UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~June~~March 3031, ~~2008~~2009

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

For the transition period from ~~________to_______~~________to________

Commission File No. 001-12995

Commission	Exact name of registrant as specified in its charter;	IRS Employer
File Number	State or other jurisdiction of incorporation or organization	Identification No.

001-12995	CE CASECNAN WATER AND ENERGY COMPANY, INC.	Not Applicable

	24th Floor, 6750 Building, Ayala Avenue
	Makati, Metro Manila, Philippines
	011 63 2 892-0276

	N/A
(Former name, former address and former fiscal year, if changed since last report)

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.)
24th Floor, 6750 Building, Ayala Avenue Makati, Metro Manila, Philippines		Not Applicable
(Address of principal executive offices)		(Zip Code)
011 63 2 892-0276
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes T No *

Indicate by check mark whether the registrant ishas asubmitted ~~large~~electronically ~~accelerated~~and ~~filer,~~posted anon ~~accelerated~~its ~~filer~~corporate Web site, aif ~~non-accelerated~~any, ~~filer~~every orInteractive aData ~~smaller~~File ~~reporting~~required ~~company~~to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 ~~See~~of this chapter) during the ~~definitions~~preceding of12 ~~“large~~months ~~accelerated~~(or ~~filer,”~~for ~~“accelerated~~such ~~filer”~~shorter ~~and~~period ~~“smaller~~that the ~~reporting~~registrant ~~company”~~was inrequired ~~Rule~~to ~~12b-2~~submit ofand ~~the~~post ~~Exchange~~such ~~Act~~files).

Large accelerated filer * Accelerated filer * Non-accelerated filer T Smaller reporting company *Yes  No 

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

Large accelerated filer 

Accelerated filer 

Non-accelerated filer T

Smaller reporting company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange 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 investors. As of ~~July~~ 25April 23, ~~2008~~2009, the ~~number~~ number of outstanding shares of $0.038 par value common stock was 767,162.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

PART I

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4.	Controls and Procedures	17

PART II

Item 1.	Legal Proceedings	18

Item 1A.	Risk Factors	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	18

Item 4.	Submission of Matters to a Vote of Security Holders	18

Item 5.	Other Information	18

Item 6.	Exhibits	18

Signatures		19

Exhibit Index		20

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Submission of Matters to a Vote of Security Holders	20
Item 5.	Other Information	20
Item 6.	Exhibits	20
Signatures		21
Exhibit Index		22

PART I ~~– FINANCIAL INFORMATION~~

Item 1.

Financial Statements

~~Report~~REPORT ofOF ~~Independent~~INDEPENDENT ~~Registered~~REGISTERED ~~Public~~PUBLIC ~~Accounting~~ACCOUNTING ~~Firm~~FIRM

To the Board of Directors and Shareholders of

CE Casecnan Water and Energy Company, Inc.

We have reviewed the accompanying balance sheet of CE Casecnan Water and Energy Company, Inc. (the “Company”) as of ~~June~~March 3031, ~~2008~~2009, and the related statements of operations, ~~for~~cash ~~each of the three-month and six-month periods ended June 30~~flows, ~~2008~~ and ~~2007 and of~~ changes in shareholders’ ~~equity and of~~ ~~cash flows~~ equity for ~~each of~~ the ~~six~~three-month ~~periods~~period ~~ended~~then ~~June 30, 2008 and 2007~~ended. These interim financial statements are the responsibility of the Company’'s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical review procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to ~~the~~such ~~accompanying~~ interim financial statements for them to be in conformity ~~with~~ with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company ~~Accounting~~ Accounting Oversight Board (United States), the balance sheet of CE Casecnan Water and Energy Company, Inc. as of December 31, ~~2007~~2008, and the related statement ~~statements~~ of operations, of changes in ~~shareholders~~stockholders’ equity, and of cash flows for the year then ended (not presented herein),; and in our report dated February 27, ~~2008~~ 2009, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the ~~accompanying~~ accompanying balance sheet as of December 31, ~~2007,~~2008 is fairly stated, in all ~~material~~ material respects, in relation to the balance sheet from which it has been derived.

~~/s/~~The accompanying ~~Isla~~financial information for the three-month period ended March 31, ~~Lipana~~2008, &was Conot reviewed by us and, accordingly, we do not express any form of assurance on this information.

~~ISLA~~Manabat, ~~LIPANA~~Delgado, Amper & COCo.

ADeloitte ~~PricewaterhouseCoopers~~& ~~Member Firm~~Touche

Makati City, Philippines

~~July~~April 2524, ~~2008~~2009

CE CASECNAN WATER AND ENERGY COMPANY, INC.

BALANCE SHEETS (Unaudited)

(Amounts in thousands, except share data)

	As of
	June 30,			December 31,
	March 31,			December 31,
	2008			2007
	2009			2008
ASSETS
Current assets:
Cash and cash equivalents	$	2143,~~799~~357		$	3149,~~083~~350
Restricted cash and investments		2332,~~068~~088			22,~~414~~881
Trade receivable, net		1618,~~905~~250			20,~~365~~308
Other current assets		67,~~279~~936			67,~~653~~387
Total current assets		68101,~~051~~631			8099,~~515~~926
Property, plant and equipment, net		~~292~~276,~~377~~351			~~303~~281,~~056~~485
Other investments		614,~~921~~822			714,~~503~~096
Long-term restricted cash and investments		12,826			13,906
Deferred income taxes		6,692			6,995
Deferred income taxes		5,618			5,198
Other		183			222
Bond issue costs, net		381			539
Total assets	$	399,679		$	402,724
Total assets	$	386,174		$	410,717
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities	$	31,~~631~~044		$	51,~~171~~748
Dividends payable		1011,~~825~~325			10,825
Accrued interest		31,~~119~~383			73,~~801~~067
Income tax payable		6,657			3,032
Accrued property, income and other taxes		8,789			5,817
Payable to affiliates		2,~~597~~598			2,~~480~~726
Notes payable		~~7,115~~-			397,~~200~~115
Current portion of long-term debt		2513,~~725~~720			3713,~~730~~720
Total current liabilities		5938,~~669~~859			~~106~~45,~~239~~018
Deferred revenue		5,529			1,768
Long-term debt		17,150			17,150
Long-term debt		24,010			30,870
Total liabilities		56,009			62,168
Total liabilities		89,208			138,877
Commitments and contingencies (Note 6)
Shareholders’ equity:
Common stock – 2,148,000 shares authorized, one Philippine peso($0.038) par value; 767,162 shares issued and outstanding		29			29
Common stock – 2,148,000 shares authorized, one Philippine peso ($0.038) par value; 767,162 shares issued and outstanding		29			29
Additional paid-in capital		123,807			123,807
Retained earnings		~~174~~224,~~211~~445			~~148~~221,~~004~~839
Accumulated other comprehensive loss, net		(14,~~081~~611	)		-(5,119	)
Total shareholders’ equity		~~296~~343,~~966~~670			~~271~~340,~~840~~556
Total liabilities and shareholders’ equity	$	~~386~~399,~~174~~679		$	~~410~~402,~~717~~724

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

CE CASECNAN WATER AND ENERGY COMPANY, INC.

STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in thousands)

Three-Month Periods

~~Six-Month Periods~~

Ended June 30,

Ended March 31,

2008

2007

2008

2007

2009

2008

Revenue:

Lease rentals and service contracts

2823,~~757~~499

2228,~~014~~894

~~57,651~~

~~46,352~~

Operating expenses:

Depreciation

5,~~440~~494

5,~~401~~402

~~10,842~~

~~10,807~~

Plant operations and other operating expenses

21,~~498~~969

2,~~103~~219

~~4,717~~

~~3,926~~

Total operating expenses

7,~~938~~463

7,~~504~~621

~~15,559~~

~~14,733~~

Operating income

2016,~~819~~036

1421,~~510~~273

~~42,092~~

~~31,619~~

Other income (expense):

Interest expense

(21,~~401~~016

)

(43,~~381~~102

)

~~(5,503~~

)

~~(9,031~~

)

Interest income

~~455~~250

~~671~~662

~~1,117~~

~~1,532~~

Other, net

~~1,280~~693

~~900~~937

~~2,217~~

~~1,880~~

Total other income (expense)

(~~666~~73

)

(21,~~810~~503

)

~~(2,169~~

)

~~(5,619~~

)

Income before income tax expense

2015,~~153~~963

1119,~~700~~770

~~39,923~~

~~26,000~~

Income tax expense

63,~~807~~357

~~558~~6,909

~~13,716~~

~~1,184~~

Net income

1312,~~346~~606

1112,~~142~~861

~~26,207~~

~~24,816~~

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

CE CASECNAN WATER AND ENERGY COMPANY, INC.

