries of MEHC.

(2)	Refer to Note 9 of Notes to Financial Statements included in Item 8 of this Form 10-K for additional information regarding shareholder litigation.

(1) In April 2003, CE Casecnan Ltd., a Bermuda registered corporation assigned shares in CE Casecnan to CE Casecnan II, Inc., a Philippine corporation. CE Casecnan Ltd and CE Casecnan II, Inc are indirectly owned by MidAmerican.30

(23) ~~Pursuant~~Includes rights to ~~the~~115,000 ~~share ownership adjustment mechanism in the CE Casecnan stockholder agreement~~shares, which isrights ~~based~~were ~~upon~~purchased ~~pro~~from ~~forma~~San ~~financial~~Lorenzo ~~projections~~Ruiz ofBuilders ~~the~~and ~~Casecnan~~Developers ~~Project prepared following commencement of commercial operations~~Group, ~~in February 2002, MidAmerican’s indirect wholly owned subsidiary CE Casecnan Ltd~~Inc., ~~advised~~(“San ~~the~~Lorenzo”) ~~minority stockholder of the Company, LPG, that MidAmerican’s indirect ownership interest~~ in ~~CE Casecnan had increased to 100% effective from commencement of commercial operations~~1998. OnThe ~~July 8~~115,000 ~~2002,~~shares ~~LPG~~are ~~filed~~subject ato ~~complaint in~~ the ~~Superior~~ownership ~~Court~~adjustment ofmechanism ~~the State of California, City and County of San Francisco against, among others, CE Casecnan Ltd. and MidAmerican. The Company is not a defendant~~ in the ~~action.~~Shareholders ~~On January 21, 2004, CE Casecnan Ltd~~Agreement., ~~LPG~~San ~~and~~Lorenzo ~~the~~retained ~~Company~~an ~~entered~~option ~~into a status quo agreement pursuant~~ to ~~which~~repurchase the ~~parties~~115,000 ~~agreed to set aside certain distributions related to the~~ shares, ~~subject~~if ~~to the LPG dispute and CE Casecnan agreed not to take~~ any, ~~further~~remaining ~~actions~~after ~~with respect to~~ such ~~distributions~~ownership ~~without~~adjustment. atRefer ~~least 15 days’ prior notice~~ to ~~LPG.~~Note ~~Accordingly, 15% of the dividend declarations for the year ended December 31, 2004, totaling $15.~~9 ~~million, was set aside in a separate bank account in the name~~ of ~~the~~Notes ~~Company~~to ~~and~~Financial isStatements ~~shown~~included ~~as restricted cash and investments and dividends payable~~ in ~~the~~Item ~~accompanying~~8 ~~balance sheet at December 31, 2004. The court is currently expected to rule on the first phase~~ of ~~the~~this ~~litigation~~Form ~~before~~10-K ~~the~~for ~~end~~additional ofinformation ~~the~~regarding ~~first~~shareholder ~~quarter of 2005~~litigation.

~~(3)~~Item ~~Includes~~13. ~~rights~~Certain toRelationships ~~115,000 shares, which rights were purchased from San Lorenzo Ruiz Builders~~ and ~~Developers~~Related ~~Group~~Transactions, ~~Inc.~~and inDirector 1998. The 115,000 shares are subject to the ownership adjustment mechanism in the Stockholders Agreement discussed in Note (2). San Lorenzo retained an option to repurchase the 115,000 shares, if any, remaining after such ownership adjustment.Independence

~~Item 13. Certain Relationships~~Not ~~and Related Transactions~~applicable.

~~Not Applicable~~Item 14. Principal Accountant Fees and Services

39On September 12, 2008, Isla Lipana & Co. resigned as the independent registered public accounting firm of the Company. On October 2, 2008, the Company’s Board of Directors approved the appointment of Manabat Delgado Amper & Co. (a Deloitte Touche Tohmatsu member firm) as its new independent registered public accounting firm for the year ended December 31, 2008.

