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      Salton Sea Funding Corp Comment Letter

    June
      10,
      2005

    VIA
      EDGAR
      AND FACSIMILE

    Mr.
      William Choi

    Accounting
      Branch Chief

    Division
      of Corporation Finance

    Securities
      and Exchange Commission

    450
      Fifth
      Street, N.W.

    Mail
      Stop
      0308

    Washington,
      D.C. 20549

    RE:  Salton
      Sea Funding Corporation

        Form
      10-K for
      the Year Ended December 31, 2004

        File
      No.
      33-95538

    Dear
      Mr.
      Choi:

    This
      correspondence is being filed in response to comments with respect to the Salton
      Sea Funding Corporation ("Funding Corporation" or the "Company") and its Form
      10-K for the year ended December 31, 2004 (the "Form 10-K") received from the
      staff of the Securities and Exchange Commission (the "Commission") by letter
      dated May 13, 2005 (the "Comments"). The numbering below corresponds to the
      numbering of the Comments, which we have incorporated into this response letter
      in italics.

    General

            1.

              Unless
                otherwise indicated, where a comment below requests additional disclosures
                or other revisions to be made, please include the additional disclosures
                and revisions in your future annual and quarterly filings, as
                applicable.

    Response:
      The
      Company respectfully acknowledges the comment. Except as otherwise noted, the
      Company will include the additional disclosures or revisions in future filings
      as applicable. Set forth below are proposed responses for inclusion in future
      filings as applicable, unless otherwise noted.

    Item
      1, Business

    General,
      page 4

            2.

              Please
                consider including an organization chart reflecting the ownership
                of
                Funding Corporation and the Guarantors indicating the types of legal
                entities, ownership percentages and general partners, where applicable.
                Please tell us the owners of and their ownership interests in Fish
                Lake
                Power LLC, Salton Sea Power LLC, CE Salton Sea Inc., San Felipe Energy
                Company, Conejo Energy Company, Niguel Energy Company and VPC Geothermal
                LLC. Please also tell us the ownership interest of Cal Energy Operating
                Corp., Niguel, San Felipe and Conejo in Elmore, Leathers and Del
                Ranch. In
                addition, please tell us the ownership interest of Vulcan Power Company
                and VPC Geothermal LLC in Vulcan/BN Geothermal Power
                Company.

        1

    Response:
      The
      Company will include an organization chart similar to the one attached as
      Exhibit A in its future annual filings. The chart details the owners of and
      their ownership interests in Funding Corporation, as well as the legal entities
      which comprise the Salton Sea Guarantors, the Partnership Guarantors, and the
      Royalty Guarantor (collectively, the "Guarantors").

As
      shown
      on the chart attached as Exhibit A, Magma Power Company directly or indirectly
      owns 100% of the Funding Corporation, the Salton Sea Guarantors, the Partnership
      Guarantors and the Royalty Guarantor. Responses to your specific questions
      regarding the owners of and their ownership interests in the respective legal
      entities are as follows:

    Question
      - Please tell us the owners of and their ownership interests in Fish Lake Power
      LLC, Salton Sea Power LLC, CE Salton Sea Inc., San Felipe Energy Company, Conejo
      Energy Company, Niguel Energy Company, and VPC Geothermal LLC.

    Fish
      Lake Power LLC
      - Fish
      Lake Power LLC is owned 99% by Magma Power Company and 1% by Funding
      Corporation. Fish Lake Power LLC has a 1% ownership interest in the Salton
      Sea
      IV Project.

    CE
      Salton Sea Inc. and Salton Sea Power LLC
      - CE
      Salton Sea Inc. is owned 99% by Magma Power Company and 1% by Funding
      Corporation. CE Salton Sea Inc. has a 100% ownership interest in both Salton
      Sea
      Power LLC and CE Turbo LLC. Salton Sea Power LLC and CE Turbo LLC, in turn,
      have
      a 100% ownership interest in the Salton Sea V Project and the CE Turbo Project,
      respectively.

    San
      Felipe Energy Company-
      San
      Felipe Energy Company is owned 100% by CalEnergy Operating Corporation, which
      is
      owned 99% by Magma Power Company and 1% by Funding Corporation. San Felipe
      Energy Company has a 50% ownership interest in Leathers, L.P., which in turn
      has
      a 100% ownership interest in the Leathers Project.