STATEMENTS OF ~~CHANGES~~CASH INFLOWS ~~SHAREHOLDERS’ EQUITY~~ (Unaudited)

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2008 AND 2007

(Amounts in thousands)

									Accumulated
	Three-Month Periods
				Additional					Other
	Ended March 31,
	Common			Paid-in			Retained		Comprehensive
	2009			2008
	Stock			Capital			Earnings		Loss, net			Total
Cash flows from operating activities:
Balance, January 1, 2007	$	29		$	123,807		$	69,465	$	-		$	193,301
Net income	$	12,606		$	12,861
Net income		-			-			24,816		-			24,816
Adjustments to reconcile net income to net cash flows from operating activities:
Balance, June 30, 2007	$	29		$	123,807		$	94,281	$	-		$	218,117
Depreciation		5,494			5,402
Balance, January 1, 2008	$	29		$	123,807		$	148,004	$	-		$	271,840
Amortization of bond issue costs		39			79
Net income		-			-			26,207		-			26,207
Provision for deferred income taxes		85			195
Other comprehensive loss		-			-			-		(1,081	)		(1,081	)
Changes in other operating assets and liabilities:
Balance, June 30, 2008	$	29		$	123,807		$	174,211	$	(1,081	)	$	296,966
Trade receivable, net		2,058			5,075
Other current assets		(549	)		(495	)
Accounts payable and other accrued liabilities		(704	)		(1,145	)
Accrued interest		(1,684	)		2,828
Accrued property, income and other taxes		2,972			6,710
Deferred revenue		-			1,880
Net cash flows from operating activities		20,317			33,390
Cash flows from investing activities:
Capital expenditures		(360	)		(2	)
Increase in restricted cash and investments		(9,207	)		(402	)
Net cash flows from investing activities		(9,567	)		(404	)
Cash flows from financing activities:
Increase in payable to affiliates		(128	)		(17	)
Repayment of notes payable		(7,115	)		-
Dividends paid		(9,500	)		-
Net cash flows from financing activities		(16,743	)		(17	)
Net change in cash and cash equivalents		(5,993	)		32,969
Cash and cash equivalents at beginning of period		49,350			31,083
Cash and cash equivalents at end of period	$	43,357		$	64,052

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

CE CASECNAN WATER AND ENERGY COMPANY, INC.

STATEMENTS OF ~~CASH~~CHANGES ~~FLOWS~~IN SHAREHOLDERS’ EQUITY (Unaudited)

(Amounts in thousands)

	Six-Month Periods
										Accumulated
	Ended June 30,
				Additional						Other
	2008			2007
	Common			Paid-in			Retained			Comprehensive
Cash flows from operating activities:
	Stock			Capital			Earnings			Loss, net			Total
Net income	$	26,207		$	24,816
Balance, January 1, 2008	$	29		$	123,807		$	148,004		$	-		$	271,840
Adjustments to reconcile net income to cash flows from operations:
Net income		-			-			12,861			-			12,861
Depreciation		10,842			10,807
Other comprehensive loss		-			-			-			(1,181	)		(1,181	)
Amortization of bond issue costs		158			259
Balance, March 31, 2008	$	29		$	123,807		$	160,865		$	(1,181	)	$	283,520
Provision for deferred income taxes		161			-
Balance, January 1, 2009	$	29		$	123,807		$	221,839		$	(5,119	)	$	340,556
Changes in other items:
Net income		-			-			12,606			-			12,606
Trade receivable, net		3,460			(500	)
Other comprehensive income		-			-			-			508			508
Other current assets		374			658
Dividends declared		-			-			(10,000	)		-			(10,000	)
Accounts payable and other accrued liabilities		(1,540	)		(416	)
Balance, March 31, 2009	$	29		$	123,807		$	224,445		$	(4,611	)	$	343,670
Accrued interest		(4,682	)		219
Income tax payable		3,625			(91	)
Deferred revenue		3,761			3,761
Net cash flows from operating activities		42,366			39,513
Cash flows from investing activities:
Capital expenditures		(163	)		(155	)
Purchases of available-for-sale securities		-			(37,500	)
Proceeds from sale of available-for-sale securities		-			30,000
(Increase) decrease in restricted cash and investments for debt serviceobligations and dividends payable		(654	)		25,576
Net cash flows from investing activities		(817	)		17,921
Cash flows from financing activities:
Increase (decrease) in payable to affiliates		117			(38,857	)
Repayment of long-term debt		(18,865	)		(18,865	)
Repayment of notes payable		(32,085	)		-
Dividends paid		-			(21,650	)
Net cash flows from financing activities		(50,833	)		(79,372	)
Net change in cash and cash equivalents		(9,284	)		(21,938	)
Cash and cash equivalents at beginning of period		31,083			31,946
Cash and cash equivalents at end of period	$	21,799		$	10,008

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

CE CASECNAN WATER AND ENERGY COMPANY, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

(in U.S. dollars, unless indicated otherwise)

(1)

General

CE Casecnan Water and Energy Company, Inc. (~~“CE~~the ~~Casecnan~~“Company” or ~~the~~ “~~Company~~CE Casecnan”) ~~has~~is a ~~contract~~privately ~~with~~held ~~the~~Philippine ~~Republic~~corporation offormed ~~the~~indirectly ~~Philippines~~by ~~(“ROP”),~~MidAmerican ~~through the Philippine~~Energy ~~National~~Holdings ~~Irrigation~~Company ~~Administration~~ (“~~NIA~~MEHC”) ~~(a ROP-owned~~ and ~~controlled corporation),~~was ~~for~~registered with the ~~development~~Philippine ~~and~~Securities ~~construction of a hydroelectric power plant~~ and ~~related facilities under a build-own-operate-transfer agreement, as~~ ~~amended~~Exchange byCommission ~~the~~on ~~Supplemental Agreement dated~~ September 2921, ~~2003~~1994. ~~(“Project Agreement”),~~The ~~covering~~Company ais ~~20-year~~70% ~~cooperation~~owned ~~period (“Cooperation Period”)~~by ~~commencing December~~CE 11Casecnan II, ~~2001~~ Inc., ~~with~~20% ~~“take-or-pay”~~owned ~~obligations~~by ~~for water and electricity~~CE Casecnan Ltd. ~~At the end of the Cooperation Period~~, ~~the combined irrigation and~~a ~~150~~Bermuda-registered ~~megawatt~~corporation, ~~hydroelectric~~which ~~power~~are ~~generation~~both ~~project~~indirectly ~~(the~~wholly ~~“Casecnan Project”)~~owned ~~will~~subsidiaries beof ~~transferred~~MEHC, toand ~~the~~10% ~~ROP~~owned atby noa ~~cost~~third onparty. anMEHC ~~“as~~ is” ~~basis. The ROP also signed~~ a ~~Performance Undertaking, which, among others, affirms and guarantees~~consolidated ~~the~~subsidiary ~~obligations~~ of ~~NIA~~Berkshire ~~under~~Hathaway ~~the Project Agreement~~Inc.