~~Item~~The following 14table shows the Company’s fees paid or accrued for audit and audit-related services and fees paid for tax and all other services rendered by Deloitte & Touche, LLP, the member firms of Deloitte Touche Tohmatsu, including Manabat Delgado Amper & Co. ~~Principal~~, ~~Accountant~~and their respective affiliates ~~Fees~~(collectively, the “Deloitte Entities”) for the three-month period ended December 31, 2008, and ~~Services~~Isla Lipana & Co., (a PricewaterhouseCoopers member firm) for the nine-month period ended September 30, 2008 and the year ended December 31, 2007 (in thousands):

Aggregate fees billed to CE Casecnan as a entity during the fiscal years ending December 31, 2004 and 2003 by its principal accounting firm, Joaquin Cunanan & Co. (A PricewaterhouseCoopers Member Firm) and their respective affiliates (collectively, " Joaquin Cunanan & Co."), are set forth below (in thousands).

	Three-Month		Nine-Month
	Period Ended		Period Ended		Year Ended
	December 31,		September 30,		December 31,
	2008		2008		2007

Audit fees (1)	$	144	$	23	$	252
Audit-related fees (2)		-		-		-
Tax fees (3)		-		36		19
All other fees		-		-		-
Total aggregate fees billed	$	144	$	59	$	271

		Year Ended December 31,
(1)	Audit fees include fees for the audit of the Company’s financial statements and interim reviews of the Company’s quarterly financial statements, audit services provided in connection with required statutory audits, and comfort letters, consents and other services related to SEC matters.
		2004		2003
(2)	Audit-related fees primarily include fees for assurance and related services for any other statutory or regulatory requirements, audits of certain employee benefit plans and consultation on various accounting and reporting matters.
Audit Fees (1)		$	32	$	222
(3)	Tax fees include fees for services relating to tax compliance, tax planning and tax advice. These services include assistance regarding tax compliance, tax return preparation and tax audits.
Audit-Related Fees (2)			3		-
Tax Fees (3)			31		388
All Other Fees (4)			-		-
Total aggregate fees billed		$	66	$	610

~~(1)~~The ~~Includes~~audit committee ~~the~~of ~~aggregate~~MEHC ~~fees~~reviewed ~~billed~~and ~~for~~approved ~~each of~~ the ~~last two fiscal years for professional~~ services rendered by ~~Joaquin~~Isla ~~Cunanan~~ Lipana & Co. in and for the ~~audit~~period of ~~the~~their ~~Company’s~~engagement ~~financial~~in ~~statements~~2008 and ~~review~~for offiscal ~~financial~~2007 as ~~statements~~set ~~included~~forth in the ~~Company’s~~table ~~Form~~above ~~10-K~~ and ~~10-Q~~concluded ~~for services~~ that ~~are~~the ~~normally~~non-audit ~~provided~~services bywere compatible ~~Joaquin Cunanan & Co. in connection~~ with ~~statutory~~maintaining ~~and~~the ~~regulatory~~principal ~~filings or engagements for those fiscal years~~accountant’s independence.

(2) Includes the aggregate fees billed in each of the last two fiscal years for assurance and related services by Joaquin Cunanan & Co. that are reasonably related to the performance of the audit or review of the registrant's financial statements. Services included in this category include audits of benefit plans, due diligence for possible acquisitions and consultation pertaining to new and proposed accounting and regulatory rules.31

