10-Q 1 a2093124z10-q.htm 10-Q
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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002
OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 333-96239

TENASKA GEORGIA PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

47-0812088
(I.R.S. Employer Identification No.)

1044 N. 115^th Street, Suite 400
Omaha, Nebraska 68154-4446
(Address of principal executive offices) (Zip Code)

(402) 691-9500
(Registrant's telephone number, including area code)

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 /x/ No / /

TENASKA GEORGIA PARTNERS, L.P.
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2002

INDEX

			Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited)
		Balance Sheets	3
		Statements of Operations	4
		Statement of Partners' Equity (Deficit)	5
		Statements of Cash Flows	6
		Notes to Financial Statements	7
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
	Item 4.	Controls and Procedures	16
PART II.	OTHER INFORMATION
	Item 6.	Exhibits and Reports on Form 8-K	17
		Signature	18
		Certification of Principal Executive Officer	19
		Certification of Principal Financial Officer	20

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Tenaska Georgia Partners, L.P.

Balance Sheets

(Unaudited)

			September 30, 2002			December 31, 2001
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	8,153,344		$	5,187,618
	Restricted cash and cash equivalents			4,455,046			126,499
	Accounts receivable			4,284,726			1,747,685
	Other receivables			100,888			262,527
	Interest receivable			14,527			33,582
	Prepaid insurance			497,795			226,748
	Inventory			4,038,122			4,676,547

		Total current assets		21,544,448			12,261,206

DEVELOPMENT WORK IN PROGRESS				—			112,491,923

PLANT AND EQUIPMENT, at cost:
	Land			602,529			602,529
	Electric generation plant			243,415,417			118,281,179
	Other			474,398			328,566

				244,492,344			119,212,274
	Less—Accumulated depreciation			(5,119,009	)		(1,639,700	)

		Total plant and equipment, net		239,373,335			117,572,574

OTHER ASSETS:
	Contract costs, net			10,196,532			9,791,748
	Pipeline and interconnection costs, net			11,892,675			11,933,866
	Deferred finance charges, net			4,813,458			4,933,177

		Total other assets		26,902,665			26,658,791

		Total assets	$	287,820,448		$	268,984,494

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
	Accounts payable		$	3,837,196		$	4,782,499
	Payable to affiliate			149,301			133,895
	Accrued interest payable			4,354,167			10,885,417
	Contract retainage payable			3,143,185			—

		Total current liabilities		11,483,849			15,801,811

CONTRACT RETAINAGE PAYABLE				—			2,879,868

LONG-TERM DEBT				275,000,000			275,000,000

		Total liabilities		286,483,849			293,681,679

COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY (DEFICIT):
	Diamond Georgia, LLC			38,169			(50,755	)
	Tenaska Georgia, Inc.			(24,803	)		(196,216	)
	Tenaska Georgia I, L.P.			1,323,233			(24,450,214	)

		Total partners' equity (deficit)		1,336,599			(24,697,185	)

		Total liabilities and partners' equity (deficit)	$	287,820,448		$	268,984,494

The accompanying notes are an integral part of these balance sheets.

Tenaska Georgia Partners, L.P.

Statements of Operations

(Unaudited)

			Three Months Ended September 30,					Nine Months Ended September 30,
			2002		2001			2002			2001
REVENUE:
	Electric		$	11,160,762	$	4,490,940		$	24,250,686		$	6,040,401
	Other			—		836,629			—			836,629

		Total revenue		11,160,762		5,327,569			24,250,686			6,877,030

OPERATING EXPENSES:
	Fuel for electric generation plant			—		391,820			3,435,413			1,511,037
	Plant operation and maintenance			1,514,350		433,797			3,129,088			496,463
	Management fees and expenses			860,934		600,924			2,348,428			794,903
	Depreciation and amortization			1,826,564		819,914			4,007,858			1,024,436
	Other expenses			16,250		—			63,037			—

		Total operating expenses		4,218,098		2,246,455			12,983,824			3,826,839

		Operating income		6,942,664		3,081,114			11,266,862			3,050,191

INTEREST EXPENSE:
	Interest expense			6,531,250		6,531,250			19,593,750			19,593,750
	Interest expense capitalized			—		(1,764,519	)		(4,090,377	)		(7,948,032	)
	Other interest expense			228,230		181,289			548,002			211,519

		Interest expense, net		6,759,480		4,948,020			16,051,375			11,857,237

INVESTMENT INCOME				71,195		494,534			128,297			3,029,467

NET INCOME (LOSS)			$	254,379	$	(1,372,372	)	$	(4,656,216	)	$	(5,777,579	)

The accompanying notes are an integral part of these statements.