~~Under the~~The ~~terms~~Company ofhas ~~its~~a ~~registration~~contract with the ~~Philippine~~Republic ~~Board~~ of ~~Investments,~~ the ~~Company was~~Philippines ~~entitled~~(“ROP”), tothrough ~~certain~~the Philippine ~~incentives~~National ~~which~~Irrigation ~~include~~Administration an(“NIA”) ~~income~~(a ~~tax~~ROP-owned ~~holiday~~and controlled corporation), for ~~six years~~the ~~from~~development ~~the~~and ~~start~~construction of ~~commercial~~a ~~operations.~~hydroelectric power ~~The~~plant ~~registration~~and ~~also~~related ~~requires~~facilities under a build-own-operate-transfer agreement, ~~among~~as ~~others,~~amended by the ~~maintenance~~Supplemental ofAgreement adated ~~debt-to-equity~~September 29, ~~ratio~~2003 ~~not exceeding 75:25~~(“Project ~~during~~Agreement”), ~~commercial~~covering ~~operations.~~a ~~The~~20-year ~~income~~cooperation ~~tax~~period ~~holiday~~(“Cooperation ~~expired~~Period”) onending December 11, ~~2007~~2021, with obligations for the delivery of water and electricity. ~~The~~At ~~Company’s~~the ~~taxable~~end ~~income~~of ~~from~~the ~~December~~Cooperation 11Period, ~~2007~~the combined irrigation and ~~forward~~150 ismegawatt ~~subject~~hydroelectric power generation project (the “Casecnan Project”) will be transferred to ~~income~~the ~~tax~~ROP at no cost on an “as is” basis. NIA’s obligations under the ~~Philippine~~Project ~~statutory~~Agreement ~~rate~~are guaranteed by the full faith and credit of the ROP (the “Performance Undertaking”).

The Casecnan Project is 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 can produce significant ~~variability~~ variability in revenue between reporting periods.

The ~~Company~~unaudited Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the United States Securities and Exchange Commission’s ~~operations~~(“SEC”) ~~are~~rules inand ~~one~~regulations ~~reportable~~for ~~segment~~Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the ~~water~~disclosures ~~delivery~~required by GAAP for annual financial statements. Management believes the unaudited Financial Statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the Financial Statements as of March 31, 2009, and for the three-month periods ~~electricity~~ended ~~generation~~March 31, ~~industry~~2009 and 2008. The results of operations for the three-month period ended March 31, 2009 are not necessarily indicative of the results to be expected for the full year.

The preparation of the unaudited Financial Statements ~~have been prepared~~ in ~~accordance~~conformity with ~~accounting~~GAAP ~~principles~~requires ~~generally~~management ~~accepted~~to inmake ~~the~~estimates ~~United~~and ~~States~~assumptions ofthat ~~America~~affect ~~(“GAAP”)~~the ~~for~~reported ~~interim~~amounts ~~financial~~of ~~information~~assets and liabilities at the ~~U.S.~~date ~~Securities~~of ~~and~~the ~~Exchange~~financial ~~Commission’s rules~~statements and the ~~regulations~~reported ~~for~~amounts ~~Form~~of ~~10-Q~~revenues and ~~Article~~expenses 10during ofthe ~~Regulation S-X~~period. ~~Accordingly,~~ ~~they~~Actual doresults may ~~not~~differ ~~include~~from ~~all of~~ the ~~disclosures~~estimates ~~required~~used byin ~~GAAP~~preparing ~~for annual financial statements. Management believes~~ the unaudited Financial Statements. ~~contain~~Note ~~all~~2 ~~adjustments (consisting only~~ of ~~normal~~Notes ~~recurring adjustments)~~to ~~considered~~Financial ~~necessary~~Statements ~~for~~included ~~the~~in ~~fair presentation of~~ the ~~financial~~Company’s ~~statements~~Annual asReport ofon ~~June 30,~~Form ~~2008,~~10-K ~~and~~ for the ~~three-~~year ~~and six-month periods~~ ended ~~June~~December 3031, 2008 ~~and~~describes the ~~2007.~~most ~~Gross~~significant ~~purchases~~accounting estimates and ~~sales~~policies ~~of available-for-sale~~used ~~securities were presented~~ in the ~~Statement~~ preparation of ~~Cash Flows under investing activities in 2007 to conform to~~ the ~~2008~~Financial ~~presentation~~Statements. ~~Such revisions~~There inhave ~~presentation~~been ~~did~~no ~~not~~significant ~~impact~~changes ~~previously~~in ~~reported net cash flows from~~the ~~investing~~Company’s ~~activities,~~assumptions ~~operating~~regarding ~~income,~~significant ~~net~~accounting ~~income~~policies orduring ~~retained earnings. The results of operations for~~ the first three- ~~and~~months ~~six-month periods ended June 30, 2008, are not necessarily indicative~~ of ~~the results to be expected for the full year~~2009.

The preparation of the unaudited Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results may differ from the estimates used in preparing the unaudited Financial Statements. Note 2 of Notes to Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, describes the most significant accounting estimates and policies used in the preparation of the Financial Statements. There have been no significant changes in the Company’s assumptions regarding significant accounting policies during the first six months of 2008.

(2)	New Accounting Pronouncements

In ~~February~~April ~~2007~~2009, the Financial Accounting Standards Board (the “FASB”) ~~issued~~ ~~Statement~~issued ofStaff ~~Financial~~Position ~~Accounting~~(“FSP”) ~~Standards~~ No. FAS ~~159~~107-1 and APB 28-1, “~~The~~Interim Disclosures about Fair Value ~~Option~~of ~~for~~ Financial ~~Assets and Financial Liabilities - including an amendment of FASB Statement No. 115~~Instruments” (“~~SFAS~~FSP ~~No. 159~~FAS 107-1”). FSP ~~SFAS No.~~FAS ~~159~~107-1 ~~permits~~requires ~~entities~~publicly totraded ~~elect~~ companies to ~~measure~~include ~~many~~the ~~financial~~annual ~~instruments and certain other items at~~ fair ~~value.~~ ~~Upon~~value ~~adoption~~disclosures ofrequired ~~SFAS No. 159, an entity may elect the fair value option~~ for ~~eligible~~all ~~items~~financial ~~that~~instruments ~~exist~~within at the ~~adoption~~scope ~~date. Subsequent to the initial adoption, the election~~ of ~~the fair value option may only be made at initial~~ ~~recognition~~Statement of ~~the~~Financial ~~asset~~Accounting orStandards ~~liability~~(“SFAS”) ~~or upon a remeasurement event that gives rise to new-basis accounting~~No. ~~The~~107, ~~decision~~“Disclosures about Fair ~~whether~~Value toof ~~elect~~Financial ~~the~~Instruments,” ~~fair~~in ~~value option~~interim isfinancial ~~applied~~statements. ~~on an instrument~~FSP FAS 107-~~by-instrument~~1 ~~basis,~~ is ~~irrevocable~~effective ~~and~~for ~~is applied~~financial ~~only~~statements toissued anafter ~~entire instrument and not only to specified risks~~June 15, ~~cash flows~~ or2009, ~~portions~~with ofearly ~~that~~application ~~instrument~~permitted. ~~SFAS~~The ~~No. 159~~Company ~~does~~will ~~not~~include ~~affect~~the ~~any existing~~disclosures ~~accounting~~required ~~literature~~by ~~that~~FSP ~~requires~~FAS 107-1 ~~certain~~within ~~assets~~Notes ~~and liabilities~~ to beFinancial ~~carried at~~Statements ~~fair value nor does it eliminate disclosure requirements included~~ in ~~other~~its ~~accounting standards. The Company adopted SFAS No.~~June ~~159 effective January 1~~30, ~~2008,~~2009 ~~and~~interim ~~did~~financial ~~not elect the fair value option for any existing eligible items~~statements.

~~In September~~8 ~~2006, the FASB issued SFAS 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 No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”), 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. 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 7 for additional discussion.