~~(3)~~The ~~Includes~~audit committee of MEHC reviewed and approved the ~~aggregate~~services ~~fees~~rendered ~~billed~~by the Deloitte Entities in ~~each~~and for the period of their engagement in 2008 as set forth in the above ~~last~~table ~~two~~and ~~fiscal~~concluded ~~years~~that ~~for~~the ~~professional~~non-audit services ~~rendered~~were compatible with maintaining the principal accountant’s independence. Under the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by ~~Joaquin~~the ~~Cunanan~~principal accountant &require Coapproval in advance by the audit committee in order to assure that such services do not impair the principal accountant’s independence from the Company. ~~for~~Accordingly, ~~tax~~the ~~compliance~~audit committee has an Audit and Non-Audit Services Pre-Approval Policy (the “Policy”) that sets forth the procedures and the conditions pursuant to which services to be performed by the principal accountant are to be pre-approved. Pursuant to the Policy, ~~tax~~certain ~~advice~~services described in detail in the Policy may be pre-approved on an annual basis together with pre-approved maximum fee levels for such services. The services eligible for annual pre-approval consist of services that would be included under the categories of Audit Fees, Audit-Related Fees and ~~tax~~Tax ~~planning~~Fees. If not pre-approved on an annual basis, proposed services must otherwise be separately approved prior to being performed by the principal accountant. In addition, any services that receive annual pre-approval but exceed the pre-approved maximum fee level also will require separate approval by the audit committee prior to being performed. The Policy does not delegate to management the audit committee’s responsibilities to pre-approve services performed by the principal accountant.

(4) Includes the aggregate fees billed in each of the last two fiscal years for products and services provided by Joaquin Cunanan & Co., other than the services reported as “Audit Fees,” “Audit-Related Fees” or “Tax Fees.” 32

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)	Financial Statements and Schedules
	(i)	Financial Statements
	Financial Statements are included in Part II of this Form 10-K.
		Financial Statements are included in Item 8 of this Form 10-K.
	(ii)	Financial Statement Schedules
	Schedules have been omitted because they are either not applicable, not required or the information required to be set forth therein is included in the financial statements or notes thereto.
		Schedules not listed above have been omitted because they are either not applicable, not required or the information required to be set forth therein is included in the financial statements or notes thereto.
(b)	Exhibits
	The exhibits listed on the accompanying Exhibit Index are filed as part of this Annual Report.
(c)	Financial statements required by Regulation S-X, which are excluded from the Annual Report by Rule 14a-3(b).
	Not applicable.

4133

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the ~~Company~~registrant has duly caused this report to be signed on its behalf by ~~the~~ the undersigned, thereunto duly authorized, inon ~~the~~this ~~City~~13th ofday ~~Omaha, State~~ of ~~Nebraska,~~ on February 11, ~~2005~~2009.

CE CASECNAN WATER AND ENERGY COMPANY, INC. By: /s/ * Joseph L. Sullivan Joseph L. Sullivan President and General Manager (~~chief~~principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, ~~the Company has caused~~ this report tohas be been signed below by the following persons inon behalf of the ~~capacities~~registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ David L. Sokol*	Director and Chairman of the Board	February 11, 2005
/s/ Joseph L. Sullivan*	Director, President and General Manager	February 27, 2009
David L. Sokol
Joseph L. Sullivan	(principal executive officer)
/s/ Joseph L. Sullivan*	Director, President and General Manager	February 11, 2005
/s/ Patrick J. Goodman*	Director, Senior Vice President and Chief Financial Officer	February 27, 2009
Joseph L. Sullivan	(Principal Executive Officer)
Patrick J. Goodman	(principal financial and accounting officer)
/s/ Patrick J. Goodman*	Director, Senior Vice President and Chief Financial Officer	February 11, 2005
/s/ Douglas L. Anderson	Director and Chairman	February 27, 2009
Patrick J. Goodman	(Principal Financial Officer)
Douglas L. Anderson
/s/ Douglas L. Anderson	Director, Senior Vice President, General Counsel	February 11, 2005
/s/ Eulogio Wilfredo G. Sarmago *	Director	February 27, 2009
Douglas L. Anderson	and Assistant Secretary
Eulogio Wilfredo G. Sarmago
	Director	February 11, 2005
/s/ Trinity S. Gatuz*	Director and Vice President	February 27, 2009
Jose R. Sandejas
Trinity S. Gatuz
	Director	February 11, 2005
/s/ Belinda E. Dugan*	Director and Corporate Counsel	February 27, 2009
Jose Jaime Cruz
Belinda E. Dugan
/s/ David A. Baldwin*	Director	February 11, 2005
/s/ Suzy Lyn A. Bayona-Salova*	Director and Head of Accounting	February 27, 2009
David A. Baldwin
Suzy Lyn A. Bayona-Salova
	Director	February 11, 2005
/s/ P. Eric Connor*	Director	February 27, 2009
Scott LaPrairie
P. Eric Connor
/s/ Linda B. Castillo*	Director	February 11, 2005
Scott LaPrairie	Director	February 27, 2009
Linda B. Castillo
*By: /s/ Douglas L. Anderson
Douglas L. Anderson
Attorney-in-Fact