Tenaska Georgia Partners, L.P.

Statement of Partners' Equity (Deficit)

(Unaudited)

		Diamond Georgia, LLC			Tenaska Georgia, Inc.			Tenaska Georgia I, L.P.			Total
BALANCE, December 31, 2001		$	(50,755	)	$	(196,216	)	$	(24,450,214	)	$	(24,697,185	)
	Equity contributions		106,500			248,500			35,145,000			35,500,000
	Equity distributions		(3,607	)		(44,493	)		(4,761,900	)		(4,810,000	)
	Net loss		(13,969	)		(32,594	)		(4,609,653	)		(4,656,216	)

BALANCE, September 30, 2002		$	38,169		$	(24,803	)	$	1,323,233		$	1,336,599

The accompanying notes are an integral part of this statement.

Tenaska Georgia Partners, L.P.

Statements of Cash Flows

(Unaudited)

				Nine Months Ended September 30,
				2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	(4,656,216	)	$	(5,777,579	)
	Adjustments to reconcile net loss to net cash from operating activities-
		Depreciation and amortization			4,007,858			1,024,436
		Amortization of deferred finance charges			148,547			57,774
		Increase in accounts receivable			(2,537,041	)		(1,685,515	)
		Decrease (increase) in other receivables			161,639			(4,346,379	)
		Decrease in interest receivable			19,055			1,267,287
		(Increase) decrease in prepaid insurance			(271,047	)		356,842
		Decrease (increase) in inventory			638,425			(2,695,356	)
		Decrease in accounts payable			(688,238	)		(2,040,672	)
		Increase in payable to affiliate			15,406			38,223
		Decrease in accrued interest payable			(6,531,250	)		(6,531,250	)

			Total adjustments		(5,036,646	)		(14,554,610	)

			Net cash from operating activities		(9,692,862	)		(20,332,189	)

CASH FLOWS FROM INVESTING ACTIVITIES:
	Decrease in short-term investments				—			69,999,618
	Additions to development work in progress/plant and equipment				(13,045,212	)		(74,353,094	)
	Contract costs				(605,169	)		(3,591,019	)
	Pipeline and interconnection costs				(286,973	)		(7,715,259	)

			Net cash from investing activities		(13,937,354	)		(15,659,754	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	(Increase) decrease in restricted cash and cash equivalents				(4,328,547	)		20,723,818
	Deferred finance charges				(28,828	)		(287,007	)
	Increase in contract retainage payable				263,317			772,246
	Equity contributions				35,500,000			—
	Equity distributions				(4,810,000	)		—

			Net cash from financing activities		26,595,942			21,209,057

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					2,965,726			(14,782,886	)
CASH AND CASH EQUIVALENTS, beginning of period					5,187,618			48,524,392

CASH AND CASH EQUIVALENTS, end of period				$	8,153,344		$	33,741,506

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid for interest, net of amounts capitalized			$	22,034,623		$	18,176,968
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
	Included in decrease in accounts payable and additions to development work in progress/plant and equipment as of September 30, 2002 are accrued costs of $5,245,295 capitalized as development work in progress/plant and equipment as of December 31, 2001.
	Excluded from decrease in accounts payable and additions to development work in progress/plant and equipment as of September 30, 2002 are accrued costs of $4,988,230 capitalized as plant and equipment as of September 30, 2002.

The accompanying notes are an integral part of these statements.

Tenaska Georgia Partners, L.P.

Notes to Financial Statements

September 30, 2002
(Unaudited)

1. General

The financial statements included herein as of September 30, 2002 and for the three and nine months ended September 30, 2002 and 2001 have been prepared by Tenaska Georgia Partners, L.P. (the "Limited Partnership") without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the financial results for the interim periods. Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. However, the Limited Partnership believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Limited Partnership's audited financial statements and the notes thereto for the year ended December 31, 2001 included in the Limited Partnership's Annual Report on Form 10-K for such year.

