[Willkie Farr & Gallagher Letterhead]



July 14, 1995

California Energy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131

Re:  Registration Statement on Form S-3

Ladies and Gentlemen:

California Energy Company, Inc., a Delaware corporation (the "Company"), has
requested our opinion in connection with the Registration Statement on Form S-3
(Registration No. 33-59401) (as amended, the "Registration Statement") relating
to the __% Limited Recourse Senior Secured Notes Due 2003 of the Company (the
"Notes").  The Notes will be issued under an Indenture (the "Indenture") to be
entered into between the Company and The Bank of New York, as Trustee (the
"Trustee"), and sold pursuant to the terms of an underwriting agreement to be
executed by the Company and CS First Boston Corporation (the "Underwriter").

We have examined copies of the Certificate of Incorporation and By-laws of the
Company, each as amended to date, the Registration Statement, certain
resolutions adopted by the Company's Board of Directors and other records and
documents that we have deemed necessary for the purpose of this opinion.  We
have also examined such other documents, papers, statutes and authorities as we
have deemed necessary to form a basis for the opinions hereinafter expressed.

In our examination, we have assumed the genuineness of all signatures and the
conformity to original documents of all copies submitted to us.  As to various
questions of fact material to our opinion, we have relied on statements and
certificates of officers and representatives of the Company and public
officials.

Based upon and subject to the foregoing, we are of the opinion that:

        1.      The Notes have been duly authorized by all necessary corporate
action of the Company and, when duly executed, authenticated and delivered by or
on behalf of the Company and paid for by the Underwriter, will be valid and
binding obligations of the Company and will be entitled to the benefits of the
Indenture.




    


        2.      The Indenture, when duly executed and delivered by the Company
and the Trustee, will constitute a valid and binding instrument of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Registration Statement.

Very truly yours,


/s/ Willkie Farr & Gallagher