UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549



                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

       Date of report (Date of earliest event reported): December 23, 1998



                              KENETECH CORPORATION
             (Exact Name of registrant as specified in its charter)


                                    Delaware
                 (State or other jurisdiction of incorporation)


                  33-53132                                       94-3009803
         (Commission File Number)                             (I.R.S. Employer
                                                             Identification No.)


             500 Sansome Street, Suite 410
             San Francisco, California  94111                              94111
         (Address of principal executive offices)                     (Zip Code)


                                 (415) 398-3825
              (Registrant's telephone number, including area code)


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Item 2.  Acquisition or Disposition of Assets.

On December 23, 1998,  KENETECH  Energy  Systems,  Inc., a Delaware  corporation
("KES"),  a  wholly-owned   subsidiary  of  KENETECH  Corporation,   a  Delaware
corporation (the "Registrant"), sold its indirectly owned 50% equity interest in
a partnership that owns a gas-fired  cogeneration  facility of approximately 540
MW currently  under  construction  in Penuelas,  Puerto Rico (the  "EcoElectrica
Project") and other associated contract rights (collectively,  the "EcoElectrica
Interest")  to Edison  Mission  Energy,  an unrelated  party.  The  EcoElectrica
Project  also  includes a  liquefied  natural  gas import  terminal  and storage
facility, a desalination plant and assorted ancillary  facilities.  The sale was
made pursuant to a Stock Purchase and Assignment Agreement, dated as of December
23,  1998,  by and among KES and certain of its  affiliates  and Edison  Mission
Energy and one of its affiliates.

The  EcoElectrica  Interest  was sold for cash and  assumption  of a KES  equity
funding  commitment in the  approximate  aggregate  amount of $247 million.  The
consideration  received for the  EcoElectrica  Interest was  determined  from an
auction  solicitation  for such interest conducted by KES's and the Registrant's
financial  advisor.  The proceeds have been used (i) to satisfy and discharge in
full, in the amount of  approximately  $145.5 million,  the Registrant's 12 3/4%
Senior Secured Notes due 2002 after  acceleration by the Trustee for such notes,
on December 23, 1998, of the unpaid principal thereof in the face amount of $100
million,  accrued and unpaid interest and fees and expenses,  (ii) in payment in
full of a  development  loan for the  EcoElectrica  Project  in the  approximate
amount of $27 million,  (iii) in payment of $6.5 million to KENETECH  Windpower,
Inc., a wholly-owned  subsidiary of the Registrant ("KWI"), under the terms of a
Settlement  Agreement  and  Release  approved  by the  Bankruptcy  Court  having
jurisdiction  over KWI's chapter 11 proceeding,  and (iv) in payment of costs of
sale of the EcoElectrica Interest of approximately $11 million.

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 hereunto duly authorized.


                                                     KENETECH Corporation
                                                     (Registrant)

Date:   January 6, 1999                By: _________________________________
                                           Mark D. Lerdal
                                           President and Chief Executive Officer


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