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (“FSP FAS 115-2”). FSP FAS 115-2 amends current other-than-temporary impairment guidance for debt securities to require a new other-than-temporary impairment model that would shift the focus from an entity’s intent to hold the debt security until recovery to its intent to sell the debt security. The existing other-than-temporary impairment models for equity securities will continue to apply. In addition, FSP FAS 115-2 addresses whether an other-than-temporary impairment should be recognized in earnings, other comprehensive income, or some combination thereof. FSP FAS 115-2 also expands the already required annual disclosures about other-than-temporary impairment for debt and equity securities and requires companies to include these expanded disclosures in interim financial statements. FSP FAS 115-2 is effective for financial statements issued after June 15, 2009, with early application permitted. The Company is currently evaluating the impact of adopting FSP FAS 115-2 on its financial results and disclosures included within Notes to Financial Statements.

In April 2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 clarifies the application of SFAS No. 157, “Fair Value Measurements,” (SFAS No. 157”) in determining when a market is not active and if a transaction is not orderly. In addition, FSP FAS 157-4 amends SFAS No. 157 to require disclosures in interim and annual periods of the inputs and valuation techniques used to measure fair value and a discussion of changes in valuation techniques and related inputs, if any, during the period. FSP FAS 157-4 also amends SFAS No. 157 to define “major categories” to be consistent with those described in SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” FSP FAS 157-4 is effective for financial statements issued after June 15, 2009, with early application permitted. The Company is currently evaluating the impact of adopting FSP FAS 157-4 on its financial results and disclosures included within Notes to Financial Statements.

(3)	Restricted Cash and Investments and Other Investments

Restricted cash and investments consist of the following (in thousands):

	June 30,		December 31,
	March 31, 2009		December 31, 2008
	2008		2007
Dividend set aside account	$	13,780	$	13,279
Current:
Debt service reserve fund		18,308		9,602
Dividend set aside account	$	13,204	$	13,054
	$	32,088	$	22,881
Debt service reserve fund		9,864		9,360
	$	23,068	$	22,414
Noncurrent - Debt service reserve fund	$	12,826	$	13,906

Restricted cash and investments are invested in money-market accounts holding U.S. government securities. Other investments consist of auction rate securities with a carrying value of $14.8 million and $14.1 million at March 31, 2009 and December 31, 2008, respectively. The investments earned interest at 2.6% and 2.5% at March 31, 2009 and December 31, 2008, respectively. The investments have a remaining weighted average maturity of 22 years and are classified as available-for-sale securities.

~~The~~With the ~~dividend~~liquidity ~~set~~issues ~~aside~~experienced ~~account~~in global credit and capital markets, the $21.4 million ~~current~~par ~~debt~~value ~~service~~of ~~reserve~~auction ~~fund~~rate ~~are~~securities held by the Company at ~~invested~~March in31, U2009, have experienced multiple failed auctions as the amount of securities submitted for sale has exceeded the amount of purchase orders.S. ~~dollar~~The securities ~~money~~are rated Baa1 by Moody’s Investors Service and AA- and A by Standard & Poor’s at March 31, 2009. Although there is no current liquid market ~~instruments~~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. ~~The~~Further, ~~noncurrent~~the ~~debt~~Company ~~service~~has the intent ~~reserve~~and ~~fund~~ability isto ~~invested~~hold inthe auction rate securities for a period of time sufficient to allow for any anticipated recovery in the credit and capital markets that would ~~had~~facilitate athe ~~remaining~~periodic auction and sale of these securities. Therefore, ~~maturity~~the Company considers the auction rate securities to be temporarily impaired. At March 31, 2009, the Company’s pre-tax temporary impairment of 25the auction rate securities totaled $6.6 ~~years~~million. If the underlying assets and 26the guarantors ~~years~~of atthe ~~June 30~~auction rate securities experience credit deterioration, ~~2008~~the Company ~~and~~may not ultimately realize the par value of the investments held at ~~December~~March 31, ~~2007, respectively~~2009.

Other investments consist of auction rate securities with a carrying value of $6.9 million and $7.5 million at June 30, 2008 and December 31, 2007, respectively, and had a remaining maturity of 17 years.

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 June 30, 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 A2 and Aa3 by Moody’s Investors Service and AA by Standard & Poor’s at June 30, 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. At June 30, 2008, the pre-tax temporary impairment of the auction rate securities totaled $1.7 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 investment held at June 30, 2008.

Given the failed auctions, it is uncertain if the Company’s 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.

(4)	Income Taxes

During the three-months periods ended March 31, 2009 and 2008, CE Casecnan incurred $3.4 million and $6.9 million, respectively, of income taxes. The following table reconciles the Philippine statutory tax rate to the effective tax rate applicable to income before income tax:

The Company recognized income taxes totaling $6.8 million and $0.6 million for the three-month periods ended June 30, 2008 and 2007, respectively, and $13.7 million and $1.2 million for the six-month periods ended June 30, 2008 and 2007, respectively. Prior to the December 11, 2007 expiration of the income tax holiday granted to the Company by the Philippine Board of Investments, income taxes were incurred only on interest income earned outside the Philippines and on other income not covered by the income tax holiday. The Company’s taxable income from December 11, 2007 forward is subject to income tax at the Philippine statutory rate. The Company’s deferred income tax asset of $5.6 million and $5.2 million as of June 30, 2008 and December 31, 2007, respectively, consists mainly of the difference between the financial reporting basis and the tax reporting basis for development and construction costs.

	Three-Month Periods
	Ended March 31,
	2009			2008

Philippine statutory rate		30	%		35	%
Optional standard deduction		(9	)		-
Effective tax rate		21	%		35	%

The Company’s deferred income tax asset of $6.7 million and $7.0 million as of March 31, 2009 and December 31, 2008, respectively, consists mainly of the difference between the financial reporting basis and the tax reporting basis for development and construction costs.

(5)	Related Party Transactions

In the normal course of business, the Company transacts with ~~its~~related ~~affiliates~~parties inon commercial ~~the~~terms ~~form of~~comparable ~~advances~~to ~~for~~transactions ~~operating~~with ~~expenses~~third parties. The payable to affiliates was $2.6 million and $2.5 7 million at ~~June~~March 3031, ~~2008~~2009 and December 31, ~~2007~~2008, respectively. Costs incurred by the Company in transactions with related parties amounted to $0.4 million ~~and~~for ~~$0.7 million~~each ~~for~~of the three-month periods ended ~~June 30, 2008~~March ~~and 2007~~31, ~~respectively,~~2009 and ~~$0.8 million and $1.6 million for the six-month periods ended June 30,~~ 2008 ~~and 2007~~, ~~respectively,~~ and consist primarily of cost allocations.

As of ~~June 30, 2008 and~~ December 31, ~~2007~~2008, the Company had outstanding $7.1 ~~million and $39.2~~ million, ~~respectively,~~ of ~~unsecured~~ unsecured subordinated notes payable (the “Notes”) to CE Casecnan Ltd., a shareholder. The ~~notes mature~~Notes onhad a maturity of November 1, 2015, and ~~bear~~bore an interest rate consisting of the London Interbank Offer Rate plus 5.25%~~; however, CE Casecnan Ltd~~. ~~can~~However, ~~demand payment of~~ the ~~outstanding~~Notes ~~principal~~were ~~amount~~redeemable at any time prior to ~~the~~ maturity ~~date.~~upon ~~The~~demand ~~interest~~from isCE Casecnan ~~payable each May 15 and November 15~~Ltd. Interest expense on the ~~notes~~Notes was $0.61 million and $1.40 million for the three-month periods ended ~~June~~March 3031, ~~2008~~2009 and ~~2007, respectively, and~~ ~~$1.6 million and $2.7 million for the six-month periods ended June 30,~~ 2008 ~~and 2007~~, respectively. ~~Any~~On ~~overdue payment of principal or interest payable on the notes shall increase the annual interest rate by two percentage points. At June~~February 305, ~~2008~~2009, the effective interest rate on the notes was 8.08%. The notes may be prepaid at any time without premium or penalty but with accrued interest, if any. The notes and any and all payments, whether of principal, interest or otherwise are subject in all respects to the terms of the Subordination Agreement dated November 15, 2001, and as amended on November 1, 2005, between CE Casecnan ~~Ltd.~~repaid ~~and~~ the outstanding ~~Company~~Notes in favor of the Trustee, the Collateral Agent, the co-collateral agent, the Depositary, any party that becomes a Permitted Counterparty under an Interest Rate/Currency Protection Agreement, and any party that becomes a working capital facility agent and any other Person that becomes a secured party under the Intercreditor Agreementfull.