2. Summary of Significant Accounting Policies

Organization

The Limited Partnership was formed on April 16, 1998 to develop, finance, construct, own or lease, operate and maintain a natural gas-fired electric generation peaking facility (the "Facility") located in Heard County, Georgia. The Facility generates electric power for sale. As of June 1, 2002, all six turbine-generators have achieved commercial operation. The Limited Partnership is scheduled to terminate December 31, 2050.

The following are the partners and their respective ownership interests and their percentage share of net income or loss:

Partner	Percentage Interest (For Equity Contribution Purposes)		Percentage Interest (For Allocation of Net Income or Loss)
Diamond Georgia, LLC (General)	.30	%	.30	%
Tenaska Georgia, Inc. (General)	.70		.70
Tenaska Georgia I, L.P. (Limited)	99.00		99.00

	100.00	%	100.00	%

The Limited Partnership has issued senior secured bonds (the "Bonds") in the principal amount of $275,000,000 and the partners have contributed equity of $35,500,000 to fund construction of the Facility.

The day-to-day management of the affairs of the Limited Partnership, including preparation and maintenance of the financial and other records and books of account of the Limited Partnership and supervision of the ongoing operations of the facilities, loan administration and activities of the Limited Partnership, is the responsibility of the managing general partner ("Tenaska Georgia, Inc."), subject to the direction of the Executive Review Committee. Tenaska Georgia, Inc. does not have the authority to incur any obligations or liabilities on behalf of the Limited Partnership, except as approved by the Executive Review Committee.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Depreciation

Plant and equipment is recorded at cost and depreciated using the straight-line method. The estimated useful lives of the major asset categories are:

Electric generation plant		38 years
Other plant and equipment		5-20 years

Deferred Finance Charges

During the development phase, the Limited Partnership incurred charges and fees necessary to obtain financing. These costs have been capitalized and deferred. The costs associated with the first three turbine-generators (the "Initial Units") that were placed in service in 2001 and the remaining three turbine-generators (the "Final Units") that were placed in service on June 1, 2002 are being amortized to expense over the term of the related debt. As of September 30, 2002 and December 31, 2001, accumulated amortization was $235,209 and $86,662, respectively. The Initial Units and the Final Units are referred to herein collectively as the "Units."

Capitalization of Interest

The Limited Partnership has capitalized interest on the average accumulated expenditures for development work in progress based upon the Limited Partnership's borrowing rate. As of June 1, 2002, the Units have achieved commercial operation. Therefore, the Limited Partnership has ceased capitalizing interest on development work in progress.

Contract Costs

The Limited Partnership incurred certain direct costs associated with the Power Purchase Agreement (the "Power Purchase Agreement") with Exelon Generation Company, LLC ("Exelon"). These costs include professional services, technical construction oversight, permits and other costs directly related to entering into various project documents and construction contracts necessary to construct the Facility and to ultimately perform under the Power Purchase Agreement. These costs have been capitalized and deferred. Commencing with commercial operation in 2001, the costs associated with the Initial Units are being amortized to expense over the 348-month term of the Power Purchase Agreement. Commencing with commercial operation in June 2002, the costs associated with the Final Units are being amortized to expense over the remaining 336-month term of the Power

Purchase Agreement. As of September 30, 2002 and December 31, 2001, accumulated amortization was $299,905 and $99,520, respectively.

Pipeline and Interconnection Costs

The Limited Partnership incurred costs to secure a long-term water supply contract and to construct a natural gas pipeline, natural gas metering facilities and electrical interconnections. These costs have been capitalized and are being amortized to expense over the 348-month term of the Power Purchase Agreement commencing with commercial operation in June 2001. As of September 30, 2002 and December 31, 2001, accumulated amortization was $573,141 and $244,977, respectively.

Revenue Recognition

Under the terms set forth in the Power Purchase Agreement with Exelon, Exelon is obligated to purchase the entire net electric power generated from the Facility and is obligated to provide the natural gas and fuel oil for the Facility for a term of 29 years ending in 2030. The Power Purchase Agreement provides for certain fixed payments, an availability bonus, along with variable payments. The Limited Partnership recognizes related revenue from the sale of electricity in the months energy is delivered based upon output delivered and capacity provided at rates specified in the Power Purchase Agreement. Availability bonuses or payments for non-availability are recognized as revenue or expense in the month the Limited Partnership achieves or fails to achieve the availability targets defined in the Power Purchase Agreement.

