Tax Opinion of Willkie Farr & Gallagher


                            Willkie Farr & Gallagher
                              One Citicorp Center
                              153 East 53rd Street
                               New York, NY 10022
                           Telephone: (212) 821-8000
                           Facsimile: (212) 821-8111


February 4, 1998


CalEnergy Capital Trust III
c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131

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

Re:      CalEnergy Company, Inc.;
         CalEnergy Capital Trust III;
         Registration Statement on Form S-3

Ladies and Gentlemen:

We have acted as special counsel to CalEnergy Company, Inc., a Delaware
corporation (the "Company"), and CalEnergy Capital Trust III, a statutory
business trust formed under the laws of the State of Delaware (the "Trust"), in
connection with the preparation of a Registration Statement on Form S-3, as
filed by the Company and the Trust with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Act"), on
the date hereof (such registration statement being hereinafter referred to as
the "Registration Statement"), relating to the registration under the Act of
(i) 5,400,000 6-1/2% Convertible Preferred Securities (liquidation preference
$50 per each of the Trust Convertible Preferred Securities) (the "Convertible
Preferred Securities") representing undivided beneficial ownership interests in
the assets of the Trust; (ii) the 6-1/2% Convertible Junior Subordinated
Debentures due 2027 (the "Convertible Junior Subordinated Debentures") of the
Company, which may be distributed under certain circumstances to the holders of
the Convertible Preferred Securities; (iii) the shares of common stock, par
value $.0675 per share (the "Common Stock"), of the Company, issuable upon
conversion of the Convertible Preferred Securities and the Convertible Junior
Subordinated Debentures; and (iv) the Preferred Securities Guarantee of the
Company (as defined in the Registration Statement).




CalEnergy Capital Trust III
CalEnergy Company, Inc.
Page 2

We hereby confirm that, although the discussion set forth in the above
captioned registration statement under the heading "UNITED STATES TAXATION"
does not purport to discuss all possible United States federal income tax
consequences of the purchase, ownership and disposition of the Convertible
Preferred Securities, in our opinion such discussion constitutes, in all
material respects, a fair and accurate summary of the United States federal
income tax consequences of the purchase, ownership and disposition of the
Convertible Preferred Securities under current law. It is possible that
contrary positions may be taken by the Internal Revenue Service and that a
court may agree with such contrary positions.

We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and to the use of our name under the
heading "Legal Matters" in the Registration Statement and in the related
Prospectus. In giving this consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission promulgated thereunder.


Very truly yours,

/s/ Willkie Farr & Gallagher