On May 15, 2007, CE Casecnan Ltd. demanded payment in full of the outstanding principal amount of the notes and accrued interest. To the extent that the Company does not have available cash from distributions from the Distribution Fund under the Depositary Agreement (each, as defined in the Subordination Agreement) to pay such amount in full, the Company shall be deemed to have satisfied this demand by paying, to the extent of such available cash, first accrued but unpaid interest on the outstanding principal amount of the notes, and then the outstanding principal amount of the notes. To the extent that such available cash is insufficient to pay any accrued interest or outstanding principal, the Company shall not be deemed in default and such amounts shall remain outstanding and payable pursuant to the terms of the notes and the Subordination Agreement. CE Casecnan intends to repay the outstanding notes and accrued interest within the next six months. The Company expects to generate sufficient cash from operations, after considering income taxes, to pay the notes and other short-term obligations.

(6)	Commitments and Contingencies

Shareholder Litigation

In February 2002, pursuant to the share ownership adjustment mechanism in the CE Casecnan shareholder agreement, ~~MidAmerican Energy Holdings Company’s (“MEHC”) indirect wholly owned subsidiary,~~ CE Casecnan Ltd., advised ~~the~~ the minority shareholder of the Company, LaPrairie Group Contractors (International) Ltd. (“LPG”) that 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 CE Casecnan Ltd. and MEHC. On January 3, 2006, the Superior Court of the State of California entered a judgment in favor of LPG against CE Casecnan Ltd. Pursuant to the judgment, 15% of the distributions of the Company was deposited into escrow plus interest at 9% per annum. The judgment was appealed, and as a result of the appellate decision, CE Casecnan Ltd. determined that LPG would retain ownership of 10% of the shares of the Company, with the remaining 5% share to be transferred to CE Casecnan Ltd. subject to certain buy-up rights under the shareholder agreement, which are also being litigated. Certain predicate issues ~~The~~have been determined by the court and the remaining issues are fully briefed and pending before the court. Exercise of the buy-up rights is a transaction between shareholders and is not expected to have any impact on the Company’s results 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~~ 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 ~~one-week~~ trial has been set to begin in November ~~3, 2008~~ 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 tax years 2002 through the second quarter of 2008. CE Casecnan forwarded the assessment to NIA and the Philippine Department of Finance (“DOF”), which 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 which the provincial treasurer failed to resolve timely. CE Casecnan will file an appeal with the Local Board of Assessment Appeals by May 16, 2009. No liability for supplemental real property tax has been recognized as the Company believes that the claim is without merit.

On March 12, 2009, CE Casecnan received a supplemental real property tax assessment totaling $36.5 million from the province of Nueva Vizcaya for the tax years 2002 to 2009. CE Casecnan forwarded the assessment to NIA and the DOF”), which must authorize any payment for real property taxes and are obligated to reimburse the Company pursuant to the Project Agreement. NIA instructed CE Casecnan to file an appeal of the supplemental assessment with the Local Board of Assessment Appeals by May 11, 2009. Discussions among the parties to resolve the matter are ongoing. 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, which 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 Electric Power Industry Reform Act 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 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.

Franchise Tax

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 Electric Power Industry Reform Act of 2001 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. CE Casecnan filed appeals of the assessments with the Regional Trial Court of Nueva Vizcaya. The appeals were referred to the Supreme Court Office of the Court Administrator who assigned the consolidated cases to the Regional Trial Court of Bayombong Vizcaya South Sector.

Real Property Tax

On July 1, 2008, CE Casecnan received a real property tax assessment adjustment 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. On July 2, 2008, CE Casecnan forwarded the tax assessment adjustment 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.

National Wealth Tax

(7)	Fair Value Measurements

The Company has auction rate securities that are measured at fair value in the Financial Statements. The Company uses a three level hierarchy for determining fair value and a financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The auction rate securities were valued using ~~Level~~ 3internally ~~inputs~~developed ~~that~~discounted ~~reflect~~cash flow models based on available observable market data and the Company’s judgment about the assumptions, ~~market~~including liquidity and nonperformance risks, which market participants would use in pricing the asset. ~~The~~As ~~fair value of these securities was determined using broker quotes~~such, ~~which~~ the Company considers these securities to be valued using Level 3 ~~inputs~~ ~~due to the limited market data that exists~~inputs. The following table reconciles the beginning and ending balance of the Company’s auction rate securities measured at fair value on a recurring basis ~~during the six-month period ended June 30, 2008~~ (in thousands):

Balance, January 1, 2008	$	21,409
	Three-Month Periods
Unrealized losses included in other comprehensive loss		(1,662	)
	Ended March 31,
Balance, June 30, 2008	$	19,747
	2009			2008
Beginning balance	$	14,096		$	21,409
Unrealized gains (losses) included in other comprehensive (loss) income		726			(1,817	)
Ending balance	$	14,822		$	19,592

(8)	Comprehensive Income and Components of Accumulated Other Comprehensive Loss, Net

~~The~~Comprehensive ~~components~~income consists of ~~comprehensive~~the ~~income~~following ~~are~~components ~~as follows~~ (in thousands):

	Three-Month Periods					~~Six-Month Periods~~
	Ended June 30,					Ended June 30,
	Ended March 31,
	2008		2007			2008			2007
	2009		2008
Net income	$	1312,~~346~~606	$	1112,~~142~~861		$	~~26,207~~		$	~~24,816~~
Other comprehensive income (loss) – unrealized gains(losses) on marketable securities, net of tax of $55;$-; $(581); and $-		100		-			(1,081	)		-
Other comprehensive income (loss) – unrealized gains (losses) on marketablesecurities, net of tax of $218 and $(636)		508		(1,181	)
Comprehensive income	$	13,~~446~~114	$	11,~~142~~680		$	~~25,126~~		$	~~24,816~~

Accumulated other comprehensive loss, net ~~is included in the Balance Sheets in the shareholders’ equity section~~, ~~and~~ consists of unrealized losses on marketable securities totaling $14.16 million, net of tax of $2.0 million, and $5.61 million, net of tax of $2.2 million, as of ~~June~~ March 3031, 2009 and December 31, 2008, respectively.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is management’s discussion and analysis of certain significant factors that have affected the financial condition and results of operations of CE Casecnan Water and Energy Company, Inc. (“CE Casecnan” or 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 the Company’s historical unaudited Financial Statements and ~~the~~ ~~related~~Notes ~~notes~~to ~~included~~Financial ~~elsewhere~~Statements included in Item 1 of this Form 10-Q. The Company’s actual results in the future could differ significantly from the ~~historical~~ historical results.

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. Forward-looking statements can typically be identified by the use of forward-looking words, such as “may,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “intend,” “potential,” “plan,” “forecast” and similar terms. These statements are based upon the Company’s current intentions, assumptions, 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 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; changes in governmental, legislative or regulatory requirements affecting the Company or the power generation industry; availability of qualified personnel; changes in financial or regulatory accounting principles or policies imposed by the Public Company Accounting Oversight Board (United States), 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 filings with the SEC or in other publicly disseminated written documents.

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 of the potential risks and uncertainties affecting the Company are described in the Company’s filings with the SEC, including Item 1A and other discussions contained in this Form 10-Q. 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.