3. Transactions with Affiliates

As of September 30, 2002 and December 31, 2001, the Limited Partnership had a payable to Tenaska Georgia, Inc. of $149,301 and $133,895, respectively. For the three and nine month periods ended September 30, 2002, billings from Tenaska Georgia, Inc. to the Limited Partnership for services provided as managing general partner and reimbursable expenses were $560,890 and $2,057,202, respectively. For the nine month period ended September 30, 2002, $372,884 was capitalized as contract costs. For the three and nine month periods ended September 30, 2002, $560,890 and $1,684,318, respectively, were expensed as management fees and expenses. For the three and nine month periods ended September 30, 2001, billings from Tenaska Georgia, Inc. to the Limited Partnership were $440,369 and $1,777,668, respectively. For the three and nine month periods ended September 30, 2001, $31,308 and $1,194,784, respectively, were capitalized as contract costs and $409,061 and $582,884, respectively, were expensed as management fees and expenses.

For the nine month period ended September 30, 2002, the Limited Partnership recognized electric revenues of $1,569,741 for the sale of power to Tenaska Power Services Co. ("TPS"), an affiliate, for testing not associated with commercial dispatch. For the three and nine month periods ended September 30, 2001, the Limited Partnership recognized electric revenues of $203,700 and $619,169, respectively, for the sale of power to TPS for testing not associated with commercial dispatch. As of December 31, 2001, $120,185 was due from TPS and is included in the accompanying balance sheets as accounts receivable.

4. Development Work in Progress

The Limited Partnership entered into an Engineering, Procurement and Construction Contract (the "EPC Contract") with Zachry Construction Corporation ("Zachry") to design, engineer, procure, expedite and supply all labor, equipment (including the gas turbine-generators), materials, supervision and tools for the construction of the Facility. Construction of the Facility was completed (except for certain punch list items) on schedule and within budget.

As of June 1, 2002, all of the Units have achieved commercial operation. Therefore, as of September 30, 2002, all development work in progress costs have been reclassified to electric generation plant and pipeline and interconnection costs in the accompanying balance sheets. Total EPC Contract costs, including interest of $19,882,991, have been capitalized as follows: (a) costs of $243,415,417 associated with the Units are included in the accompanying balance sheets as electric generation plant and (b) costs of $8,139,231 associated with electrical interconnections are included in the accompanying balance sheets as pipeline and interconnection costs.

Two of the Initial Units were completed on schedule under the EPC Contract. Under the terms of the Power Purchase Agreement with Exelon, Unit 1 commenced commercial operation effective June 1, 2001, while Unit 3 commenced commercial operation effective June 2, 2001, which was one day late.

One of the Initial Units (Unit 2) did not achieve commercial operation as scheduled in June 2001 due to damage sustained during testing. Repairs were made and Unit 2 achieved commercial operation under the terms of the EPC Contract as of August 29, 2001. Under the terms of the Power Purchase Agreement with Exelon, Unit 2 commenced commercial operation effective August 30, 2001.

Because Unit 2 did not achieve commercial operation on schedule under the terms of the EPC Contract, the Limited Partnership has asserted its rights to receive delay liquidated damages from Zachry. As of September 30, 2002 and December 31, 2001, the Limited Partnership had accrued liquidated damages of $1,600,000 due from Zachry in accordance with the terms of the EPC Contract, as a reduction of capitalized contract costs, with the final amount due not yet determined. Furthermore, this amount has been offset against amounts payable to Zachry under the EPC Contract as of September 30, 2002 and December 31, 2001, and is included in the accompanying balance sheets as accounts payable.

The Limited Partnership's delay-in-start-up insurance claim of $3,836,644 was approved and settled in October 2001. All delay-in-start-up insurance proceeds were received as of June 30, 2002. For each of the three and nine month periods ended September 30, 2001, the Limited Partnership recognized other revenue of $836,629 associated with the settlement of the Limited Partnership's delay-in-start-up insurance claim for the portion of the claim relating to lost operating margins.