4234

EXHIBIT INDEX

Exhibit No.	Description
3.1	Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 the Company’s Registration Statement on Form S-4, as amended, dated January 25, 1996 (“Form S-4”)).
3.2	By-laws of the Company (incorporated by reference to Exhibit 3.2 the Company’s Form S-4).
4.1(a)	Trust Indenture, dated as of November 27, 1995, between Chemical Trust Company of California and the Company (incorporated by reference to Exhibit 4.1(a) the Company’s Form S-4).
4.1(b)	First Supplemental Indenture, dated as of April 10, 1996, between Chemical Trust Company of California and the Company (incorporated by reference to Exhibit 4.1(b) to the Company’s Form S-4).
4.2	Exchange and Registration Rights Agreement, dated as of November 27, 1995, by and among CS First Boston Corporation, Bear Stearns & Co. Inc., Lehman Brothers Inc. and the Company (incorporated by reference to Exhibit 4.2 the Company’s Form S-4).
4.3	Collateral Agency and Intercreditor Agreement, dated as of November 27, 1995, by and among Chemical Trust Company of California, Far East Bank & Trust Company and the Company (incorporated by reference to Exhibit 4.3 the Company’s Form S-4).
4.4	Mortgage and Security Agreement, dated as of November 10, 1995, by and among CE Casecnan Ltd., Kiewit Energy International (Bermuda) Ltd., La Prairie Group Contractors (International) Ltd., San Lorenzo Ruiz Builders and Developers Group, Inc., Chemical Trust Company of California, Far East Bank & Trust Company and the Company (incorporated by reference to Exhibit 4.4 the Company’s Form S-4).
4.6	Deposit and Disbursement Agreement, dated as of November 27, 1995, by and among the Company, Chemical Trust Company of California, Kiewit Energy Company and the Company (incorporated by reference to the Company’s Form S-4).
4.7	Consent of ~~NIA~~National Irrigation Administration, dated as of November 10, 1995, to the assignment of the Amended and Restated Casecnan Project Agreement (incorporated by reference to Exhibit 4.7 to the Company’s Form S-4).
4.8	Consent of the Republic of the Philippines, dated November 10, 1995, to the assignment of the Performance Undertaking and the Amended and Restated Casecnan Project Agreement (incorporated by reference to Exhibit 4.8 to the Company’s Form S-4).
10.1	Amended and Restated Casecnan Project Agreement, dated as of June 26, 1995, between the National Irrigation Administration and the Company (incorporated by reference to Exhibit 10.1 the Company’s Form S-4).
10.2	Performance Undertaking, dated as of July 20, 1995, executed by the Secretary of Finance on behalf of the Republic of the Philippines (incorporated by reference to Exhibit 10.2 to the Company’s Form S-4).
10.8	Supplemental Agreement between CE Casecnan Water and Energy Company, Inc. and the Philippines National Irrigation Administration dated as of September 29, 2003 (incorporated by reference to Exhibit 99.1 to the Company’s Form 8-K dated October 15, 2003).
14.1	CE Casecnan Water and Energy Company, Inc. Code of Ethics for Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer (incorporated by reference to Exhibit 14.1 to the Company’s Form 10-K dated December 31, 2003).
24	Power of Attorney

4335

31.1	Chief Executive Officer’s Certificate Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit No.	Description
31.2	Chief Financial Officer’s Certificate Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.1	Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Chief Executive Officer’s Certificate Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.2	Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.2	Chief Financial Officer’s Certificate Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.1	Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

44 36

Filing Compare · CE CASECNAN WATER & ENERGY CO INC