Business

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”) ~~commencing~~ending December 11, ~~2001~~2021, with ~~“take-or-pay”~~ obligations for the delivery of water and electricity. OnAt ~~December 11, 2021,~~ the end of the Cooperation Period, ~~the~~ the combined irrigation and 150 megawatt hydroelectric power generation ~~project~~ project (the “Casecnan Project”) will be transferred to the ROP at no cost on an “as is” basis. ~~The~~NIA’s ~~ROP also signed a Performance Undertaking, which, among others, affirms and guarantees the~~ obligations ~~of NIA~~ under the Project Agreement. ~~Under~~are ~~the~~guaranteed ~~terms~~by ~~of its registration with~~ the ~~Philippine Board of~~full ~~Investments,~~faith ~~CE Casecnan~~and iscredit ~~entitled~~of tothe ~~certain~~ROP ~~incentives which include an income tax holiday for six years from~~ (the ~~start~~“Performance ~~of commercial operations~~Undertaking”). The ~~Casecnan~~ Project ~~Cooperation Period began upon commencement of commercial~~ ~~operations~~Agreement onand ~~December 11,~~the ~~2001.~~Performance ~~The~~Undertaking ~~income~~provide ~~tax~~for ~~holiday~~the ~~expired~~resolution ~~on December 11,~~of ~~2007. The Company’s taxable income from December 11, 2007~~disputes ~~forward~~by isbinding ~~subject~~arbitration toin ~~income~~Singapore ~~tax~~under atinternational ~~the Philippine statutory rate~~arbitration rules.

Results of Operations for the Three-Month Periods Ended March 31, 2009 and 2008

The Casecnan Project is 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 and energy delivery fees can produce significant variability in revenue between reporting periods.

~~Seasonality~~Prior 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 were recorded each month prorated to 58.3 million cubic meters until the minimum threshold had 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.

~~The~~For ~~Casecnan~~contract ~~Project~~years ~~is dependent upon sufficient rainfall to generate electricity and deliver water. The seasonality of rainfall patterns and the variability of rainfall~~ from ~~year to year~~December 25, ~~all~~2008 ofthrough ~~which are outside~~ the ~~control~~end of the ~~Company,~~Cooperation ~~have~~Period, aDecember ~~material~~11, ~~impact~~2021, onguaranteed ~~the amounts of electricity generated and~~ water ~~delivered~~ bydelivery ~~the~~fees ~~Casecnan Project~~are $51.7 million, ~~Rainfall~~calculated ~~has~~as ~~historically~~the ~~been~~annual ~~highest~~minimum ~~from June through December and lowest from January through May. The contractual terms for~~ water delivery ~~fees and variable energy fees (described below) can produce~~threshold ~~significant~~multiplied ~~variability~~by ~~in revenue between reporting periods~~$0.07381.

~~Under the~~Variable ~~Project Agreement, the~~ water delivery ~~fee~~fees isare aearned ~~fixed~~for ~~monthly~~all ~~payment based upon an assumed annual~~ water ~~delivery~~deliveries ofwithin ~~801.9 million~~the ~~cubic meters~~contract year, ~~pro-rated to~~if ~~approximately~~any, ~~66.8 million~~exceeding ~~cubic~~the ~~meters~~annual ~~per~~minimum ~~month, multiplied by the~~ water delivery ~~fee~~threshold ~~rate~~multiplied by of $0.07381 ~~per cubic meter. For each contract year starting from December 25~~, ~~2003~~until ~~and ending on December 25, 2008,~~ a ~~water~~ ~~delivery~~cumulative ~~fee credit (deferred revenue) is computed equal to 801~~1.9324 ~~million~~billion cubic meters ~~minus the greater~~ of ~~actual~~ water ~~deliveries or~~subject ~~700.0 million cubic meters - the minimum threshold. The water delivery fee credit at the end of each contract year is available~~ to bevariable ~~earned in the succeeding contract year through December 25, 2008. The cumulative~~ water ~~delivery~~ fee credit at December 25, 2008, if any, shall be amortized on a straight-line basis from December 25, 2008 through December 25, 2013, as a reduction from billings to NIA. Accordingly, in recognizing revenue, the water delivery fees ~~are~~have ~~recorded each month pro-rated to approximately 58.3 million cubic meters per month until the minimum threshold has~~ been ~~reached~~ ~~for the current contract year. Subsequent water delivery fees within the contract year are based on actual water~~ delivered. For contract years starting from December 25, 2008 through the end of the Cooperation Period, guaranteed water delivery fees will be $51.7 million (the 700.0 million cubic meter minimum threshold multiplied by the water delivery fee rate of $0.07381).

~~For~~Guaranteed ~~contract~~energy ~~years starting from December 25, 2008 through the end of the Cooperation Period, variable water~~ delivery fees ~~will~~are be$36.4 ~~earned~~million ~~for~~per ~~all water deliveries~~year, ifcalculated ~~any,~~as ~~exceeding~~ the ~~700.0 million cubic meter~~ assumed annual ~~minimum threshold~~delivery ~~until~~of ~~a cumulative 1~~228.~~324~~0 ~~billion~~Gigawatt-hours ~~cubic~~(“GWh”), ~~meters~~prorated ofto ~~water~~19.0 ~~subject~~GWh toper ~~variable~~month ~~water~~and ~~delivery~~multiplied ~~fees~~by ~~have~~$0.1596 ~~been~~per ~~delivered~~kilowatt-hour (“kWh”).

The Company earns ~~guaranteed~~variable energy delivery fees in each contract year based upon actual anenergy ~~assumed~~delivered ~~delivery~~in excess of 19228.0 GWh, multiplied by the applicable ~~gigawatt~~rate, ~~hours~~until (“cumulative energy of 490.0 GWh”) per ~~month~~year are delivered. Prior to December 25, at2008, athe rate ofwas $0.~~1596~~1509 per ~~kilowatt~~kWh. ~~hour~~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 (“~~kWh~~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.

The ~~Company~~following ~~earns~~table ~~variable~~provides ~~energy~~certain ~~fees~~operating ~~based~~data ~~upon actual energy delivered in each month in excess~~ of ~~19.0 GWh, currently payable at a rate of $0.1509 per kWh. On December 25, 2008,~~ the ~~kWh~~Casecnan ~~rate~~Project for ~~energy deliveries in excess of~~the ~~19.0 GWh per~~ three-month isperiods ~~reduced~~ended ~~to $0.1132, escalating at 1% per annum thereafter. Any deliveries of energy in excess of 490.0~~March GWh, but less than 550.0 GWh per year are paid at a rate of 1.3 pesos per kWh, reduced to 0.98 pesos starting in 2009 and escalated at 1% per annum thereafter. Deliveries in excess of 550.0 GWh per year are at no cost to NIA. Within each contract year, no variable energy fees are payable until energy in excess of the cumulative 19.0 GWh per month for the contract year to date has been delivered.31:

Results of Operations for the Three- and Six-Month Periods Ended June 30, 2008 and 2007

	2009		2008

Electricity produced (GWh)		65.8		99.4
Water delivered (million cubic meters)		111.9		172.3

The ~~following~~Company's ~~table~~water ~~provides~~and ~~certain~~energy ~~operating~~fees ~~data~~for of the ~~Casecnan~~three-month periods ended March 31 are ~~Project~~as follows (in millions):

	Second Quarter					First Six Months
	2009		2008
	2008		2007			2008		2007
Water delivery fees	$	12.8	$	14.8
Electricity produced (GWh)		106.2		40.1			205.6		99.1
Guaranteed energy fees		9.1		9.1
Water delivered (million cubic meters)		178.0		65.5			350.3		168.0
Variable energy fees		1.6		6.9
Deferred water delivery fees		-		(1.9	)
	$	23.5	$	28.9

Revenue decreased $5.4 million for 2009 compared to 2008. The decrease in variable energy fees was due to higher than normal water flow which resulted in higher electricity production in 2008 as compared to 2009 and a lower price for variable energy fees in 2009. The deferred water delivery fees in 2008 represent the difference between the actual water delivery fees earned and water delivery fees invoiced pursuant to the Project Agreement.

Plant operations and other operating expenses decreased $0.2 million for 2009 compared to 2008 due primarily to lower general and administrative costs.

Interest expense decreased $2.1 million for 2009 compared to 2008 due to lower outstanding debt balances resulting from the scheduled repayment of long-term debt and the repayment of notes payable.

Interest income decreased $0.4 million for 2009 compared to 2008 as a result of lower interest rates.