    Conejo
      Energy Company-
      Conejo
      Energy Company is owned 100% by CalEnergy Operating Corporation. Conejo Energy
      Company has a 50% ownership interest in Del Ranch L.P., which in turn has a
      100%
      ownership interest in the Del Ranch Project.

    Niguel
      Energy Company-
      Niguel
      Energy Company is owned 100% by CalEnergy Operating Corporation. Niguel Energy
      Company has a 50% ownership interest in Elmore L.P., which in turn has a 100%
      ownership interest in the Elmore Project.

        2

    VPC
      Geothermal LLC-
      VPC
      Geothermal LLC is owned 100% by Vulcan Power Company. VPC Geothermal LLC has
      a
      50% ownership interest in Vulcan/BN Geothermal Power Company, which in turn
      has
      a 100% ownership interest in the Vulcan Project.

    Question
      - Please also tell us the ownership interest of CalEnergy Operating Corp.,
      Niguel, San Felipe and Conejo in Elmore, Leathers and Del
      Ranch.

    CalEnergy
      Operating Corporation is owned 99% by Magma Power Company and 1% by Funding
      Corporation. CalEnergy Operating Corporation has a 100% ownership interest
      in
      each of San Felipe Energy Company, Conejo Energy Company, and Niguel Energy
      Company.

    San
      Felipe Energy Company, Conejo Energy Company, and Niguel Energy Company have
      a
      50% ownership interest in Leathers, L.P. (the 100% owner of the Leathers
      Project), Del Ranch L.P. (the 100% owner of the Del Ranch Project) and Elmore,
      L.P. (the 100% owner of the Elmore Project), respectively.

    Question
      - In addition, please tell us the ownership interest of Vulcan Power Company
      and
      VPC Geothermal LLC in Vulcan/BN Geothermal Power Company.

    Vulcan
      Power Company and VPC Geothermal LLC each have a 50% ownership interest in
      Vulcan/BN Geothermal Power Company, which in turn is the 100% owner of the
      Vulcan Project. VPC Geothermal LLC is owned 100% by Vulcan Power
      Company.

    Also
      attached, as Exhibit B, are updated narratives describing the organization
      of
      Funding Corporation and each of the Guarantors. The Company will include the
      narratives (in the Notes to Financial Statements as Note 1. Organization and
      Operations) in future annual filings.

    Zinc
      Recovery Project and Minerals Assets, page 7

            3.

              We
                note your use of the terms "extractable mineral," "mineral reserves"
                and
                "mineral assets" in your filing. Please be advised that these terms
                are
                only permitted in filings if you have proven or probable reserves
                as
                defined in Industry Guide 7. Since you have not disclosed any quantities
                of proven or probable reserves, please remove all references to "reserves"
                throughout your document or tell us why a revision is
                unnecessary.

    Response:
      The
      assets of the Partnership Guarantors and the Salton Sea Guarantors include
      the
      rights to commercial quantities of extractable minerals contained in the
      geothermal brine of the Salton Sea reservoir. A pilot extraction facility
      installed near the Guarantors’ power plants by a third party mining company
      demonstrated that mineral production from the geothermal brine was commercially
      viable. Furthermore, the mineral content of the geothermal brine had been proven
      by a third party mining company as it related to zinc, manganese, boric acid
      and
      lithium carbide. Based upon the information obtained, it was determined that
      the
      reservoir contained commercial quantities of extractable minerals and that
      the
      mineral rights met the definition of probable and proven reserves as provided
      in
      Industry Guide 7. Accordingly, the Company believes the references to “reserves”
      throughout the document are appropriate.

        3

To
      recover the minerals, CalEnergy Minerals LLC constructed a zinc recovery project
      that began limited production during December 2002. Efforts to increase
      production to the designed capacity of approximately 30,000 metric tons per
      year
      continued throughout 2003 and 2004 with an emphasis on process modifications.
      On
      September 10, 2004, management made the decision to cease operations
      of the
      zinc recovery project and CalEnergy Minerals LLC committed to a plan to dispose
      of the project’s assets. Accordingly, no disclosures regarding the quantities of
      reserves are necessary in future filings.

    Item
      6. Selected Financial Data, page 11

            4.

              We
                note that total revenue, net income (loss), total assets and total
                stockholder’s equity of Funding Corporation and total assets and total
                guarantors’ equity of Partnership Guarantors as of and for the most recent
                year presented do not agree to the financial statements included
                in the
                filing. Please advise or
                revise.

    Response:
      The
      Company respectfully acknowledges the comment and will revise the Selected
      Financial Data in its next annual filing. The revised amounts and originally
      reported amounts are as follows:

              Funding
                Corporation

              Revised

              2004

              Originally

              Reported

              2004

              Statement
                of Operations Data

              Total
                revenue

              $

              21,653

              $

              21,666

              Net
                income (loss)

              (4,499

              )

              (4,861

              )

              Balance
                Sheet Data:

              Total
                assets

              $

              326,503

              $

              326,475

              Total
                stockholder’s equity

              11,139

              10,736

              Partnership
                Guarantors

              Balance
                Sheet Data:

              Total
                assets

              $

              613,781

              $

              610,951

              Total
                guarantors’ equity

              402,690

              399,860

        4

    Item
      7. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations for the Years Ended December 31, 2004 and 2003, page
      15

            5.

              Please
                provide an analysis and discussion of the changes in interest income
                and
                expense and the effective tax rates of Funding Corporation for the
                periods
                presented.

    Response:
      The
      Company has reevaluated Management’s Discussion and Analysis of Financial
      Condition and Results of Operations for the Years Ended December 31,
      2004
      and 2003 and believes that it includes the necessary information to provide
      an
      understanding of the material trends and events affecting the results of
      operations. However, the Company respectfully acknowledges the comment and
      in
      future filings agrees to provide expanded disclosure, as may be appropriate,
      regarding interest income, interest expense and the effective tax rates of
      Funding Corporation similar to the following:

    Funding
      Corporation’s interest income decreased $10.8 million to $26.5 million for the
      year ended December 31, 2004 from $37.3 million for the same period in 2003.
      Interest income represents interest earned on secured project notes receivable
      from the Guarantors and interest earned on cash balances.

    Funding
      Corporation’s interest expense decreased $10.7 million to $26.1 million for the
      year ended December 31, 2004 from $36.8 million for the same period in 2003.
      Interest expense represents interest on the senior secured notes and
      bonds.

    The
      decrease in interest income and expense was due to the lower outstanding
      balances of the secured project notes receivable from the Guarantors and the
      senior secured notes and bonds in connection with the redemption of
      $136.4 million of the Series F Bonds on March 1,
      2004.

    Funding
      Corporation’s effective tax rate was 6.08% for the year ended December 31,
      2004, as compared to 41.09% for the same period in 2003. The significant change
      in the effective tax rate relates to the increase in Funding Corporation’s
      equity in the Partnership Guarantors’ net loss to $4.1 million for the year
      ended December 31, 2004, as compared with $0.4 million for the
      same
      period in 2003. The Partnership Guarantors’ statements of operations reflect
      state and federal taxes. As such, Funding Corporation’s provision for income tax
      does not reflect taxes on the equity in loss of the Partnership Guarantors.
      Therefore, as Funding Corporation’s equity in the Partnership Guarantors varies
      and all other pre-tax book income amounts remain fairly constant, the effective
      tax rate will vary.

            6.

                In
                  each circumstance where you identify a significant change between
                  periods
                  in key financial data or indicators, please provide an analysis
                  and
                  discussion of the underlying business reasons for the change. For
                  example,
                  explain why:

              w

              Depreciation
                and amortization of the Salton Sea Guarantors
                decreased;

              w

              Maintenance
                of Partnership Guarantors increased;
                and

              w

              Energy
                tax credits and percentage depletion
                increased.

        5

    Response:
      The
      Company has reevaluated Management’s Discussion and Analysis of Financial
      Condition and Results of Operations for the Years Ended December 31, 2004 and
      2003 and believes that it includes the necessary information to provide an
      understanding of the material trends and events affecting the results of
      operations. However, the Company respectfully acknowledges the comment and
      in
      future filings will provide expanded discussion, as may be appropriate, of
      the
      underlying business reasons for significant changes similar to the
      following:

    The
      Salton Sea Guarantors’ change in depreciation and amortization was not
      significant. The Company will remove references to insignificant changes in
      future filings.

    The
      Pa