During 2001, the Limited Partnership paid Exelon liquidated damages of $5,150,020, which was recorded as an increase to capitalized contract costs, as a result of Units 2 and 3 not achieving their scheduled commercial operation dates under the Power Purchase Agreement. Of the liquidated damages paid to Exelon, $3,000,015 was covered by the Limited Partnership's delay-in-start-up insurance claim and was recorded as a reduction to capitalized contract costs.

As of September 30, 2002 and December 31, 2001, the Limited Partnership had contract retainage payable to Zachry and accounts payable that consisted primarily of accrued construction costs payable to Zachry, net of accrued liquidated damages of $1,600,000 due from Zachry for the Unit 2 delay.

All three of the Final Units were completed on schedule under the EPC Contract and achieved commercial operation effective June 1, 2002 under the terms of the Power Purchase Agreement with Exelon. The Facility's declared capacity for determining payments due from Exelon under the Power Purchase Agreement is 944 megawatts for the contract year beginning June 1, 2002.

5. Credit Facilities / Long-term Debt

The Toronto Dominion Bank ("TD") is obligated to issue a letter of credit up to a maximum of $16,000,000 for the Limited Partnership's debt service reserve obligation. On June 1, 2002, pursuant to the Debt Service Reserve Letter of Credit and Reimbursement Agreement, TD issued a letter of credit in the amount of $13,300,000 to satisfy the Limited Partnership's debt service reserve obligation.

Prior to 2002, The First National Bank of Omaha had issued letters of credit in the amounts of $1,322,500 and $248,500 on behalf of Tenaska Georgia I, L.P. and Tenaska Georgia, Inc., respectively, and Mitsubishi Corporation had issued a Guaranty, on behalf of Tenaska Georgia I, L.P. and Diamond Georgia, LLC, in the amount of $33,929,000, to support each partner's equity funding commitment. As of June 30, 2002, the Limited Partnership had received equity contributions of $35,500,000, which is the partners' total equity commitment for construction of the Facility. Therefore, the Trustee has released the letters of credit and the Guaranty.

The Bonds have various restrictive covenants related to, among other things, maintenance of a specified debt coverage ratio, maintenance of specified levels of reserve account balances (which may be satisfied by using letters of credit), limitations on additional debt and lease obligations, mergers, sale or purchase of assets and restrictions on certain payments. The Limited Partnership was in compliance with all covenants that were in effect as of September 30, 2002 and December 31, 2001. The Bonds are secured by a security interest in substantially all of the assets of the Limited Partnership.

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

The following information should be read in conjunction with the accompanying unaudited financial statements and the notes thereto included in Item 1 of this quarterly report, and the audited financial statements and the notes thereto and management's discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K (File No. 333-96239) for the year ended December 31, 2001 filed with the Securities and Exchange Commission (the "Annual Report"). Unless otherwise indicated or the context otherwise requires, all references in this quarterly report to "we," "us," "our," "ours," "the Limited Partnership," "the Partnership" or similar terms refer to Tenaska Georgia Partners, L. P.

General

We were formed on April 16, 1998 to develop, finance, construct, own or lease, operate and maintain the Facility. As of June 1, 2002, all of the Units have achieved commercial operation and have begun generating operating revenues.

On November 10, 1999, we completed a private offering of $275,000,000 aggregate principal amount of 9.50 percent fixed rate Senior Secured Bonds due 2030. On August 31, 2000, we completed an exchange offer whereby the holders of the original bonds exchanged their bonds for new bonds registered under the Securities Act of 1933. In this report, references to "Bonds" means both the original bonds and the new bonds, unless the context otherwise requires. Our partners committed to fund up to $35,500,000 in equity contributions to fund construction of the Facility. As of June 30, 2002, we had received equity contributions of $35,500,000, which is the partners' total equity commitment. The total net cost of the construction of the Facility is estimated to range from approximately $301,800,000 to $303,000,000, depending upon the amount of liquidated damages actually recovered for the Unit 2 delay, which occurred in 2001.