~~The~~Income ~~Company’s~~tax ~~water~~expense ~~and~~decreased ~~energy~~$3.5 million ~~fees~~for ~~are~~2009 ascompared ~~follows~~to 2008 due to lower (taxable income, a reduction in ~~millions):~~ the Philippine statutory tax rate from 35% to 30%, and the adoption of the optional standard deduction method for calculating income tax liabilities.

	Second Quarter						First Six Months
	2008			2007			2008			2007
Water delivery fees	$	14.8		$	14.8		$	29.7		$	29.7
Guaranteed energy fees		9.1			9.1			18.2			18.2
Variable energy fees		6.8			-			13.6			2.3
Deferred water delivery fees		(1.9	)		(1.9	)		(3.8	)		(3.8	)
	$	28.8		$	22.0		$	57.7		$	46.4

Revenue for the second quarter and the first six months of 2008 increased $6.8 million and $11.3 million, respectively, from the comparable periods in 2007. The increase in variable energy fees was due to the higher rainfall which resulted in higher electricity production in 2008 compared to 2007. Deferred water delivery fees represent the difference between the actual water delivery fees earned and the water delivery fees invoiced pursuant to the Project Agreement.

Plant operations and other operating expenses for the second quarter and the first six months of 2008 increased $0.4 million and $0.8 million, respectively, from the comparable periods in 2007, due to higher general and administrative cost allocations in 2008.

Interest expense for the second quarter and the first six months of 2008 decreased $2.0 million and $3.5 million, respectively, from the comparable periods in 2007. The lower interest expense was due to lower outstanding debt balances resulting from the scheduled repayment of Series B bonds and the repayment of notes payable.

Income tax expense for the second quarter and the first six months of 2008 increased $6.2 million and $12.5 million, respectively, from the comparable periods in 2007, due to the expiration of the income tax holiday on December 11, 2007. From December 11, 2007 forward, the Company’s taxable income is subject to income tax at the Philippine statutory rate.

Liquidity and Capital Resources

CENIA’s ~~Casecnan~~obligations ~~developed,~~under ~~financed,~~the ~~constructed~~Project ~~and~~Agreement ~~owns~~are ~~and~~substantially ~~operates~~denominated ~~the~~in ~~Casecnan~~U.S. ~~Project~~dollars ~~for~~and are the ~~term~~Company’s sole source of ~~the~~operating ~~Cooperation~~revenue. ~~Period,~~Because ~~which~~of ~~commenced~~the Company’s dependence on ~~December 11~~ NIA, ~~2001.~~any ~~During~~material ~~the~~failure ~~Cooperation~~of ~~Period,~~ NIA isto ~~obligated~~fulfill toits ~~accept~~obligations ~~all~~under ~~deliveries~~the ofProject ~~water~~Agreement and ~~energy,~~any ~~and~~material sofailure ~~long~~of as the ~~Casecnan~~ROP ~~Project~~to isfulfill ~~physically~~its ~~capable~~obligations ofunder ~~operating~~the ~~and~~Performance ~~delivering~~Undertaking inwould ~~accordance with agreed~~significantly ~~levels~~impair ~~set~~the ~~forth~~ability inof the ~~Project~~Company ~~Agreement,~~to ~~NIA~~meet isits ~~obligated~~existing toand ~~pay~~future CEobligations, including ~~Casecnan~~obligations ~~a fixed~~pertaining ~~fee~~to ~~for~~its ~~the~~outstanding ~~delivery~~debt. ofNo ashareholders, partners ~~threshold~~or ~~volume~~affiliates of ~~water~~the ~~and~~Company, aincluding ~~fixed~~MidAmerican ~~fee~~Energy ~~for~~Holdings ~~the~~Company, ~~delivery~~and ofno adirectors, ~~threshold~~officers ~~amount~~or employees of ~~electricity.~~the InCompany ~~addition,~~have ~~NIA is obligated~~guaranteed toor ~~pay~~will abe ~~fee~~in ~~for~~any ~~all~~way ~~electricity~~liable ~~delivered~~for inpayment ~~excess~~ of the ~~threshold~~Company’s ~~amount~~obligations. ~~up to~~As a result, ~~specified~~payment ~~amount~~of ~~and~~the ~~will~~Company’s beobligations ~~obligated~~depends toupon ~~pay~~the aavailability ~~fee for all water delivered~~of insufficient ~~excess~~revenue offrom the ~~threshold~~Company’s ~~amount~~business upafter tothe apayment ~~specified~~of ~~amount beginning after~~operating ~~December 25, 2008~~expenses.

The ~~ROP~~ ~~has provided a Performance Undertaking under which NIA~~Company’s ~~obligations~~cash ~~under the Project Agreement are guaranteed by the full faith~~ and ~~credit~~cash ofequivalents ~~the~~were ~~ROP~~$43.4 million ~~The Project Agreement~~ and ~~the Performance Undertaking provide for the resolution of~~ ~~disputes~~$49.4 million byat ~~binding~~March 31, 2009 ~~arbitration~~and ~~in Singapore under international arbitration~~December 31, 2008, ~~rules~~respectively.

~~NIA’s obligations~~Cash ~~under~~Flows 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 or affiliates of the Company, including MidAmerican Energy Holdings Company (“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~~Operating ~~expenses.~~Activities

15Net cash flows from operating activities for the three-month periods ended March 31, 2009 and 2008 were $20.3 million and $33.4 million, respectively. The decrease in operating cash flows for the first quarter of 2009 was primarily due to lower variable energy fees earned, timing of revenue collections, and payment of interest related to notes payable.

~~The Company’s~~Cash ~~cash~~Flows ~~and~~from ~~cash equivalents were $21.8 million and $31.1 million at~~Investing ~~June 30, 2008 and December 31, 2007, respectively.~~Activities

~~Cash~~Net cash flows from ~~operations~~investing ~~were~~activities ~~$42.4 million and $39.5 million~~ for the ~~six~~ three-month periods ended ~~June 30~~March 31, 2009 and 2008 were $(9.6) million and ~~2007~~$(0.4) million, respectively. ~~The increase~~In in2009, ~~cash~~the Company ~~from~~increased ~~operations~~its inrestricted ~~2008~~cash ~~was~~and ~~primarily~~investments ~~due~~balance toby ~~collection~~$8.7 ofmillion to ~~higher~~cover ~~variable~~the ~~energy~~scheduled ~~revenue~~May ~~resulting~~15, ~~from~~2009 ~~higher~~repayment ~~water~~obligations ~~flow~~on ~~and~~the ~~related~~Company’s ~~energy~~long-term ~~generation in 2008~~debt.

Cash ~~flows~~ Flows from ~~investing activities were ($0.8) million and $17.9 million~~Financing for the six-month periods ended June 30, 2008 and 2007, respectively. The Company decreased its restricted cash and investments related to obligations for debt service and unpaid dividends in 2007 by paying $25.6 million of dividends and accrued interest held in escrow. This was partially offset by net purchases of available-for-sale securities totaling $7.5 million during the six-month period ended June 30, 2007.Activities

~~Cash~~Net cash flows from financing activities ~~were ($50.8) million and ($79.4) million for~~ the ~~six~~three-month periods ended ~~June 30~~March 31, ~~2008~~ 2009 and ~~2007,~~2008 ~~respectively.~~were ~~The Company repaid~~ $18(16.9 7) million ~~of its outstanding project financing debt~~ and $~~32.1~~- million, ofrespectively. ~~its~~In ~~notes~~2009, ~~payable during~~ the ~~six-month~~ ~~period ended June 30, 2008. The~~ Company repaid the remaining $387.91 million of ~~advances~~ ~~received~~notes ~~from~~payable ~~its~~to ~~affiliates~~CE ~~and $18~~Casecnan Ltd.9 ~~million of its outstanding project financing debt~~ and ~~also~~paid ~~released~~ $219.7 5 million of dividends ~~held~~on ~~in escrow~~common ~~during the six-month period ended June 30, 2007~~stock.