Facility Construction

Construction of the Facility is complete, except for certain punch list items, and is within budget. The Initial Units were scheduled to be operational by June 1, 2001, with the remaining three Final Units scheduled to be operational by June 1, 2002. All three of the Final Units were completed on schedule under the EPC Contract and achieved commercial operation effective June 1, 2002 under the terms of the Power Purchase Agreement with Exelon. The Facility's declared capacity for determining payments due from Exelon under the Power Purchase Agreement is 944 megawatts for the contract year beginning June 1, 2002.

As of September 30, 2002, total EPC Contract costs, including interest of $19,882,991, have been capitalized as follows: (a) costs of $243,415,417 associated with the Units are included in the accompanying balance sheets as electric generation plant and (b) costs of $8,139,231 associated with electrical interconnections are included in the accompanying balance sheets as pipeline and interconnection costs.

Unit 2 did not achieve commercial operation as scheduled in June 2001 due to damage sustained during testing. Repairs were made and Unit 2 achieved commercial operation under the terms of the EPC Contract as of August 29, 2001. Under the terms of the Power Purchase Agreement with Exelon, Unit 2 commenced commercial operation effective August 30, 2001.

Because Unit 2 did not achieve commercial operation on schedule under the terms of the EPC Contract, we have asserted our rights to receive delay liquidated damages from Zachry. As of September 30, 2002 and December 31, 2001, we had accrued liquidated damages of $1,600,000 due from Zachry in accordance with the terms of the EPC Contract, as a reduction of capitalized contract costs, with the final amount due not yet determined. Furthermore, this amount has been offset against amounts payable to Zachry under the EPC Contract as of September 30, 2002 and December 31, 2001, and is included in the accompanying balance sheets as accounts payable.

The financial impact of Unit 2's damage to the project, net of insurance proceeds, is anticipated to range from approximately $100,000 to $1,300,000, depending upon the amount of liquidated damages that we actually receive from Zachry. Proceeds from our insurance policies are expected to pay for the costs to repair Unit 2 and have covered the shortfall in operating revenues and liquidated damages owed to Exelon after deduction for the policy deductible amounts. The financial impact to us, net of insurance proceeds, will be covered with construction contingency funds.

Our delay-in-start-up insurance claim of $3,836,644 was approved and settled in October 2001. All delay-in-start-up insurance proceeds were received as of June 30, 2002.

Exelon continues to fulfill its contractual obligations under the Power Purchase Agreement and is purchasing the output from all of the Units. During 2001, we paid Exelon liquidated damages of $5,150,020, which was recorded as an increase to capitalized contract costs, as a result of Units 2 and 3 not achieving their scheduled commercial operation dates under the Power Purchase Agreement. Of the liquidated damages paid to Exelon, $3,000,015 was covered by our delay-in-start-up insurance claim and was recorded as a reduction to capitalized contract costs.

As of September 30, 2002 and December 31, 2001, we had contract retainage payable to Zachry and accounts payable that consisted primarily of accrued construction costs payable to Zachry, net of accrued liquidated damages of $1,600,000 due from Zachry for the Unit 2 delay.

Results of Operations

As noted above, the Final Units achieved commercial operation effective June 1, 2002. Prior to June 1, 2002, the Facility was still under construction with only the Initial Units achieving commercial operation during 2001. Accordingly, the results of operations and cash flows for the three and nine month periods ended September 30, 2002 and 2001 are not comparable. Furthermore, the results of operations for the three and nine month periods ended September 30, 2002 and 2001 may not be indicative of the results of operations in future periods, since the Facility has only recently commenced full operations.

Revenues

We recognize related revenue from the sale of electricity in the months energy is delivered based upon output delivered and capacity provided at rates specified in the Power Purchase Agreement. Availability bonuses or payments for non-availability are recognized as revenue or expense in the month we achieve or fail to achieve the availability targets defined in the Power Purchase Agreement.

Commercial operations commenced on June 1, 2002 for each of the Final Units, and on June 1, 2001, June 2, 2001 and August 30, 2001 for Units 1, 3 and 2, respectively, under the Power Purchase Agreement. Revenues for the three and nine month periods ended September 30, 2002 were $11,160,762 and $24,250,686, respectively. For the three and nine month periods ended September 30, 2002, we recognized electric revenues of $11,160,762 and $22,680,945, respectively, under the Power Purchase Agreement. For the three and nine month periods ended September 30, 2002, we recognized unit start revenues of $826,000 and $1,317,854, respectively. The remaining revenues consist of capacity, energy and availability bonus revenues. For the nine month period ended September 30, 2002, we

recognized electric revenues of $1,569,741 for the sale of power to TPS, an affiliate, for testing not associated with commercial dispatch.