Auction Rate Securities

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 ~~June~~March 3031, ~~2008~~2009, have experienced multiple failed auctions as the amount of securities submitted for sale has exceeded the amount of purchase orders. The securities are rated A2Baa1 ~~and Aa3~~ by Moody’s Investors Service and AA- and A by Standard & Poor’s at ~~June~~March 3031, ~~2008~~2009. 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 March 31, 2009, the Company’s pre-tax temporary impairment of the auction rate securities totaled $6.6 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 March 31, 2009.

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. At June15 ~~30, 2008, the Company’s pre-tax temporary impairment of the auction~~ rate securities totaled $1.7 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 investment at June 30, 2008.

~~Given the~~Supplemental ~~failed~~Real ~~auctions,~~Property it is uncertain if the Company’s 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.Tax

~~Shareholder~~On ~~Litigation~~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 tax years 2002 through the second quarter of 2008. CE Casecnan forwarded the assessment to NIA and the Philippine Department of Finance (“DOF”), which 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 which the provincial treasurer failed to resolve timely. CE Casecnan will file an appeal with the Local Board of Assessment Appeals by May 16, 2009. No liability for supplemental real property tax has been recognized as the Company believes that the claim is without merit.

~~In February 2002,~~On ~~pursuant to the share ownership adjustment mechanism in the~~March ~~CE Casecnan shareholder agreement~~12, ~~MEHC’s indirect wholly owned subsidiary~~2009, CE Casecnan ~~Ltd.,~~ ~~advised~~received ~~the~~a ~~minority~~supplemental ~~shareholder~~real ofproperty ~~the~~tax ~~Company,~~assessment ~~LaPrairie~~totaling ~~Group Contractors (International) Ltd~~$36.5 ~~(“LPG”)~~million ~~that 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~~province ~~Court~~ of ~~the~~Nueva ~~State~~Vizcaya offor ~~California,~~the ~~City~~tax ~~and~~years ~~County of~~2002 ~~San~~to ~~Francisco,~~2009. ~~against~~ CE Casecnan ~~Ltd.~~forwarded ~~and MEHC. On January 3, 2006,~~ the ~~Superior~~assessment ~~Court~~to ofNIA and the ~~State~~DOF, ofwhich ~~California entered~~must aauthorize ~~judgment~~any inpayment ~~favor~~for ofreal ~~LPG~~property ~~against~~taxes CEand ~~Casecnan~~are ~~Ltd.~~obligated ~~Pursuant~~ to ~~the~~reimburse ~~judgment,~~the ~~15%~~Company ofpursuant ~~the~~to ~~distributions of~~ the ~~Company~~Project ~~was deposited into escrow plus interest at 9% per annum~~Agreement. ~~The~~NIA ~~judgment~~instructed ~~was appealed, and as a result of the appellate decision,~~ CE Casecnan ~~Ltd.~~to ~~determined~~file ~~that LPG would retain ownership of 10% of~~an ~~the~~appeal ~~shares~~ of the ~~Company,~~supplemental assessment with the ~~remaining~~Local 5%Board ~~share~~of toAssessment beAppeals by ~~transferred~~May to11, ~~CE Casecnan Ltd~~2009. Discussions ~~subject~~among tothe ~~certain~~parties ~~buy-up~~to ~~rights~~resolve ~~under~~ the ~~shareholder~~matter ~~agreement,~~are ~~which~~ongoing. ~~are~~No ~~also~~liability ~~being~~for ~~litigated.~~supplemental ~~The~~real ~~remaining~~property ~~issues~~tax ~~are~~has ~~fully~~been ~~briefed~~recognized ~~and~~as ~~pending before~~ the ~~court.~~Company ~~Exercise~~believes ofthat the ~~buy-up~~claim ~~rights~~ is awithout ~~transaction between shareholders and is not expected to have any impact on the Company’s results of operations~~merit.

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 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 one-week trial has been set to begin November 3, 2008. The impact, if any, of this litigation on the Company cannot be determined at this time.

Franchise Tax

Real Property Tax

National Wealth Tax

On ~~July~~ 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. On ~~July 22, 2008,~~ CE Casecnan forwarded the assessment to NIA and the DOF, ~~who~~which 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.

~~Contractual~~Franchise ~~Obligations and Commercial Commitments~~Tax

~~Subsequent to~~In ~~December 31~~2006, CE Casecnan ~~2007,~~received ~~there~~franchise ~~were~~tax noassessments ~~material~~for ~~changes~~the ~~outside~~years ~~the~~2001 ~~normal~~to 2006 ~~course~~totaling $2.2 million from the Province of ~~business~~Nueva inVizcaya. CE Casecnan believes that franchise tax is imposed on companies which have a secondary or special franchise from the ~~contractual~~government. ~~obligations~~CE Casecnan is an independent power producer and ~~commercial~~does ~~commitments~~not have a government franchise. The Electric Power Industry ~~from~~Reform Act provides that independent power generation is not a public utility operation and does not require a franchise. Therefore, the ~~information~~Company ~~provided~~has innot recognized ~~Item~~a liability relating to these assessments. In 2006, CE 7Casecnan filed appeals of the ~~Company’s~~assessments ~~Annual~~which ~~Report~~are oncurrently pending before the Supreme ~~Form 10-K~~Court ~~for~~Office of the ~~year~~Court ~~ended~~Administrator ~~December 31,~~for ~~2007~~reassignment to another court to hear and decide the cases.

Contractual Obligations

Subsequent to December 31, 2008, there were no material changes outside the normal course of business in contractual obligations from the information provided in Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

New Accounting Pronouncements

For a discussion of new accounting pronouncements affecting the Company, refer to Note 2 of Notes to Financial Statements included in Item 1 of this Form 10-Q.

1716

Critical Accounting Policies

Certain accounting policies require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized in the Financial Statements from such estimates are necessarily based on numerous assumptions involving varying and potentially significant degrees of judgment and uncertainty. Accordingly, the amounts currently reflected in the Financial Statements will likely increase or decrease in the future as additional information becomes available. Estimates are used for, but not limited to, the allowance for doubtful accounts and ~~revenue~~auction rate securities – measurement principles. For additional discussion of the Company’s critical accounting policies, see Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2007~~2008. The Company’s critical accounting policies have not changed materially since December 31, ~~2007~~ 2008.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk affecting the Company, see Item 7A of ~~CE Casecnan~~the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2007~~2008. The Company’s exposure to market risk and its management of such risk has not changed materially since December 31, ~~2007~~2008.

Item 4.

Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, 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), 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). Based upon that evaluation, the Company’s management, including the President (principal executive officer) and the Chief Financial Officer (principal financial officer), concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time ~~frames~~periods specified in the ~~Commission~~SEC’s rules and forms, and is accumulated and communicated to management, including the Company’s President (principal executive officer) and the Chief Financial ~~Officer~~ Officer (principal financial officer), or persons performing similar functions, as as appropriate to allow timely decisions regarding required disclosure. There ~~has~~ has been no change in the Company’s internal control over financial reporting ~~during~~ during the quarter ended ~~June~~March 3031, ~~2008~~2009 that has materially affected, or is ~~reasonably~~ reasonably likely to materially affect, the Company’s internal control over ~~financial~~ financial reporting.

1917

PART II ~~– OTHER INFORMATION~~

Item 1.

Legal Proceedings

None.

Item 1A.

Risk Factors

There has been no material change to the Company’s risk factors from those disclosed in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2007~~ 2008.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3.

Defaults Upon Senior Securities

Not applicable.

Item 4.

Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5.

Other Information

Not applicable.

Item 6.

Exhibits

The exhibits listed on the accompanying Exhibit Index are filed as part of this Quarterly Report.

2018

SIGNATURES

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

		CE CASECNAN WATER AND ENERGY COMPANY, INC.
		(Registrant)
Date: July 25, 2008		/s/ Patrick J. Goodman
Date: April 24, 2009		/s/ Patrick J. Goodman
		Patrick J. Goodman
		Senior Vice President and Chief Financial Officer
		(principal financial and accounting officer)

2119

EXHIBIT INDEX

Exhibit No.		Description

31.1		Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		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.

2220

Filing Compare · CE CASECNAN WATER & ENERGY CO INC