Revenues for the three and nine month periods ended September 30, 2001 were $5,327,569 and $6,877,030, respectively. For the three and nine month periods ended September 30, 2001, we recognized electric revenues of $4,287,240 and $5,421,232, respectively, under the Power Purchase Agreement. For the three and nine month periods ended September 30, 2001, we recognized unit start revenues of $280,500 and $346,500, respectively. The remaining revenues consist of capacity, energy and availability bonus revenues. For the three and nine month periods ended September 30, 2001, we recognized electric revenues of $203,700 and $619,169, respectively, for the sale of power to TPS for testing not associated with commercial dispatch. For each of the three and nine month periods ended September 30, 2001, we recognized other revenue of $836,629 associated with the settlement of our delay-in-start-up insurance claim for the portion of the claim relating to lost operating margins.

The Initial Units completed their first operating year as of May 31, 2002. The Annual Availability Percentage for the first Power Purchase Agreement contract year ending May 31, 2002 was 99 percent, which exceeded the 97 percent availability level required to avoid reductions in reservation payments under the Power Purchase Agreement. The capacity factor, under the terms of the Power Purchase Agreement, for the first contract year was 2.64 percent, based upon declared available output.

As of September 30, 2002, the Annual Availability Percentage and the Summer Availability Percentage, for the months of June through September, was 99.7 percent for the Power Purchase Agreement contract year beginning June 1, 2002. The capacity factor, under the terms of the Power Purchase Agreement, for the contract year beginning June 1, 2002 was 4.41 percent through September 30, 2002, based upon declared available output.

Operating Expenses

Operating expenses for the three and nine month periods ended September 30, 2002 were $4,218,098 and $12,983,824, respectively. Fuel costs incurred for testing not associated with commercial dispatch for the nine month period ended September 30, 2002 were $3,435,413. Other operating expenses for the three and nine month periods ended September 30, 2002 were $4,218,098 and $9,548,411, respectively, of which depreciation and amortization expenses were $1,826,564 and $4,007,858, respectively.

Operating expenses for the three and nine month periods ended September 30, 2001 were $2,246,455 and $3,826,839, respectively. Fuel costs incurred for testing not associated with commercial dispatch for the three and nine month periods ended September 30, 2001 were $391,820 and $1,511,037, respectively. Other operating expenses for the three and nine month periods ended September 30, 2001 were $1,854,635 and $2,315,802, respectively, of which depreciation and amortization expenses were $819,914 and $1,024,436, respectively.

Interest

The portion of the proceeds from the sale of the Bonds and equity contributions not expended on construction was invested in cash and cash equivalents and short-term investments. The interest earned on these invested funds was included as investment income. The interest expense incurred on the portion of the Bond proceeds expended to construct the Facility has been capitalized as electric generation plant. Interest expense incurred on the Bond proceeds not spent on construction was included as interest expense. For the three and nine month periods ended September 30, 2002, interest, net of amounts capitalized, of $6,759,480 and $16,051,375, respectively, was expensed. For the nine month period ended September 30, 2002, interest costs of $4,090,377 were capitalized. For the three and nine month periods ended September 30, 2001, interest, net of amounts capitalized, of $4,948,020 and $11,857,237, respectively, was expensed. For the three and nine month periods ended

September 30, 2001, interest costs of $1,764,519 and $7,948,032, respectively, were capitalized. For the three and nine month periods ended September 30, 2002, interest in the amount of $71,195 and $128,297, respectively, was recorded as investment income. For the three and nine month periods ended September 30, 2001, interest in the amount of $494,534 and $3,029,467, respectively, was recorded as investment income. The decrease in investment income primarily relates to the utilization of the Bond proceeds and equity contributions for construction of the Facility, along with a decrease in short-term interest rates.

Liquidity and Capital Resources

The net proceeds from the sale of the Bonds, investment income on the unspent portion thereof during the construction period, actual revenues from the operation of the Initial Units and proceeds from the equity contributions has been sufficient to (1) fund the engineering, procurement, construction, testing and commissioning of the Facility, (2) pay certain fees and expenses in connection with the financing and development of our project, and (3) pay the costs of developing, financing and initially operating our project, including interest on the Bonds. Now that the Facility is in commercial operation, we expect that our revenues under the Power Purchase Agreement with Exelon will be adequate to support our costs of operations.

In order to provide liquidity in the event of temporary cash flow shortfalls, we are required to maintain an account that will contain an amount equal to the principal and interest due on the Bonds on the next scheduled payment date. Our obligation to fund this account began on June 1, 2002. On June 1, 2002, pursuant to the Debt Service Reserve Letter of Credit and Reimbursement Agreement, TD issued a letter of credit in the amount of $13,300,000 to satisfy our debt service reserve obligation.

Business Strategy and Outlook

Our overall business strategy is to perform as agreed under the Power Purchase Agreement and to maximize our revenues under the Power Purchase Agreement by earning incentive payments available through achieving certain availability and efficiency levels. We intend to cause the Facility to be managed, operated and maintained in compliance with all applicable documents relating to our project and all applicable legal requirements.

Critical Accounting Policies

We believe that our critical accounting policies relate to revenue recognition under our Power Purchase Agreement with Exelon, depreciation on our plant and equipment and amortization on our contract costs and pipeline and interconnection costs. Please refer to the accompanying unaudited financial statements and the notes thereto included in Item 1 of this quarterly report and the audited financial statements and the notes thereto included in the Annual Report regarding our critical and other accounting policies.

Impact of Recent Accounting Pronouncements

There are currently no recent accounting pronouncements issued by the Financial Accounting Standards Board that are expected to have a material impact on our financial position or results of operations.

Forward Looking Statements

Various statements contained in this quarterly report are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which speak only as of the date hereof, can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "intends," "will," "should," or "anticipates," or by the negative

forms or other variations of these terms or comparable terminology, or by the discussions of strategy. Although these statements are based on assumptions that we believe are reasonable, no assurance can be given that the future results covered by these statements will be achieved. These statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed or implied by these statements. The most significant of these risks, uncertainties and other factors are discussed under the heading "Risk Factors" in the Annual Report, and you are urged to read this section and carefully consider these factors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Bonds were issued at a 9.50 percent fixed rate of interest, and as a result, we are not exposed to market risk associated with an increase in interest rates.

Upon achieving commercial operation of the Units, we are not exposed to commodity price risk as Exelon is obligated to provide the natural gas and fuel oil for the Facility for the term of the Power Purchase Agreement.

ITEM 4. CONTROLS AND PROCEDURES

Based on their evaluation, as of a date within 90 days of the filing of this report, the Limited Partnership's principal executive officer and principal financial officer have concluded that the Limited Partnership's disclosure controls and procedures (as defined in Rule 15d-14 under the Securities Exchange Act of 1934) were effective. There have been no significant changes in the Limited Partnership's internal controls or in other factors that could significantly affect these controls subsequent to the date of the Limited Partnership's evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a): Exhibits

None.

(b): Reports on Form 8-K

During the quarter ended September 30, 2002, the Limited Partnership filed a Current Report on Form 8-K dated July 17, 2002 covering information required under Item 4 of Form 8-K. Effective July 17, 2002, the Limited Partnership dismissed Arthur Andersen LLP as its independent auditors and appointed KPMG LLP to serve as its independent auditors for the year ending December 31, 2002. No financial statements were filed as part of the Current Report on Form 8-K.

SIGNATURE

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

November 12, 2002	TENASKA GEORGIA PARTNERS, L.P. a Delaware limited partnership
	By:	TENASKA GEORGIA, INC. a Delaware corporation, as Managing General Partner of Tenaska Georgia Partners, L.P.
	By:	/s/ MICHAEL F. LAWLER Michael F. Lawler Vice President of Finance and Treasurer

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Howard L. Hawks, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Tenaska Georgia Partners, L.P.;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

November 12, 2002

By:

/s/ HOWARD L. HAWKS

Howard L. Hawks
Chief Executive Officer
of Tenaska Georgia, Inc., the Managing
General Partner of the Limited Partnership

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Ronald N. Quinn, certify that: