**UNITED
          STATES**
 **SECURITIES
          AND EXCHANGE COMMISSION**
 Washington,
          D.C. 20549
 
 **FORM
          10-Q**
 
 (X)   Quarterly
          report pursuant to Section 13 or 15(d)
 of
          the Securities Exchange Act of
          1934
 **for the Quarterly Period Ended September 30, 2007**
 OR
 (  )    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
                Exact
                    name of registrant as specified in its charter;
                  State
                    of Incorporation;
                  Address
                    and Telephone Number
                IRS
                    Employer
                  Identification
                    No.1-14756
                **Ameren
                    Corporation**
                43-1723446(Missouri
                    Corporation)1901
                    Chouteau AvenueSt.
                    Louis, Missouri 63103(314)
                    621-32221-2967
                **Union
                    Electric Company**
                43-0559760(Missouri
                    Corporation)1901
                    Chouteau AvenueSt.
                    Louis, Missouri 63103(314)
                    621-32221-3672
                **Central
                    Illinois Public Service Company**
                37-0211380(Illinois
                    Corporation)607
                    East Adams StreetSpringfield,
                    Illinois 62739(888)
                    789-2477333-56594
                **Ameren
                    Energy Generating Company**
                37-1395586(Illinois
                    Corporation)1901
                    Chouteau AvenueSt.
                    Louis, Missouri 63103(314)
                    621-32222-95569
                **CILCORP
                    Inc.**
                37-1169387(Illinois
                    Corporation)300
                    Liberty StreetPeoria,
                    Illinois 61602(309)
                    677-52711-2732
                **Central
                    Illinois Light Company**
                37-0211050(Illinois
                    Corporation)300
                    Liberty StreetPeoria,
                    Illinois 61602(309)
                    677-52711-3004
                **Illinois
                    Power Company**
                37-0344645(Illinois
                    Corporation)370
                    South Main StreetDecatur,
                    Illinois 62523(217)
                    424-6600
   
 Indicate
          by check mark whether the
          registrants: (1) have 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) have been subject to such filing require­ments for the past 90
          days.     Yes   (X)
          No   (  )
 
 Indicate
          by check mark whether each
          registrant is a large accelerated filer, an accelerated filer, or a
          non-accelerated filer. See definitions of accelerated filer and large
          accelerated filer in Rule 12b-2 of the Securities Exchange Act of
          1934.
 
 Large
                    Accelerated Filer
                Accelerated
                    Filer
                Non-Accelerated
                    FilerAmeren
                    Corporation
                (X)
                (  )
                ( 
                     )Union
                    Electric Company
                (  )
                (  )
                (X)Central
                    Illinois Public Service Company
                (  )
                (  )
                (X)Ameren
                    Energy Generating Company
                (  )
                (  )
                (X)CILCORP
                    Inc.
                (  )
                (  )
                (X)Central
                    Illinois Light Company
                (  )
                (  )
                (X)Illinois
                    Power Company
                (  )
                (  )
                (X)
 
 Indicate
          by check mark whether each
          registrant is a shell company (as defined in Rule 12b-2 of the Securities
          Exchange Act of 1934).
 
 Ameren
                    Corporation
                Yes
                (
                      )
                No
                (X)Union
                    Electric Company
                Yes
                (
                      )
                No
                (X)Central
                    Illinois Public Service Company
                Yes
                (
                      )
                No
                (X)Ameren
                    Energy Generating Company
                Yes
                ( 
                     )
                No
                (X)CILCORP
                    Inc.
                Yes
                ( 
                     )
                No
                (X)Central
                    Illinois Light Company
                Yes
                ( 
                     )
                No
                (X)Illinois
                    Power Company
                Yes
                (
                      )
                No
                (X)
 
 The
          number of shares outstanding of
          each registrant’s classes of common stock as of November 1, 2007, was as
          follows:
 
 Ameren
                    Corporation
                Common
                    stock, $.01 par value per share – 208,009,159Union
                    Electric Company
                Common
                    stock, $5 par value per share, held by Ameren
                  Corporation
                    (parent company of the registrant) – 102,123,834Central
                    Illinois Public Service Company
                Common
                    stock, no par value, held by Ameren
                  Corporation
                    (parent company of the registrant) – 25,452,373Ameren
                    Energy Generating Company
                Common
                    stock, no par value, held by Ameren Energy
                  Development
                    Company (parent company of the
                  registrant
                    and indirect subsidiary of Ameren
                  Corporation)
                    – 2,000CILCORP
                    Inc.
                Common
                    stock, no par value, held by Ameren
                  Corporation
                    (parent company of the registrant) – 1,000Central
                    Illinois Light Company
                Common
                    stock, no par value, held by CILCORP Inc.
                  (parent
                    company of the registrant and subsidiary of
                  Ameren
                    Corporation) – 13,563,871Illinois
                    Power Company
                Common
                    stock, no par value, held by Ameren
                  Corporation
                    (parent company of the registrant) – 23,000,000
 
 
 
 
 **OMISSION
            OF CERTAIN INFORMATION**
 Ameren
          Energy Generating Company and CILCORP Inc. meet the conditions set forth
          in
          General Instruction H(1)(a) and (b) of Form 10-Q and are therefore filing
          this
          form with the reduced disclosure format allowed under that General
          Instruction.
  
 
 This
          combined Form 10-Q is separately
          filed by Ameren Corporation, Union Electric Company, Central Illinois Public
          Service Company, Ameren Energy Generating Company, CILCORP Inc., Central
          Illinois Light Company, and Illinois Power Company. Each registrant hereto
          is
          filing on its own behalf all of the information contained in this quarterly
          report that relates to such registrant. Each registrant hereto is not filing
          any
          information that does not relate to such registrant, and therefore makes
          no
          representation as to any such information.
 **TABLE
          OF CONTENTS**
 **Page**Glossary
                    of Terms and Abbreviations
                    ..................................................................................................................................................................................................................
                5Forward-looking
                    Statements
                    ...................................................................................................................................................................................................................................
                6**PART
                    I   Financial Information**Item
                    1.     Financial Statements
                    (Unaudited)**Ameren
                    Corporation**Consolidated
                    Statement of Income
                    ................................................................................................................................................................................................
                8Consolidated
                    Balance Sheet
                    ...........................................................................................................................................................................................................
                9Consolidated
                    Statement of Cash Flows
                    ........................................................................................................................................................................................
                10**Union
                    Electric
                    Company**Consolidated
                    Statement of Income
                    ................................................................................................................................................................................................
                11Consolidated
                    Balance Sheet
                    ...........................................................................................................................................................................................................
                12Consolidated
                    Statement of Cash Flows
                    ........................................................................................................................................................................................
                13**Central
                    Illinois Public Service
                    Company**Statement
                    of Income
                    ........................................................................................................................................................................................................................
                14Balance
                    Sheet
                    ...................................................................................................................................................................................................................................
                15Statement
                    of Cash Flows
                    ................................................................................................................................................................................................................
                16**Ameren
                    Energy Generating
                    Company**Consolidated
                    Statement of Income
                    ...............................................................................................................................................................................................
                17Consolidated
                    Balance Sheet
                    ..........................................................................................................................................................................................................
                18Consolidated
                    Statement of Cash Flows
                    .......................................................................................................................................................................................
                19**CILCORP
                    Inc.**Consolidated
                    Statement of Income
                    ...............................................................................................................................................................................................
                20Consolidated
                    Balance Sheet
                    ..........................................................................................................................................................................................................
                21Consolidated
                    Statement of Cash Flows
                    .......................................................................................................................................................................................
                22**Central
                    Illinois Light
                    Company**Consolidated
                    Statement of Income
                    ...............................................................................................................................................................................................
                23Consolidated
                    Balance Sheet
                    ..........................................................................................................................................................................................................
                24Consolidated
                    Statement of Cash Flows
                    .......................................................................................................................................................................................
                25**Illinois
                    Power
                    Company**Consolidated
                    Statement of Income
                    ..............................................................................................................................................................................................
                26Consolidated
                    Balance Sheet
                    .........................................................................................................................................................................................................
                27Consolidated
                    Statement of Cash Flows
                    ......................................................................................................................................................................................
                28Combined
                    Notes to Financial Statements
                    ...........................................................................................................................................................................................
                29Item
                    2.    Management’s Discussion and Analysis of Financial
                    Condition and Results of Operations
                    ....................................................................................................
                57Item
                    3.    Quantitative and Qualitative Disclosures About Market
                    Risk
                    .........................................................................................................................................................
                83Item
                    4.    Controls and Procedures
                    ........................................................................................................................................................................................................................
                87**PART
                    II Other Information**Item
                    1.    Legal Proceedings
                    ..................................................................................................................................................................................................................................
                87Item
                    1A.Risk Factors
                    ..............................................................................................................................................................................................................................................
                88Item
                    2.   Unregistered Sales of Equity Securities and Use of Proceeds
                    .........................................................................................................................................................
                91Item
                    6.   Exhibits
                    ......................................................................................................................................................................................................................................................
                91Signatures
                    ................................................................................................................................................................................................................................................................
                93
 
 This
          Form 10-Q contains
“forward-looking” statements within the meaning of Section 21E of the Securities
          Exchange Act of 1934, as amended. Forward-looking statements are all statements
          other than statements of historical fact, including those statements that
          are
          identified by the use of the words “anticipates,” “estimates,” “expects,”
“intends,” “plans,” “predicts,” “projects,” and similar expressions.
          Forward-looking statements should be read with the cautionary statements
          and
          important factors included on page 6 of this Form 10-Q under the heading
          “Forward-looking Statements.”
 4
  **GLOSSARY
            OF TERMS AND ABBREVIATIONS**
 
 We
            use the words “our,” “we” or “us”
with respect to certain information that relates to all Ameren Companies,
            as
            defined below. When appropriate, subsidiaries of Ameren are named specifically
            as we discuss their various business activities.
 
 ***AERG***– AmerenEnergy Resources Generating Company, a CILCO subsidiary
            that operates a non-rate-regulated electric generation business in
            Illinois.
 ***AFS***– Ameren Energy Fuels and Services Company, a Development
            Company
            subsidiary that procures fuel and natural gas and manages the related
            risks for
            the Ameren Companies.
 ***Ameren***– Ameren Corporation and its subsidiaries on a consolidated
            basis.
            In references to financing activities, acquisition activities, or liquidity
            arrangements, Ameren is defined as Ameren Corporation, the parent.
 ***Ameren
            Companies***– The individual registrants within the Ameren
            consolidated group.
 ***Ameren
            Energy***– Ameren Energy, Inc., an Ameren Corporation subsidiary
            that is a power marketing and risk management agent for UE.
 ***Ameren
            Illinois Utilities***– CIPS, IP and the rate-regulated electric and
            gas utility operations of CILCO.
 ***Ameren
            Services***–******Ameren Services Company,
            an Ameren Corporation subsidiary that provides support services to Ameren
            and
            its subsidiaries.
 ***ARO***–
            Asset retirement obligations.
 ***Baseload****–*The minimum amount of electric power delivered
            or
            required over a given period of time at a steady rate.
 ***Capacity
            factor***– A percentage measure that indicates how much of an
            electric power generating unit’s capacity was used during a specific
            period.
 ***CILCO***– Central Illinois Light Company, a CILCORP subsidiary that
            operates a rate-regulated electric and natural gas transmission and distribution
            business and a non-rate-regulated electric generation business through
            AERG, all
            in Illinois, as AmerenCILCO. CILCO owns all of the common stock of
            AERG.
 ***CILCORP***– CILCORP Inc., an Ameren Corporation subsidiary that operates
            as
            a holding company for CILCO and various non-rate-regulated
            subsidiaries.
 ***CIPS***– Central Illinois Public Service Company, an Ameren Corporation
            subsidiary that operates a rate-regulated electric and natural gas transmission
            and distribution business in Illinois as AmerenCIPS.
 ***CIPSCO***–******CIPSCO Inc., the former parent
            of
            CIPS.
 ***CT***– Combustion turbine electric generation equipment used primarily
            for peaking capacity.
 ***CUB***– Citizens Utility Board.
 ***Development
            Company***– Ameren Energy Development Company, which is a Resources
            Company subsidiary, and parent of Genco, Marketing Company and AFS.
 ***DOE***– Department of Energy, a U.S. government agency.
 ***DRPlus***– Ameren Corporation’s dividend reinvestment and direct stock
            purchase plan.
 ***Dynegy***– Dynegy Inc.
 ***EEI***– Electric Energy, Inc., an 80%-owned Ameren Corporation
            subsidiary (40% owned by UE and 40% owned by Development Company) that
            operates
            non-rate-regulated electric generation facilities and FERC-regulated
            transmission facilities in Illinois. The remaining 20% is owned by Kentucky
            Utilities Company.
 ***ELPC***– Environmental Law and Policy Center.
 ***EPA***– Environmental Protection Agency, a U.S. government
            agency.
 ***Exchange
            Act***– Securities Exchange Act of 1934, as amended.
 ***FASB***– Financial Accounting Standards Board, a rulemaking organization
            that establishes financial accounting and reporting standards in the
            United
            States.
 ***FERC***– The Federal Energy Regulatory Commission, a U.S. government
            agency.
 ***FIN***– FASB Interpretation. A FIN statement is an explanation
            intended
            to clarify accounting pronouncements previously issued by the FASB.
 ***Fitch***– Fitch Ratings, a credit rating agency.
 ***Form
            10-K***–******The combined Annual Report
            on Form 10-K for the year ended December 31, 2006, filed by the Ameren
            Companies
            with the SEC.
 ***FSP***–
            FASB Staff Position, which provides application guidance on FASB
            literature.
 ***GAAP***– Generally accepted accounting principles in the United
            States of
            America.
 ***Genco***– Ameren Energy Generating Company, a Development Company
            subsidiary that operates a non-rate-regulated electric generation business
            in
            Illinois and Missouri.
 ***Gigawatthour***– One thousand megawatthours.
 ***Heating
            degree-days***– The summation of negative differences between the
            mean daily temperature and a 65- degree Fahrenheit base. This statistic
            is
            useful as an indicator of demand for electricity and natural gas for
            winter
            space heating for residential and commercial customers.
 ***ICC***– Illinois Commerce Commission, a state agency that regulates
            the
            Illinois utility businesses and the rate-regulated operations of CIPS,
            CILCO and
            IP.
 ***Illinois
            Customer Choice Law***– Illinois Electric Service Customer Choice
            and Rate Relief Law of 1997, which provided for electric utility restructuring
            and introduced competition into the retail supply of electric energy
            in
            Illinois.
 ***Illinois
            EPA***– Illinois Environmental Protection Agency, a state government
            agency.
 ***Illinois
            Regulated***– A financial reporting segment consisting of the
            regulated electric and gas transmission and distribution businesses of
            CIPS,
            CILCO and IP.
 ***IP***–******Illinois Power Company, an
            Ameren
            Corporation subsidiary. IP operates a rate-regulated electric and natural
   5
  gas
            transmission and distribution business in Illinois as AmerenIP.
 ***IPA***–
            Illinois Power Agency, a state government agency that has broad authority
            to
            assist in the procurement of electric power for residential and nonresidential
            customers beginning in June 2009.
 ***IP
            LLC***– Illinois Power Securitization Limited Liability Company,
            which is a special-purpose Delaware limited-liability company. Under
            FIN 46R,
            Consolidation of Variable-interest Entities, IP LLC was no longer consolidated
            within IP’s financial statements as of December 31, 2003.
 ***IP
            SPT***– Illinois Power Special Purpose Trust, which was created
            as a
            subsidiary of IP LLC to issue TFNs as allowed under the Illinois Customer
            Choice
            Law. Pursuant to FIN 46R, IP SPT is a variable-interest entity, as the
            equity
            investment is not sufficient to permit IP SPT to finance its activities
            without
            additional subordinated debt.
 ***JDA***– The joint dispatch agreement among UE, CIPS, and Genco
            under
            which UE and Genco jointly dispatched electric generation prior to its
            termination on December 31, 2006.
 ***Kilowatthour***–******A
            measure of electricity consumption equivalent to the use of 1,000 watts
            of power
            over a period of one hour.
 ***Marketing
            Company***–******Ameren Energy Marketing
            Company, a Development Company subsidiary that markets power for Genco,
            AERG and
            EEI.
 ***Medina
            Valley***– AmerenEnergy******Medina Valley
            Cogen (No. 4) LLC and its subsidiaries, all Development Company subsidiaries,
            which indirectly own a 40-megawatt gas-fired electric generation
            plant.
 ***Megawatthour***– One thousand kilowatthours.
 ***MGP***–******Manufactured gas
            plant.
 ***MISO***–******Midwest Independent Transmission
            System Operator, Inc.
 ***MISO
            Day Two Energy Market***–******A market
            that uses market-based pricing, incorporating transmission congestion
            and line
            losses, to compensate market participants for power. ***Missouri
            Regulated***– A financial reporting segment consisting of all the
            operations of UE’s business, except for UE’s 40% interest in EEI and other
            non-rate-regulated activities.
 ***Money
            pool***–******Borrowing agreements among
            Ameren and its subsidiaries to coordinate and provide for certain short-term
            cash and working capital requirements. Separate money pools are maintained
            for
            rate-regulated and non-rate-regulated businesses. These are referred
            to as the
            utility money pool and the non-state-regulated subsidiary money pool,
            respectively.
 ***Moody’s***–******Moody’s Investors Service Inc., a
            credit rating agency.
 ***MoPSC***– Missouri Public Service Commission, a state agency that
            regulates the Missouri utility business and operations of UE.
 ***Non-rate-regulated
            Generation***– A financial reporting segment consisting of the
            operations or activities of Genco, CILCORP holding company, AERG, EEI
            and
            Marketing Company.
 ***NO******x*********–******Nitrogen
            oxide.
 ***NRC***– Nuclear Regulatory Commission, a U.S. government
            agency.
 ***NYMEX***– New York Mercantile Exchange.
 ***OCI***–******Other comprehensive income
            (loss)
            as defined by GAAP.
 ***Off-system***–
            Revenues from non-native load sales.
 ***PGA***– Purchased Gas Adjustment tariffs, which allow the passing
            through of the actual cost of natural gas to utility customers.
 ***PUHCA
            1935***– The Public Utility Holding Company Act of 1935, which was
            repealed effective February 8, 2006, by the Energy Policy Act of 2005
            that was
            enacted on August 8, 2005.
 ***PUHCA
            2005***– The Public Utility Holding Company Act of 2005, enacted
            as
            part of the Energy Policy Act of 2005, effective February 8, 2006.
 ***Resources
            Company***– Ameren Energy Resources Company, an Ameren Corporation
            subsidiary that consists of non-rate-regulated operations, including
            Development
            Company, Genco, Marketing Company, AFS, and Medina Valley.
 ***S&P***– Standard & Poor’s Ratings Services, a credit rating agency
            that is a division of The McGraw-Hill Companies, Inc.
 ***SEC***– Securities and Exchange Commission, a U.S. government
            agency.
 ***SFAS***–******Statement of Financial Accounting
            Standards, the accounting and financial reporting rules issued by the
            FASB.
 ***SO******2***–******Sulfur
            dioxide.
 ***TFN***–
            Transitional Funding Trust Notes issued by IP SPT as allowed under the
            Illinois
            Customer Choice Law. IP must designate a portion of cash received from
            customer
            billings to pay the TFNs. The proceeds received by IP are remitted to
            IP SPT.
            The proceeds are restricted for the sole purpose of making payments of
            principal
            and interest on, and paying other fees and expenses related to, the TFNs.
            Since
            the application of FIN 46R, IP does not consolidate IP SPT. Therefore,
            the
            obligation to IP SPT appears on IP’s balance sheet.
 ***TVA***–
            Tennessee Valley Authority, a public power authority.
 ***UE***–******Union Electric Company, an
            Ameren
            Corporation subsidiary that operates a rate-regulated electric generation,
            transmission and distribution business, and a rate-regulated natural
            gas
            transmission and distribution business in Missouri as AmerenUE.
 _________________________________________________
 
 **FORWARD-LOOKING
            STATEMENTS**
 
 Statements
            in this report not based on historical facts are considered “forward-looking”
and, accordingly, involve risks and uncertainties that could cause actual
            results to differ materially from those discussed. Although such forward-looking
            statements have been made in good faith and are
  6
  based
            on
            reasonable assumptions, there is no assurance that the expected results
            will be
            achieved. These statements include (without limitation) statements as
            to future
            expectations, beliefs, plans, strategies, objectives, events, conditions,
            and
            financial performance. In connection with the “safe harbor” provi­sions of
            the Private Securities Litigation Reform Act of 1995, we are providing
            this
            cautionary statement to identify important factors that could cause actual
            results to differ materially from those anticipated. The following factors,
            in
            addition to those discussed under Risk Factors and elsewhere in this
            report and
            in our other filings with the SEC, could cause actual results to differ
            materially from management expectations suggested in such
            forward-looking statements:
 
 ·
                  regulatory
                      or legislative actions, including changes in regulatory policies
                      and
                      ratemaking determinations, such as the outcome of pending CIPS,
                      CILCO and
                      IP rate proceedings or future legislative actions that seek
                      to limit rate
                      increases;
 ·
                  uncertainty
                      as to the effect of implementation of the Illinois electric
                      settlement
                      agreement on Ameren, the Ameren Illinois Utilities, Genco and
                      AERG,
                      including implementation of the new power procurement process
                      in Illinois
                      for 2008 and 2009;
 ·
                  changes
                      in laws and other governmental actions, including monetary
                      and fiscal
                      policies;
 ·
                  the
                      effects of increased competition in the future due to, among
                      other things,
                      deregulation of certain aspects of our business at both the
                      state and
                      federal levels, and the implementation of deregulation, such
                      as occurred
                      when the electric rate freeze and power supply contracts expired
                      in
                      Illinois at the end of 2006;
 ·
                  the
                      effects of participation in the
                      MISO;
 ·
                  the
                      availability of fuel such as coal, natural gas, and enriched
                      uranium used
                      to produce electricity; the availability of purchased power
                      and natural
                      gas for distribution; and the level and volatility of future
                      market prices
                      for such commodities, including the ability to recover the
                      costs for such
                      commodities;
 ·
                  the
                      effectiveness of our risk management strategies and the use
                      of financial
                      and derivative instruments;
 ·
                  prices
                      for power in the Midwest;
 ·
                  business
                      and economic conditions, including their impact on interest
                      rates;
 ·
                  disruptions
                      of the capital markets or other events that make the Ameren
                      Companies’
                      access to necessary capital more difficult or
                      costly;
 ·
                  the
                      impact of the adoption of new accounting standards and the
                      application of
                      appropriate technical accounting rules and
                      guidance;
 ·
                  actions
                      of credit rating agencies and the effects of such
                      actions;
 ·
                  weather
                      conditions and other natural
                      phenomena;
 ·
                  the
                      impact of system outages caused by severe weather conditions
                      or other
                      events;
 ·
                  generation
                      plant construction, installation and performance, including
                      costs
                      associated with UE’s Taum Sauk pumped-storage hydroelectric plant incident
                      and the plant’s future operation;
 ·
                  recoverability
                      through insurance of costs associated with UE’s Taum Sauk pumped-storage
                      hydroelectric plant incident;
 ·
                  operation
                      of UE’s nuclear power facility, including planned and unplanned outages,
                      and decommissioning costs;
 ·
                  the
                      effects of strategic initiatives, including acquisitions and
                      divestitures;
 ·
                  the
                      impact of current environmental regulations on utilities and
                      power
                      generating companies and the expectation that more stringent
                      requirements,
                      including those related to greenhouse gases, will be introduced
                      over time,
                      which could have a negative financial
                      effect;
 ·
                  labor
                      disputes, future wage and employee benefits costs, including
                      changes in
                      discount rates and returns on benefit plan
                      assets;
 ·
                  the
                      inability of our counterparties and affiliates to meet their
                      obligations
                      with respect to contracts and financial
                      instruments;
 ·
                  the
                      cost and availability of transmission capacity for the energy
                      generated by
                      the Ameren Companies’ facilities or required to satisfy energy sales made
                      by the Ameren Companies;
 ·
                  legal
                      and administrative proceedings; and
 ·
                  acts
                      of sabotage, war, terrorism or intentionally disruptive
                      acts.
  Given
            these uncertainties, undue reliance should not be placed on these
            forward-looking statements. Except to the extent required by the federal
            securities laws, we undertake no obligation to update or revise publicly
            any
            forward-looking statements to reflect new information or future
            events.
   7
 **PART
            I.  FINANCIAL INFORMATION**
 
 **ITEM
            1.  FINANCIAL STATEMENTS.**




**AMEREN
                  CORPORATION****CONSOLIDATED
                  STATEMENT OF INCOME****(Unaudited)
                  (In millions, except per share amounts)****Three
                  Months Ended**
                **September
                  30,**
              
              
              **Nine
                  Months Ended**
                **September
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Operating
                  Revenues:**Electric
              **$**
              **1,872**
              
              
              $
              1,767
              
              
              **$**
              **4,844**
              
              
              $
              4,356Gas
              ****
              **125**
              
              
              
              143
              
              
              ****
              **895**
              
              
              
              904Total
                  operating revenues
              ****
              **1,997**
              
              
              
              1,910
              
              
              ****
              **5,739**
              
              
              
              5,260**Operating
                  Expenses:**Fuel
              ****
              **338**
              
              
              
              277
              
              
              ****
              **864**
              
              
              
              776Purchased
                  power
              ****
              **419**
              
              
              
              346
              
              
              ****
              **1,106**
              
              
              
              896Gas
                  purchased for resale
              ****
              **68**
              
              
              
              84
              
              
              ****
              **622**
              
              
              
              641Other
                  operations and maintenance
              ****
              **427**
              
              
              
              395
              
              
              ****
              **1,249**
              
              
              
              1,141Depreciation
                  and amortization
              ****
              **169**
              
              
              
              162
              
              
              ****
              **514**
              
              
              
              485Taxes
                  other than income taxes
              ****
              **97**
              
              
              
              99
              
              
              ****
              **295**
              
              
              
              302Total
                  operating expenses
              ****
              **1,518**
              
              
              
              1,363
              
              
              ****
              **4,650**
              
              
              
              4,241**Operating
                  Income**
              ****
              **479**
              
              
              
              547
              
              
              ****
              **1,089**
              
              
              
              1,019**Other
                  Income and Expenses:**Miscellaneous
                  income
              ****
              **20**
              
              
              
              12
              
              
              ****
              **54**
              
              
              
              29Miscellaneous
                  expense
              ****
              **(6**
              **)**
              
              
              (3
              )
              
              ****
              **(10**
              **)**
              
              
              (4
              )Total
                  other income
              ****
              **14**
              
              
              
              9
              
              
              ****
              **44**
              
              
              
              25**Interest
                  Charges**
              ****
              **110**
              
              
              
              89
              
              
              ****
              **316**
              
              
              
              254**Income
                  Before Income Taxes, Minority Interest****and
                  Preferred Dividends of Subsidiaries**
              ****
              **383**
              
              
              
              467
              
              
              ****
              **817**
              
              
              
              790**Income
                  Taxes**
              ****
              **130**
              
              
              
              161
              
              
              ****
              **279**
              
              
              
              273**Income
                  Before Minority Interest and Preferred****Dividends
                  of Subsidiaries**
              ****
              **253**
              
              
              
              306
              
              
              ****
              **538**
              
              
              
              517**Minority
                  Interest and Preferred Dividends of Subsidiaries**
              ****
              **9**
              
              
              
              13
              
              
              ****
              **28**
              
              
              
              31**Net
                  Income**
              **$**
              **244**
              
              
              $
              293
              
              
              **$**
              **510**
              
              
              $
              486**Earnings
                  per Common Share – Basic and Diluted**
              **$**
              **1.18**
              
              
              $
              1.42
              
              
              **$**
              **2.46**
              
              
              $
              2.37**Dividends
                  per Common Share**
              **$**
              **0.635**
              
              
              $
              0.635
              
              
              **$**
              **1.905**
              
              
              $
              1.905**Average
                  Common Shares Outstanding**
              ****
              **207.6**
              
              
              
              205.9
              
              
              ****
              **207.1**
              
              
              
              205.4




The accompanying notes are an integral part of
      these
      consolidated financial statements.


8




**AMEREN
                  CORPORATION****CONSOLIDATED
                  BALANCE SHEET****(Unaudited)
                  (In millions, except per share amounts)****September
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006****ASSETS****Current
                  Assets:**Cash
                  and cash equivalents
              **$**
              **170**
              
              
              $
              137Accounts
                  receivable – trade (less allowance for doubtfulaccounts
                  of $26 and $11, respectively)
              ****
              **691**
              
              
              
              418Unbilled
                  revenue
              ****
              **263**
              
              
              
              309Miscellaneous
                  accounts and notes receivable
              ****
              **258**
              
              
              
              160Materials
                  and supplies
              ****
              **757**
              
              
              
              647Other
                  current assets
              ****
              **202**
              
              
              
              203Total
                  current assets
              ****
              **2,341**
              
              
              
              1,874**Property
                  and Plant, Net**
              ****
              **14,729**
              
              
              
              14,286**Investments
                  and Other Assets:**Nuclear
                  decommissioning trust fund
              ****
              **301**
              
              
              
              285Goodwill
              ****
              **831**
              
              
              
              831Intangible
                  assets
              ****
              **197**
              
              
              
              217Other
                  assets
              ****
              **683**
              
              
              
              654Regulatory
                  assets
              ****
              **1,323**
              
              
              
              1,431Total
                  investments and other assets
              ****
              **3,335**
              
              
              
              3,418**TOTAL
                  ASSETS**
              **$**
              **20,405**
              
              
              $
              19,578**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  Liabilities:**Current
                  maturities of long-term debt
              **$**
              **203**
              
              
              $
              456Short-term
                  debt
              ****
              **1,202**
              
              
              
              612Accounts
                  and wages payable
              ****
              **415**
              
              
              
              671Taxes
                  accrued
              ****
              **136**
              
              
              
              58Other
                  current liabilities
              ****
              **548**
              
              
              
              406Total
                  current liabilities
              ****
              **2,504**
              
              
              
              2,203**Long-term
                  Debt, Net**
              ****
              **5,486**
              
              
              
              5,285**Preferred
                  Stock of Subsidiary Subject to Mandatory
                  Redemption**
              ****
              **16**
              
              
              
              17**Deferred
                  Credits and Other Liabilities:**Accumulated
                  deferred income taxes, net
              ****
              **2,055**
              
              
              
              2,144Accumulated
                  deferred investment tax credits
              ****
              **111**
              
              
              
              118Regulatory
                  liabilities
              ****
              **1,241**
              
              
              
              1,234Asset
                  retirement obligations
              ****
              **571**
              
              
              
              549Accrued
                  pension and other postretirement benefits
              ****
              **1,058**
              
              
              
              1,065Other
                  deferred credits and liabilities
              ****
              **392**
              
              
              
              169Total
                  deferred credits and other liabilities
              ****
              **5,428**
              
              
              
              5,279**Preferred
                  Stock of Subsidiaries Not Subject to Mandatory
                  Redemption**
              ****
              **195**
              
              
              
              195**Minority
                  Interest in Consolidated Subsidiaries**
              ****
              **20**
              
              
              
              16**Commitments
                  and Contingencies (Notes 2, 8, and 9)****Stockholders'
                  Equity:**Common
                  stock, $.01 par value, 400.0 shares authorized –shares
                  outstanding of 208.0 and 206.6, respectively
              ****
              **2**
              
              
              
              2Other
                  paid-in capital, principally premium on common stock
              ****
              **4,579**
              
              
              
              4,495Retained
                  earnings
              ****
              **2,134**
              
              
              
              2,024Accumulated
                  other comprehensive income
              ****
              **41**
              
              
              
              62Total
                  stockholders’ equity
              ****
              **6,756**
              
              
              
              6,583**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              **$**
              **20,405**
              
              
              $
              19,578




The accompanying notes are an integral part of
      these
      consolidated financial statements.




9




**AMEREN
                  CORPORATION****CONSOLIDATED
                  STATEMENT OF CASH FLOWS****(Unaudited)
                  (In millions)****Nine
                  Months Ended****September
                  30,****2007**
              
              
              **2006****Cash
                  Flows From Operating Activities:**Net
                  income
              **$**
              **510**
              
              
              $
              486Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Gain
                  on sales of emission allowances
              ****
              **(7**
              **)**
              
              
              (25
              )Depreciation
                  and amortization
              ****
              **537**
              
              
              
              507Amortization
                  of nuclear fuel
              ****
              **26**
              
              
              
              26Amortization
                  of debt issuance costs and premium/discounts
              ****
              **14**
              
              
              
              12Deferred
                  income taxes and investment tax credits, net
              ****
              **18**
              
              
              
              7Loss
                  on sale of noncore properties
              ****
              **-**
              
              
              
              4Minority
                  interest
              ****
              **20**
              
              
              
              23Other
              ****
              **10**
              
              
              
              17Changes
                  in assets and liabilities:Receivables
              ****
              **(320**
              **)**
              
              
              157Materials
                  and supplies
              ****
              **(110**
              **)**
              
              
              (136
              )Accounts
                  and wages payable
              ****
              **(113**
              **)**
              
              
              (260
              )Taxes
                  accrued
              ****
              **75**
              
              
              
              148Assets,
                  other
              ****
              **(20**
              **)**
              
              
              (87
              )Liabilities,
                  other
              ****
              **193**
              
              
              
              101Pension
                  and other postretirement benefit obligations
              ****
              **87**
              
              
              
              89Net
                  cash provided by operating activities
              ****
              **920**
              
              
              
              1,069**Cash
                  Flows From Investing Activities:**Capital
                  expenditures
              ****
              **(1,035**
              **)**
              
              
              (693
              )CT
                  acquisitions
              ****
              **-**
              
              
              
              (292
              )Nuclear
                  fuel expenditures
              ****
              **(39**
              **)**
              
              
              (37
              )Proceeds
                  from sale of noncore properties
              ****
              **-**
              
              
              
              11Purchases
                  of securities – nuclear decommissioning trust fund
              ****
              **(110**
              **)**
              
              
              (78
              )Sales
                  of securities – nuclear decommissioning trust fund
              ****
              **98**
              
              
              
              68Purchases
                  of emission allowances
              ****
              **(12**
              **)**
              
              
              (38
              )Sales
                  of emission allowances
              ****
              **5**
              
              
              
              12Other
              ****
              **-**
              
              
              
              3Net
                  cash used in investing activities
              ****
              **(1,093**
              **)**
              
              
              (1,044
              )**Cash
                  Flows From Financing Activities:**Dividends
                  on common stock
              ****
              **(395**
              **)**
              
              
              (391
              )Capital
                  issuance costs
              ****
              **(3**
              **)**
              
              
              (4
              )Short-term
                  debt, net
              ****
              **590**
              
              
              
              158Dividends
                  paid to minority interest
              ****
              **(16**
              **)**
              
              
              (21
              )Redemptions,
                  repurchases, and maturities:Long-term
                  debt
              ****
              **(465**
              **)**
              
              
              (138
              )Preferred
                  stock
              ****
              **(1**
              **)**
              
              
              (1
              )Issuances:Common
                  stock
              ****
              **71**
              
              
              
              78Long-term
                  debt
              ****
              **425**
              
              
              
              232Net
                  cash provided by (used in) financing activities
              ****
              **206**
              
              
              
              (87
              )Net
                  change in cash and cash equivalents
              ****
              **33**
              
              
              
              (62
              )Cash
                  and cash equivalents at beginning of year
              ****
              **137**
              
              
              
              96Cash
                  and cash equivalents at end of period
              **$**
              **170**
              
              
              $
              34




The accompanying notes are an integral part of
      these
      consolidated financial statements.




10




**UNION
                  ELECTRIC COMPANY****CONSOLIDATED
                  STATEMENT OF INCOME****(Unaudited)
                  (In millions)****Three
                  Months Ended**
              
              
              **Nine
                  Months Ended****September
                  30,**
              
              
              **September
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Operating
                  Revenues:**Electric
                  - excluding off-system
              **$**
              **835**
              
              
              $
              746
              
              
              **$**
              **1,865**
              
              
              $
              1,759Electric
                  - off-system
              ****
              **92**
              
              
              
              90
              
              
              ****
              **303**
              
              
              
              331Gas
              ****
              **18**
              
              
              
              20
              
              
              ****
              **123**
              
              
              
              111Other
              ****
              **-**
              
              
              
              1
              
              
              ****
              **1**
              
              
              
              2Total
                  operating revenues
              ****
              **945**
              
              
              
              857
              
              
              ****
              **2,292**
              
              
              
              2,203**Operating
                  Expenses:**Fuel
              ****
              **179**
              
              
              
              150
              
              
              ****
              **447**
              
              
              
              399Purchased
                  power
              ****
              **71**
              
              
              
              64
              
              
              ****
              **140**
              
              
              
              199Gas
                  purchased for resale
              ****
              **9**
              
              
              
              10
              
              
              ****
              **73**
              
              
              
              66Other
                  operations and maintenance
              ****
              **218**
              
              
              
              214
              
              
              ****
              **667**
              
              
              
              581Depreciation
                  and amortization
              ****
              **81**
              
              
              
              82
              
              
              ****
              **252**
              
              
              
              243Taxes
                  other than income taxes
              ****
              **70**
              
              
              
              66
              
              
              ****
              **187**
              
              
              
              184Total
                  operating expenses
              ****
              **628**
              
              
              
              586
              
              
              ****
              **1,766**
              
              
              
              1,672**Operating
                  Income**
              ****
              **317**
              
              
              
              271
              
              
              ****
              **526**
              
              
              
              531**Other
                  Income and Expenses:**Miscellaneous
                  income
              ****
              **9**
              
              
              
              9
              
              
              ****
              **28**
              
              
              
              22Miscellaneous
                  expense
              ****
              **(5**
              **)**
              
              
              (3
              )
              
              ****
              **(9**
              **)**
              
              
              (7
              )Total
                  other income
              ****
              **4**
              
              
              
              6
              
              
              ****
              **19**
              
              
              
              15**Interest
                  Charges**
              ****
              **49**
              
              
              
              42
              
              
              ****
              **146**
              
              
              
              123**Income
                  Before Income Taxes and Equity****in
                  Income of Unconsolidated Investment**
              ****
              **272**
              
              
              
              235
              
              
              ****
              **399**
              
              
              
              423**Income
                  Taxes**
              ****
              **93**
              
              
              
              92
              
              
              ****
              **132**
              
              
              
              161**Income
                  Before Equity in Income****of
                  Unconsolidated Investment**
              ****
              **179**
              
              
              
              143
              
              
              ****
              **267**
              
              
              
              262**Equity
                  in Income of Unconsolidated Investment,****Net
                  of Taxes**
              ****
              **14**
              
              
              
              23
              
              
              ****
              **40**
              
              
              
              47**Net
                  Income**
              ****
              **193**
              
              
              
              166
              
              
              ****
              **307**
              
              
              
              309**Preferred
                  Stock Dividends**
              ****
              **1**
              
              
              
              1
              
              
              ****
              **4**
              
              
              
              4**Net
                  Income Available to Common Stockholder**
              **$**
              **192**
              
              
              $
              165
              
              
              **$**
              **303**
              
              
              $
              305




The
      accompanying notes as they relate to UE are an integral part of these
      consolidated financial statements.






11




**UNION
                  ELECTRIC COMPANY****CONSOLIDATED
                  BALANCE SHEET****(Unaudited)
                  (In millions, except per share amounts)****September
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006****ASSETS****Current
                  Assets:**Cash
                  and cash equivalents
              **$**
              **-**
              
              
              $
              1Accounts
                  receivable – trade (less allowance for doubtfulaccounts
                  of $6 and $6, respectively)
              ****
              **242**
              
              
              
              145Unbilled
                  revenue
              ****
              **127**
              
              
              
              120Miscellaneous
                  accounts and notes receivable
              ****
              **207**
              
              
              
              128Advances
                  to money pool
              ****
              **13**
              
              
              
              18Accounts
                  receivable – affiliates
              ****
              **32**
              
              
              
              33Materials
                  and supplies
              ****
              **285**
              
              
              
              236Other
                  current assets
              ****
              **58**
              
              
              
              45Total
                  current assets
              ****
              **964**
              
              
              
              726**Property
                  and Plant, Net**
              ****
              **8,078**
              
              
              
              7,882**Investments
                  and Other Assets:**Nuclear
                  decommissioning trust fund
              ****
              **301**
              
              
              
              285Intangible
                  assets
              ****
              **60**
              
              
              
              58Other
                  assets
              ****
              **476**
              
              
              
              526Regulatory
                  assets
              ****
              **784**
              
              
              
              810Total
                  investments and other assets
              ****
              **1,621**
              
              
              
              1,679**TOTAL
                  ASSETS**
              **$**
              **10,663**
              
              
              $
              10,287**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  Liabilities:**Current
                  maturities of long-term debt
              **$**
              **152**
              
              
              $
              5Short-term
                  debt
              ****
              **92**
              
              
              
              234Intercompany
                  note payable – Ameren
              ****
              **57**
              
              
              
              77Accounts
                  and wages payable
              ****
              **172**
              
              
              
              313Accounts
                  payable – affiliates
              ****
              **143**
              
              
              
              185Taxes
                  accrued
              ****
              **206**
              
              
              
              66Other
                  current liabilities
              ****
              **226**
              
              
              
              191Total
                  current liabilities
              ****
              **1,048**
              
              
              
              1,071**Long-term
                  Debt, Net**
              ****
              **3,212**
              
              
              
              2,934**Deferred
                  Credits and Other Liabilities:**Accumulated
                  deferred income taxes, net
              ****
              **1,279**
              
              
              
              1,293Accumulated
                  deferred investment tax credits
              ****
              **86**
              
              
              
              89Regulatory
                  liabilities
              ****
              **850**
              
              
              
              827Asset
                  retirement obligations
              ****
              **511**
              
              
              
              491Accrued
                  pension and other postretirement benefits
              ****
              **375**
              
              
              
              374Other
                  deferred credits and liabilities
              ****
              **83**
              
              
              
              55Total
                  deferred credits and other liabilities
              ****
              **3,184**
              
              
              
              3,129**Commitments
                  and Contingencies (Notes 2, 8 and 9)****Stockholders'
                  Equity:**Common
                  stock, $5 par value, 150.0 shares authorized – 102.1 shares
                  outstanding
              ****
              **511**
              
              
              
              511Preferred
                  stock not subject to mandatory redemption
              ****
              **113**
              
              
              
              113Other
                  paid-in capital, principally premium on common stock
              ****
              **744**
              
              
              
              739Retained
                  earnings
              ****
              **1,843**
              
              
              
              1,783Accumulated
                  other comprehensive income
              ****
              **8**
              
              
              
              7Total
                  stockholders' equity
              ****
              **3,219**
              
              
              
              3,153**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              **$**
              **10,663**
              
              
              $
              10,287


**The
        accompanying notes as they relate to UE are an integral part of these
        consolidated financial statements.**




12




**UNION
                  ELECTRIC COMPANY****CONSOLIDATED
                  STATEMENT OF CASH FLOWS****(Unaudited)
                  (In millions)****Nine
                  Months Ended****September
                  30,****2007**
              
              
              **2006****Cash
                  Flows From Operating Activities:**Net
                  income
              **$**
              **307**
              
              
              $
              309Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Gain
                  on sales of emission allowances
              ****
              **(5**
              **)**
              
              
              (2
              )Depreciation
                  and amortization
              ****
              **252**
              
              
              
              243Amortization
                  of nuclear fuel
              ****
              **26**
              
              
              
              26Amortization
                  of debt issuance costs and premium/discounts
              ****
              **4**
              
              
              
              4Deferred
                  income taxes and investment tax credits, net
              ****
              **19**
              
              
              
              (10
              )Other
              ****
              **1**
              
              
              
              -Changes
                  in assets and liabilities:Receivables
              ****
              **(182**
              **)**
              
              
              (34
              )Materials
                  and supplies
              ****
              **(49**
              **)**
              
              
              (35
              )Accounts
                  and wages payable
              ****
              **(97**
              **)**
              
              
              (110
              )Taxes
                  accrued
              ****
              **140**
              
              
              
              174Assets,
                  other
              ****
              **60**
              
              
              
              (42
              )Liabilities,
                  other
              ****
              **16**
              
              
              
              62Pension
                  and other postretirement obligations
              ****
              **27**
              
              
              
              35Net
                  cash provided by operating activities
              ****
              **519**
              
              
              
              620**Cash
                  Flows From Investing Activities:**Capital
                  expenditures
              ****
              **(493**
              **)**
              
              
              (341
              )CT
                  acquisitions
              ****
              **-**
              
              
              
              (292
              )Nuclear
                  fuel expenditures
              ****
              **(39**
              **)**
              
              
              (37
              )Changes
                  in money pool advances
              ****
              **5**
              
              
              
              -Proceeds
                  from intercompany note receivable – CIPS
              ****
              **-**
              
              
              
              67Purchases
                  of securities – nuclear decommissioning trust fund
              ****
              **(110**
              **)**
              
              
              (78
              )Sales
                  of securities – nuclear decommissioning trust fund
              ****
              **98**
              
              
              
              68Sales
                  of emission allowances
              ****
              **4**
              
              
              
              2Net
                  cash used in investing activities
              ****
              **(535**
              **)**
              
              
              (611
              )**Cash
                  Flows From Financing Activities:**Dividends
                  on common stock
              ****
              **(246**
              **)**
              
              
              (154
              )Dividends
                  on preferred stock
              ****
              **(4**
              **)**
              
              
              (4
              )Capital
                  issuance costs
              ****
              **(3**
              **)**
              
              
              -Short-term
                  debt, net
              ****
              **(142**
              **)**
              
              
              128Intercompany
                  note payable – Ameren, net
              ****
              **(20**
              **)**
              
              
              -Issuances
                  of long-term debt
              ****
              **425**
              
              
              
              -Capital
                  contribution from parent
              ****
              **5**
              
              
              
              3Net
                  cash provided by (used in) financing activities
              ****
              **15**
              
              
              
              (27
              )Net
                  change in cash and cash equivalents
              ****
              **(1**
              **)**
              
              
              (18
              )Cash
                  and cash equivalents at beginning of year
              ****
              **1**
              
              
              
              20Cash
                  and cash equivalents at end of period
              **$**
              **-**
              
              
              $
              2




The
        accompanying notes as they relate to UE are an integral part of these
        consolidated financial statements.
   13




**CENTRAL
                  ILLINOIS PUBLIC SERVICE COMPANY****STATEMENT
                  OF INCOME****(Unaudited)
                  (In millions)****Three
                  Months Ended**
              
              
              **Nine
                  Months Ended****September
                  30,**
              
              
              **September
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Operating
                  Revenues:**Electric
              **$**
              **201**
              
              
              $
              228
              
              
              **$**
              **605**
              
              
              $
              569Gas
              ****
              **22**
              
              
              
              23
              
              
              ****
              **159**
              
              
              
              150Other
              ****
              **1**
              
              
              
              3
              
              
              ****
              **3**
              
              
              
              4Total
                  operating revenues
              ****
              **224**
              
              
              
              254
              
              
              ****
              **767**
              
              
              
              723**Operating
                  Expenses:**Purchased
                  power
              ****
              **142**
              
              
              
              125
              
              
              ****
              **416**
              
              
              
              355Gas
                  purchased for resale
              ****
              **12**
              
              
              
              11
              
              
              ****
              **107**
              
              
              
              99Other
                  operations and maintenance
              ****
              **40**
              
              
              
              41
              
              
              ****
              **124**
              
              
              
              117Depreciation
                  and amortization
              ****
              **16**
              
              
              
              16
              
              
              ****
              **49**
              
              
              
              47Taxes
                  other than income taxes
              ****
              **6**
              
              
              
              9
              
              
              ****
              **24**
              
              
              
              30Total
                  operating expenses
              ****
              **216**
              
              
              
              202
              
              
              ****
              **720**
              
              
              
              648**Operating
                  Income**
              ****
              **8**
              
              
              
              52
              
              
              ****
              **47**
              
              
              
              75**Other
                  Income and Expenses:**Miscellaneous
                  income
              ****
              **5**
              
              
              
              4
              
              
              ****
              **13**
              
              
              
              13Miscellaneous
                  expense
              ****
              **(1**
              **)**
              
              
              -
              
              
              ****
              **(2**
              **)**
              
              
              (1
              )Total
                  other income
              ****
              **4**
              
              
              
              4
              
              
              ****
              **11**
              
              
              
              12**Interest
                  Charges**
              ****
              **10**
              
              
              
              8
              
              
              ****
              **28**
              
              
              
              23**Income
                  Before Income Taxes**
              ****
              **2**
              
              
              
              48
              
              
              ****
              **30**
              
              
              
              64**Income
                  Taxes**
              ****
              **1**
              
              
              
              19
              
              
              ****
              **11**
              
              
              
              21**Net
                  Income**
              ****
              **1**
              
              
              
              29
              
              
              ****
              **19**
              
              
              
              43**Preferred
                  Stock Dividends**
              ****
              **1**
              
              
              
              1
              
              
              ****
              **2**
              
              
              
              2**Net
                  Income Available to Common Stockholder**
              **$**
              **-**
              
              
              $
              28
              
              
              **$**
              **17**
              
              
              $
              41




The
      accompanying notes as they relate to CIPS are an integral part of
      these financial statements.






14




**CENTRAL
                  ILLINOIS PUBLIC SERVICE COMPANY****BALANCE
                  SHEET****(Unaudited)
                  (In millions)****September
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006****ASSETS****Current
                  Assets:**Cash
                  and cash equivalents
              **$**
              **1**
              
              
              $
              6Accounts
                  receivable – trade (less allowance for doubtfulaccounts
                  of $6 and $2, respectively)
              ****
              **66**
              
              
              
              55Unbilled
                  revenue
              ****
              **36**
              
              
              
              43Accounts
                  receivable – affiliates
              ****
              **50**
              
              
              
              10Current
                  portion of intercompany note receivable – Genco
              ****
              **39**
              
              
              
              37Current
                  portion of intercompany tax receivable – Genco
              ****
              **9**
              
              
              
              9Advances
                  to money pool
              ****
              **95**
              
              
              
              1Materials
                  and supplies
              ****
              **78**
              
              
              
              71Other
                  current assets
              ****
              **53**
              
              
              
              46Total
                  current assets
              ****
              **427**
              
              
              
              278**Property
                  and Plant, Net**
              ****
              **1,167**
              
              
              
              1,155**Investments
                  and Other Assets:**Intercompany
                  note receivable – Genco
              ****
              **87**
              
              
              
              126Intercompany
                  tax receivable – Genco
              ****
              **107**
              
              
              
              115Other
                  assets
              ****
              **32**
              
              
              
              27Regulatory
                  assets
              ****
              **132**
              
              
              
              146Total
                  investments and other assets
              ****
              **358**
              
              
              
              414**TOTAL
                  ASSETS**
              **$**
              **1,952**
              
              
              $
              1,847**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  Liabilities:**Short-term
                  debt
              **$**
              **135**
              
              
              $
              35Accounts
                  and wages payable
              ****
              **36**
              
              
              
              36Accounts
                  payable – affiliates
              ****
              **51**
              
              
              
              81Taxes
                  accrued
              ****
              **4**
              
              
              
              10Other
                  current liabilities
              ****
              **71**
              
              
              
              36Total
                  current liabilities
              ****
              **297**
              
              
              
              198**Long-term
                  Debt, Net**
              ****
              **471**
              
              
              
              471**Deferred
                  Credits and Other Liabilities:**Accumulated
                  deferred income taxes and investment tax credits, net
              ****
              **274**
              
              
              
              297Regulatory
                  liabilities
              ****
              **229**
              
              
              
              224Accrued
                  pension and other postretirement benefits
              ****
              **83**
              
              
              
              90Other
                  deferred credits and liabilities
              ****
              **38**
              
              
              
              24Total
                  deferred credits and other liabilities
              ****
              **624**
              
              
              
              635**Commitments
                  and Contingencies (Notes 2 and 8)****Stockholders'
                  Equity:**Common
                  stock, no par value, 45.0 shares authorized – 25.5 shares
                  outstanding
              ****
              **-**
              
              
              
              -Other
                  paid-in capital
              ****
              **191**
              
              
              
              190Preferred
                  stock not subject to mandatory redemption
              ****
              **50**
              
              
              
              50Retained
                  earnings
              ****
              **319**
              
              
              
              302Accumulated
                  other comprehensive income
              ****
              **-**
              
              
              
              1Total
                  stockholders' equity
              ****
              **560**
              
              
              
              543**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              **$**
              **1,952**
              
              
              $
              1,847




The
        accompanying notes as they relate to CIPS are an integral part of
        these financial statements.
   15




**CENTRAL
                  ILLINOIS PUBLIC SERVICE COMPANY****STATEMENT
                  OF CASH FLOWS****(Unaudited)
                  (In millions)****Nine
                  Months Ended****September
                  30,****2007**
              
              
              **2006****Cash
                  Flows From Operating Activities:**Net
                  income
              **$**
              **19**
              
              
              $
              43Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Depreciation
                  and amortization
              ****
              **49**
              
              
              
              47Amortization
                  of debt issuance costs and premium/discounts
              ****
              **1**
              
              
              
              1Deferred
                  income taxes and investment tax credits, net
              ****
              **(13**
              **)**
              
              
              (27
              )Other
              ****
              **-**
              
              
              
              1Changes
                  in assets and liabilities:Receivables
              ****
              **(36**
              **)**
              
              
              60Materials
                  and supplies
              ****
              **(7**
              **)**
              
              
              (7
              )Accounts
                  and wages payable
              ****
              **(27**
              **)**
              
              
              (5
              )Taxes
                  accrued
              ****
              **(6**
              **)**
              
              
              8Assets,
                  other
              ****
              **(8**
              **)**
              
              
              -Liabilities,
                  other
              ****
              **34**
              
              
              
              -Pension
                  and other postretirement obligations
              ****
              **5**
              
              
              
              6Net
                  cash provided by operating activities
              ****
              **11**
              
              
              
              127**Cash
                  Flows From Investing Activities:**Capital
                  expenditures
              ****
              **(58**
              **)**
              
              
              (63
              )Proceeds
                  from intercompany note receivable – Genco
              ****
              **37**
              
              
              
              34Changes
                  in money pool advances
              ****
              **(94**
              **)**
              
              
              (18
              )Net
                  cash used in investing activities
              ****
              **(115**
              **)**
              
              
              (47
              )**Cash
                  Flows From Financing Activities:**Dividends
                  on common stock
              ****
              **-**
              
              
              
              (50
              )Dividends
                  on preferred stock
              ****
              **(2**
              **)**
              
              
              (2
              )Capital
                  issuance costs
              ****
              **-**
              
              
              
              (1
              )Short-term
                  debt, net
              ****
              **100**
              
              
              
              -Changes
                  in money pool borrowings
              ****
              **-**
              
              
              
              (2
              )Redemptions,
                  repurchases, and maturities:Long-term
                  debt
              ****
              **-**
              
              
              
              (20
              )Intercompany
                  note payable – UE
              ****
              **-**
              
              
              
              (67
              )Issuances
                  of long-term debt
              ****
              **-**
              
              
              
              61Capital
                  contribution from parent
              ****
              **1**
              
              
              
              1Net
                  cash provided by (used in) financing activities
              ****
              **99**
              
              
              
              (80
              )Net
                  change in cash and cash equivalents
              ****
              **(5**
              **)**
              
              
              -Cash
                  and cash equivalents at beginning of year
              ****
              **6**
              
              
              
              -Cash
                  and cash equivalents at end of period
              **$**
              **1**
              
              
              $
              -




The
        accompanying notes as they relate to CIPS are an integral part of
        these financial statements.
  16
 **AMEREN
                      ENERGY GENERATING COMPANY****CONSOLIDATED
                      STATEMENT OF INCOME****(Unaudited)
                      (In millions)****Three
                      Months Ended**
                  
                  
                  **Nine
                      Months Ended****September
                      30,**
                  
                  
                  **September
                      30,****2007**
                  
                  
                  **2006**
                  
                  
                  **2007**
                  
                  
                  **2006****Operating
                      Revenues**
                  **$**
                  **221**
                  
                  
                  $
                  259
                  
                  
                  **$**
                  **649**
                  
                  
                  $
                  744**Operating
                      Expenses:**Fuel
                  ****
                  **102**
                  
                  
                  
                  86
                  
                  
                  ****
                  **257**
                  
                  
                  
                  216Purchased
                      power
                  ****
                  **1**
                  
                  
                  
                  84
                  
                  
                  ****
                  **23**
                  
                  
                  
                  269Other
                      operations and maintenance
                  ****
                  **39**
                  
                  
                  
                  34
                  
                  
                  ****
                  **122**
                  
                  
                  
                  113Depreciation
                      and amortization
                  ****
                  **18**
                  
                  
                  
                  18
                  
                  
                  ****
                  **54**
                  
                  
                  
                  53Taxes
                      other than income taxes
                  ****
                  **5**
                  
                  
                  
                  3
                  
                  
                  ****
                  **15**
                  
                  
                  
                  14Total
                      operating expenses
                  ****
                  **165**
                  
                  
                  
                  225
                  
                  
                  ****
                  **471**
                  
                  
                  
                  665**Operating
                      Income**
                  ****
                  **56**
                  
                  
                  
                  34
                  
                  
                  ****
                  **178**
                  
                  
                  
                  79**Miscellaneous
                      Income**
                  ****
                  **-**
                  
                  
                  
                  -
                  
                  
                  ****
                  **1**
                  
                  
                  
                  -**Interest
                      Charges**
                  ****
                  **15**
                  
                  
                  
                  15
                  
                  
                  ****
                  **43**
                  
                  
                  
                  45**Income
                      Before Income Taxes**
                  ****
                  **41**
                  
                  
                  
                  19
                  
                  
                  ****
                  **136**
                  
                  
                  
                  34**Income
                      Taxes**
                  ****
                  **16**
                  
                  
                  
                  -
                  
                  
                  ****
                  **52**
                  
                  
                  
                  7**Net
                      Income**
                  **$**
                  **25**
                  
                  
                  $
                  19
                  
                  
                  **$**
                  **84**
                  
                  
                  $
                  27




The accompanying notes as they relate to Genco
      are an
      integral part of these consolidated financial
      statements.






17




**AMEREN
                  ENERGY GENERATING COMPANY****CONSOLIDATED
                  BALANCE SHEET****(Unaudited)
                  (In millions, except shares)****September
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006****ASSETS****Current
                  Assets:**Cash
                  and cash equivalents
              **$**
              **2**
              
              
              $
              1Accounts
                  receivable – affiliates
              ****
              **114**
              
              
              
              96Accounts
                  receivable – trade
              ****
              **15**
              
              
              
              19Materials
                  and supplies
              ****
              **97**
              
              
              
              96Other
                  current assets
              ****
              **17**
              
              
              
              5Total
                  current assets
              ****
              **245**
              
              
              
              217**Property
                  and Plant, Net**
              ****
              **1,594**
              
              
              
              1,539**Intangible
                  Assets**
              ****
              **57**
              
              
              
              74**Other
                  Assets**
              ****
              **18**
              
              
              
              20**TOTAL
                  ASSETS**
              **$**
              **1,914**
              
              
              $
              1,850**LIABILITIES
                  AND STOCKHOLDER'S EQUITY****Current
                  Liabilities:**Short-term
                  debt
              **$**
              **75**
              
              
              $
              -Current
                  portion of intercompany note payable – CIPS
              ****
              **39**
              
              
              
              37Borrowings
                  from money pool
              ****
              **108**
              
              
              
              123Accounts
                  and wages payable
              ****
              **36**
              
              
              
              52Accounts
                  payable – affiliates
              ****
              **49**
              
              
              
              66Current
                  portion of intercompany tax payable – CIPS
              ****
              **9**
              
              
              
              9Taxes
                  accrued
              ****
              **15**
              
              
              
              22Other
                  current liabilities
              ****
              **31**
              
              
              
              22Total
                  current liabilities
              ****
              **362**
              
              
              
              331**Long-term
                  Debt, Net**
              ****
              **474**
              
              
              
              474**Intercompany
                  Note Payable – CIPS**
              ****
              **87**
              
              
              
              126**Deferred
                  Credits and Other Liabilities:**Accumulated
                  deferred income taxes, net
              ****
              **153**
              
              
              
              165Accumulated
                  deferred investment tax credits
              ****
              **8**
              
              
              
              9Intercompany
                  tax payable – CIPS
              ****
              **107**
              
              
              
              115Asset
                  retirement obligations
              ****
              **31**
              
              
              
              31Accrued
                  pension and other postretirement benefits
              ****
              **41**
              
              
              
              34Other
                  deferred credits and liabilities
              ****
              **45**
              
              
              
              2Total
                  deferred credits and other liabilities
              ****
              **385**
              
              
              
              356**Commitments
                  and Contingencies (Notes 2 and 8)****Stockholder's
                  Equity:**Common
                  stock, no par value, 10,000 shares authorized – 2,000 shares
                  outstanding
              ****
              **-**
              
              
              
              -Other
                  paid-in capital
              ****
              **503**
              
              
              
              428Retained
                  earnings
              ****
              **127**
              
              
              
              156Accumulated
                  other comprehensive loss
              ****
              **(24**
              **)**
              
              
              (21
              )Total
                  stockholder's equity
              ****
              **606**
              
              
              
              563**TOTAL
                  LIABILITIES AND STOCKHOLDER'S EQUITY**
              **$**
              **1,914**
              
              
              $
              1,850


The accompanying notes as they relate to Genco
      are an
      integral part of these consolidated financial
      statements.






18




**AMEREN
                  ENERGY GENERATING COMPANY****CONSOLIDATED
                  STATEMENT OF CASH FLOWS****(Unaudited)
                  (In millions)****Nine
                  Months Ended****September
                  30,****2007**
              
              
              **2006****Cash
                  Flows From Operating Activities:**Net
                  income
              **$**
              **84**
              
              
              $
              27Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Gain
                  on sales of emission allowances
              ****
              **(1**
              **)**
              
              
              (1
              )Depreciation
                  and amortization
              ****
              **79**
              
              
              
              78Deferred
                  income taxes and investment tax credits, net
              ****
              **28**
              
              
              
              7Other
              ****
              **(1**
              **)**
              
              
              1Changes
                  in assets and liabilities:Receivables
              ****
              **(14**
              **)**
              
              
              (30
              )Materials
                  and supplies
              ****
              **(1**
              **)**
              
              
              (30
              )Accounts
                  and wages payable
              ****
              **(12**
              **)**
              
              
              16Taxes
                  accrued, net
              ****
              **(7**
              **)**
              
              
              (9
              )Assets,
                  other
              ****
              **(12**
              **)**
              
              
              (16
              )Liabilities,
                  other
              ****
              **5**
              
              
              
              2Pension
                  and other postretirement obligations
              ****
              **5**
              
              
              
              4Net
                  cash provided by operating activities
              ****
              **153**
              
              
              
              49**Cash
                  Flows From Investing Activities:**Capital
                  expenditures
              ****
              **(131**
              **)**
              
              
              (58
              )Purchases
                  of emission allowances
              ****
              **(7**
              **)**
              
              
              (26
              )Sales
                  of emission allowances
              ****
              **1**
              
              
              
              1Net
                  cash used in investing activities
              ****
              **(137**
              **)**
              
              
              (83
              )**Cash
                  Flows From Financing Activities:**Dividends
                  on common stock
              ****
              **(113**
              **)**
              
              
              (93
              )Short-term
                  debt, net
              ****
              **75**
              
              
              
              -Changes
                  in money pool borrowings
              ****
              **(15**
              **)**
              
              
              13Intercompany
                  notes payable – CIPS
              ****
              **(37**
              **)**
              
              
              (34
              )Capital
                  contribution from parent
              ****
              **75**
              
              
              
              150Net
                  cash provided by (used in) financing activities
              ****
              **(15**
              **)**
              
              
              36Net
                  change in cash and cash equivalents
              ****
              **1**
              
              
              
              2Cash
                  and cash equivalents at beginning of year
              ****
              **1**
              
              
              
              -Cash
                  and cash equivalents at end of period
              **$**
              **2**
              
              
              $
              2


**The
        accompanying notes as they relate to Genco are an integral part of these
        consolidated financial statements.**




19




**CILCORP
                  INC.****CONSOLIDATED
                  STATEMENT OF INCOME****(Unaudited)
                  (In millions)****Three
                  Months Ended**
                **September
                  30,**
              
              
              **Nine
                  Months Ended**
                **September
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Operating
                  Revenues:**Electric
              **$**
              **170**
              
              
              $
              119
              
              
              **$**
              **507**
              
              
              $
              309Gas
              ****
              **36**
              
              
              
              38
              
              
              ****
              **231**
              
              
              
              236Other
              ****
              **-**
              
              
              
              1
              
              
              ****
              **1**
              
              
              
              1Total
                  operating revenues
              ****
              **206**
              
              
              
              158
              
              
              ****
              **739**
              
              
              
              546**Operating
                  Expenses:**Fuel
              ****
              **21**
              
              
              
              26
              
              
              ****
              **58**
              
              
              
              79Purchased
                  power
              ****
              **74**
              
              
              
              17
              
              
              ****
              **206**
              
              
              
              25Gas
                  purchased for resale
              ****
              **21**
              
              
              
              24
              
              
              ****
              **166**
              
              
              
              175Other
                  operations and maintenance
              ****
              **48**
              
              
              
              41
              
              
              ****
              **135**
              
              
              
              134Depreciation
                  and amortization
              ****
              **20**
              
              
              
              18
              
              
              ****
              **58**
              
              
              
              55Taxes
                  other than income taxes
              ****
              **3**
              
              
              
              5
              
              
              ****
              **17**
              
              
              
              18Total
                  operating expenses
              ****
              **187**
              
              
              
              131
              
              
              ****
              **640**
              
              
              
              486**Operating
                  Income**
              ****
              **19**
              
              
              
              27
              
              
              ****
              **99**
              
              
              
              60**Other
                  Income and Expenses:**Miscellaneous
                  income
              ****
              **2**
              
              
              
              -
              
              
              ****
              **4**
              
              
              
              1Miscellaneous
                  expense
              ****
              **(2**
              **)**
              
              
              (2
              )
              
              ****
              **(5**
              **)**
              
              
              (4
              )Total
                  other expenses
              ****
              **-**
              
              
              
              (2
              )
              
              ****
              **(1**
              **)**
              
              
              (3
              )**Interest
                  Charges**
              ****
              **17**
              
              
              
              13
              
              
              ****
              **46**
              
              
              
              38**Income
                  Before Income Taxes and Preferred****Dividends
                  of Subsidiaries**
              ****
              **2**
              
              
              
              12
              
              
              ****
              **52**
              
              
              
              19**Income
                  Taxes (Benefit)**
              ****
              **1**
              
              
              
              (1
              )
              
              ****
              **17**
              
              
              
              (4
              )**Income
                  Before Preferred Dividends of Subsidiaries**
              ****
              **1**
              
              
              
              13
              
              
              ****
              **35**
              
              
              
              23**Preferred
                  Dividends of Subsidiaries**
              ****
              **-**
              
              
              
              -
              
              
              ****
              **1**
              
              
              
              1**Net
                  Income**
              **$**
              **1**
              
              
              $
              13
              
              
              **$**
              **34**
              
              
              $
              22




**The
        accompanying notes as they relate to CILCORP are an integral part of these
        consolidated financial statements.**




20




**CILCORP
                  INC.****CONSOLIDATED
                  BALANCE SHEET****(Unaudited)
                  (In millions, except shares)****September
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006****ASSETS****Current
                  Assets:**Cash
                  and cash equivalents
              **$**
              **84**
              
              
              $
              4Accounts
                  receivable – trade (less allowance for doubtfulaccounts
                  of $3 and $1, respectively)
              ****
              **51**
              
              
              
              47Unbilled
                  revenue
              ****
              **29**
              
              
              
              45Accounts
                  receivable – affiliates
              ****
              **66**
              
              
              
              10Advances
                  to money pool
              ****
              **-**
              
              
              
              42Materials
                  and supplies
              ****
              **111**
              
              
              
              93Other
                  current assets
              ****
              **50**
              
              
              
              42Total
                  current assets
              ****
              **391**
              
              
              
              283**Property
                  and Plant, Net**
              ****
              **1,401**
              
              
              
              1,277**Investments
                  and Other Assets:**Goodwill
              ****
              **542**
              
              
              
              542Intangible
                  assets
              ****
              **42**
              
              
              
              48Other
                  assets
              ****
              **22**
              
              
              
              16Regulatory
                  assets
              ****
              **55**
              
              
              
              75Total
                  investments and other assets
              ****
              **661**
              
              
              
              681**TOTAL
                  ASSETS**
              **$**
              **2,453**
              
              
              $
              2,241**LIABILITIES
                  AND STOCKHOLDER'S EQUITY****Current
                  Liabilities:**Current
                  maturities of long-term debt
              **$**
              **-**
              
              
              $
              50Short-term
                  debt
              ****
              **540**
              
              
              
              215Intercompany
                  note payable – Ameren
              ****
              **-**
              
              
              
              73Accounts
                  and wages payable
              ****
              **31**
              
              
              
              54Accounts
                  payable – affiliates
              ****
              **44**
              
              
              
              60Taxes
                  accrued
              ****
              **2**
              
              
              
              3Other
                  current liabilities
              ****
              **80**
              
              
              
              58Total
                  current liabilities
              ****
              **697**
              
              
              
              513**Long-term
                  Debt, Net**
              ****
              **538**
              
              
              
              542**Preferred
                  Stock of Subsidiary Subject to Mandatory
                  Redemption**
              ****
              **16**
              
              
              
              17**Deferred
                  Credits and Other Liabilities:**Accumulated
                  deferred income taxes, net
              ****
              **189**
              
              
              
              201Accumulated
                  deferred investment tax credits
              ****
              **6**
              
              
              
              7Regulatory
                  liabilities
              ****
              **74**
              
              
              
              73Accrued
                  pension and other postretirement benefits
              ****
              **154**
              
              
              
              171Other
                  deferred credits and liabilities
              ****
              **57**
              
              
              
              27Total
                  deferred credits and other liabilities
              ****
              **480**
              
              
              
              479**Preferred
                  Stock of Subsidiary Not Subject to Mandatory
                  Redemption**
              ****
              **19**
              
              
              
              19**Commitments
                  and Contingencies (Notes 2 and 8)****Stockholder's
                  Equity:**Common
                  stock, no par value, 10,000 shares authorized – 1,000 shares
                  outstanding
              ****
              **-**
              
              
              
              -Other
                  paid-in capital
              ****
              **627**
              
              
              
              627Retained
                  earnings
              ****
              **45**
              
              
              
              11Accumulated
                  other comprehensive income
              ****
              **31**
              
              
              
              33Total
                  stockholder's equity
              ****
              **703**
              
              
              
              671**TOTAL
                  LIABILITIES AND STOCKHOLDER'S EQUITY**
              **$**
              **2,453**
              
              
              $
              2,241
 **The
          accompanying notes as they relate to CILCORP are an integral part of these
          consolidated financial statements.**
  21
  **CILCORP
                    INC.****CONSOLIDATED
                    STATEMENT OF CASH FLOWS****(Unaudited)
                    (In millions)****Nine
                    Months Ended****September
                    30,****2007**
                
                
                **2006****Cash
                    Flows From Operating Activities:**Net
                    income
                **$**
                **34**
                
                
                $
                22Adjustments
                    to reconcile net income to net cashprovided
                    by operating activities:Depreciation
                    and amortization
                ****
                **60**
                
                
                
                74Amortization
                    of debt issuance costs and premium/discounts
                ****
                **1**
                
                
                
                -Deferred
                    income taxes and investment tax credits
                ****
                **2**
                
                
                
                8Loss
                    on sale of noncore properties
                ****
                **-**
                
                
                
                4Other
                ****
                **-**
                
                
                
                1Changes
                    in assets and liabilities:Receivables
                ****
                **(38**
                **)**
                
                
                49Materials
                    and supplies
                ****
                **(18**
                **)**
                
                
                (22
                )Accounts
                    and wages payable
                ****
                **(29**
                **)**
                
                
                (47
                )Taxes
                    accrued
                ****
                **(3**
                **)**
                
                
                (9
                )Assets,
                    other
                ****
                **(16**
                **)**
                
                
                24Liabilities,
                    other
                ****
                **22**
                
                
                
                (4
                )Pension
                    and postretirement benefit obligations
                ****
                **5**
                
                
                
                4Net
                    cash provided by operating activities
                ****
                **20**
                
                
                
                104**Cash
                    Flows From Investing Activities:**Capital
                    expenditures
                ****
                **(183**
                **)**
                
                
                (75
                )Proceeds
                    from note receivable – Resources Company
                ****
                **-**
                
                
                
                42Proceeds
                    from sale of noncore properties
                ****
                **-**
                
                
                
                11Changes
                    in money pool advances
                ****
                **42**
                
                
                
                -Purchases
                    of emission allowances
                ****
                **-**
                
                
                
                (12
                )Sales
                    of emission allowances
                ****
                **-**
                
                
                
                1Net
                    cash used in investing activities
                ****
                **(141**
                **)**
                
                
                (33
                )**Cash
                    Flows From Financing Activities:**Dividends
                    on common stock
                ****
                **-**
                
                
                
                (50
                )Capital
                    issuance costs
                ****
                **-**
                
                
                
                (2
                )Short-term
                    debt, net
                ****
                **325**
                
                
                
                -Changes
                    in money pool borrowings
                ****
                **-**
                
                
                
                (92
                )Intercompany
                    note payable – Ameren, net
                ****
                **(73**
                **)**
                
                
                (30
                )Borrowings
                    from credit facility
                ****
                **-**
                
                
                
                40Redemptions,
                    repurchases, and maturities:Long-term
                    debt
                ****
                **(50**
                **)**
                
                
                (32
                )Preferred
                    stock
                ****
                **(1**
                **)**
                
                
                (1
                )Issuances
                    of long-term debt
                ****
                **-**
                
                
                
                96Net
                    cash provided by (used in) financing activities
                ****
                **201**
                
                
                
                (71
                )Net
                    change in cash and cash equivalents
                ****
                **80**
                
                
                
                -Cash
                    and cash equivalents at beginning of year
                ****
                **4**
                
                
                
                3Cash
                    and cash equivalents at end of period
                **$**
                **84**
                
                
                $
                3
 **The
            accompanying notes as they relate to CILCORP are an integral part of
            these
            consolidated financial statements.**
  22




**CENTRAL
                  ILLINOIS LIGHT COMPANY****CONSOLIDATED
                  STATEMENT OF INCOME****(Unaudited)
                  (In millions)****Three
                  Months Ended**
                **September
                  30,**
              
              
              **Nine
                  Months Ended**
                **September
                  30,****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006****Operating
                  Revenues:**Electric
              **$**
              **170**
              
              
              $
              119
              
              
              **$**
              **507**
              
              
              $
              309Gas
              ****
              **36**
              
              
              
              38
              
              
              ****
              **231**
              
              
              
              236Other
              ****
              **-**
              
              
              
              -
              
              
              ****
              **1**
              
              
              
              1Total
                  operating revenues
              ****
              **206**
              
              
              
              157
              
              
              ****
              **739**
              
              
              
              546**Operating
                  Expenses:**Fuel
              ****
              **18**
              
              
              
              22
              
              
              ****
              **52**
              
              
              
              70Purchased
                  power
              ****
              **74**
              
              
              
              17
              
              
              ****
              **206**
              
              
              
              25Gas
                  purchased for resale
              ****
              **21**
              
              
              
              24
              
              
              ****
              **166**
              
              
              
              175Other
                  operations and maintenance
              ****
              **46**
              
              
              
              41
              
              
              ****
              **133**
              
              
              
              134Depreciation
                  and amortization
              ****
              **18**
              
              
              
              18
              
              
              ****
              **54**
              
              
              
              52Taxes
                  other than income taxes
              ****
              **4**
              
              
              
              4
              
              
              ****
              **17**
              
              
              
              17Total
                  operating expenses
              ****
              **181**
              
              
              
              126
              
              
              ****
              **628**
              
              
              
              473**Operating
                  Income**
              ****
              **25**
              
              
              
              31
              
              
              ****
              **111**
              
              
              
              73**Other
                  Income and Expenses:**Miscellaneous
                  income
              ****
              **2**
              
              
              
              -
              
              
              ****
              **4**
              
              
              
              -Miscellaneous
                  expense
              ****
              **(2**
              **)**
              
              
              (2
              )
              
              ****
              **(5**
              **)**
              
              
              (4
              )Total
                  other expenses
              ****
              **-**
              
              
              
              (2
              )
              
              ****
              **(1**
              **)**
              
              
              (4
              )**Interest
                  Charges**
              ****
              **8**
              
              
              
              4
              
              
              ****
              **19**
              
              
              
              13**Income
                  Before Income Taxes**
              ****
              **17**
              
              
              
              25
              
              
              ****
              **91**
              
              
              
              56**Income
                  Taxes**
              ****
              **7**
              
              
              
              6
              
              
              ****
              **33**
              
              
              
              12**Net
                  Income**
              ****
              **10**
              
              
              
              19
              
              
              ****
              **58**
              
              
              
              44**Preferred
                  Stock Dividends**
              ****
              **-**
              
              
              
              -
              
              
              ****
              **1**
              
              
              
              1**Net
                  Income Available to Common Stockholder**
              **$**
              **10**
              
              
              $
              19
              
              
              **$**
              **57**
              
              
              $
              43




**The
        accompanying notes as they relate to CILCO are an integral part of these
        consolidated financial statements.**
   23




**CENTRAL
                  ILLINOIS LIGHT COMPANY****CONSOLIDATED
                  BALANCE SHEET****(Unaudited)
                  (In millions)****September
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006****ASSETS****Current
                  Assets:**Cash
                  and cash equivalents
              **$**
              **72**
              
              
              $
              3Accounts
                  receivable – trade (less allowance for doubtfulaccounts
                  of $3 and $1, respectively)
              ****
              **51**
              
              
              
              47Unbilled
                  revenue
              ****
              **29**
              
              
              
              45Accounts
                  receivable – affiliates
              ****
              **59**
              
              
              
              9Advances
                  to money pool
              ****
              **-**
              
              
              
              42Materials
                  and supplies
              ****
              **111**
              
              
              
              93Other
                  current assets
              ****
              **45**
              
              
              
              32Total
                  current assets
              ****
              **367**
              
              
              
              271**Property
                  and Plant, Net**
              ****
              **1,400**
              
              
              
              1,275**Intangible
                  Assets**
              ****
              **1**
              
              
              
              2**Other
                  Assets**
              ****
              **25**
              
              
              
              18**Regulatory
                  Assets**
              ****
              **55**
              
              
              
              75**TOTAL
                  ASSETS**
              **$**
              **1,848**
              
              
              $
              1,641**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  Liabilities:**Current
                  maturities of long-term debt
              **$**
              **-**
              
              
              $
              50Short-term
                  debt
              ****
              **365**
              
              
              
              165Accounts
                  and wages payable
              ****
              **30**
              
              
              
              54Accounts
                  payable – affiliates
              ****
              **44**
              
              
              
              47Taxes
                  accrued
              ****
              **2**
              
              
              
              3Other
                  current liabilities
              ****
              **63**
              
              
              
              47Total
                  current liabilities
              ****
              **504**
              
              
              
              366**Long-term
                  Debt, Net**
              ****
              **148**
              
              
              
              148**Preferred
                  Stock Subject to Mandatory Redemption**
              ****
              **16**
              
              
              
              17**Deferred
                  Credits and Other Liabilities:**Accumulated
                  deferred income taxes, net
              ****
              **156**
              
              
              
              166Accumulated
                  deferred investment tax credits
              ****
              **6**
              
              
              
              7Regulatory
                  liabilities
              ****
              **204**
              
              
              
              206Accrued
                  pension and other postretirement benefits
              ****
              **154**
              
              
              
              171Other
                  deferred credits and liabilities
              ****
              **57**
              
              
              
              25Total
                  deferred credits and other liabilities
              ****
              **577**
              
              
              
              575**Commitments
                  and Contingencies (Notes 2 and 8)****Stockholders'
                  Equity:**Common
                  stock, no par value, 20.0 shares authorized – 13.6 shares
                  outstanding
              ****
              **-**
              
              
              
              -Preferred
                  stock not subject to mandatory redemption
              ****
              **19**
              
              
              
              19Other
                  paid-in capital
              ****
              **429**
              
              
              
              415Retained
                  earnings
              ****
              **155**
              
              
              
              99Accumulated
                  other comprehensive income
              ****
              **-**
              
              
              
              2Total
                  stockholders' equity
              ****
              **603**
              
              
              
              535**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              **$**
              **1,848**
              
              
              $
              1,641




**The
        accompanying notes as they relate to CILCO are an integral part of these
        consolidated financial statements.**
   24




**CENTRAL
                  ILLINOIS LIGHT COMPANY****CONSOLIDATED
                  STATEMENT OF CASH FLOWS****(Unaudited)
                  (In millions)****Nine
                  Months Ended****September
                  30,****2007**
              
              
              **2006****Cash
                  Flows From Operating Activities:**Net
                  income
              **$**
              **58**
              
              
              $
              44Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Depreciation
                  and amortization
              ****
              **55**
              
              
              
              61Amortization
                  of debt issuance costs and premium/discounts
              ****
              **1**
              
              
              
              -Deferred
                  income taxes and investment tax credits, net
              ****
              **4**
              
              
              
              15Loss
                  on sale of noncore properties
              ****
              **-**
              
              
              
              6Changes
                  in assets and liabilities:Receivables
              ****
              **(32**
              **)**
              
              
              51Materials
                  and supplies
              ****
              **(18**
              **)**
              
              
              (20
              )Accounts
                  and wages payable
              ****
              **(17**
              **)**
              
              
              (30
              )Taxes
                  accrued
              ****
              **(3**
              **)**
              
              
              (17
              )Assets,
                  other
              ****
              **(21**
              **)**
              
              
              14Liabilities,
                  other
              ****
              **16**
              
              
              
              (6
              )Pension
                  and postretirement benefit obligations
              ****
              **5**
              
              
              
              9Net
                  cash provided by operating activities
              ****
              **48**
              
              
              
              127**Cash
                  Flows From Investing Activities:**Capital
                  expenditures
              ****
              **(183**
              **)**
              
              
              (75
              )Proceeds
                  from sale of noncore properties
              ****
              **-**
              
              
              
              11Changes
                  in money pool advances
              ****
              **42**
              
              
              
              -Purchases
                  of emission allowances
              ****
              **-**
              
              
              
              (12
              )Sales
                  of emission allowances
              ****
              **-**
              
              
              
              1Net
                  cash used in investing activities
              ****
              **(141**
              **)**
              
              
              (75
              )**Cash
                  Flows From Financing Activities:**Dividends
                  on common stock
              ****
              **-**
              
              
              
              (65
              )Dividends
                  on preferred stock
              ****
              **(1**
              **)**
              
              
              (1
              )Capital
                  issuance costs
              ****
              **-**
              
              
              
              (2
              )Short-term
                  debt, net
              ****
              **200**
              
              
              
              -Changes
                  in money pool borrowings
              ****
              **-**
              
              
              
              (99
              )Borrowings
                  from credit facility
              ****
              **-**
              
              
              
              40Redemptions,
                  repurchases, and maturities:Long-term
                  debt
              ****
              **(50**
              **)**
              
              
              (20
              )Preferred
                  stock
              ****
              **(1**
              **)**
              
              
              (1
              )Issuances
                  of long-term debt
              ****
              **-**
              
              
              
              96Capital
                  contribution from parent
              ****
              **14**
              
              
              
              -Net
                  cash provided by (used in) financing activities
              ****
              **162**
              
              
              
              (52
              )Net
                  change in cash and cash equivalents
              ****
              **69**
              
              
              
              -Cash
                  and cash equivalents at beginning of year
              ****
              **3**
              
              
              
              2Cash
                  and cash equivalents at end of period
              **$**
              **72**
              
              
              $
              2




**The
        accompanying notes as they relate to CILCO are an integral part of these
        consolidated financial statements.**
   25
  **ILLINOIS
                    POWER COMPANY****CONSOLIDATED
                    STATEMENT OF INCOME****(Unaudited)
                    (In millions)****Three
                    Months Ended**
                
                
                **Nine
                    Months Ended****September
                    30,**
                
                
                **September
                    30,****2007**
                
                
                **2006**
                
                
                **2007**
                
                
                **2006****Operating
                    Revenues:**Electric
                **$**
                **307**
                
                
                $
                375
                
                
                **$**
                **859**
                
                
                $
                888Gas
                ****
                **49**
                
                
                
                59
                
                
                ****
                **375**
                
                
                
                381Other
                ****
                **-**
                
                
                
                1
                
                
                ****
                **2**
                
                
                
                2Total
                    operating revenues
                ****
                **356**
                
                
                
                435
                
                
                ****
                **1,236**
                
                
                
                1,271**Operating
                    Expenses:**Purchased
                    power
                ****
                **211**
                
                
                
                213
                
                
                ****
                **573**
                
                
                
                561Gas
                    purchased for resale
                ****
                **26**
                
                
                
                35
                
                
                ****
                **267**
                
                
                
                272Other
                    operations and maintenance
                ****
                **74**
                
                
                
                68
                
                
                ****
                **197**
                
                
                
                188Depreciation
                    and amortization
                ****
                **20**
                
                
                
                20
                
                
                ****
                **60**
                
                
                
                57Amortization
                    of regulatory assets
                ****
                **4**
                
                
                
                -
                
                
                ****
                **12**
                
                
                
                -Taxes
                    other than income taxes
                ****
                **13**
                
                
                
                14
                
                
                ****
                **50**
                
                
                
                52Total
                    operating expenses
                ****
                **348**
                
                
                
                350
                
                
                ****
                **1,159**
                
                
                
                1,130**Operating
                    Income**
                ****
                **8**
                
                
                
                85
                
                
                ****
                **77**
                
                
                
                141**Other
                    Income and Expenses:**Miscellaneous
                    income
                ****
                **4**
                
                
                
                2
                
                
                ****
                **9**
                
                
                
                4Miscellaneous
                    expense
                ****
                **(2**
                **)**
                
                
                (1
                )
                
                ****
                **(3**
                **)**
                
                
                (3
                )Total
                    other income
                ****
                **2**
                
                
                
                1
                
                
                ****
                **6**
                
                
                
                1**Interest
                    Charges**
                ****
                **19**
                
                
                
                13
                
                
                ****
                **55**
                
                
                
                37**Income
                    (Loss) Before Income Taxes (Benefit)**
                ****
                **(9**
                **)**
                
                
                73
                
                
                ****
                **28**
                
                
                
                105**Income
                    Taxes (Benefit)**
                ****
                **(5**
                **)**
                
                
                30
                
                
                ****
                **10**
                
                
                
                42**Net
                    Income (Loss)**
                ****
                **(4**
                **)**
                
                
                43
                
                
                ****
                **18**
                
                
                
                63**Preferred
                    Stock Dividends**
                ****
                **1**
                
                
                
                1
                
                
                ****
                **2**
                
                
                
                2**Net
                    Income (Loss) Available to Common Stockholder**
                **$**
                **(5**
                **)**
                
                $
                42
                
                
                **$**
                **16**
                
                
                $
                61
  **The
          accompanying notes as they relate to IP are an integral part of these
          consolidated financial statements.**
   26




**ILLINOIS
                  POWER COMPANY****CONSOLIDATED
                  BALANCE SHEET****(Unaudited)
                  (In millions)****September
                  30,**
              
              
              **December
                  31,****2007**
              
              
              **2006****ASSETS****Current
                  Assets:**Cash
                  and cash equivalents
              **$**
              **-**
              
              
              $
              -Accounts
                  receivable - trade (less allowance for doubtfulaccounts
                  of $10 and $3, respectively)
              ****
              **125**
              
              
              
              105Unbilled
                  revenue
              ****
              **71**
              
              
              
              101Accounts
                  receivable – affiliates
              ****
              **61**
              
              
              
              1Materials
                  and supplies
              ****
              **156**
              
              
              
              122Other
                  current assets
              ****
              **52**
              
              
              
              27Total
                  current assets
              ****
              **465**
              
              
              
              356**Property
                  and Plant, Net**
              ****
              **2,190**
              
              
              
              2,134**Investments
                  and Other Assets:**Investment
                  in IP SPT
              ****
              **9**
              
              
              
              8Goodwill
              ****
              **214**
              
              
              
              214Other
                  assets
              ****
              **52**
              
              
              
              62Regulatory
                  assets
              ****
              **353**
              
              
              
              401Total
                  investments and other assets
              ****
              **628**
              
              
              
              685**TOTAL
                  ASSETS**
              **$**
              **3,283**
              
              
              $
              3,175**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY****Current
                  Liabilities**:Current
                  maturities of long-term debt payable to IP SPT
              **$**
              **51**
              
              
              $
              51Short-term
                  debt
              ****
              **200**
              
              
              
              75Borrowings
                  from money pool
              ****
              **95**
              
              
              
              43Accounts
                  and wages payable
              ****
              **82**
              
              
              
              119Accounts
                  payable – affiliates
              ****
              **41**
              
              
              
              67Taxes
                  accrued
              ****
              **6**
              
              
              
              7Other
                  current liabilities
              ****
              **117**
              
              
              
              72Total
                  current liabilities
              ****
              **592**
              
              
              
              434**Long-term
                  Debt, Net**
              ****
              **766**
              
              
              
              772**Long-term
                  Debt Payable to IP SPT**
              ****
              **24**
              
              
              
              92**Deferred
                  Credits and Other Liabilities:**Regulatory
                  liabilities
              ****
              **93**
              
              
              
              110Accrued
                  pension and other postretirement benefits
              ****
              **217**
              
              
              
              230Accumulated
                  deferred income taxes
              ****
              **135**
              
              
              
              138Other
                  deferred credits and other noncurrent liabilities
              ****
              **94**
              
              
              
              53Total
                  deferred credits and other liabilities
              ****
              **539**
              
              
              
              531**Commitments
                  and Contingencies (Notes 2 and 8)****Stockholders’
                  Equity:**Common
                  stock, no par value, 100.0 shares authorized – 23.0 shares
                  outstanding
              ****
              **-**
              
              
              
              -Other
                  paid-in-capital
              ****
              **1,194**
              
              
              
              1,194Preferred
                  stock not subject to mandatory redemption
              ****
              **46**
              
              
              
              46Retained
                  earnings
              ****
              **117**
              
              
              
              101Accumulated
                  other comprehensive income
              ****
              **5**
              
              
              
              5Total
                  stockholders’ equity
              ****
              **1,362**
              
              
              
              1,346**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY**
              **$**
              **3,283**
              
              
              $
              3,175


**The
        accompanying notes as they relate to IP are an integral part of these
        consolidated financial statements.**






27




**ILLINOIS
                  POWER COMPANY****CONSOLIDATED
                  STATEMENT OF CASH FLOWS****(Unaudited)
                  (In millions)****Nine
                  Months Ended****September
                  30,****2007**
              
              
              **2006****Cash
                  Flows From Operating Activities:**Net
                  income
              **$**
              **18**
              
              
              $
              63Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Depreciation
                  and amortization
              ****
              **63**
              
              
              
              18Amortization
                  of debt issuance costs and premium/discounts
              ****
              **6**
              
              
              
              3Deferred
                  income taxes
              ****
              **8**
              
              
              
              58Other
              
              **(1**
              **)**
              
              
              -Changes
                  in assets and liabilities:Receivables
              ****
              **(50**
              **)**
              
              
              60Materials
                  and supplies
              ****
              **(34**
              **)**
              
              
              (34
              )Accounts
                  and wages payable
              ****
              **(45**
              **)**
              
              
              (62
              )Assets,
                  other
              ****
              **(16**
              **)**
              
              
              (1
              )Liabilities,
                  other
              ****
              **54**
              
              
              
              (5
              )Pension
                  and other postretirement benefit obligations
              ****
              **20**
              
              
              
              8Net
                  cash provided by operating activities
              ****
              **23**
              
              
              
              108**Cash
                  Flows From Investing Activities:**Capital
                  expenditures
              ****
              **(132**
              **)**
              
              
              (128
              )Other
              ****
              **(1**
              **)**
              
              
              (1
              )Net
                  cash used in investing activities
              ****
              **(133**
              **)**
              
              
              (129
              )**Cash
                  Flows From Financing Activities:**Dividends
                  on preferred stock
              ****
              **(2**
              **)**
              
              
              (2
              )Capital
                  issuance costs
              ****
              **-**
              
              
              
              (1
              )Short-term
                  debt, net
              ****
              **125**
              
              
              
              -Changes
                  in money pool borrowings, net
              ****
              **52**
              
              
              
              35IP
                  SPT maturities
              ****
              **(65**
              **)**
              
              
              (69
              )Issuance
                  of long-term debt
              ****
              **-**
              
              
              
              75Overfunding
                  of TFNs
              ****
              **-**
              
              
              
              (17
              )Net
                  cash provided by financing activities
              ****
              **110**
              
              
              
              21Net
                  change in cash and cash equivalents
              ****
              **-**
              
              
              
              -Cash
                  and cash equivalents at beginning of year
              ****
              **-**
              
              
              
              -Cash
                  and cash equivalents at end of period
              **$**
              **-**
              
              
              $
              -




The accompanying notes as they relate to IP are
      an
      integral part of these consolidated financial statements.






28




**AMEREN
        CORPORATION(Consolidated)**
 **UNION
        ELECTRIC COMPANY(Consolidated)**
 **CENTRAL
        ILLINOIS PUBLIC SERVICE COMPANY**
 **AMEREN
        ENERGY GENERATING COMPANY(Consolidated)**
 **CILCORP
        INC. (Consolidated)**
 **CENTRAL
        ILLINOIS LIGHT COMPANY (Consolidated)**
 **ILLINOIS
        POWER COMPANY (Consolidated)**
 
 **COMBINED
        NOTES TO FINANCIAL STATEMENTS**
 **(Unaudited)**
 **September
        30, 2007**
 
 **NOTE
        1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **General**
 
 Ameren,
        headquartered in St. Louis, Missouri, is a public utility holding company
        under
        PUHCA 2005, administered by FERC. Ameren’s primary assets are the common stock
        of its subsidiaries. Ameren’s subsidiaries, which are separate, independent
        legal entities with separate businesses, assets and liabilities, operate
        rate-regulated electric generation, transmission and distribution businesses,
        rate-regulated natural gas transmission and distribution businesses and
        non-rate-regulated electric generation businesses in Missouri and Illinois.
        Dividends on Ameren’s common stock depend on distributions made to it by its
        subsidiaries. Ameren’s principal subsidiaries are listed below. Also see the
        Glossary of Terms and Abbreviations at the front of this report.
 
 ·
              UE,
                  or Union Electric Company, also known as AmerenUE, operates a
                  rate-regulated electric generation, transmission and distribution
                  business, and a rate-regulated natural gas transmission and distribution
                  business in Missouri.
 ·
              CIPS,
                  or Central Illinois Public Service Company, also known as AmerenCIPS,
                  operates a rate-regulated electric and natural gas transmission
                  and
                  distribution business in Illinois.
 ·
              Genco,
                  or Ameren Energy Generating Company, operates a non-rate-regulated
                  electric generation business in Illinois and
                  Missouri.
 ·
              CILCO,
                  or Central Illinois Light Company, also known as AmerenCILCO, is
                  a
                  subsidiary of CILCORP (a holding company). It operates a rate-regulated
                  electric and natural gas transmission and distribution business
                  and a
                  non-rate-regulated electric generation business (through its subsidiary,
                  AERG), all in Illinois.
 ·
              IP,
                  or Illinois Power Company, also known as AmerenIP, operates a
                  rate-regulated electric and natural gas transmission and distribution
                  business in Illinois.
  Ameren
        has various other subsidiaries responsible for the short-term and long-term
        marketing of power, procurement of fuel, management of commodity risks, and
        provision of other shared services. Ameren has an 80% ownership interest
        in EEI
        through UE and Development Company, which each own 40% of EEI. Ameren
        consolidates EEI for financial reporting purposes, while UE reports its interest
        in EEI under the equity method. The following table presents summarized
        financial information of EEI for the three and nine months ended September
        30,
        2007 and 2006.
 
 **Three
                  Months**
              
              
              **Nine
                  Months****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006**Operating
                  revenues
              **$**
              **117**
              
              
              $
              105
              
              
              **$**
              **324**
              
              
              $
              290Operating
                  income
              ****
              **53**
              
              
              
              93
              
              
              ****
              **158**
              
              
              
              191Net
                  income
              ****
              **34**
              
              
              
              56
              
              
              ****
              **99**
              
              
              
              117
 
 The
        financial statements of the Ameren Companies (except CIPS) are prepared on
        a
        consolidated basis and therefore include the accounts of their majority-owned
        subsidiaries. All significant intercompany transactions have been eliminated.
        All tabular dollar amounts are in millions, unless otherwise
        indicated.
 
 Our
        accounting policies conform to GAAP. Our financial statements reflect all
        adjustments (which include normal, recurring adjustments) necessary, in our
        opinion, for a fair presentation of our results. The preparation of financial
        statements in conformity with GAAP requires management to make certain estimates
        and assumptions. Such estimates and assumptions affect reported amounts of
        assets and liabilities, the disclosure of contingent assets and liabilities
        at
        the dates of financial statements, and the reported amounts of revenues and
        expenses during the reported periods. Actual results could differ from those
        estimates. The results of operations of an interim period may not give a
        true
        indication of results that may be expected for a full year. Certain
        reclassifications have been made to the prior year’s financial statements to
        conform to our 2007 reporting presentation. These financial statements should
        be
        read in conjunction with the financial statements and the notes thereto included
        in the Form 10-K.
 
 **Earnings
        Per Share**
 
 There
        were no material differences between Ameren’s basic and diluted earnings per
        share amounts for the three and nine months ended September 30, 2007 and
        2006,
        due to an immaterial number of stock options, restricted stock and performance
        share units outstanding.
 
 29
  **Long-term
        Incentive Plan of 1998 and 2006 Omnibus Incentive Compensation
        Plan**
 
 A
        summary of nonvested shares as of
        September 30, 2007, and changes during the nine-month period
        ended September 30, 2007, under the Long-term Incentive Plan of 1998, as
        amended, and the 2006 Omnibus Incentive Compensation Plan (2006 Plan) is
        presented below:
 
 **Performance
                  Share Units**
              
              
              **Restricted
                  Shares****Shares**
              
              
              **Weighted-average**
                **Fair
                  Value Per Unit**
              **Shares**
              **Weighted-average**
                **Fair
                  Value Per Share**Nonvested
                  at January 1,
                  2007
              
              338,516
              
              
              $
              56.07
              
              
              
              377,776
              
              
              $
              45.79Granted(a)
              
              357,573
              
              
              
              59.60
              
              
              
              -
              
              
              
              -Dividends
              
              -
              
              
              
              -
              
              
              
              11,567
              
              
              
              50.62Forfeitures
              
              (13,711
              )
              
              
              56.64
              
              
              
              (5,841
              )
              
              
              46.47Vested(b)
              
              (12,975
              )
              
              
              59.14
              
              
              
              (70,391
              )
              
              
              43.84Nonvested
                  at September 30,
                  2007
              
              669,403
              
              
              $
              57.88
              
              
              
              313,111
              
              
              $
              46.23
 
 (a)
              Includes
                  performance share units (share units) granted to certain executive
                  and
                  non-executive officers and other eligible employees in February
                  2007 under
                  the 2006 Plan.
 (b)
              Share
                  units vested due to attainment of retirement eligibility by certain
                  employees. Actual shares issued for retirement-eligible employees
                  will
                  vary depending on actual performance over the three-year measurement
                  period.
 
 The
        fair value of each share unit
        awarded in February 2007 under the 2006 Plan was determined to be $59.60
        based
        on Ameren’s closing common share price of $53.99 per share at the grant date and
        lattice simulations used to estimate expected share payout based on Ameren’s
        attainment of certain financial measures relative to the designated peer
        group.
        The significant assumptions used to calculate fair value also included a
        three-year risk-free rate of 4.735%, dividend yields of 2.3% to 5.2% for
        the
        peer group, volatility of 12.91% to 18.33% for the peer group, and Ameren’s
        maintenance of its $2.54 annual dividend over the performance
        period.
 
 Ameren
        recorded compensation expense
        of $4 million and $3 million for the quarters ended September 30, 2007 and
        2006,
        respectively, and a related tax benefit of $2 million and $1
        million for the quarters ended September 30, 2007 and 2006, respectively.
        Ameren
        recorded compensation expense of $13 million and $8 million for the
        nine-month periods ended September 30, 2007 and 2006, respectively, and a
        related tax benefit of $5 million and $3 million for the nine-month periods
        ended September 30, 2007 and 2006, respectively. As of September 30, 2007,
        total
        compensation cost of $25 million related to nonvested awards not yet recognized
        is expected to be recognized over a weighted-average period of three
        years.
 
 **Accounting
        Changes and Other Matters**
 
 **FASB
        Interpretation No. 48, *Accounting for Uncertainty in Income Taxes – an
        Interpretation of SFAS No. 109* (FIN 48)**
 
 FIN
        48 addresses the determination of
        whether tax benefits claimed or expected to be claimed on a tax return should
        be
        recorded in the financial statements. Under FIN 48, Ameren may recognize
        the tax
        benefit from an uncertain tax position only if it is more likely than not
        that
        the tax position will be sustained on examination by the taxing authorities,
        based on the technical merits of the position. The tax benefits recognized
        in
        the financial statements from such a position are measured based on the largest
        benefit that has a greater than 50% likelihood of being realized upon ultimate
        settlement. FIN 48 also provides guidance on derecognition of income tax
        assets
        and liabilities, classification of current and deferred income tax assets
        and
        liabilities, accounting for interest and penalties on income taxes, accounting
        for income taxes in interim periods, and requires expanded
        disclosures.
 
 The
        Ameren Companies adopted the provisions of FIN 48 on January 1, 2007. The
        amount of unrecognized tax benefits as of January 1, 2007, was $155 million,
        $58
        million,
 $15
        million, $36 million, $18 million, $18 million and $12 million for Ameren,
        UE, CIPS, Genco, CILCORP, CILCO and IP, respectively. Of these unrecognized
        tax
        benefits on January 1, 2007, $20 million, $6 million, less than $1 million,
        less
        than $1 million, and less than $1 million for Ameren, UE, CIPS, Genco, and
        CILCORP, respectively, would impact the respective company’s effective tax rate,
        if recognized.
 
 As
        of
        January 1, 2007, the Ameren Companies adopted a policy of recognizing interest
        and penalties accrued on tax liabilities on a gross basis as interest expense
        or
        penalty expense in the statements of income. Prior to January 1, 2007, the
        Ameren Companies recognized such items in the provision for taxes on a
        net-of-tax basis. As of January 1, 2007, Ameren, UE, CIPS, Genco, CILCORP,
        CILCO, and IP had recorded a liability of $12 million, $5 million, less
        than $1 million, $4 million, $1 million, less than $1 million, and less
        than
 $1
        million, respectively, for the payment of interest with respect to unrecognized
        tax benefits and no amount for penalties with respect to unrecognized tax
        benefits.
 
 All
        of
        the Ameren Companies’ federal income tax returns are closed through 2001. The
        Ameren Companies are currently under federal income tax return examination
        for
        years 2002 through 2005. State income tax returns are generally subject to
        examination for a period of three years
   30
  after
        filing of the respective returns. The state impact of any federal changes
        remains subject to examination by various states for a period of up to one
        year
        after formal notification to the states. The Ameren Companies do not have
        state
        income tax returns in the process of examination. The Ameren Companies also
        do
        not have material state income tax issues in the process of administrative
        appeals or litigation.
 
 It
        is reasonably possible that events
        will occur during the next 12 months that would cause the total amount of
        unrecognized tax benefits to increase or decrease; however, the Ameren Companies
        do not believe such increases or decreases would be material to their financial
        condition or results of operations.
 
 **SFAS
        No. 157, *Fair Value Measurements***
 
 In
        September 2006, the FASB issued SFAS
        No. 157, which defines fair value, establishes a framework for measuring
        fair
        value, and expands required disclosures about fair value measurements. SFAS
        No.
        157 clarifies that fair value is a market-based measurement that should be
        determined based on the assumptions that market participants would use in
        pricing an asset or liability. This standard is effective as of the beginning
        of
        our 2008 fiscal year. We are still determining the impact the adoption of
        SFAS
        No. 157 will have on our results of operations, financial position, and
        liquidity, if any; however, at this time, we do not expect the impact to
        be
        material.
 
 **SFAS
        No. 159, *The Fair Value Option for Financial Assets and Financial
        Liabilities, Including an Amendment of SFAS No. 115***
  In
        February 2007, the FASB issued SFAS No. 159, which permits companies
        to choose to measure many financial instruments and certain assets and
        liabilities at fair value that are not currently required to be measured
        at fair
        value on an instrument-by-instrument basis. Entities electing the fair value
        option will be required to recognize changes in fair value in earnings and
        to
        expense upfront cost and fees associated with the item for which the fair
        value
        option is elected. SFAS No. 159 is effective as of the beginning of our 2008
        fiscal year. At this time, we do not expect to elect the fair value option
        for
        any of our eligible financial instruments or other items.
 
 **FSP
        FIN 39-1,*Amendment of FASB Interpretation No. 39***
 
 In
        April 2007, the FASB issued FSP
        FIN 39-1, effective for us as of the beginning of our 2008 fiscal year.
        FSP FIN 39-1 permits companies to offset fair value amounts recognized for
        the right to reclaim cash collateral (a receivable) or the obligation to
        return
        cash collateral (a liability) against fair value amounts recognized for
        derivative instruments that are executed with the same counterparty under
        the
        same master netting arrangement. We are currently evaluating whether we will
        elect to apply the accounting policies permitted under this pronouncement.
        The
        adoption of FSP FIN 39-1 will have no impact on net income, and we do not
        expect
        the impact to be material to our financial position.
 
 **Goodwill
        and Intangible Assets**
 
 *Goodwill.*Goodwill represents the excess of the purchase price of an acquisition
        over
        the fair value of the net assets acquired. We evaluate goodwill for impairment
        in the fourth quarter of each year, or more frequently if events and
        circumstances indicate that the asset might be impaired. Ameren’s and IP’s
        goodwill relates to the acquisitions of IP and an additional 20% ownership
        interest in EEI in 2004, and Ameren’s and CILCORP’s goodwill relates to the
        acquisitions of CILCORP and Medina Valley in 2003. For the period from January
        1, 2007 to September 30, 2007, there were no changes in the carrying amount
        of
        goodwill.
 
 *Intangible
        Assets.*******At September 30, 2007, intangible
        assets consisted of emission allowances of $197 million at Ameren, $60
        million at UE, $57 million at Genco, $42 million at CILCORP and $1 million
        at
        CILCO. Emission allowances consist of various individual emission allowance
        certificates and do not have expiration dates. Emission allowances are charged
        to fuel expense as they are used in operations.
 
 The
        following table presents the net book value of emission allowances consumed
        or
        (sold) for Ameren, UE, Genco, CILCORP and CILCO during the three and nine
        months
        ended September 30, 2007 and 2006.
 
 **Three
                  Months**
              
              
              **Nine
                  Months****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006**Ameren(a)
              $
              7
              
              
              $
              (7
              )
              
              $
              27
              
              
              $
              18UE
              
              (2
              )
              
              
              -
              
              
              
              (5
              )
              
              
              (2
              )Genco
              
              8
              
              
              
              9
              
              
              
              23
              
              
              
              24CILCORP(b)
              
              3
              
              
              
              7
              
              
              
              6
              
              
              
              18CILCO
              
              -
              
              
              
              2
              
              
              
              -
              
              
              
              8
 
 (a)
              Includes
                  amounts for Ameren registrant and nonregistrant subsidiaries and
                  intercompany eliminations.
 (b)
              Includes
                  allowances consumed that were recorded through purchase
                  accounting.
   31
 **Excise
        Taxes**
 
 Excise
        taxes reflected on Missouri electric, Missouri gas, and Illinois gas customer
        bills are imposed on us. They are recorded on a gross basis in Operating
        Revenues and Taxes Other than Income Taxes on the statement of income. Excise
        taxes reflected on Illinois electric customer bills are imposed on the consumer
        and are therefore not included in revenues and expenses. They are recorded
        as
        tax collections payable and included in Taxes Accrued. The following table
        presents excise taxes recorded in Operating Revenues and Taxes Other
        than Income Taxes for the three and nine months ended September 30, 2007
        and
        2006:
 
 **Three
                  Months**
              
              
              **Nine
                  Months****2007**
              
              
              **2006**
              
              
              **2007**
              
              
              **2006**Ameren
              **$**
              **46**
              
              
              $
              43
              
              
              **$**
              **128**
              
              
              $
              129UE
              ****
              **38**
              
              
              
              35
              
              
              ****
              **88**
              
              
              
              87CIPS
              ****
              **2**
              
              
              
              2
              
              
              ****
              **11**
              
              
              
              11CILCORP
              ****
              **2**
              
              
              
              2
              
              
              ****
              **8**
              
              
              
              8CILCO
              ****
              **2**
              
              
              
              2
              
              
              ****
              **8**
              
              
              
              8IP
              ****
              **4**
              
              
              
              4
              
              
              ****
              **21**
              
              
              
              23
  **Asset
        Retirement Obligations**
 
 AROs
        at Ameren and UE increased
        compared to December 31, 2006, to reflect the accretion of obligations to
        their
        fair values.
 
 **Prior
        Period Adjustment**
 
 During
        the third quarter of 2007, we identified a misallocation of first quarter
        2007
        purchased power expense among Ameren subsidiaries. The error resulted in
        an
        understatement of UE and Genco purchased power expense of approximately $7
        million and $2 million, respectively, and an overstatement of CIPS, CILCORP,
        CILCO and IP purchased power expense of approximately $4 million, $1
        million, $1 million, and $4 million, respectively, during both the three
        months
        ended March 31, 2007, and the six months ended June 30, 2007. The error resulted
        in an overstatement of UE and Genco net income of $5 million and $1 million,
        respectively, and an understatement of CIPS, CILCORP, CILCO and IP net income
        of
        approximately $3 million, $1 million, $1 million, and $3 million,
        respectively, during both the three months ended March 31, 2007, and the
        six
        months ended June 30, 2007. The error did not have a significant impact on
        previously reported subsidiary balance sheets or statements of cash flows,
        and
        the error had no impact on Ameren’s previously reported consolidated financial
        position or results of operations or cash flows.
 
 All
        UE, CIPS, Genco, CILCORP, CILCO
        and IP financial information as of and for the nine months ended September
        30,
        2007, included in this quarterly report reflects the correction of the error.
        Previously-issued quarterly financial statements have not been restated,
        as
        management does not believe that the impact of these errors is material to
        the
        financial statements of UE, CIPS, Genco, CILCORP, CILCO  and IP as of
        and for the quarter ended March 31, 2007, and as of and for the six months
        ended
        June 30, 2007.
  **NOTE
        2 – RATE AND REGULATORY MATTERS**
 
 Below
        is
        a summary of significant regulatory proceedings and related lawsuits. We
        are
        unable to predict the ultimate outcome of these matters, the timing of the
        final decisions of the various agencies and courts, or the impact on our
        results
        of operations, financial position, or liquidity.
 
 **Missouri**
 
 *Electric*
 
 With
        the
        expiration of an electric rate moratorium that provided for no changes in
        UE’s
        electric rates before July 1, 2006, UE filed in July 2006 a request with
        the
        MoPSC for a proposed average increase in electric rates of 17.7%, or $361
        million, based on a requested return on equity of 12.0%. This rate increase
        filing was based on a test year ended June 30, 2006, and was updated for
        known
        and measurable items through January 1, 2007. In May 2007, the MoPSC issued
        an
        order, as clarified, granting UE a $43 million increase in base rates for
        electric service based on a return on equity of 10.2% and a capital structure
        of
        52% common equity. New electric rates became effective June 4, 2007. The
        MoPSC
        order also included the following significant provisions:
  ·
                Acceptance
                    without rate adjustment of the expiration of UE’s cost-based power supply
                    contract with EEI, which expired in December
                    2005.
 ·
                Allowance
                    of the full cost of certain CTs purchased or built in the past
                    few years
                    to be included in UE’s rate base.
 ·
                Establishment
                    of a regulatory tracking mechanism, through the use of a regulatory
                    liability account, for gains on sales of SO2emission
                    allowances, net of SO2 premiums incurred under the terms of
                    coal procurement contracts, plus any SO2discounts received
                    under such contracts. These deferred amounts will be addressed
                    as part of
                    UE’s next rate case. The MoPSC allowed an annual base level of
                    SO2 emission allowance sales of up to $5 million, which
                    UE can
                    recognize in its statement of
                    income.
 ·
                Approval
                    of a regulatory tracking mechanism for pension and postretirement
                    benefit
                    costs.
 ·
                Change
                    of income tax method associated with the cost of property removal,
                    net of
                    salvage, to the normalization method of accounting, which reduced
                    income
                    tax expense in the calculation of UE’s electric rates and for financial
                    reporting purposes.
 ·
                Establishment
                    of off-system sales base level of $230 million used in determining
                    UE’s revenue requirement.
    
 32
 ·
                Extension
                    of UE’s Callaway nuclear plant and fossil generation plant lives used
                    in
                    calculating depreciation expense for electric rates and financial
                    reporting purposes.
 ·
                MoPSC
                    staff directed to review a possible loss in capacity sales as
                    a result of
                    the breach of the upper reservoir of the Taum Sauk pumped-storage
                    hydroelectric facility.
 ·
                Establishment
                    of a requirement to fund low-income energy assistance and energy
                    conservation programs; half of such funding will be recoverable
                    through
                    rates to customers.
 ·
                Denial
                    of UE’s request to implement a fuel and purchased power cost recovery
                    mechanism.
 In
        June
        2007, the MoPSC denied UE’s and other intervenors’ applications for rehearing
        with respect to certain aspects of the MoPSC rate order. In July 2007, UE
        appealed certain aspects of the MoPSC decision, principally the 10.2% return
        on
        equity granted by the MoPSC, to the Circuit Court of Cole County in Jefferson
        City, Missouri. The Office of Public Counsel and the Missouri attorney general,
        who were both intervenors in the electric rate case, also appealed certain
        aspects of the MoPSC decision to the Circuit Court of Cole County.
 
 *Taum
        Sauk*
  In
        June 2007, the MoPSC opened an
        investigation of the breach of the upper reservoir at UE’s Taum Sauk
        pumped-storage hydroelectric facility in December 2005. In October 2007,
        the
        MoPSC staff issued its report on the Taum Sauk incident, and in November
        2007 UE
        provided its response to the report.  The MoPSC is expected to issue an
        order on the investigation by the end of 2007.  See Note 8 – Commitments
        and Contingencies for additional information.
 
 *January
        2007 Ice Storm Cost Recovery*
 
 UE
        submitted a filing to the MoPSC in November 2007 requesting operations and
        maintenance expenses that UE incurred as a result of a severe ice storm in
        January 2007 be deferred as a regulatory asset and, if approved, be amortized
        over five years beginning with the effective date of electric rates approved
        in
        UE's next rate proceeding. UE incurred approximately $25 million of
        operations and maintenance expenses in the first quarter of 2007 as a result
        of
        the January storm.
  **Illinois**
 
 *Electric*
 
 New
        electric rates for CIPS, CILCO
        and IP went into effect on January 2, 2007, reflecting delivery service tariffs
        approved by the ICC in November 2006 and full cost recovery of power purchased
        on behalf of Ameren Illinois Utilities’ customers in the September 2006 auction
        in accordance with a January 2006 ICC order. As a result of these new electric
        rates going into effect, the estimated average annual residential rate overall
        increase in 2007 was expected to be 40% to 55% over 2006 rates. The estimated
        average annual residential rate overall increase for electric heat customers
        was
        expected to be 60% to 80% over 2006 rates.
 
 Due
        to the magnitude of these rate
        increases, various legislators supported legislation that would have reduced
        and
        frozen the electric rates of CIPS, CILCO and IP to the rates that were in
        effect
        prior to January 2, 2007, and would have imposed a tax on electric generation
        in
        Illinois to help fund customer assistance programs. The Illinois governor
        also
        supported rate rollback and freeze legislation. In July 2007, an agreement
        was
        reached among key stakeholders in Illinois designed to avoid such legislation
        and address the increase in electric rates and the future power procurement
        process in Illinois. The terms of the agreement, which includes a comprehensive
        rate relief and customer assistance program, were set forth in a letter dated
        July 24, 2007, to the leaders of the Illinois General Assembly and the Illinois
        attorney general, in a release and settlement agreement with the Illinois
        attorney general, in funding agreements among the parties contributing to
        the
        rate relief and assistance programs and in legislation, which became effective
        on August 28, 2007. The following is a discussion of this agreement, including
        its impact on future power procurement for the Ameren Illinois Utilities,
        and
        outstanding significant regulatory and related legal matters affecting our
        Illinois electric operations.
 
 Electric
        Settlement
        Agreement
 
 The
        settlement agreement was the
        result of many months of negotiations among leaders of the House of
        Representatives and Senate in Illinois, the office of the Illinois attorney
        general, Ameren, on behalf of its affiliates, including Marketing Company,
        Genco
        and AERG, the Ameren Illinois Utilities, Exelon Corporation (Exelon), on
        behalf
        of Exelon Generation Company LLC, Commonwealth Edison Company, Exelon’s Illinois
        electric utility subsidiary, Dynegy Holdings Inc., Midwest Generation, LLC,
        and
        MidAmerican Energy Company. The comprehensive program provides approximately
        $1
        billion of funding for rate relief for certain electric customers in Illinois,
        including approximately $488 million to customers of the Ameren Illinois
        Utilities. Pursuant to the comprehensive program, the Ameren Illinois Utilities,
        Genco and AERG, have agreed to make aggregate contributions of $150 million
        over
        a four-year period, with $60 million coming from the Ameren Illinois
        Utilities (CIPS - $21 million; CILCO - $11 million; IP - $28 million), $62
        million from Genco and
 $28
        million from AERG. Below is a summary of the total customer relief and
        assistance to be provided to the customers of the Ameren Illinois Utilities,
        the
        Ameren Illinois Utilities’, Genco’s and AERG’s portion of the funding
   33
 that
        is
        expected to be disbursed, and the expected charges to earnings as a result
        of
        the program and agreement.
 
 **Total**
                **Relief/Assistance**
                **to
                  Ameren**
                **Illinois**
                **Customers**
              
              
              **Ameren**
                **Subsidiaries’**
                **Funding(a)**
              
              
              **Estimated**
                **Ameren
                  Earnings**
                **Per
                  Share**
                **Impact(b)**2007
              $
              253,000,000
              
              
              $
              86,000,000
              
              
              $
              0.262008
              
              132,000,000
              
              
              
              37,000,000
              
              
              
              0.112009
              
              97,000,000
              
              
              
              25,000,000
              
              
              
              0.072010
              
              6,000,000
              
              
              
              2,000,000
              
              
              
              0.01Total
              $
              488,000,000
              
              
              $
              150,000,000
              
              
              $
              0.45
 
 (a)
              Includes
                  a $4.5 million contribution in 2007 towards funding of a newly-created
                  IPA.
 (b)
              Includes
                  estimated cost of proposed forgiveness of outstanding customer
                  late
                  payment fees.
 
 The
        Ameren Illinois Utilities, Genco and AERG will recognize in their financial
        statements the costs of their respective rate relief contributions and program
        funding in a manner corresponding with the timing of the funding included
        in the
        above table. Ameren, CIPS, CILCO (Illinois Regulated), IP, Genco and CILCO
        (AERG) incurred charges to earnings, primarily recorded as a reduction to
        electric operating revenues, of $59 million, $8 million, $5 million,
        $11 million, $24 million and $11 million, respectively, under the terms of
        the
        settlement agreement during the quarter ended September 30, 2007. At September
        30, 2007, Ameren, CIPS, CILCO and IP (Illinois Regulated) had receivable
        balances from nonaffiliated Illinois generators for reimbursement of customer
        rate relief and program funding of $108 million, $37 million, $21 million
        and
        $50 million, respectively.
 
 Other
        electric generators and
        utilities in Illinois have agreed to contribute $851 million to the
        comprehensive rate relief and customer assistance program. Contributions
        by the
        other electric generators (the Generators) and utilities to the comprehensive
        program are subject to funding agreements. Under these agreements, at the
        end of
        each month, the Ameren Illinois Utilities will bill the Generators and utilities
        for their proportionate share of that month’s rate relief and assistance, which
        will be due in 30 days. If any escrow funds have been provided by the
        Generators, these funds will be drawn prior to seeking reimbursement from
        the
        Generators.
 
 The
        settlement agreement preserves
        existing rates and rate structures, and the Ameren Illinois Utilities retain
        the
        right to file new electric delivery service rate cases with the ICC at the
        respective utility’s discretion. See Electric Delivery Service Rate Cases below
        for information on electric delivery service rate increase requests recently
        filed by the Ameren Illinois Utilities. The settlement agreement provides
        that
        if legislation is enacted in Illinois before August 1, 2011, freezing or
        reducing retail electric rates, or imposing or authorizing a new tax, special
        assessment or fee on the generation of electricity, then the remaining
        commitments under this agreement would expire, and any funds set aside in
        support of the commitments would be refunded to the utilities and
        Generators.
 
 As
        part of the settlement agreement,
        the current reverse auction used for power procurement in Illinois was
        discontinued and replaced with a new power procurement process. In 2008,
        Illinois utilities will contract for their necessary baseload, intermediate
        and
        peaking power requirements through a request-for-proposal process, subject
        to
        ICC review and approval. Also as part of the agreement, existing supply
        contracts from the September 2006 reverse auction remain in place. In October
        2007, CIPS, CILCO and IP filed a proposal with the ICC to formalize the
        structure of the power procurement process and related products for the period
        June 1, 2008 through May 31, 2009.
 
 As
        part of the settlement agreement,
        the Ameren Illinois Utilities entered into financial contracts with Marketing
        Company (for the benefit of Genco and AERG), to lock-in energy prices for
        400 to
        1,000 megawatts annually of their around-the-clock power requirements during
        the
        period June 1, 2008 to December 31, 2012, at relevant market prices. These
        financial contracts do not include capacity, are not load-following products
        and
        do not involve the physical delivery of energy. These financial contracts
        became
        effective on August 28, 2007, when legislation in connection with the settlement
        agreement became law. Below are the contracted volumes and prices per
        megawatthour.
 
 **Period**
              **Volume**
              **Price
                  per**
                **Megawatthour**June
                  1, 2008 – December 31, 2008
              400
                  MW
              $47.45January
                  1, 2009 – May 31, 2009
              400
                  MW
              49.47June
                  1, 2009 – December 31, 2009
              800
                  MW
              49.47January
                  1, 2010 – May 31, 2010
              800
                  MW
              51.09June
                  1, 2010 – December 31, 2010
              1,000
                  MW
              51.09January
                  1, 2011 – December 31, 2011
              1,000
                  MW
              52.06January
                  1, 2012 – December 31, 2012
              1,000
                  MW
              53.08
 
 The
        financial contracts provide that
        if any one of the following events occurs during their term, the Ameren Illinois
        Utilities and Marketing Company will meet as soon as practicable, but no
        later
        than 30 days after the date such event occurs, to identify and discuss its
        effect on the terms and conditions of, and prices under the financial contracts:
        a) a state tax on electric generation; b) a state or federal tax on and/or
        regulation of greenhouse gas emissions (e.g., a carbon tax); or c) if the
        state
        of Illinois enacts a law that eliminates retail electric supplier choice
        for the
        residential and small commercial customers of the Ameren Illinois Utilities.
        The
        financial contracts also provide that if any one of these events occurs,
        the
        parties to the financial contracts will negotiate to determine in a commercially
        reasonable manner whether the affected terms, conditions and prices can be
        revised so as to preserve the economic benefits of the financial contracts
        for
        all parties and to revise the financial contracts accordingly. In the event
        the
        parties to the financial contracts are not able to agree on such revisions,
        Marketing Company may terminate the financial contracts by written notice
        no
        earlier than 60 days and no later than 90 days after such event occurs, with
        the
        termination being effective when
   34
  notice
        is
        given. Under the terms of the settlement agreement and the legislation, these
        financial contracts are deemed prudent, and the Ameren Illinois Utilities
        are
        permitted full recovery of their costs in rates.
 
 Beginning
        in June 2009 and
        thereafter, power procurement will be accomplished through competitive requests
        for proposals to supply the separate baseload, intermediate and peaking power
        needs of the utility instead of the full requirements, load-following supply
        contracts previously procured through the reverse auction. The power procurement
        process that is expected to be implemented would require the IPA to develop
        an
        annual Procurement Plan (Plan) for the Ameren Illinois Utilities and
        Commonwealth Edison. Each Plan would govern a utility’s procurement of power to
        meet the expected load requirements that are not met by pre-existing contracts
        or generation facilities. Subject to ICC approval, the Ameren Illinois Utilities
        would be allowed to lease, or invest in, generation facilities. The objective
        of
        each Plan would be to ensure adequate, reliable, affordable, efficient, and
        environmentally sustainable electric service at the lowest total cost over
        time,
        taking into account any benefits of price stability for the utilities’ eligible
        retail customers. The power procurement process provides that each Plan be
        submitted to the ICC for initial approval; if approved, the final design
        and
        implementation of a Plan would be overseen by an independent procurement
        administrator selected by the IPA and a procurement monitor selected by the
        ICC.
        The IPA has broad authority to assist in the procurement of electric power
        for
        residential and nonresidential customers beginning in June 2009. Winning
        proposals will be selected on the basis of price, compared for reasonableness
        to
        benchmarks developed by the procurement administrator and procurement monitor,
        and approved by the ICC.
 
 The
        power
        procurement process provides for the subject electric utility in Illinois
        to
        file proposed tariffs with the ICC, which will be designed to pass-through
        to
        customers the costs of procuring electric power supply with no mark-up on
        the
        price paid by the utility, plus any reasonable costs that the utility incurred
        in arranging and providing for the supply of electric power. All such
        procurement costs will be deemed to have been prudently incurred and recoverable
        through rates.
 
 The
        settlement agreement and the
        legislation provide that the Ameren Illinois Utilities have a right to maintain
        membership in a FERC-approved regional transmission organization of their
        choice
        for a period of at least 15 years.
  The
        settlement agreement and the
        legislation also include a commitment to energy conservation programs designed
        to reduce energy consumption through increased energy efficiency and demand
        response. In addition, 2% of the Illinois utilities’ electricity is to be
        procured from renewable sources beginning June 1, 2008, with that percentage
        increasing in subsequent years, subject to limits on customer rate impacts.
        The
        provision for full and timely recovery of the cost of these commitments is
        also
        included in the settlement agreement and the legislation.
 
 Pursuant
        to the settlement agreement,
        all previously pending litigation and regulatory actions by the office of
        the
        Illinois attorney general relating to the reverse auction procurement process,
        which was used to determine market-based rates effective January 1, 2007,
        and
        the electric space heating marketing practices of the Ameren Illinois Utilities
        have been withdrawn with prejudice. The litigation and regulatory actions
        included those filed by the office of the attorney general with the FERC,
        the
        ICC, the United States Court of Appeals for the District of Columbia Circuit
        and
        the Circuit Court of the First Judicial Circuit Jackson County, Illinois
        and the
        Appellate Court of Illinois, Second Judicial Circuit.
 
 Finally,
        the settlement agreement
        establishes the authority to obtain accelerated review by the ICC of a merger
        or
        combination of the three Ameren Illinois Utilities, if requested in the
        future.
 
 Appeals
        of 2006 ICC Procurement
        Order
 
 The
        Illinois attorney general, CUB,
        and ELPC, appealed to Illinois district appellate courts the ICC’s denial of
        rehearing requests with respect to its January 2006 order, which approved
        the
        power procurement auction and related tariffs. In August 2006, the Supreme
        Court
        of Illinois ordered that the appeals be consolidated in the appellate court
        for
        the Second Judicial Circuit in Illinois. The Illinois attorney general’s appeal
        at the Second Judicial Circuit appellate court was withdrawn as part of the
        agreement discussed above. CUB’s and ELPC’s appeals at the Second Judicial
        Circuit appellate court are still pending. The Ameren Illinois Utilities
        filed a
        motion to dismiss the appeals in September 2007.
 
 Power
        Procurement Auction
        Lawsuits
 
 Ameren,
        CIPS, CILCO, IP, Commonwealth
        Edison Company and its parent company, Exelon, and 15 electricity suppliers,
        including Marketing Company, which are selling power to the Illinois utilities
        pursuant to contracts entered into as a result of the September 2006 power
        procurement auction, were named as defendants in two similar lawsuits seeking
        class action status filed in the Circuit Court of Cook County, Illinois in
        March
        2007. The classes have yet to be certified. The asserted class seeks to
        represent all customers who purchased electric service from Commonwealth
        Edison
        Company or the Ameren Illinois Utilities. Both lawsuits allege, among other
        things, that the Illinois utilities and the power suppliers illegally
        manipulated prices in the September 2006 power procurement auction. The relief
        sought in both lawsuits is actual damages to be determined at trial and legal
        costs,
  35
  including
        attorneys’ fees. One of the lawsuits also seeks punitive damages and recovery of
        illegal profits and excludes the Ameren Illinois Utilities from the requests
        for
        relief. In April 2007, the defendants in these lawsuits filed notices removing
        these cases to the U.S. District Court for the Northern District of Illinois.
        The defendants have pending motions to dismiss.  These two lawsuits are not
        affected by the settlement agreement discussed above.
 
 *Redesigned
        Rates*
 
 In
        October 2007, the ICC issued an
        order authorizing redesigned electric rates for CIPS, CILCO and IP to be
        implemented December 1, 2007. These rates were designed to reduce seasonal
        fluctuations for residential customers who use large amounts of electricity
        while allowing utilities to fully recover costs. The ICC subsequently issued
        a
        rehearing order in late October 2007, granting CIPS’, CILCO’s and IP’s rehearing
        request to change the implementation date of the rate redesign for certain
        customers to January 1, 2008. The ICC granted the change in effective date
        to
        ensure the implementation of redesigned rates was revenue neutral to the
        Ameren
        Illinois Utilities in 2007 and subsequent calendar years.
 
 *Electric
        and Natural Gas Delivery Service Rate Cases*
  CIPS,
        CILCO and IP filed requests with the ICC in November 2007 to increase their
        annual revenues for electric delivery service by $180 million in the aggregate
        (CIPS - $31 million, CILCO - $10 million and IP - $139 million).  The
        Ameren Illinois Utilities pledged earlier this year to keep the overall
        residential electric bill increases to less than 10% per year for each utility
        in their next rate filings.  These filings are consistent with that
        pledge.  Accordingly, the requested rate increase for IP residential
        customers is proposed to be capped in the first year of the increase if the
        amount of the final authorized rate increase exceeds the first year capped
        rate
        level.  This rate increase limit could result in approximately $30 million
        of the requested increase not being phased in until the second year.  The
        amount of CIPS' and CILCO's requested increases did not require inclusion
        of
        similar limits as they were within the scope of the pledge.  The electric
        rate increase requests are based on an 11% return on equity, a capital structure
        composed of 51 to 53 percent equity, an aggregate rate base for the Ameren
        Illinois Utilities of $2.1 billion, and a test year ended December 31, 2006,
        with certain prosective updates.
  CIPS,
        CILCO and IP filed requests with the ICC in November 2007 to increase their
        annual revenues for natural gas delivery service by $67 million in the aggregate
        (CIPS -
 $15
        million increase, CILCO - $4 million decrease and IP - $56 million
        increase).  The natural gas rate change requests are based on an 11% return
        on equity, a capital structure composed of 51 to 53
        percent equity, an aggregate rate base for the Ameren Illinois Utilities
        of $0.9
        billion and a test year ended December 31, 2006, with certain prospective
        updates.
  In
        their
        filings, the Ameren Illinois Utilities have also requested ICC approval to
        implement mechanisms that would permit the reconciliation and adjustment
        of
        actual bad debt expenses to those established in rates by the ICC for electric
        and gas customers and the more timely recovery of investments in existing
        electric distribution plant. Since general rate adjustment proceedings require
        up to 11 months in Illinois, these mechanisms would allow current revenues
        to
        better match current costs. In addition, the Ameren Illlinois Utilities are
        seeking approval of a revenue decoupling rate adjustment mechanism as a part
        of
        their natural gas delivery service rate change requests.  This mechanism
        would separate each utility's fixed cost recovery from the volume of gas
        it
        sells by providing a periodic true-up of revenues.  The periodic true-up
        would result in adjustments to a utility's ICC-approved tariffs based on
        increases or decreases in demand for natural gas.
  The
        ICC
        proceedings relating to the proposed electric and natural gas delivery service
        rate changes will take place over a period of up to 11 months, and decisions
        by
        the ICC in such proceedings are required by October 2008.  The Ameren
        Illinois Utilities cannot predict the level of any delivery service rate
        change
        the ICC may approve, when any rate change may go into effect, whether any
        rate
        adjustment mechanism discussed above will be approved or whether any rate
        increase that may eventually be approved will be sufficient for the Ameren
        Illinois Utilities to recover their costs and earn a reasonable return on
        their
        investments when the increase goes into effect.
 **Federal**
 
 *FERC
          Order – MISO Charges*
 
 In
          May
          2007, Ameren Services, on behalf of UE, CIPS, CILCO and IP, filed with
          the
          United States Court of Appeals for the District of Columbia Circuit, an
          appeal
          of the FERC’s March 2007 order involving the reallocation of certain MISO
          operational costs among MISO participants, retroactive to 2005. In August
          2007,
          the court granted the FERC’s motion to hold the appeal in abeyance pending
          completion of the underlying proceedings at the FERC. Other MISO participants
          also filed appeals. On November 5, 2007, the FERC issued orders relative
          to
          these allocation matters.  We are evaluating the impact of these orders and
          cannot determine their ultimate impact at this time.
 
 *UE
          Power Purchase Agreement with Entergy Arkansas, Inc.*
 
 In
          July 2007, as a consequence of a
          series of orders issued by the FERC addressing a complaint filed by the
          Louisiana Public Service Commission against Entergy
 
  36
 Arkansas,
        Inc. (Entergy) and certain of its affiliates, which alleged unjust and
        unreasonable cost allocations, Entergy commenced billing UE for additional
        charges under a 165-megawatt power purchase agreement. These additional
        charges to UE are expected to approximate $13 million for 2007 and additional
        amounts during the term of the power purchase agreement, which terminates
        effective August 25, 2009. Although UE was not a party to the FERC proceedings
        that gave rise to these additional charges, UE intervened in August 2007
        in a
        related FERC proceeding for the purpose of challenging the additional charges.
        UE is unable to predict whether the FERC will grant any relief.
  **NOTE
        3 – CREDIT FACILITIES AND LIQUIDITY**
 
 The
        liquidity needs of the Ameren Companies are typically supported through the
        use
        of available cash, drawings under committed bank credit facilities, and
        commercial paper issuances.
 
 The
        following table summarizes the borrowing activity and relevant interest rates
        as
        of September 30, 2007, under the $1.15 billion credit facility and the 2007
        and 2006
 $500
        million credit facilities:
 
 **$1.15
                  Billion Credit Facility(a)**
              **Ameren
                  (Parent)**
              
              
              **UE**
              
              
              **Genco**
              
              
              **Ameren
                  Total****September
                  30, 2007:**Average
                  daily borrowings outstanding during 2007
              $
              164
              
              
              $
              350
              
              
              $
              6
              
              
              $
              520Outstanding
                  short-term debt at period end
              
              250
              
              
              
              92
              
              
              
              75
              
              
              
              417Weighted-average
                  interest rate during 2007
              
              5.90
              %
              
              
              5.70
              %
              
              
              5.26
              %
              
              
              5.76
              %Peak
                  short-term borrowings during 2007
              $
              350
              
              
              $
              506
              
              
              $
              75
              
              
              $
              856Peak
                  interest rate during 2007
              
              8.25
              %
              
              
              8.25
              %
              
              
              5.75
              %
              
              
              8.25
              %
 
 (a)
              Includes
                  issuances under commercial paper programs at Ameren and UE supported
                  by
                  this credit facility.
 
 **2007
                  $500 Million Credit Facility**
              
              **CIPS**
              
              
              **CILCORP
                  (Parent)**
              
              
              **CILCO**
                **(Parent)**
              
              
              **IP**
              
              
              **AERG**
              
              
              **Total****September
                  30, 2007:**Average
                  daily borrowings outstanding during 2007
              
              $
              -
              
              
              $
              98
              
              
              $
              23
              
              
              $
              120
              
              
              $
              73
              
              
              $
              314Outstanding
                  short-term debt at period end
              
              
              -
              
              
              
              125
              
              
              
              75
              
              
              
              200
              
              
              
              100
              
              
              
              500Weighted-average
                  interest rate during 2007
              
              
              -
              
              
              
              6.87
              %
              
              
              6.31
              %
              
              
              6.53
              %
              
              
              6.84
              %
              
              
              6.69
              %Peak
                  short-term borrowings during 2007
              
              $
              -
              
              
              $
              125
              
              
              $
              75
              
              
              $
              200
              
              
              $
              100
              
              
              $
              500Peak
                  interest rate during 2007
              
              
              -
              
              
              
              8.63
              %
              
              
              6.47
              %
              
              
              6.64
              %
              
              
              7.02
              %
              
              
              8.63
              %**2006
                  $500 Million Credit Facility****September
                  30, 2007:**Average
                  daily borrowings outstanding during 2007
              
              $
              92
              
              
              $
              48
              
              
              $
              62
              
              
              $
              79
              
              
              $
              95
              
              
              $
              376Outstanding
                  short-term debt at period end
              
              
              135
              
              
              
              50
              
              
              
              75
              
              
              
              -
              
              
              
              115
              
              
              
              375Weighted-average
                  interest rate during 2007
              
              
              6.52
              %
              
              
              6.82
              %
              
              
              6.28
              %
              
              
              6.59
              %
              
              
              6.89
              %
              
              
              6.62
              %Peak
                  short-term borrowings during 2007
              
              $
              135
              
              
              $
              50
              
              
              $
              75
              
              
              $
              125
              
              
              $
              115
              
              
              $
              500Peak
                  interest rate during 2007
              
              
              8.25
              %
              
              
              7.04
              %
              
              
              6.47
              %
              
              
              6.64
              %
              
              
              8.25
              %
              
              
              8.25
              %
  At
          September 30, 2007, Ameren and certain of its subsidiaries had $2.15 billion
          of
          committed credit facilities, consisting of the three facilities shown above,
          in
          the amounts of
 $1.15
          billion, $500 million and $500 million maturing in July 2010, January 2010
          and
          January 2010, respectively.
 
 Effective
          July 12, 2007, the termination date for UE’s and Genco’s direct borrowing
          sublimits under the $1.15 billion credit facility was extended to July
          10, 2008,
          pursuant to the annual 364-day renewal provisions of the facility. The $1.15
          billion credit facility will terminate on July 14, 2010, with respect to
          Ameren.
 
 The
          $1.15 billion credit facility was
          used to support the commercial paper programs that included $92 million
          of
          outstanding commercial paper of UE as of September 30, 2007.
 
 The
          2007
          $500 million credit facility was entered into in February 2007, by CIPS,
          CILCORP, CILCO, IP and AERG.
 
 The
          obligations of IP under the 2007
          $500 million credit facility were secured by the issuance of mortgage bonds
          in
          the amount of $200 million. CIPS and CILCO cannot utilize any amount of
          their
          borrowing authority under the 2007 $500 million credit facility until they
          reduce their borrowing authority by an equal amount under the 2006 $500
          million
          credit facility. If CIPS or CILCO elect to transfer borrowing authority
          from the
          2006 $500 million credit facility to the 2007 $500 million credit facility,
          that
          company must retire an appropriate amount of first mortgage bonds issued
          with
          respect to the 2006 $500 million credit facility and issue new bonds in
          an equal
          amount to secure its obligations under the 2007 $500
          million credit facility. In July 2007, CILCO permanently reduced its $150
          million of borrowing authority under the 2006 $500 million credit facility
          by
          $75 million and shifted that amount of capacity to the 2007 $500
          million credit
 
 37
 
 facility.
        CILCO is now considered a borrower under both credit facilities and is subject
        to the covenants of both.
 
 Access
        to the $1.15 billion credit
        facility, the 2007 $500 million credit facility and the 2006 $500 million
        credit facility for the Ameren Companies and AERG is subject to reduction
        as
        borrowings are made by affiliates. Ameren and UE are currently limited in
        their
        access to the commercial paper market as a result of downgrades in their
        short-term credit ratings.
 
 **Money
        Pools**
 
 Ameren
        has money pool agreements with
        and among its subsidiaries to coordinate and provide for certain short-term
        cash
        and working capital requirements. Separate money pools are maintained for
        utility and non-state-regulated entities. Ameren Services is responsible
        for the
        operation and administration of the money pool agreements.
  *Utility*
 
 CIPS,
        CILCO and IP borrow from each other through the utility money pool agreement
        subject to applicable regulatory short-term borrowing authorizations. AERG
        may
        make loans to, but may not borrow from, the utility money pool. Although
        UE and
        Ameren Services are parties to the utility money pool agreement, they are
        not
        currently borrowing or lending under the agreement. The average interest
        rate
        for borrowing under the utility money pool for the three and nine months
        ended
        September 30, 2007, was 5.4% and 5.7%, respectively (2006 – 5.4% and 5.0%,
        respectively).
 
 *Non-state-regulated
        Subsidiaries*
 
 Ameren
        Services, Resources Company,
        Genco, AERG, Marketing Company, AFS, Ameren Energy and other non-state-regulated
        Ameren subsidiaries have the ability, subject to Ameren parent company
        authorization and applicable regulatory short-term borrowing authorizations,
        to
        access funding from Ameren’s $1.15 billion credit facility through a
        non-state-regulated subsidiary money pool agreement. At September 30, 2007,
        $728
        million was available through the non-state-regulated subsidiary money pool,
        excluding additional funds available through excess cash balances. The average
        interest rate for borrowing under the non-state-regulated subsidiary money
        pool
        for the three and nine months ended September 30, 2007, was 5.6% and 5.1%,
        respectively (2006 – 4.8% and 4.6%, respectively).
 
 See
        Note 7 – Related Party Transactions
        for the amount of interest income (expense) from the money pool arrangements
        recorded by the Ameren Companies for the three and nine months ended September
        30, 2007 and 2006.
 
 **Indebtedness
        Provisions and Other Covenants**
 
 The
        information below presents a
        summary of the Ameren Companies’ and AERG’s compliance with indebtedness
        provisions and other covenants. See Note 5 – Credit Facilities and Liquidity in
        the Form 10-K, for a detailed description of those provisions.
 
 The
        Ameren Companies’ bank credit facilities contain provisions that, among other
        things, place restrictions on the ability to incur liens, sell assets, and
        merge
        with other entities. The $1.15 billion credit facility contains provisions
        that
        limit total indebtedness of
        each
        of Ameren, UE and Genco to 65% of total consolidated capitalization pursuant
        to
        a calculation defined in the facility. Exceeding these debt levels would
        result
        in a default under the $1.15 billion credit facility. 
 The
          $1.15
          billion credit facility also contains default provisions, including cross
          defaults, with respect to a borrower under the facility that can result
          from the
          occurrence of an event of default under any other facility covering indebtedness
          of that borrower or certain of its subsidiaries in excess of $50 million in
          the aggregate. The obligations of Ameren, UE and Genco under the facility
          are
          several and not joint, and except under limited circumstances, the obligations
          of UE and Genco are not guaranteed by Ameren or any other subsidiary. CIPS,
          CILCORP, CILCO, AERG and IP are not considered subsidiaries for purposes
          of the
          cross-default or other provisions.
 
 Under
          the
          $1.15 billion credit facility, restrictions apply limiting investments
          in and
          other transfers to CIPS, CILCORP, CILCO, IP, AERG and their subsidiaries
          by
          Ameren and certain subsidiaries. Additionally, CIPS, CILCORP, CILCO, IP,
          AERG
          and their subsidiaries are excluded for purposes of determining compliance
          with
          the 65% total consolidated indebtedness to total consolidated capitalization
          financial covenant in the facility.
 
 Both
          the
          2007 $500 million credit facility and the 2006 $500 million credit facility
          entered into by CIPS, CILCORP, CILCO, IP and AERG, discussed above, limit
          the
          indebtedness of each borrower to 65% of consolidated total capitalization
          pursuant to a calculation set forth in the facilities. Events of default
          under
          these facilities apply separately to each borrower (and, except in the
          case of
          CILCORP, to their subsidiaries), and an event of default under these facilities
          does not constitute an event of default under the $1.15 billion credit
          facility
          and vice versa. In addition, if CIPS’, CILCO’s or IP’s senior secured long-term
          debt securities or first mortgage bonds, or CILCORP’s senior unsecured long-term
          debt securities, have received a below-investment-grade credit rating by
          either
          Moody’s or S&P, then such borrower will be limited to capital stock dividend
          payments of $10 million per year each, while such below-investment-grade
          credit
          rating is in effect. On July 26, 2006, Moody’s downgraded CILCORP’s
   38
  senior
        unsecured long-term debt credit rating to below investment-grade, causing
        it to
        be subject to this dividend payment limitation. A similar restriction does
        not
        apply to AERG, which is currently not rated by Moody’s or S&P, if its
        debt-to-operating cash flow ratio, as set forth in these facilities, is less
        than or equal to a 3.0 to 1.0 ratio. As of September 30, 2007, AERG was in
        compliance with this test in the 2007 $500 million credit facility and the
        2006 $500 million credit facility. CIPS, CILCO and IP are not currently
        limited in their dividend payments by this provision of the 2007 $500 million
        or
        2006 $500 million credit facilities. Ameren’s access to dividends from CILCO and
        AERG is limited by dividend restrictions at CILCORP.
 
 The
        2007 $500 million credit facility
        and the 2006 $500 million credit facility also limit the amount of other
        secured indebtedness issuable by each borrower thereunder. For CIPS, CILCO
        and
        IP, other secured debt is limited to that permitted under their respective
        mortgage indentures. For CILCORP, other secured debt is limited to $425 million
        (including the principal amount of CILCORP’s outstanding senior notes and senior
        bonds) under the 2007 $500 million credit facility and $550 million (including
        the principal amount of CILCORP’s outstanding senior notes and senior bonds as
        well as amounts drawn under the 2007 $500 million credit facility) under
        the
        2006 $500 million credit facility, secured in each case by the pledge of
        CILCO
        common stock. For AERG, other secured debt is limited to $100 million under
        the
        2007 $500 million credit facility and $200 million under the 2006 $500 million
        credit facility secured on an equal basis with its obligations under the
        facilities. The limitations on other secured debt at CILCORP and AERG in
        the
        2007 $500 million credit facility are subject to adjustment based on the
        borrowing sublimits of these entities under this facility or under the 2006
        $500
        million credit facility. In addition, the 2007 $500 million credit facility
        and the 2006 $500 million credit facility prohibit CILCO from issuing any
        preferred stock if, after giving effect to such issuance, the aggregate
        liquidation value of all CILCO preferred stock issued after February 9, 2007
        and
        July 14, 2006, respectively, would exceed $50 million.
 
 The
        2007 $500 million credit facility
        provides that CIPS, CILCO and IP will agree to reserve future bonding capacity
        under their respective mortgage indentures (that is, agree to forego the
        issuance of additional mortgage bonds otherwise permitted under the terms
        of
        each mortgage indenture) in the following amounts (subject to, in the case
        of
        CIPS and CILCO, their then current borrowing sublimits under the facility
        and
        similar provisions in the 2006 facility): CIPS, prior to December 31, 2007
        - $50
        million, on and after December 31, 2007, but prior to December 31, 2008 -
        $100
        million, on and after December 31, 2008, but prior to December 31, 2009 -
        $150
        million, on and after December 31, 2009 - $200 million; CILCO, prior to December
        31, 2007 - $25 million, on and after December 31, 2007, but prior to December
        31, 2008 - $50 million, on and after December 31, 2008, but prior to
        December 31, 2009 - $75 million, on and after December 31, 2009 - $150 million;
        and IP, prior to December 31, 2008 - $100 million, on and after December
        31,
        2008, but prior to December 31, 2009 - $200 million, on and after December
        31,
        2009 - $350 million.
 
 The
        2006 $500 million credit facility
        provides that CIPS, CILCO and IP will agree to reserve future bonding capacity
        under their respective mortgage indentures in the following amounts: CIPS,
        prior
        to December 31, 2007 - $50 million, on and after December 31, 2007, but prior
        to
        December 31, 2008 - $100 million, on and after December 31, 2008 - $150 million;
        CILCO - $25 million; and IP - $100 million.
 
 As
        of
        September 30, 2007, the ratio of total indebtedness to total consolidated
        capitalization, calculated in accordance with the provisions of the $1.15
        billion credit facility for Ameren, UE and Genco was 50%, 50% and 48%,
        respectively. The ratios for CIPS, CILCORP, CILCO, IP and AERG, calculated
        in
        accordance with the provisions of the 2007$500
        million credit facility and 2006 $500 million credit facility, were 53%,
        59%,
        46%, 46% and 39%, respectively. 
 None
          of
          Ameren’s credit facilities or financing arrangements contain credit rating
          triggers that would cause an event of default or acceleration of repayment
          of
          outstanding balances. At September 30, 2007, the Ameren Companies were
          in
          compliance with their credit facility provisions and
          covenants*.*
 
 **NOTE
          4 – LONG-TERM DEBT AND EQUITY FINANCINGS**
 
 **Ameren**
 
 Under
          DRPlus, pursuant to an effective
          SEC Form S-3 registration statement, and under our 401(k) plans, pursuant
          to
          effective SEC Form S-8 registration statements, Ameren issued a total of
          0.5
          million new shares of common stock valued at $23 million and 1.4 million
          new
          shares valued at  $71 million in the three and nine months ended
          September 30, 2007, respectively.
 
 In
          February 2007, $100 million of
          Ameren’s 2002 5.70% notes matured and were retired.
 
 In
          May 2007, $250 million of Ameren’s
          senior notes related to its 2002 equity security units matured and were
          retired.
 
 **UE**
 
 In
          June
          2007, UE issued, pursuant to an effective SEC Form S-3 shelf registration
          statement, $425 million of 6.40% senior secured notes due June 15, 2017,
          with
          interest payable semi-annually on June 15 and December 15 of each
          year,
   39
  beginning
        in December 2007. UE received net proceeds of $422 million, which were used
        to
        repay short-term debt.
 
 In
        connection with UE’s June 2007 issuance of $425 million of senior secured notes,
        UE agreed, for so long as those senior secured notes are outstanding, that
        it
        would not, prior to June 15, 2012, optionally redeem, purchase or otherwise
        retire in full its outstanding first mortgage bonds not subject to release
        provisions thus causing a first mortgage bond release date to occur. Such
        release date is the date at which the security provided by the pledge under
        UE’s
        first mortgage indenture would no longer be available to holders of any
        outstanding series of its senior secured notes and such indebtedness would
        become senior unsecured indebtedness ranking equally with any other outstanding
        senior unsecured indebtedness of UE. UE further agreed that the interest
        rate for these $425 million of senior secured notes will be subject to an
        increase of up to a maximum of 2.00% if such release date occurs between
        June
        15, 2012 and June 15, 2017 (the maturity date of the $425 million senior
        secured
        notes) and Moody's or S&P downgrades the rating assigned to these senior
        secured notes below investment grade as a result of the occurrence of the
        release within 30 days of such release date (subject to extension if and
        for so
        long as the rating for such senior secured notes is under consideration for
        possible downgrade). Any interest rate increase on these senior secured
        notes will take effect on the first day of the interest period during which
        such
        rating downgrade requires an increase in the interest rate.
 
 **CIPS**
 
 See
        Note 5 – Credit Facilities and
        Liquidity in the Form 10-K regarding CIPS’ agreement under the 2007 $500 million
        credit facility and the 2006 $500 million credit facility to reserve future
        bonding capacity under its mortgage indenture.
 
 **CILCORP**
 
 In
        conjunction with Ameren’s
        acquisition of CILCORP, CILCORP’s long-term debt was recorded at fair value.
        Amortization related to these fair value adjustments was $1 million (2006
        -$1 million) and $4 million (2006 - $4 million) for the three and nine months
        ended September 30, 2007, respectively, and was included as a reduction to
        interest expense in the Consolidated Statements of Income of Ameren and CILCORP.
        See Note 5 – Credit Facilities and Liquidity in the Form 10-K regarding
        CILCORP’s pledge of the common stock of CILCO as security for CILCORP’s
        obligations under the 2007 $500 million credit facility and the 2006 $500
        million credit facility.
 
 **CILCO**
 
 In
        January 2007, $50 million of
        CILCO’s 7.50% first mortgage bonds matured and were retired.
 
 See
        Note 5 – Credit Facilities and
        Liquidity in the Form 10-K regarding CILCO’s agreement under the 2007 $500
        million credit facility and the 2006 $500 million credit facility to reserve
        future bonding capacity under its mortgage indenture.
  In
        July 2007, CILCO redeemed 11,000
        shares of its 5.85% Class A preferred stock at a redemption price of $100
        per
        share plus accrued and unpaid dividends. The redemption satisfied CILCO’s
        mandatory sinking fund redemption requirement for this series of preferred
        stock
        for 2007.
 
 **IP**
 
 In
        conjunction with Ameren’s
        acquisition of IP, IP’s long-term debt was recorded at fair value. Amortization
        related to these fair value adjustments was $3 million
 (2006
        -
        $3 million) and $9 million (2006 - $10 million) for the three and nine months
        ended September 30, 2007, respectively, and was included
        as a reduction to interest expense in the Consolidated Statements of Income
        of
        Ameren and IP. 
 See
          Note 5 – Credit Facilities and
          Liquidity in the Form 10-K regarding IP’s agreement under the 2007 $500 million
          credit facility and the 2006 $500 million credit facility to reserve future
          bonding capacity under its mortgage indenture.
  **Indenture
          Provisions and Other Covenants**
 
 The
          information below presents a
          summary of the Ameren Companies’ compliance with indenture provisions and other
          covenants. See Note 6 – Long-term Debt and Equity Financings in the Form 10-K,
          for a detailed description of those provisions.
   40
  
 UE’s,
        CIPS’, CILCO’s and IP’s
        indenture provisions and articles of incorporation include covenants and
        provisions related to the issuances of first mortgage bonds and preferred
        stock.
        The following table includes the required and actual earnings coverage ratios
        for interest charges and preferred dividends and bonds and preferred stock
        issuable based on the 12 months ended September 30, 2007, at an assumed interest
        and dividend rate of 7%.
  **Required
                  Interest Coverage Ratio(a)(b)**
              **Actual
                  Interest**
                **Coverage
                  Ratio**
              **Bonds**
                **Issuable(c)(d)**
              **Required
                  Dividend Coverage Ratio(e)**
              **Actual**
                **Dividend**
                **Coverage
                  Ratio**
              **Preferred**
                **Stock**
                **Issuable**UE
              ≥2.0
              4.2
              $     2,232
              ≥2.5
              49.2
              1,584CIPS
              ≥2.0
              1.8
              -
              ≥1.5
              1.3
              -CILCO
              ≥2.0(f)
              11.0
              84
              ≥2.5
              32.1
              319(g)IP
              ≥2.0
              1.8
              -
              ≥1.5
              1.1
              -
 (a)
              Coverage
                required on the annual interest charges on mortgage bonds outstanding
                and
                to be issued. (b)
              Coverage
                is not required in certain cases when additional mortgage bonds are
                issued
                on the basis of retired bonds. (c)
              Amount
                  of bonds issuable based on either meeting required coverage ratios
                  or
                  unfunded property additions, whichever is more restrictive. In
                  addition to
                  these tests, UE, CIPS, CILCO and IP have the ability to issue bonds
                  based
                  upon retired bond capacity of $16 million, $3 million, $175 million,
                  and $914 million, respectively, for which no earnings coverage test
                  is required.
 (d)
              Amounts
                  are net of future bonding capacity restrictions agreed to by CIPS,
                  CILCO
                  and IP under the 2007 $500 million credit facility and the 2006 $500
                  million credit facility entered into by these companies. See Note
                  3 –
                  Credit Facilities and Liquidity for further
                  discussion.
 (e)
              Coverage
                  required on the annual interest charges on all long-term debt (CIPS-only)
                  and the annual dividend on preferred stock outstanding and to be
                  issued,
                  as required in the respective company’s articles of incorporation. For
                  CILCO, this ratio must be met for a period of 12 consecutive calendar
                  months within the 15 months immediately preceding the
                  issuance.
 (f)
              In
                  lieu of meeting the interest coverage ratio requirement, CILCO
                  may attempt
                  to meet an earnings requirement of at least 12% of the principal
                  amount of
                  all mortgage bonds outstanding and to be issued. For the three
                  and nine
                  months ended September 30, 2007, CILCO had earnings equivalent
                  to at least
                  38% of the principal amount of all mortgage bonds
                  outstanding.
 (g)
              See
                  Note 3 – Credit Facilities and Liquidity for a discussion regarding a
                  restriction on the issuance of preferred stock by CILCO under the
                  2007 $500 million credit facility and the 2006 $500 million credit
                  facility.
 
 UE’s
        mortgage indenture contains certain provisions that restrict the amount of
        common dividends that can be paid by UE. Under this mortgage indenture, $31
        million of retained earnings was restricted against payment of common dividends,
        except those dividends payable in common stock, which left $1.8 billion of
        free
        and unrestricted retained earnings at September 30, 2007.
 
 Genco’s
        and CILCORP’s indentures
        include provisions that require the companies to maintain certain debt service
        coverage and debt-to-capital ratios in order for the companies to pay dividends,
        to make certain principal or interest payments, to make certain loans to
        affiliates, or to incur additional indebtedness. The following table summarizes
        these ratios for the 12 months ended September 30, 2007:
  **Required**
                    **Interest**
                    **Coverage
                      Ratio**
                  **Actual**
                    **Interest**
                    **Coverage
                      Ratio**
                  **Required**
                    **Debt–to-**
                    **Capital**
                    **Ratio**
                  **Actual**
                    **Debt–to-**
                    **Capital**
                    **Ratio**Genco(a)
                  ≥1.75(b)
                  6.3
                  ≤60%
                  44%CILCORP(c)
                  ≥2.2
                  3.0
                  ≤67%
                  27%
 
 (a)
                  Interest
                      coverage ratio relates to covenants regarding certain dividend,
                      principal
                      and interest payments on certain subordinated intercompany
                      borrowings. The
                      debt-to-capital ratio relates to a debt incurrence covenant,
                      which
                      requires an interest coverage ratio of 2.5 for the most recently
                      ended
                      four fiscal quarters.
 (b)
                  Ratio
                      excludes amounts payable under Genco’s intercompany note to CIPS and must
                      be met for both the prior four fiscal quarters and for the
                      four succeeding
                      six-month periods.
 (c)
                  CILCORP
                      must maintain the required interest coverage ratio and debt-to-capital
                      ratio in order to make any payment of dividends or intercompany
                      loans to
                      affiliates other than to its direct or indirect
                      subsidiaries.
  Genco’s
              ratio restrictions under its indenture may be disregarded if both Moody’s and
              S&P reaffirm the ratings of Genco in place at the time of the debt
              incurrence after considering the additional indebtedness. In the event
              CILCORP
              is not in compliance with these restrictions, CILCORP may make payments
              of
              dividends or intercompany loans if its senior long-term debt rating
              is at least
              BB+ from S&P, Baa2 from Moody’s, and BBB from Fitch. At September 30, 2007,
              CILCORP’s senior long-term debt ratings from S&P, Moody’s and Fitch were B+,
              Ba2, and BB+, respectively. The common stock of CILCO is pledged as
              security to
              the holders of CILCORP’s senior notes and bonds and credit facility
              obligations.
 
 In
              order
              for the Ameren Companies to issue securities in the future, they will
              have to
              comply with any applicable tests in effect at the time of any such
              issuances.
 
 **Off-Balance-Sheet
              Arrangements**
 
 At
              September 30, 2007, none of the Ameren Companies had any off-balance-sheet
              financing arrangements, other than operating leases entered into in
              the ordinary
              course of business. None of the Ameren Companies expect to engage in
              any
              significant off-balance-sheet financing arrangements in the near
              future.
 
 41
 
 
 **NOTE
            5 – OTHER INCOME AND EXPENSES**
 
 The
            following table presents Other Income and Expenses for each of the Ameren
            Companies for the three and nine months ended September 30, 2007 and
            2006:
 
 **Three
                      Months**
                  
                  
                  **Nine
                      Months****2007**
                  
                  
                  **2006**
                  
                  
                  **2007**
                  
                  
                  **2006****Ameren:(a)**Miscellaneous
                      income:Interest
                      and dividend
                      income
                  
                  **$**
                  **16**
                  
                  
                  $
                  9
                  
                  
                  **$**
                  **41**
                  
                  
                  $
                  21Allowance
                      for equity funds used
                      during construction
                  
                  ****
                  **2**
                  
                  
                  
                  1
                  
                  
                  ****
                  **2**
                  
                  
                  
                  2Other
                  
                  ****
                  **2**
                  
                  
                  
                  2
                  
                  
                  ****
                  **11**
                  
                  
                  
                  6Total
                      miscellaneous
                      income
                  
                  **$**
                  **20**
                  
                  
                  $
                  12
                  
                  
                  **$**
                  **54**
                  
                  
                  $
                  29Miscellaneous
                      expense:Other
                  
                  **$**
                  **(6**
                  **)**
                  
                  $
                  (3
                  )
                  
                  **$**
                  **(10**
                  **)**
                  
                  $
                  (4
                  )Total
                      miscellaneous
                      expense
                  
                  **$**
                  **(6**
                  **)**
                  
                  $
                  (3
                  )
                  
                  **$**
                  **(10**
                  **)**
                  
                  $
                  (4
                  )**UE:**Miscellaneous
                      income:Interest
                      and dividend
                      income
                  
                  **$**
                  **8**
                  
                  
                  $
                  7
                  
                  
                  **$**
                  **24**
                  
                  
                  $
                  18Allowance
                      for equity funds used
                      during construction
                  
                  ****
                  **1**
                  
                  
                  
                  1
                  
                  
                  ****
                  **1**
                  
                  
                  
                  1Other
                  
                  ****
                  **-**
                  
                  
                  
                  1
                  
                  
                  ****
                  **3**
                  
                  
                  
                  3Total
                      miscellaneous
                      income
                  
                  **$**
                  **9**
                  
                  
                  $
                  9
                  
                  
                  **$**
                  **28**
                  
                  
                  $
                  22Miscellaneous
                      expense:Other
                  
                  **$**
                  **(5**
                  **)**
                  
                  $
                  (3
                  )
                  
                  **$**
                  **(9**
                  **)**
                  
                  $
                  (7
                  )Total
                      miscellaneous
                      expense
                  
                  **$**
                  **(5**
                  **)**
                  
                  $
                  (3
                  )
                  
                  **$**
                  **(9**
                  **)**
                  
                  $
                  (7
                  )**CIPS:**Miscellaneous
                      income:Interest
                      and dividend
                      income
                  
                  **$**
                  **4**
                  
                  
                  $
                  4
                  
                  
                  **$**
                  **12**
                  
                  
                  $
                  12Other
                  
                  ****
                  **1**
                  
                  
                  
                  -
                  
                  
                  ****
                  **1**
                  
                  
                  
                  1Total
                      miscellaneous
                      income
                  
                  **$**
                  **5**
                  
                  
                  $
                  4
                  
                  
                  **$**
                  **13**
                  
                  
                  $
                  13Miscellaneous
                      expense:Other
                  
                  **$**
                  **(1**
                  **)**
                  
                  $
                  -
                  
                  
                  **$**
                  **(2**
                  **)**
                  
                  $
                  (1
                  )Total
                      miscellaneous
                      expense
                  
                  **$**
                  **(1**
                  **)**
                  
                  $
                  -
                  
                  
                  **$**
                  **(2**
                  **)**
                  
                  $
                  (1
                  )**Genco:**Miscellaneous
                      income:Other
                  
                  **$**
                  **-**
                  
                  
                  $
                  -
                  
                  
                  **$**
                  **1**
                  
                  
                  $
                  -Total
                      miscellaneous
                      income
                  
                  **$**
                  **-**
                  
                  
                  $
                  -
                  
                  
                  **$**
                  **1**
                  
                  
                  $
                  -**CILCORP:**Miscellaneous
                      income:Interest
                      and dividend
                      income
                  
                  **$**
                  **1**
                  
                  
                  $
                  -
                  
                  
                  **$**
                  **3**
                  
                  
                  $
                  1Other
                  
                  ****
                  **1**
                  
                  
                  
                  -
                  
                  
                  ****
                  **1**
                  
                  
                  
                  -Total
                      miscellaneous
                      income
                  
                  **$**
                  **2**
                  
                  
                  $
                  -
                  
                  
                  **$**
                  **4**
                  
                  
                  $
                  1Miscellaneous
                      expense:Other
                  
                  **$**
                  **(2**
                  **)**
                  
                  $
                  (2
                  )
                  
                  **$**
                  **(5**
                  **)**
                  
                  $
                  (4
                  )Total
                      miscellaneous
                      expense
                  
                  **$**
                  **(2**
                  **)**
                  
                  $
                  (2
                  )
                  
                  **$**
                  **(5**
                  **)**
                  
                  $
                  (4
                  )
 **CILCO:**Miscellaneous
                      income:Interest
                      and dividend
                      income
                  
                  **$**
                  **1**
                  
                  
                  $
                  -
                  
                  
                  **$**
                  **3**
                  
                  
                  $
                  -Other
                  
                  ****
                  **1**
                  
                  
                  
                  -
                  
                  
                  ****
                  **1**
                  
                  
                  
                  -Total
                      miscellaneous
                      income
                  
                  **$**
                  **2**
                  
                  
                  $
                  -
                  
                  
                  **$**
                  **4**
                  
                  
                  $
                  -Miscellaneous
                      expense:Other
                  
                  **$**
                  **(2**
                  **)**
                  
                  $
                  (2
                  )
                  
                  **$**
                  **(5**
                  **)**
                  
                  $
                  (4
                  )Total
                      miscellaneous
                      expense
                  
                  **$**
                  **(2**
                  **)**
                  
                  $
                  (2
                  )
                  
                  **$**
                  **(5**
                  **)**
                  
                  $
                  (4
                  )**IP:**Miscellaneous
                      income:Interest
                      and dividend
                      income
                  
                  **$**
                  **2**
                  
                  
                  $
                  1
                  
                  
                  **$**
                  **5**
                  
                  
                  $
                  2Other
                  
                  ****
                  **2**
                  
                  
                  
                  1
                  
                  
                  ****
                  **4**
                  
                  
                  
                  2Total
                      miscellaneous
                      income
                  
                  **$**
                  **4**
                  
                  
                  $
                  2
                  
                  
                  **$**
                  **9**
                  
                  
                  $
                  4Miscellaneous
                      expense:Other
                  
                  **$**
                  **(2**
                  **)**
                  
                  $
                  (1
                  )
                  
                  **$**
                  **(3**
                  **)**
                  
                  $
                  (3
                  )Total
                      miscellaneous
                      expense
                  
                  **$**
                  **(2**
                  **)**
                  
                  $
                  (1
                  )
                  
                  **$**
                  **(3**
                  **)**
                  
                  $
                  (3
                  )
 
 (a)
                  Includes
                      amounts for Ameren registrant and nonregistrant subsidiaries
                      and
                      intercompany eliminations.
  
 42
   **NOTE
            6 – DERIVATIVE FINANCIAL INSTRUMENTS**
 
 The
            following table presents the
            pretax net gain (loss) for the three and nine months ended September
            30, 2007
            and 2006, of power hedges included in Operating Revenues – Electric. This pretax
            net gain (loss) represents the impact of discontinued cash flow hedges,
            the
            ineffective portion of cash flow hedges, and the reversal of amounts
            previously
            recorded in OCI due to transactions being delivered or settled:
 
 **Three
                      Months**
                  
                  
                  **Nine
                      Months****Gains
                      (Losses)**
                  
                  **2007**
                  
                  
                  **2006**
                  
                  
                  **2007**
                  
                  
                  **2006**Ameren
                  
                  **$**
                  **22**
                  
                  
                  $
                  2
                  
                  
                  **$**
                  **35**
                  
                  
                  $
                  -UE
                  
                  ****
                  **2**
                  
                  
                  
                  2
                  
                  
                  ****
                  **-**
                  
                  
                  
                  5Genco
                  
                  ****
                  **-**
                  
                  
                  
                  1
                  
                  
                  ****
                  **-**
                  
                  
                  
                  2IP
                  
                  ****
                  **-**
                  
                  
                  
                  (1
                  )
                  
                  ****
                  **-**
                  
                  
                  
                  (7
                  )
 
 The
            following table presents the
            carrying value of all derivative instruments and the amount of pretax
            net gains
            (losses) on derivative instruments in Accumulated OCI for cash flow hedges
            as of
            September 30, 2007:
 
 **Ameren**(a)
                  
                  
                  **UE**
                  
                  
                  **CIPS**
                  
                  
                  **Genco**
                  
                  
                  **CILCORP/**
                    **CILCO**
                  
                  
                  **IP**Derivative
                      instruments carrying value:Other
                      current
                      assets
                  
                  $
                  52
                  
                  
                  $
                  11
                  
                  
                  $
                  1
                  
                  
                  $
                  -
                  
                  
                  $
                  3
                  
                  
                  $
                  1Other
                      assets
                  
                  
                  24
                  
                  
                  
                  -
                  
                  
                  
                  2
                  
                  
                  
                  -
                  
                  
                  
                  3
                  
                  
                  
                  3Other
                      current
                      liabilities
                  
                  
                  9
                  
                  
                  
                  2
                  
                  
                  
                  1
                  
                  
                  
                  2
                  
                  
                  
                  1
                  
                  
                  
                  1Regulatory
                      liabilities
                  
                  
                  25
                  
                  
                  
                  -
                  
                  
                  
                  6
                  
                  
                  
                  -
                  
                  
                  
                  5
                  
                  
                  
                  19Other
                      deferred credits and
                      liabilities
                  
                  
                  4
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Gains
                      (losses) deferred in Accumulated OCI:Power
                      forwards(b)
                  
                  
                  54
                  
                  
                  
                  12
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Interest
                      rate swaps(c)
                  
                  
                  3
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3
                  
                  
                  
                  -
                  
                  
                  
                  -Gas
                      swaps and futures
                      contracts(d)
                  
                  
                  1
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2
                  
                  
                  
                  -SO2
                      futures
                      contracts
                  
                  
                  (1
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1
                  )
                  
                  
                  -
                  
                  
                  
                  -
 
 (a)
                  Includes
                      amounts for Ameren registrant and nonregistrant subsidiaries
                      and
                      intercompany eliminations.
 (b)
                  Represents
                      the mark-to-market value for the hedged portion of electricity
                      price
                      exposure for periods of up to four years, including $43 million
                      over the
                      next year.
 (c)
                  Represents
                      a gain associated with interest rate swaps at Genco that were
                      a partial
                      hedge of the interest rate on debt issued in June 2002. The
                      swaps cover
                      the first 10 years of debt that has a 30-year maturity and
                      the gain in OCI
                      is amortized over a 10-year period that began in June
                      2002.
 (d)
                  Represents
                      gains associated with natural gas swaps and futures contracts.
                      The swaps
                      are a partial hedge of our natural gas requirements through March
                      2011.
  As
            part
            of the Illinois electric settlement agreement, the Ameren Illinois Utilities
            entered into financial contracts with Marketing Company.  These financial
            contracts are derivative instruments being accounted for as cash flow
            hedges at
            the Ameren Illinois Utilities and Marketing Company.  Consequently, the
            Ameren Illinois Utilities and Marketing Company record the fair value
            of the
            contracts on their respective balance sheets and the changes to the fair
            value
            in regulatory assets or liabilities for the Ameren Illinois Utilities
            and OCI at
            Marketing Company.  In Ameren's consolidated financial statements, all
            financial statement effects of the swap are eliminated.  See Note 2 - Rate
            and Regulatory Matters for additional information on these financial
            contracts.
  **Other
            Derivatives**
 
 The
            following table presents the net
            change in market value for the three and nine months ended September
            30, 2007
            and 2006, of option and swap transactions used to manage our positions
            in
            SO2 allowances, coal, heating oil, and nonhedge power and gas
            trading
            activity. Certain of these transactions are treated as nonhedge transactions
            under
 SFAS
            No.
            133, “Accounting for Derivative Instruments and Hedging Activities,” as amended.
            The net change in the market value of SO2, coal and heating oil
            options and swaps is recorded as Operating Expenses – Fuel. The nonhedge power
            and
            gas swaps are recorded in Operating Revenues – Electric and Operating Revenues –
Gas.
 
 **Three
                      Months**
                  
                  
                  **Nine
                      Months****Gains
                      (Losses)**
                  
                  **2007**
                  
                  
                  **2006**
                  
                  
                  **2007**
                  
                  
                  **2006****SO2
                      options and
                      swaps:**Ameren
                  
                  **$**
                  **-**
                  
                  
                  $
                  1
                  
                  
                  **$**
                  **6**
                  
                  
                  $
                  (2
                  )UE
                  
                  ****
                  **-**
                  
                  
                  
                  1
                  
                  
                  ****
                  **5**
                  
                  
                  
                  3Genco
                  
                  ****
                  **-**
                  
                  
                  
                  1
                  
                  
                  ****
                  **1**
                  
                  
                  
                  (4
                  )**Coal
                      options:**Ameren
                  
                  ****
                  **-**
                  
                  
                  
                  (1
                  )
                  
                  ****
                  **2**
                  
                  
                  
                  (2
                  )UE
                  
                  ****
                  **-**
                  
                  
                  
                  (1
                  )
                  
                  ****
                  **2**
                  
                  
                  
                  (2
                  )**Heating
                      oil options:**Ameren
                  
                  ****
                  **-**
                  
                  
                  
                  (2
                  )
                  
                  ****
                  **3**
                  
                  
                  
                  (2
                  )**Nonhedge
                      power swaps and forwards:**Ameren
                  
                  ****
                  **3**
                  
                  
                  
                  -
                  
                  
                  ****
                  **(2**
                  **)**
                  
                  
                  -UE
                  
                  ****
                  **2**
                  
                  
                  
                  1
                  
                  
                  ****
                  **(2**
                  **)**
                  
                  
                  1**Nonhedge
                      gas futures:**Ameren
                  
                  ****
                  **(2**
                  **)**
                  
                  
                  -
                  
                  
                  ****
                  **-**
                  
                  
                  
                  -UE
                  
                  ****
                  **(2**
                  **)**
                  
                  
                  -
                  
                  
                  ****
                  **-**
                  
                  
                  
                  -
 
  43
  **NOTE
            7 – RELATED PARTY TRANSACTIONS**
 
 The
            Ameren Companies have engaged in,
            and may in the future engage in, affiliate transactions in the normal
            course of
            business. These transactions primarily consist of gas and power purchases
            and
            sales, services received or rendered, and borrowings and lendings. Transactions
            between affiliates are reported as intercompany transactions on their
            financial
            statements, but are eliminated in consolidation for Ameren’s financial
            statements. For a discussion of our material related party agreements,
            see Note
            13 – Related Party Transactions under Part II, Item 8 of the Form 10-K. Below
            are updates to several of these related party agreements.
 
 *Electric
            Rate Settlement*
 
 See
            Note 2 – Rate and Regulatory
            Matters and Note 8 – Commitments and Contingencies for information on an
            electric settlement agreement reached in July 2007 among key stakeholders
            in
            Illinois and reflected in legislation, enacted on August 28, 2007, that
            addresses electric rate increases and the future power procurement process
            in
            Illinois. As part of the electric settlement agreement in Illinois, the
            Ameren Illinois Utilities, Genco and AERG agreed to make contributions
            of $150
            million as part of a comprehensive program providing approximately $1
            billion of
            funding for rate relief to certain Illinois electric customers, including
            customers of the Ameren Illinois Utilities. At September 30, 2007, CIPS,
            CILCO
            and IP had receivable balances from Genco for reimbursement of customer
            rate
            relief of $7 million, $4 million and $10 million, respectively. Also
            at
            September 30, 2007, CIPS and IP had receivable balances from AERG for
            reimbursement of customer rate relief of $3 million and $4 million,
            respectively. In addition, as part of the electric settlement agreement,
            the
            Ameren Illinois Utilities entered into financial contracts with Marketing
            Company to lock-in energy prices for a portion of their around-the-clock
            power
            requirements from 2008 to 2012 at relevant market prices. These financial
            contracts became effective on August 28, 2007, when the legislation in
            connection with the agreement became law.
 
 **Electric
            Power Supply Agreements**
 
 The
            following table presents the
            amount of gigawatthour sales under related party electric power supply
            agreements for the three and nine months ended September 30, 2007 and
            2006:
 
 **Three
                      Months**
                  
                  
                  **Nine
                      Months****2007**
                  
                  
                  **2006**
                  
                  
                  **2007**
                  
                  
                  **2006**Genco
                      sales to
                    Marketing
                      Company(a)
                  ****
                  **-**
                  
                  
                  
                  5,820
                  
                  
                  ****
                  **-**
                  
                  
                  
                  16,707Marketing
                      Company
                    sales
                      to CIPS(a)
                  ****
                  **-**
                  
                  
                  
                  3,424
                  
                  
                  ****
                  **-**
                  
                  
                  
                  9,500Genco
                      sales to
                    Marketing
                      Company(b)
                  ****
                  **4,754**
                  
                  
                  
                  -
                  
                  
                  ****
                  **12,711**
                  
                  
                  
                  -AERG
                      sales to
                    Marketing
                      Company(b)
                  ****
                  **1,270**
                  
                  
                  
                  -
                  
                  
                  ****
                  **3,912**
                  
                  
                  
                  -Marketing
                      Company
                    sales
                      to CIPS(c)
                  ****
                  **671**
                  
                  
                  
                  -
                  
                  
                  ****
                  **1,852**
                  
                  
                  
                  -Marketing
                      Company
                    sales
                      to CILCO(c)
                  ****
                  **349**
                  
                  
                  
                  -
                  
                  
                  ****
                  **922**
                  
                  
                  
                  -Marketing
                      Company
                    sales
                      to IP(c)
                  ****
                  **1,016**
                  
                  
                  
                  -
                  
                  
                  ****
                  **2,716**
                  
                  
                  
                  -
  (a)
                  These
                      agreements expired or terminated on December 31,
                      2006.
 (b)
                  In
                      December 2006, Genco and Marketing Company, and AERG and Marketing
                      Company, entered into new power supply agreements whereby Genco
                      and AERG
                      sell and Marketing Company purchases all the capacity available
                      from
                      Genco’s and AERG’s generation fleets and such amount of associated energy
                      commencing on January 1, 2007.
 (c)
                  In
                      accordance with the January 2006 ICC order, discussed in Note
                      2 – Rate and
                      Regulatory Matters, an auction was held in September 2006 to
                      procure power
                      for CIPS, CILCO and IP after their previous power supply contracts
                      expired
                      on December 31, 2006. Through the auction, Marketing Company
                      contracted
                      with CIPS, CILCO and IP to provide power for their customers.
                      See also
                      Note 3 – Rate and Regulatory Matters under Part II, Item 8 of the Form
                      10-K for further details of the power procurement auction in
                      Illinois. See
                      Note 2 – Rate and Regulatory Matters for a discussion of future changes
                      in
                      the Illinois power procurement process as a result of the electric
                      settlement agreement reached among key stakeholders in July
                      2007 and the
                      related legislation enacted into law in August
                      2007.
 
 **Joint
            Dispatch Agreement**
 
 UE,
            CIPS and Genco mutually consented
            to waive the one-year termination notice requirement of the JDA and agreed
            to
            terminate it on December 31, 2006. The termination of the JDA was accepted
            by
            FERC in September 2006.
 
 The
            following table presents the
            amount of gigawatthour sales under the JDA for the three and nine months
            ended
            September 30, 2006:
 
 **Three
                      Months**
                  **Nine
                      Months**UE
                      sales to Genco
                  2,073
                  7,507Genco
                      sales to UE
                  898
                  2,615
 
 
 44
 
 The
            following table presents the
            short-term power sales margins under the JDA for UE and Genco for the
            three and
            nine months ended September 30, 2006:
 
 **Three
                      Months**
                  
                  
                  **Nine
                      Months**UE
                  
                  $
                  15
                  
                  
                  $
                  73Genco
                  
                  
                  5
                  
                  
                  
                  22Total
                  
                  $
                  20
                  
                  
                  $
                  95
 
 **Money
            Pools**
 
 See
            Note 3 - Credit Facilities and
            Liquidity for a discussion of affiliate borrowing arrangements.
 
 **Intercompany
            Promissory Notes**
 
 Genco’s
            subordinated note payable to
            CIPS associated with the transfer in 2000 of CIPS’ electric generating assets
            and related liabilities to Genco matures on May 1, 2010. Interest income
            and
            expense for this note recorded by CIPS and Genco, respectively, was $2
            million
            (2006 - $3 million) and $7 million (2006 - $10 million) for the three
            and nine
            months ended September 30, 2007 and 2006, respectively.
 
 CILCORP
            had no outstanding borrowings
            directly from Ameren at September 30, 2007. CILCORP had $156 million
            of
            outstanding borrowings from Ameren at September 30, 2006, with average
            interest
            rates of 4.8% and 4.5% for the three and nine months ended September
            30, 2006,
            respectively. CILCORP recorded interest expense of less than $1 million
 (2006
            - $2 million) and less than $1 million (2006 - $6 million) for these
            borrowings for the three and nine months ended September 30, 2007,
            respectively.
  The
              following table presents the impact on UE, CIPS, Genco, CILCORP, CILCO,
              and IP
              of related party transactions for the three and nine months ended September
              30,
              2007 and 2006. The table is based primarily on the agreements discussed
              above
              and in Note 13 – Related Party Transactions under Part II, Item 8 of the Form
              10-K, and the money pool arrangements discussed above in Note 3 - Credit
              Facilities and Liquidity of this report.
 
 **Three
                        Months**
                    
                    
                    **Nine
                        Months****Agreement**
                    
                    
                    **UE**
                    
                    
                    **CIPS**
                    
                    
                    **Genco**
                    
                    
                    **CILCORP(a)**
                    **IP**
                    
                    
                    **UE**
                    
                    
                    **CIPS**
                    
                    
                    **Genco**
                    
                    
                    **CILCORP(a)**
                    **IP****Operating
                        Revenues:**Genco
                        and AERG power supply
                    **2007**
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **222**
                    
                    
                    **$**
                    **73**
                    
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **615**
                    
                    
                    **$**
                    **207**
                    
                    
                    **$**
                    **(b**
                    **)**agreements
                        with Marketing CompanyAncillary
                        service agreement
                    **2007**
                    
                    ****
                    **5**
                    
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    ****
                    **13**
                    
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**with
                      CIPS, CILCO and IPPower
                        supply agreement with Marketing Company – expired
                    2006
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    
                    216
                    
                    
                    (c
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    
                    605
                    
                    
                    
                    5
                    
                    
                    (b
                    )December
                      31, 2006UE
                        and Genco gas
                    **2007**
                    **(c**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(c**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**transportation
                        agreement
                    2006
                    
                    (c
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (c
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (b
                    )JDA
                        – terminatedDecember
                        31, 2006
                    2006
                    
                    
                    35
                    
                    
                    (b
                    )
                    
                    
                    23
                    
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    
                    156
                    
                    
                    (b
                    )
                    
                    
                    69
                    
                    
                    (b
                    )
                    
                    (b
                    )**Total
                        Operating Revenues**
                    **2007**
                    
                    **$**
                    **5**
                    
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **222**
                    
                    
                    **$**
                    **73**
                    
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **13**
                    
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **615**
                    
                    
                    **$**
                    **207**
                    
                    
                    **$**
                    **(b**
                    **)**2006
                    
                    
                    35
                    
                    
                    (b
                    )
                    
                    
                    239
                    
                    
                    (c
                    )
                    
                    (b
                    )
                    
                    
                    156
                    
                    
                    (b
                    )
                    
                    
                    674
                    
                    
                    
                    5
                    
                    
                    (b
                    )**Fuel
                        and Purchased Power:**CIPS,
                        CILCO and IP agreements
                    **2007**
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **42**
                    
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **22**
                    
                    
                    **$**
                    **64**
                    
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **120**
                    
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **60**
                    
                    
                    **$**
                    **176**with
                        Marketing Company(auction)Ancillary
                        service agreement with UE
                    **2007**
                    
                    **(b**
                    **)**
                    
                    ****
                    **2**
                    
                    
                    **(b**
                    **)**
                    
                    ****
                    **1**
                    
                    
                    ****
                    **2**
                    
                    
                    **(b**
                    **)**
                    
                    ****
                    **5**
                    
                    
                    **(b**
                    **)**
                    
                    ****
                    **2**
                    
                    
                    ****
                    **6**Ancillary
                        service agreement with Marketing Company
                    **2007**
                    
                    **(b**
                    **)**
                    
                    ****
                    **1**
                    
                    
                    **(b**
                    **)**
                    
                    ****
                    **-**
                    
                    
                    ****
                    **2**
                    
                    
                    **(b**
                    **)**
                    
                    ****
                    **3**
                    
                    
                    **(b**
                    **)**
                    
                    ****
                    **1**
                    
                    
                    ****
                    **4**JDA
                        – terminated December 31, 2006
                    2006
                    
                    
                    23
                    
                    
                    (b
                    )
                    
                    
                    35
                    
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    
                    69
                    
                    
                    (b
                    )
                    
                    
                    156
                    
                    
                    (b
                    )
                    
                    (b
                    )Power
                        supply agreement with Marketing Company – expired
                    2006
                    
                    (b
                    )
                    
                    
                    118
                    
                    
                    (b
                    )
                    
                    
                    1
                    
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    
                    337
                    
                    
                    (b
                    )
                    
                    
                    1
                    
                    
                    (b
                    )December
                        31, 2006Executory
                        tolling agreement
                    **2007**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    ****
                    **8**
                    
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    ****
                    **28**
                    
                    
                    **(b**
                    **)**with
                        Medina Valley
                    2006
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    
                    9
                    
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    
                    29
                    
                    
                    (b
                    )UE
                        and Genco gas
                    **2007**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(c**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(c**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**transportation
                        agreement
                    2006
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (c
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    (c
                    )
                    
                    (b
                    )
                    
                    (b
                    )**Total
                        Fuel and Purchased**
                    **2007**
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **45**
                    
                    
                    **$**
                    **(c**
                    **)**
                    
                    **$**
                    **31**
                    
                    
                    **$**
                    **68**
                    
                    
                    **$**
                    **(b**
                    **)**
                    
                    **$**
                    **128**
                    
                    
                    **$**
                    **(c**
                    **)**
                    
                    **$**
                    **91**
                    
                    
                    **$**
                    **186****Power**
                    2006
                    
                    
                    23
                    
                    
                    
                    118
                    
                    
                    
                    35
                    
                    
                    
                    10
                    
                    
                    (b
                    )
                    
                    
                    69
                    
                    
                    
                    337
                    
                    
                    
                    156
                    
                    
                    
                    30
                    
                    
                    (b
                    )
   45
   
 **Three
                        Months**
                    
                    
                    **Nine
                        Months****Agreement**
                    
                    
                    
                    **UE**
                    ****
                    
                    
                    **CIPS**
                    
                    
                    
                    **Genco**
                    
                    
                    **CILCORP(a)**
                    **IP**
                    
                    
                    
                    **UE**
                    ****
                    ****
                    ****
                    **CIPS**
                    ****
                    ****
                    ****
                    **Genco**
                    ****
                    ****
                    **CILCORP (a)**
                    ****
                    **I**P**Other
                        Operating Expense:**Ameren
                        Services support
                    **2007**
                    
                    **$**
                    **34**
                    
                    
                    **$**
                    **12**
                    
                    
                    **$**
                    **6**
                    
                    
                    **$**
                    **12**
                    
                    
                    **$**
                    **18**
                    
                    
                    **$**
                    **102**
                    
                    
                    **$**
                    **35**
                    
                    
                    **$**
                    **18**
                    
                    
                    **$**
                    **37**
                    
                    
                    **$**
                    **54**services
                        agreement
                    2006
                    
                    
                    34
                    
                    
                    
                    12
                    
                    
                    
                    7
                    
                    
                    
                    12
                    
                    
                    
                    18
                    
                    
                    
                    103
                    
                    
                    
                    36
                    
                    
                    
                    18
                    
                    
                    
                    37
                    
                    
                    
                    54Ameren
                        Energy support
                    **2007**
                    
                    ****
                    **2**
                    
                    
                    **(b**
                    **)**
                    
                    **(c**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**
                    
                    ****
                    **7**
                    
                    
                    **(b**
                    **)**
                    
                    **(c**
                    **)**
                    
                    **(b**
                    **)**
                    
                    **(b**
                    **)**services
                        agreement
                    2006
                    
                    
                    2
                    
                    
                    (b
                    )
                    
                    
                    1
                    
                    
                    (b
                    )
                    
                    (b
                    )
                    
                    
                    6
                    
                    
                    (b
                    )
                    
                    
                    2
                    
                    
                    (b
                    )
                    
                    (b
                    )AFS
                        support services
                    **2007**
                    
                    ****
                    **2**
                    
                    
                    ****
                    **-**
                    
                    
                    ****
                    **1**
                    
                    
                    ****
                    **1**
                    
                    
                    ****
                    **-**
                    
                    
                    ****
                    **5**
                    
                    
                    ****
                    **1**
                    
                    
                    ****
                    **2**
                    
                    
                    ****
                    **2**
                    
                    
                    ****
                    **1**agreement
                    2006
                    
                    
                    1
                    
                    
                    (c
                    )
                    
                    (c
                    )
                    
                    (c
                    )
                    
                    
                    1
                    
                    
                    
                    3
                    
                    
                    
                    1
                    
                    
                    
                    1
                    
                    
                    
                    1
                    
                    
                    
                    2Insurance
                        premiums(d)
                    **2007**
                    
                    ****
                    **7**
                    
                    
                    **(b**
                    **)**
                    
                    ****
                    **1**
                    
                    
                    ****
                    **-**
                    
                    
                    **(b**
                    **)**
                    
                    ****
                    **16**
                    
                    
                    **(b**
                    **)**
                    
                    ****
                    **3**
                    
                    
                    ****
                    **1**
                    
                    
                    **(b**
                    **)****Total
                        Other Operating**
                    **2007**
                    
                    **$**
                    **45**
                    
                    
                    **$**
                    **12**
                    
                    
                    **$**
                    **8**
                    
                    
                    **$**
                    **13**
                    
                    
                    **$**
                    **18**
                    
                    
                    **$**
                    **130**
                    
                    
                    **$**
                    **36**
                    
                    
                    **$**
                    **23**
                    
                    
                    **$**
                    **40**
                    
                    
                    **$**
                    **55****Expenses**
                    2006
                    
                    
                    37
                    
                    
                    
                    12
                    
                    
                    
                    8
                    
                    
                    
                    12
                    
                    
                    
                    19
                    
                    
                    
                    112
                    
                    
                    
                    37
                    
                    
                    
                    21
                    
                    
                    
                    38
                    
                    
                    
                    56Interest
                        expense (income) from
                    **2007**
                    
                    **$**
                    **-**
                    
                    
                    **$**
                    **(c**
                    **)**
                    
                    **$**
                    **3**
                    
                    
                    **$**
                    **(c**
                    **)**
                    
                    **$**
                    **(c**
                    **)**
                    
                    **$**
                    **-**
                    
                    
                    **$**
                    **(c**
                    **)**
                    
                    **$**
                    **7**
                    
                    
                    **$**
                    **(c**
                    **)**
                    
                    **$**
                    **(c**
                    **)**money
                        pool borrowings(advances)
                    2006
                    
                    (c
                    )
                    
                    
                    (1
                    )
                    
                    
                    3
                    
                    
                    
                    1
                    
                    
                    
                    1
                    
                    
                    (c
                    )
                    
                    
                    (2
                    )
                    
                    
                    8
                    
                    
                    
                    4
                    
                    
                    
                    2
 
 (a)
                    Amounts
                        represent CILCORP and CILCO
                        activity.
 (b)
                    Not
                        applicable. (c)
                    Amount
                      less than $1 million. (d)
                    Represents
                      insurance premiums paid to an affiliate for replacement power,
                      property
                      damage and terrorism coverage.
 **NOTE
            8 – COMMITMENTS AND CONTINGENCIES**
 
 We
            are
            involved in legal, tax and regulatory proceedings before various courts,
            regulatory commissions, and governmental agencies with respect to matters
            that
            arise in the ordinary course of business, some of which involve substantial
            amounts of money. We believe that the final disposition of these proceedings,
            except as otherwise disclosed in these notes to our financial statements,
            will
            not have a material adverse effect on our results of operations, financial
            position, or liquidity.
 
 Reference
            is made to Note 1 – Summary of Significant Accounting Policies, Note 3 – Rate
            and Regulatory Matters, Note 13 – Related Party Transactions, and Note 14 –
Commitments and Contingencies under Part II, Item 8 of the Form 10-K.
            See also
            Note 1 – Summary of Significant Accounting Policies, Note 2 – Rate and
            Regulatory Matters and Note 7 – Related Party Transactions in this
            report.
 
 **Callaway
            Nuclear Plant**
 
 The
            following table presents insurance coverage at UE’s Callaway nuclear plant at
            September 30, 2007. The property coverage and the nuclear liability coverage
            were renewed on October 1, 2007 and January 1, 2007, respectively.
 
 **Type
                        and Source of Coverage**
                    **Maximum
                        Coverages**
                    **Maximum
                        Assessments for Single Incidents**Public
                        liability:American
                        Nuclear
                        Insurers
                    $                                  
                          300
                    $                                      
                          -Pool
                        participation
                    10,461(a)
                    101(b)$                               
                        10,761(c)
                    $                                
                            101Nuclear
                        worker liability:American
                        Nuclear
                        Insurers
                    $                                 
                           300(d)
                    $                                     
                           4Property
                        damage:Nuclear
                        Electric Insurance
                        Ltd.
                    $                                  2,750(e)
                    $                                      
                        24Replacement
                        power:Nuclear
                        Electric Insurance
                        Ltd.
                    $                                   
                         490(f)
                    $                                       
                          9Energy
                        Risk Assurance
                        Company
                    $                                     
                         64(g)
                    $                                      
                           -
  (a)
                    Provided
                      through mandatory participation in an industry-wide retrospective
                      premium
                      assessment program. (b)
                    Retrospective
                      premium under the Price-Anderson liability provisions of
                      the Atomic Energy Act of 1954, as amended.  This is subject
                      to retrospective assessment with respect to a covered loss
                      in excess of
                      $300 million from an incident at any licensed U.S. commercial
                      reactor,
                      payable at $15 million per year. (c)
                    Limit
                        of liability for each incident under Price-Anderson. This
                        limit is subject
                        to change to account for the effects of inflation and changes
                        in the
                        number of licensed reactors.
 (d)
                    Industry
                        limit for potential liability for worker tort claims filed
                        for bodily
                        injury caused by a nuclear energy accident. Effective January
                        1, 1998,
                        this program was modified to provide coverage to all workers
                        whose
                        nuclear-related employment began on or after the commencement
                        date of
                        reactor operations.
 (e)
                    Provides
                        for $500 million in property damage and decontamination,
                        excess property
                        insurance, and premature decommissioning coverage up to $2.25 billion
                        for losses in excess of the $500 million primary
                        coverage.
 (f)
                    Provides
                        the replacement power cost insurance in the event of a prolonged
                        accidental outage at a nuclear plant. Weekly indemnity of
                        $4.5 million for
                        52 weeks, which commences after the first eight weeks of
                        an outage, plus
                        $3.6 million per week for 71.1 weeks
                        thereafter.
 (g)
                    Provides
                        the replacement power cost insurance in the event of a prolonged
                        accidental outage at a nuclear plant. The coverage is for
                        a weekly
                        indemnity of $900,000 for 71 weeks in excess of the $3.6
                        million per week
                        set forth above. Energy Risk Assurance Company is an affiliate
                        and has
                        reinsured this coverage with third-party insurance companies.
                        See Note 7 –
                        Related Party Transactions for more information on this affiliate
                        transaction.
 
  46
  Price-Anderson
            limits the liability for claims from an incident involving any licensed
            United
            States commercial nuclear power facility. The limit is based on the number
            of
            licensed reactors. The limit of liability and the maximum potential annual
            payments are adjusted at least every five years for inflation to reflect
            changes
            in the Consumer Price Index. Owners of a nuclear reactor cover this exposure
            through a combination of private insurance and mandatory participation
            in a
            financial protection pool, as established by Price-Anderson.
 
 Subsequent
            to the terrorist attacks on September 11, 2001, both American Nuclear
            Insurers
            and Nuclear Electric Insurance Ltd. confirmed that losses resulting from
            terrorist attacks would be covered under their policies, subject to applicable
            policy limits. Both companies, however, revised their policy terms to
            include an
            industry aggregate for all “non-certified” terrorist acts as defined by the
            Terrorism Risk Insurance Act of 2002, which was renewed in 2005. The
            non-certified American Nuclear Insurers nuclear liability cap is a $300
            million
            shared industry aggregate for all facilities licensed in the United States
            during the policy period. The aggregate for all Nuclear Electric Insurance
            Ltd.
            policies, which apply to non-certified property claims within a 12-month
            period,
            is $3.2 billion, plus any amounts available through reinsurance or indemnity
            from an outside source.
 
 If
            losses
            from a nuclear incident at the Callaway nuclear plant exceed the limits
            of, or
            are not subject to, insurance, or if coverage is unavailable, UE is at
            risk for
            any uninsured losses. If a serious nuclear incident occurred, it could
            have a
            material adverse effect on Ameren’s and UE’s results of operations, financial
            position, or liquidity.
 
 **Other
            Obligations**
 
 To
            supply
            a portion of the fuel requirements of our generating plants, we have
            entered
            into various long-term commitments for the procurement of coal, natural
            gas and
            nuclear fuel. In addition, we have entered into various long-term commitments
            for the purchase of electricity and natural gas for distribution. For
            a complete
            listing of our obligations and commitments, see Note 14 – Commitments and
            Contingencies under Part II, Item 8 of the Form 10-K.
 
 As
            of
            September 30, 2007, our commitments for the procurement of coal and related
            transportation have changed from amounts previously disclosed as of December
            31,
            2006. The following table presents our total estimated coal and related
            transportation purchase commitments at September 30, 2007:
 
 **2007**
                  
                  
                  **2008**
                  
                  
                  **2009**
                  
                  
                  **2010**
                  
                  
                  **2011**Ameren(a)
                  **$**
                  **145**
                  
                  
                  $
                  552
                  
                  
                  $
                  380
                  
                  
                  $
                  186
                  
                  
                  $
                  121UE
                  ****
                  **78**
                  
                  
                  
                  294
                  
                  
                  
                  256
                  
                  
                  
                  142
                  
                  
                  
                  103Genco
                  ****
                  **43**
                  
                  
                  
                  143
                  
                  
                  
                  66
                  
                  
                  
                  20
                  
                  
                  
                  8CILCORP/CILCO
                  ****
                  **9**
                  
                  
                  
                  37
                  
                  
                  
                  21
                  
                  
                  
                  8
                  
                  
                  
                  4
  (a)
                  Includes
                      amounts for Ameren registrant and nonregistrant subsidiaries
                      and
                      intercompany eliminations.
 
 As
            of
            September 30, 2007, our commitments for the procurement of natural gas
            have
            materially changed from amounts previously disclosed as of December 31,
            2006.
            The following table presents our total estimated natural gas purchase
            commitments at September 30, 2007:
 
 **2007**
                  
                  
                  **2008**
                  
                  
                  **2009**
                  
                  
                  **2010**
                  
                  
                  **2011**
                  
                  
                  **Thereafter(a)**Ameren(b)
                  **$**
                  **173**
                  
                  
                  $
                  591
                  
                  
                  $
                  369
                  
                  
                  $
                  263
                  
                  
                  $
                  213
                  
                  
                  $
                  1,964UE
                  ****
                  **20**
                  
                  
                  
                  85
                  
                  
                  
                  58
                  
                  
                  
                  37
                  
                  
                  
                  27
                  
                  
                  
                  56CIPS
                  ****
                  **29**
                  
                  
                  
                  111
                  
                  
                  
                  81
                  
                  
                  
                  64
                  
                  
                  
                  42
                  
                  
                  
                  73Genco
                  ****
                  **9**
                  
                  
                  
                  30
                  
                  
                  
                  8
                  
                  
                  
                  8
                  
                  
                  
                  8
                  
                  
                  
                  13CILCORP/CILCO
                  ****
                  **53**
                  
                  
                  
                  162
                  
                  
                  
                  97
                  
                  
                  
                  59
                  
                  
                  
                  58
                  
                  
                  
                  838
                  (c)IP
                  ****
                  **57**
                  
                  
                  
                  192
                  
                  
                  
                  123
                  
                  
                  
                  95
                  
                  
                  
                  77
                  
                  
                  
                  983
                  (c)
 
 (a)
                  Commitments
                      for natural gas are until 2031.
 (b)
                  Includes
                      amounts for Ameren registrant and nonregistrant subsidiaries
                      and
                      intercompany eliminations.
 (c)
                  Commitments
                      for natural gas purchases for CILCO and IP include projected natural
                      gas purchases pursuant to a 20-year supply contract beginning
                      in April
                      2011. Purchases under this contract will be passed through
                      to utility
                      customers under the PGA.
 
 As
            of
            September 30, 2007, the commitments for the procurement of nuclear fuel
            have
            materially changed from amounts previously disclosed as of December 31,
            2006.
            The following table presents the total estimated nuclear fuel purchase
            commitments at September 30, 2007:
 
 **2007**
                  
                  
                  **2008**
                  
                  
                  **2009**
                  
                  
                  **2010**
                  
                  
                  **2011**
                  
                  
                  **Thereafter(a)**Ameren/UE
                  
                  $
                  52
                  
                  
                  $
                  71
                  
                  
                  $
                  63
                  
                  
                  $
                  74
                  
                  
                  $
                  51
                  
                  
                  $
                  292
 
 (a)
                  Commitments
                      for nuclear fuel are until 2020.
  47
 At
            this
            time, UE does not expect to require new baseload generation capacity
            until at
            least 2018. However, due to the significant time required to plan, acquire
            permits for and build a baseload power plant, UE is actively studying
            future
            plant alternatives, including those that would use coal or nuclear
            fuel. During the second quarter of 2007, UE entered into a commitment to
            purchase heavy forgings needed to construct a nuclear plant. This commitment
            does not mean a decision has been made to build a nuclear plant. The
            purpose of
            entering into the forgings purchase commitment was to secure access to
            heavy
            forgings, which are long lead-time materials, in the event that UE decides
            to
            build a nuclear plant. As of September 30, 2007, UE’s commitments to
            purchase heavy forgings totaled $88 million through 2010 ($3.5 million
            in 2007,
            $6.5 million in 2008, $7.5 million in 2009 and $70.5 million in
            2010).
 
 As
            part
            of the electric settlement agreement in Illinois, the Ameren Illinois
            Utilities,
            Genco and AERG, committed to make aggregate contributions of $150 million
            over a
            four-year period, with $60 million coming from the Ameren Illinois Utilities
            (CIPS - $21 million; CILCO - $11 million; IP - $28 million), $62 million
            from Genco and $28 million from AERG. Also as part of the electric settlement
            agreement in Illinois, the Ameren Illinois Utilities entered into financial
            contracts with Marketing Company to lock-in energy prices for 400 to
            1,000
            megawatts annually of their around-the-clock power requirements from
            2008 to
            2012. See Note 2 – Rate and Regulatory Matters for additional information
            regarding the electric settlement agreement in Illinois.
 
 **Environmental
            Matters**
 
 We
            are subject to various
            environmental laws and regulations by federal, state and local authorities.
            From
            the beginning phases of siting and development to the ongoing operation
            of
            existing or new electric generating, transmission and distribution facilities,
            natural gas storage plants, and natural gas transmission and distribution
            facilities, our activities involve compliance with diverse laws and regulations.
            These laws and regulations address noise, emissions, and impacts to air
            and
            water, protected and cultural resources (such as wetlands, endangered
            species,
            and archeological and historical resources), and chemical and waste handling.
            Our activities often require complex and lengthy processes as we obtain
            approvals, permits or licenses for new, existing or modified facilities.
            Additionally, the use and handling of various chemicals or hazardous
            materials
            (including wastes) requires preparation of release prevention plans and
            emergency response procedures. As new laws or regulations are promulgated,
            we
            assess their applicability and implement the necessary modifications
            to our
            facilities or our operations, as required. The more significant matters
            are
            discussed below.
 
 *Clean
            Air Act*
 
 In
            May 2005, the EPA issued final
            regulations with respect to SO2 and NOx emissions (the
            Clean Air Interstate Rule) and mercury emissions (the Clean Air Mercury
            Rule)
            from coal-fired power plants. These rules require significant reductions
            in
            these emissions from UE, Genco, AERG and EEI power plants in phases,
            beginning
            in 2009. States are required to finalize rules to implement the federal
            Clean
            Air Interstate Rule and Clean Air Mercury Rule. Although the federal
            rules
            mandate a specific cap for SO2, NOx and mercury emissions
            by state from utility boilers, the states have considerable flexibility
            in
            allocating emission allowances to individual utility boilers. In addition,
            a
            state may choose to hold back certain emission allowances for growth
            or other
            reasons, and it may implement a more stringent program than the federal
            program.
            Illinois has finalized rules to implement the federal Clean Air Interstate
            Rule
            program that will reduce the number of NOx allowances automatically
            allocated to Genco’s, AERG’s and EEI’s plants. As a result of the Illinois
            rules, Genco, AERG and EEI will need to procure allowances and install
            pollution
            control equipment in order to continue to operate. We currently plan
            to install
            scrubbers at our large coal-fired plants in Illinois.
 
 Missouri
            rules, which substantially follow the federal regulations and became
            effective
            in April 2007, are expected to reduce mercury emissions 81% by 2018 and
            reduce
            NOx emissions
            30% and SO2
            emissions 75% by 2015.
 
 Illinois
            has adopted rules for mercury emissions that are significantly stricter
            than the
            federal regulations. In 2006, Genco, CILCO, EEI, and the Illinois EPA
            entered
            into an agreement that was incorporated into Illinois’ mercury emission
            regulations. Under the regulations, Illinois generators may defer until
            2015 the
            requirement to reduce mercury emissions by 90% in exchange for accelerated
            installation of NOx and SO2 controls. In 2009, Genco, AERG
            and EEI will begin putting into service equipment designed to reduce
            mercury
            emissions. These rules, when fully implemented, are expected to reduce
            mercury emissions 90%, NOx emissions 50% and SO2 emissions
            70% by 2015 in Illinois.
 
 The
            table
            below presents estimated capital costs based on current technology to
            comply
            with both the federal Clean Air Interstate Rule and Clean Air MercuryRule
            through
            2016 and related state implementation plans. The estimates described
            below could
            change depending upon additional federal or state requirements, new technology,
            variations in costs of material or labor, or alternative compliance strategies,
            among other reasons. The timing of estimated capital costs may also be
            influenced by whether emission allowances are used
            to
            comply with the proposed rules, thereby deferring capital
            investment.
 
 
 48
 
 **2007**
                  **2008 -
                      2011**
                  **2012
                      - 2016**
                  **Total**UE(a)
                  $               110
                  $                      
                      630-    830
                  $                           
                      910- 1,180
                  $                           
                      1,650- 2,120Genco
                  110
                  820- 1,060
                  180-    260
                  1,110- 1,430CILCO
                      (AERG)
                  100
                  185-    240
                  95-    140
                  380-    480EEI
                  10
                  185- 
                        240
                  165-    220
                  360-    470Ameren
                  $              
                      330
                  $                    1,820-
                      2,370
                  $                         1,350-
                      1,800
                  $                            3,500-
                      4,500
 
 (a)
                  UE’s
                      expenditures are expected to be recoverable in rates over
                      time.
 
 Illinois
            and Missouri must also
            develop attainment plans to meet the federal eight-hour ozone ambient
            standard,
            the federal fine particulate ambient standard and the Clean Air Visibility
            rule.
            Both states have filed ozone attainment plans for the St. Louis area.
            The state
            attainment plans for fine particulate must be submitted to the EPA by
            April
            2008, and the plans for the Clean Air Visibility rule must be submitted
            to the
            EPA by December 2007. The costs in the table above assume that emission
            controls
            required for the Clean Air Interstate Rule regulations will be sufficient
            to
            meet these new standards in the St. Louis region. Should Missouri develop
            an
            alternative plan to comply with these standards, the cost impact could
            be
            material to UE, but we would expect these costs to be recoverable from
            ratepayers. Illinois is planning to impose additional requirements beyond
            the
            Clean Air Interstate Rule as part of the attainment plans for ozone and
            fine
            particulate. At this time, we are unable to determine the impact such
            state
            actions would have on our results of operations, financial position,
            or
            liquidity.
 
 *Emission
            Allowances*
  Both
            federal and state laws require
            significant reductions in SO2 and NOx emissions that
            result from burning fossil fuels. The Clean Air Act and NOx Budget
            Trading Program created marketable commodities called allowances. Currently,
            each allowance gives the owner the right to emit one ton of SO2 or
            NOx. All existing generating facilities have been allocated
            allowances based on past production and the statutory emission reduction
            goals.
            If additional allowances are needed for new generating facilities, they
            can be
            purchased from facilities that have excess allowances or from allowance
            banks.
            Our generating facilities comply with the SO2 limits through the use
            and purchase of allowances, through the use of low-sulfur fuels, and
            through the
            application of pollution control technology. The NOx Budget Trading
            Program limits emissions of NOx during the ozone season (May through
            September). The NOx Budget Trading Program has applied to all
            electric generating units in Illinois since the beginning of 2004; it
            was
            applied to the eastern third of Missouri, where UE’s coal-fired power plants are
            located, beginning in 2007. Our generating facilities are expected to
            comply
            with the NOx limits through the use and purchase of allowances or
            through the application of pollution control technology, including
            low-NOx burners, over-fire air systems, combustion optimization,
            rich-reagent injection, selective noncatalytic reduction, and selective
            catalytic reduction systems.
 
 The
            following table presents the SO2 and
            NOx emission
            allowances
            held and the related SO2 and
            NOx emission
            allowance
            book values that are carried as intangible assets as of September 30,
            2007.
 
 **SO2(a)**
                  **NOx(b)**
                  **Book
                      Value**UE
                  1.591
                  15,948
                  $                       
                      60Genco
                  0.624
                  11,841
                  57CILCO
                      (AERG)
                  0.300
                  2,147
                  1EEI
                  0.293
                  3,397
                  9Ameren
                  2.808
                  33,333
                  197(c)
 
 (a)
                  Vintages
                      are from 2007 to 2016. Each company possesses additional allowances
                      for
                      use in periods beyond 2016. Units are in millions of SO2
                      allowances
                      (currently one allowance equals one ton
                      emitted).
 (b)
                  Vintages
                      are from 2007 to 2008. Units are in NOx
                      allowances
                      (one allowance equals one ton emitted). NOx
                      allowances
                      for 2009 and beyond have not yet been allocated by the EPA;
                      however, UE,
                      Genco, AERG and EEI expect to be allocated allowances in future
                      years.
 (c)
                  Includes
                      value assigned to AERG and EEI allowances as a result of purchase
                      accounting of $70 million.
 
 UE,
            Genco, CILCO and EEI expect to use a substantial portion of the SO2 and
            NOx allowances
            for
            ongoing operations. New environmental regulations, including the Clean
            Air
            Interstate Rule, the timing of the installation of pollution control
            equipment
            and the level of operations will have a significant impact on the amount
            of
            allowances actually required for ongoing operations. The Clean Air Interstate
            Rule requires a reduction in SO2 emissions
            by
            increasing the ratio of Acid Rain Program allowances surrendered. The
            current
            Acid Rain Program requires the surrender of one SO2 allowance
            for every
            ton of SO2 that
            is emitted. The Clean Air Interstate Rule program will require that SO2 allowances
            be
            surrendered at a ratio of two allowances for every ton of emission in
            2010
            through 2014. Beginning in 2015, the Clean Air Interstate Rule program
            will
            require SO2
            allowances to be surrendered at a ratio of 2.86 allowances for every
            ton of
            emission. In order to accommodate this change in surrender ratio and
            to comply
            with the federal and state regulations, UE, Genco, AERG and EEI expect
            to
            install control technology designed to further reduce SO2 emissions,
            as
            discussed above.
  *Global
          Climate*
 
 Future
          initiatives regarding greenhouse gas emissions and global warming continue
          to be
          the subject of much debate. As a result of our diverse fuel portfolio,
          our
          contribution to greenhouse gases varies among our generating facilities.
          Coal-fired power plants, however, are significant sources of carbon dioxide,
          a
          principal greenhouse gas. Six electric power sector trade associations,
          including the Edison Electric Institute, of which Ameren is a member, and
          the
          TVA, signed a Memorandum of Understanding (MOU) with the DOE in December
          2004
          calling for a 3% to 5% voluntary decrease in carbon intensity by the utility
          sector between 2002 and 2012. Currently, Ameren is considering various
          initiatives to comply with the MOU, including increased generation at nuclear
          and hydroelectric power plants, increased efficiency
   49
  measures
          at our coal-fired units, and investments in renewable energy and carbon
          sequestration projects.
 
 In
          April
          2007, the U.S. Supreme Court issued a decision that determined that the
          EPA has
          authority to regulate carbon dioxide and other greenhouse gases from automobiles
          as “air pollutants” under the Clean Air Act. The Supreme Court sent the case
          back to the EPA, which must conduct a rulemaking to determine whether greenhouse
          gas emissions contribute to climate change “which may reasonably be anticipated
          to endanger public health or welfare.” Unless the U.S. Congress enacts
          legislation directing otherwise, the EPA could begin to regulate such
          emissions.
 
 The
          impact of future initiatives related to greenhouse gas emissions and global
          warming on us are unknown. Although compliance costs are unlikely in the
          near
          future, our costs of complying with any mandated federal or state, including
          Illinois, greenhouse gas programs could have a material impact on our future
          results of operations, financial position, or liquidity.
 
 Ameren
          is
          preparing a report to address the environmental planning process and actions
          of
          Ameren relative to the climate change issue. The report is expected to
          be issued
          in mid-December 2007.
 
 *New
          Source Review*
 
 The
          EPA has been conducting an
          enforcement initiative to determine whether modifications at a number of
          coal-fired power plants owned by electric utilities in the United States
          are
          subject to New Source Review (NSR) requirements or New Source Performance
          Standards under the Clean Air Act. The EPA’s inquiries focus on whether the best
          available emission control technology was or should have been used at such
          power
          plants when major maintenance or capital improvements were
          performed.
 
 In
          April 2007, the U.S. Supreme Court
          in *Environmental Defense v. Duke Energy Corp.,* issued a decision that
          effectively reduced the statutory defenses available to NSR and Prevention
          of
          Significant Deterioration (PSD) claims. The key issue before the Supreme
          Court
          was whether EPA requirements to obtain permits under the NSR and PSD programs
          are triggered when a “modification” at an industrial facility results in an
          increase in an hourly emissions rate, as upheld by the U.S. Court of Appeals
          for
          the Fourth Circuit, or in total annual emissions, as asserted by environmental
          groups. The U.S. Supreme Court found that the NSR and PSD regulations can
          be
          triggered by either an hourly or annual increase in the emissions. The
          Supreme
          Court decision did not address other potential defenses or potential exceptions
          under the NSR and PSD programs.
 
 In
          April 2005, Genco received a
          request from the EPA for information pursuant to Section 114(a) of the
          Clean Air
          Act seeking detailed operating and maintenance history data with respect
          to its
          Meredosia, Hutsonville, Coffeen and Newton facilities, EEI’s Joppa facility, and
          AERG’s E.D. Edwards and Duck Creek facilities. In December 2006, the EPA issued
          a second Section 114(a) request to Genco regarding projects at the Newton
          facility. All of these facilities are coal-fired power plants. We are currently
          in discussions with the EPA and the state of Illinois regarding resolution
          of
          these matters, but we are unable to predict the outcome of these discussions.
          Resolution of these matters could have a material adverse impact on the
          future
          results of operations, financial position or liquidity of Ameren, Genco,
          AERG
          and EEI. A resolution could result in increased capital expenditures, increased
          operations and maintenance expenses, and fines or penalties. We believe
          that any
          potential resolution would likely require the installation of control
          technology, some of which is already planned for compliance with other
          regulatory requirements such as the Clean Air Interstate Rule and the Illinois
          mercury rules.
 
 *Remediation*
 
 We
          are
          involved in a number of remediation actions to clean up hazardous waste
          sites as
          required by federal and state law. Such statutes require that responsible
          parties fund remediation actions regardless of degree of fault, legality
          of
          original disposal, or ownership of a disposal site. UE, CIPS, CILCO and
          IP have
          each been identified by the federal or state governments as a potentially
          responsible party at several contaminated sites. Several of these sites
          involve
          facilities that were transferred by CIPS to Genco in May 2000 and facilities
          transferred by CILCO to AERG in October 2003. As part of each transfer,
          CIPS and
          CILCO have contractually agreed to indemnify Genco and AERG for remediation
          costs associated with preexisting environmental contamination at the transferred
          sites.
 
 As
          of
          September 30, 2007, CIPS, CILCO and IP owned or were otherwise responsible
          for
          14, four, and 25 former MGP sites, respectively, in Illinois. All of these
          sites
          are in various stages of investigation, evaluation and remediation. Under
          its
          current schedule, Ameren anticipates that remediation at these sites should
          be
          completed by 2015. The ICC permits each company to recover remediation
          and
          litigation costs associated with their former MGP sites in Illinois from
          their
          Illinois electric and natural gas utility customers through environmental
          adjustment rate riders. To be recoverable, such costs must be prudently
          and
          properly incurred, and costs are subject to annual reconciliation review
          by the
          ICC. As of September 30, 2007, CIPS, CILCO and IP had recorded liabilities
          of
          $25 million, $5 million and $76 million, respectively, to represent
          estimated minimum obligations.
   50
 
 In
          addition, UE owns or is otherwise responsible for 10 MGP sites in Missouri
          and
          one in Iowa. UE does not currently have in effect in Missouri a rate rider
          mechanism that permits remediation costs associated with MGP sites to be
          recovered from utility customers. UE does not have any retail utility operations
          in Iowa that would provide a source of recovery of these remediation costs.
          Because of the unknown and unique characteristics of each site (such as
          amount
          and type of residues present, physical characteristics of the site, and
          the
          environmental risk) and uncertain regulatory requirements, we are not able
          to
          determine the maximum liability for the remediation of these sites. As
          of
          September 30, 2007, UE had recorded $5 million to represent its estimated
          minimum obligation for its MGP sites. UE also is responsible for four electric
          sites in Missouri that have corporate cleanup liability, most as a result
          of
          federal agency mandates. As of September 30, 2007, UE had recorded $4 million
          to
          represent its estimated minimum obligation for these sites. At this time,
          we are
          unable to determine what portion of these costs, if any, will be eligible
          for
          recovery from insurance carriers.
 
 In
          June
          2000, the EPA notified UE and numerous other companies, including Solutia,
          that
          former landfills and lagoons in Sauget, Illinois, may contain soil and
          groundwater contamination. These sites are known as Sauget Area 2. From
          about
          1926 until 1976, UE operated a power generating facility adjacent to Sauget
          Area
          2. UE currently owns a parcel of property that was used as a landfill.
          Under the
          terms of an Administrative Order and Consent, UE has joined with other
          potentially responsible parties (PRPs) to evaluate the extent of potential
          contamination with respect to Sauget Area 2.
 
 Sauget
          Area 2 investigation activities under the oversight of the EPA are largely
          completed, and the results of such activities will be submitted to the
          EPA by
          the end of 2007. Following this submission, the EPA will ultimately select
          a
          remedy alternative and begin negotiations with various PRPs to implement
          the
          selected alternative. Over the last several years, numerous other parties
          have
          joined the PRP group and presumably will participate in the funding of
          any
          required remediation. In addition, Pharmacia Corporation and Monsanto Company
          have agreed to assume the liabilities of Solutia related to Solutia’s former
          chemical waste landfill in the Sauget Area 2, notwithstanding Solutia’s filing
          for bankruptcy protection.
 
 In
          December 2004, AERG submitted a comprehensive package to the Illinois EPA
          to
          address groundwater and surface water issues associated with the recycle
          pond,
          ash ponds, and reservoir at the Duck Creek power plant facility. Information
          submitted by AERG is currently under review by the Illinois EPA. CILCORP
          and
          CILCO both have a liability of $3.9 million at September 30, 2007, included
          on
          their Consolidated Balance Sheets for the estimated cost of the remediation
          effort, which involves treating and discharging recycle-system water in
          order to
          address these groundwater and surface water issues.
  In
          addition, our operations, or those of our predecessor companies, involve
          the
          use, disposal and, in appropriate circumstances, the cleanup of substances
          regulated under environmental protection laws. We are unable to determine
          the
          impact these actions may have on our results of operations, financial position,
          or liquidity.
 
 *Polychlorinated
          Biphernals Information Request*
 
 Polychlorinated
          biphernals (PCBs) are
          a blend of chemical compounds that were historically used in a variety
          of
          industrial products because of their chemical and thermal stability. In
          natural
          gas systems, PCBs were used as a compressor lubricant and a valve sealant,
          before the sale of PCBs for these applications was banned by the EPA in
          1979.
          During the third quarter of 2007, the Ameren Illinois Utilities received
          requests from the Illinois attorney general and the EPA for information
          regarding its experiences with PCBs in its gas distribution system. The
          Ameren
          Illinois Utilities have responded to these information requests.
 
 We
          cannot
          predict whether any further actions will be required on the part of the
          Ameren
          Illinois Utilities regarding this matter or what the ultimate outcome of
          this
          matter will be.
 
 *Pumped-storage
          Hydroelectric Facility Breach*
 
 In
          December 2005, there was a breach of the upper reservoir at UE’s Taum Sauk
          pumped-storage hydroelectric facility. This resulted in significant flooding
          in
          the local area, which damaged a state park. At the FERC’s direction, outside
          experts were hired by UE to review the cause of the incident. Their reports
          and
          reports by FERC staff indicated design, construction, and human error as
          causes
          of the breach. In their report, UE’s outside experts concluded that restoration
          of the upper reservoir, if undertaken, will require a complete rebuild
          of the
          entire dam with a completely different design concept, not simply a repair
          of
          the breached area. FERC agreed with this conclusion and rejected repair
          as an
          option.
 
 The
          FERC
          investigation of the incident has been completed. In October 2006, the
          FERC
          approved a stipulation and consent agreement between UE and the FERC’s Office of
          Enforcement that resolves all issues arising from an investigation that
          the
          FERC’s Office of Enforcement conducted into alleged violations of license
          conditions and FERC regulations by UE as the licensee of the Taum Sauk
          hydroelectric facility that may have contributed to the breach of the upper
          reservoir. As part of the stipulation and consent agreement, UE agreed,
          among
          other things, (1) to pay a civil penalty of $10 million, (2) to pay $5
          million
          into an interest-bearing escrow account to fund project enhancements at
          or near
          the Taum Sauk facility, and (3) to implement and comply
  51
  with
          a new dam safety program developed in connection
          with the settlement.
  In
          February 2007, UE submitted plans and an environmental report to FERC to
          rebuild
          the upper reservoir at its Taum Sauk plant, assuming successful resolution
          of
          outstanding issues with authorities of the state of Missouri. UE received
          approval from FERC to rebuild the upper reservoir at its Taum Sauk plant
          in
          August 2007 and hired a contractor in November 2007.  Should the Taum Sauk
          plant be rebuilt, UE would expect it to be out of service through at least
          the
          fall of 2009, if not longer.
 
 UE
          has accepted responsibility for
          the effects of the incident. At this time, UE believes that substantially
          all
          damages and liabilities (but not penalties) caused by the breach, the cost
          of
          rebuilding the plant, and the cost of replacement power, up to $8 million
          annually, will be covered by insurance. UE expects the total cost for clean
          up,
          damage and liabilities, excluding costs to rebuild the facility, resulting
          from
          the Taum Sauk incident to range from $188 million to $208 million. As of
          September 30, 2007, UE had paid $89 million and accrued a $99 million
          liability, including costs resulting from the FERC-approved stipulation
          and
          consent agreement discussed above, while expensing $31 million and recording
          a
          $157 million receivable due from insurance companies. As of September 30,
          2007,
          UE has received $35 million from insurance companies, which has reduced the
          insurance receivable balance to $122 million as of such date.  As of
          September 30, 2007, UE had a $57 million receivable due from insurance
          companies
          related to rebuilding the facility. Under UE’s insurance policies, all claims by
          or against UE are subject to review by its insurance carriers.
 
 In
          December 2006, the state of
          Missouri, through its attorney general, and 10 business owners filed separate
          lawsuits regarding the Taum Sauk breach that are currently pending in the
          Circuit Court of Reynolds County, Missouri. The attorney general’s suit alleges
          negligence, violations of the Missouri Clean Water Act and various other
          statutory and common law claims. The business owners’ suit contains similar
          allegations and seeks damages relating to business losses and lost profit.
          Both
          suits seek unspecified punitive damages. In May 2007, the Missouri Department
          of
          Natural Resources’ petition to intervene as a plaintiff in the attorney
          general’s lawsuit was denied.  UE is currently in discussions with
          authorities of the state of Missouri to resolve outstanding issues associated
          with this incident.
 
 See
          Note 2 – Rate and Regulatory
          Matters for information on the MoPSC’s Taum Sauk investigation.
 
 Until
          the reviews conducted by state
          authorities have concluded, litigation has been resolved, the insurance
          review
          is completed, and future regulatory treatment for the facility is determined,
          among other things, we are unable to determine the impact the breach may
          have on
          Ameren’s and UE’s results of operations, financial position, or liquidity beyond
          those amounts already recognized.
 
 **Asbestos-related
          Litigation**
 
 Ameren,
          UE, CIPS, Genco, CILCO and IP
          have been named, along with numerous other parties, in a number of lawsuits
          filed by plaintiffs claiming varying degrees of injury from asbestos exposure.
          Most have been filed in the Circuit Court of Madison County, Illinois.
          The total
          number of defendants named in each case is significant; as many as 189
          parties
          are named in some pending cases and as few as six in others. However, in
          the
          cases that were pending as of September 30, 2007, the average number of
          parties
          was 71.
 
 The
          claims filed against Ameren, UE,
          CIPS, Genco, CILCO and IP allege injury from asbestos exposure during the
          plaintiffs’ activities at our present or former electric generating plants.
          Former CIPS plants are now owned by Genco, and former CILCO plants are
          now owned
          by AERG. Most of IP’s plants were transferred to a Dynegy subsidiary prior to
          Ameren’s acquisition of IP. As a part of the transfer of ownership of the CIPS
          and CILCO generating plants, CIPS and CILCO have contractually agreed to
          indemnify Genco and AERG, respectively, for liabilities associated with
          asbestos-related claims arising from activities prior to the transfer.
          Each
          lawsuit seeks unspecified damages, which, if awarded at trial, typically
          would be shared among various defendants.
 
 From
          July 1, 2007, through September
          30, 2007, nine additional asbestos-related lawsuits were filed against
          UE, CIPS,
          CILCO and IP, mostly in the Circuit Court of Madison County, Illinois.
          Four
          lawsuits were settled. The following table presents the status as of September
          30, 2007, of the asbestos-related lawsuits that have been filed against
          the
          Ameren Companies:
 
 **Specifically
                    Named as Defendant****Total**(a)
                **Ameren**
                **UE**
                **CIPS**
                **Genco**
                **CILCO**
                **IP**Filed
                343
                31
                188
                145
                2
                49
                164Settled
                116
                -
                59
                51
                -
                18
                60Dismissed
                151
                27
                99
                51
                2
                10
                70Pending
                76
                4
                30
                43
                -
                21
                34
 
 (a)
                Addition
                    of the numbers in the individual columns does not equal the total
                    column
                    because some of the lawsuits name multiple Ameren entities as
                    defendants.
   52
 As
          of
          September 30, 2007, eight asbestos-related lawsuits were pending against
          EEI.
          The general liability insurance maintained by EEI provides coverage with
          respect
          to liabilities arising from asbestos-related claims.
 
 IP
          has a tariff rider to recover the
          costs of asbestos-related litigation claims, subject to the following terms.
          Beginning in 2007, 90% of cash expenditures in excess of the amount included
          in
          base electric rates will be recovered by IP from a $20 million trust fund
          established by IP financed with contributions of $10 million each by Ameren
          and
          Dynegy.
 
 If
          cash expenditures are less than
          the amount in base rates, IP will contribute 90% of the difference to the
          fund.
          Once the trust fund is depleted, 90% of allowed cash expenditures in excess
          of
          base rates will be recovered through charges assessed to customers under
          the
          tariff rider.
 
 The
          Ameren Companies believe that the final disposition of these proceedings
          will
          not have a material adverse effect on their results of operations, financial
          position, or liquidity.
 
 **NOTE
          9 – CALLAWAY NUCLEAR PLANT**
 
 Under
          the Nuclear Waste Policy Act of
          1982, the DOE is responsible for the permanent storage and disposal of
          spent
          nuclear fuel. The DOE currently charges one mill, or 1/10
          of one cent, per
          nuclear-generated kilowatthour sold for future disposal of spent fuel.
          Pursuant
          to this act, UE collects one mill from its electric customers for each
          kilowatthour of electricity that it generates and sells from its Callaway
          nuclear plant. Electric utility rates charged to customers provide for
          recovery
          of such costs. The DOE is not expected to have its permanent storage facility
          for spent fuel available until at least 2017. UE has sufficient installed
          storage capacity at its Callaway nuclear plant until 2020. It has the capability
          for additional storage capacity through the licensed life of the plant.
          The
          delayed availability of the DOE’s disposal facility is not expected to adversely
          affect the continued operation of the Callaway nuclear plant through its
          currently licensed life.
 
 Electric
          utility rates charged to customers provide for the recovery of the Callaway
          nuclear plant’s decommissioning costs, which include decontamination,
          dismantling, and site restoration costs, over an assumed 40-year life of
          the
          plant, ending with the expiration of the plant’s operating license in 2024. It
          is assumed that the Callaway nuclear plant site will be decommissioned
          based on
          immediate dismantlement method and removal from service. Ameren and UE
          have
          recorded an ARO
          for
          the Callaway nuclear plant decommissioning costs at fair value, which represents
          the present value of estimated future cash outflows. Decommissioning costs
          are
          charged to the costs of service used to establish electric rates for UE’s
          customers. These costs amounted to $7 million in each of the years 2006,
          2005
          and 2004. Every three years, the MoPSC requires UE to file an updated cost
          study
          for decommissioning its Callaway nuclear plant. Electric rates may be adjusted
          at such times to reflect changed estimates. The latest study was filed
          in 2005.
          Minor tritium contamination was discovered on the Callaway nuclear plant
          site in
          the summer of 2006. Existing facts and regulatory requirements indicate
          that
          this discovery will not cause any significant increase in a decommissioning
          cost
          estimate when the next study is conducted. Costs collected from customers
          are
          deposited in an external trust fund to provide for the Callaway nuclear
          plant’s
          decommissioning. If the assumed return on trust assets is not earned, we
          believe
          that it is probable that any such earnings deficiency will be recovered
          in
          rates. The fair value of the nuclear decommissioning trust fund for UE’s
          Callaway nuclear plant is reported in Nuclear Decommissioning Trust Fund
          in
          Ameren’s and UE’s Consolidated Balance Sheets. This amount is legally restricted
          and may be used only to fund the costs of nuclear decommissioning. Changes
          in
          the fair value of the trust fund are recorded as an increase or decrease
          to the
          nuclear decommissioning trust fund and to a regulatory asset.
 
 **NOTE
          10 – OTHER COMPREHENSIVE INCOME**
 
 Comprehensive
          income includes net
          income as reported on the statements of income and all other changes in
          common
          stockholders’ equity, except those resulting from transactions with common
          shareholders. A reconciliation of net income to comprehensive income for
          the
          three and nine months ended September 30, 2007 and 2006, is shown below
          for the
          Ameren Companies:
 
 
 **Three
                    Months**
                
                
                **Nine
                    Months****2007**
                
                
                **2006**
                
                
                **2007**
                
                
                **2006****Ameren:(a)**Net
                    income
                
                **$**
                **244**
                
                
                $
                293
                
                
                **$**
                **510**
                
                
                $
                486Unrealized
                    gain on derivative hedging instruments, net of taxes of $8, $6,
                  $6
                    and $1, respectively
                
                ****
                **15**
                
                
                
                14
                
                
                ****
                **10**
                
                
                
                5Reclassification
                    adjustments for (gain) included in net income, net of
                  taxes
                    of $9, $1, $19 and $3, respectively
                
                ****
                **(17**
                **)**
                
                
                (1
                )
                
                ****
                **(33**
                **)**
                
                
                (4
                )
   53
  
 **Three
                    Months**
                
                
                
                **Nine
                    Months****2007**
                
                
                
                **2006**
                
                
                
                **2007**
                
                
                
                **2006**Adjustment
                    to pension and benefit obligation, net of taxes (benefit) of
                    $1,
                  $-,
                    $(2) and $-, respectively
                
                ****
                **1**
                
                
                
                -
                
                
                ****
                **2**
                
                
                
                -Total
                    comprehensive income, net of taxes
                
                **$**
                **243**
                
                
                $
                306
                
                
                **$**
                **489**
                
                
                $
                487
 **UE:**Net
                    income
                
                **$**
                **193**
                
                
                $
                166
                
                
                **$**
                **307**
                
                
                $
                309Unrealized
                    gain on derivative hedging instruments, net of taxes of $3, $5,
                  $3
                    and $2, respectively
                
                ****
                **5**
                
                
                
                8
                
                
                ****
                **4**
                
                
                
                4Reclassification
                    adjustments for (gain) included in net income, net of
                  taxes
                    of $1, $3, $2 and $3, respectively
                
                ****
                **(1**
                **)**
                
                
                (5
                )
                
                ****
                **(3**
                **)**
                
                
                (4
                )Total
                    comprehensive income, net of taxes
                
                **$**
                **197**
                
                
                $
                169
                
                
                **$**
                **308**
                
                
                $
                309**CIPS:**Net
                    income
                
                **$**
                **1**
                
                
                $
                29
                
                
                **$**
                **19**
                
                
                $
                43Unrealized
                    (loss) on derivative hedging instruments, net of taxes (benefit)
                  of
                    $-, $-, $- and $(3), respectively
                
                ****
                **-**
                
                
                
                (1
                )
                
                ****
                **-**
                
                
                
                (5
                )Reclassification
                    adjustments for (gain) included in net income, net of
                  taxes
                    of $-, $-, $1 and $1, respectively
                
                ****
                **(1**
                **)**
                
                
                -
                
                
                ****
                **(1**
                **)**
                
                
                (1
                )Total
                    comprehensive income, net of taxes
                
                **$**
                **-**
                
                
                $
                28
                
                
                **$**
                **18**
                
                
                $
                37**Genco:**Net
                    income
                
                **$**
                **25**
                
                
                $
                19
                
                
                **$**
                **84**
                
                
                $
                27Unrealized
                    gain (loss) on derivative hedging instruments, net of taxes
                  (benefit)of
                    $-, $2, $(1) and $2, respectively
                
                ****
                **-**
                
                
                
                3
                
                
                ****
                **(2**
                **)**
                
                
                3Reclassification
                    adjustments for (gain) included in net income, net of
                  taxes
                    of $-, $2, $- and $1, respectively
                
                ****
                **-**
                
                
                
                (2
                )
                
                ****
                **-**
                
                
                
                (1
                )Adjustment
                    to pension and benefit obligation, net of taxes (benefit) of
                    $1,
                  $-,
                    $(1) and $-, respectively
                
                ****
                **1**
                
                
                
                -
                
                
                ****
                **(1**
                **)**
                
                
                -Total
                    comprehensive income, net of taxes
                
                **$**
                **26**
                
                
                $
                20
                
                
                **$**
                **81**
                
                
                $
                29**CILCORP:**Net
                    income
                
                **$**
                **1**
                
                
                $
                13
                
                
                **$**
                **34**
                
                
                $
                22Unrealized
                    (loss) on derivative hedging instruments, net of taxes (benefit)
                  of
                    $(1), $(3), $- and $(13), respectively
                
                ****
                **(1**
                **)**
                
                
                (4
                )
                
                ****
                **(1**
                **)**
                
                
                (19
                )Reclassification
                    adjustments for (gain) included in net income, net of
                  taxes
                    of $-, $-, $1 and $-, respectively
                
                ****
                **-**
                
                
                
                -
                
                
                ****
                **(2**
                **)**
                
                
                (1
                )Adjustment
                    to pension and benefit obligation, net of taxes of $-, $-, $-
                    and
                  $-,
                    respectively
                
                ****
                **-**
                
                
                
                -
                
                
                ****
                **1**
                
                
                
                -Total
                    comprehensive income, net of taxes
                
                **$**
                **-**
                
                
                $
                9
                
                
                **$**
                **32**
                
                
                $
                2**CILCO:**Net
                    income
                
                **$**
                **10**
                
                
                $
                19
                
                
                **$**
                **58**
                
                
                $
                44Unrealized
                    (loss) on derivative hedging instruments, net of taxes (benefit)
                  of
                    $-, $(3), $- and $(13), respectively
                
                ****
                **-**
                
                
                
                (4
                )
                
                ****
                **-**
                
                
                
                (19
                )Reclassification
                    adjustments for (gain) included in net income, net of
                  taxes
                    of $-, $-, $1 and $-, respectively
                
                ****
                **-**
                
                
                
                -
                
                
                ****
                **(2**
                **)**
                
                
                -Total
                    comprehensive income, net of taxes
                
                **$**
                **10**
                
                
                $
                15
                
                
                **$**
                **56**
                
                
                $
                25**IP:**Net
                    income (loss)
                
                **$**
                **(4**
                **)**
                
                $
                43
                
                
                **$**
                **18**
                
                
                $
                63Unrealized
                    (loss) on derivative hedging instruments, net of taxes (benefit)
                  of
                    $-, $(4), $- and $(1), respectively
                
                ****
                **-**
                
                
                
                (6
                )
                
                ****
                **-**
                
                
                
                (2
                )Reclassification
                    adjustments for loss included in net income, net of taxes
                  (benefit)
                    of $-, $(4), $- and $(1), respectively
                
                ****
                **-**
                
                
                
                6
                
                
                ****
                **-**
                
                
                
                2Total
                    comprehensive income (loss), net of taxes
                
                **$**
                **(4**
                **)**
                
                $
                43
                
                
                **$**
                **18**
                
                
                $
                63
 
 (a)
                Includes
                    amounts for Ameren registrant and nonregistrant subsidiaries
                    and
                    intercompany eliminations.
 
 **NOTE
          11 – RETIREMENT BENEFITS**
 
 Ameren’s
          pension plans are funded in compliance with income tax regulations and
          federal
          funding requirements. We previously did not expect future contributions
          to be
          required until 2009, at which time we had expected a required contribution
          of
          $75 million to $125 million, to maintain minimum funding levels for Ameren’s
          pension plans. In May 2007, the MoPSC issued an electric rate order for
          UE that
          allows UE to recover through customer rates pension expense incurred under
          GAAP.
          Consequently, Ameren expects to fund its pension plans at a level equal
          to the
          pension expense. Based on Ameren's assumptions at December 31, 2006, and
          reflecting this pension funding policy, Ameren now expects annual voluntary
          contributions of $45 million to $70 million in each of the next five years.
          These amounts are estimates and may change with actual stock market performance,
          changes in interest rates, any pertinent changes in government regulations,
          and
          any voluntary contributions.
  54
 Ameren
          made a contribution to its
          postretirement benefit plan of $26 million during the nine months ended
          September 30, 2007 as compared to $37 million during the nine months ended
          September 30, 2006.
  The
          following table presents the
          components of the net periodic benefit cost for our pension and postretirement
          benefit plans for the three and nine months ended September 30, 2007 and
          2006:
 
 **Pension
                    Benefits(a)**
                
                
                **Postretirement
                    Benefits(a)****Three
                    Months**
                
                
                **Nine
                    Months**
                
                
                **Three
                    Months**
                
                
                **Nine
                    Months****2007**
                
                
                **2006**
                
                
                **2007**
                
                
                **2006**
                
                
                **2007**
                
                
                **2006**
                
                
                **2007**
                
                
                **2006**Service
                    cost
                **$**
                **16**
                
                
                $
                16
                
                
                **$**
                **47**
                
                
                $
                47
                
                
                **$**
                **5**
                
                
                $
                5
                
                
                **$**
                **15**
                
                
                $
                16Interest
                    cost
                ****
                **45**
                
                
                
                43
                
                
                ****
                **135**
                
                
                
                129
                
                
                ****
                **18**
                
                
                
                18
                
                
                ****
                **54**
                
                
                
                51Expected
                    return on plan assets
                ****
                **(51**
                **)**
                
                
                (49
                )
                
                ****
                **(154**
                **)**
                
                
                (147
                )
                
                ****
                **(13**
                **)**
                
                
                (12
                )
                
                ****
                **(39**
                **)**
                
                
                (35
                )Amortization
                    of:Transition
                    obligation
                ****
                **-**
                
                
                
                -
                
                
                ****
                **-**
                
                
                
                -
                
                
                ****
                **1**
                
                
                
                -
                
                
                ****
                **2**
                
                
                
                1Prior
                    service cost
                    (benefit)
                ****
                **3**
                
                
                
                3
                
                
                ****
                **9**
                
                
                
                8
                
                
                ****
                **(2**
                **)**
                
                
                (2
                )
                
                ****
                **(6**
                **)**
                
                
                (5
                )Actuarial
                    loss
                ****
                **5**
                
                
                
                10
                
                
                ****
                **16**
                
                
                
                31
                
                
                ****
                **6**
                
                
                
                9
                
                
                ****
                **18**
                
                
                
                26Net
                    periodic benefit cost
                **$**
                **18**
                
                
                $
                23
                
                
                **$**
                **53**
                
                
                $
                68
                
                
                **$**
                **15**
                
                
                $
                18
                
                
                **$**
                **44**
                
                
                $
                54
 
 (a)
                Includes
                    amounts for Ameren registrant and nonregistrant
                    subsidiaries.
 
 UE,
          CIPS,
          Genco, CILCORP, CILCO, IP and EEI are participants in Ameren’s plans and are
          responsible for their proportional share of the pension and postretirement
          costs. The following table presents the pension costs and the postretirement
          benefit costs incurred for the three and nine months ended September 30,
          2007
          and 2006:
 
 **Pension
                    Costs**
                
                
                **Postretirement
                    Costs****Three
                    Months**
                
                
                **Nine
                    Months**
                
                
                **Three
                    Months**
                
                
                **Nine
                    Months****2007**
                
                
                **2006**
                
                
                **2007**
                
                
                **2006**
                
                
                **2007**
                
                
                **2006**
                
                
                **2007**
                
                
                **2006**Ameren
                **$**
                **18**
                
                
                $
                23
                
                
                **$**
                **53**
                
                
                $
                68
                
                
                **$**
                **15**
                
                
                $
                18
                
                
                **$**
                **44**
                
                
                $
                54UE
                ****
                **10**
                
                
                
                13
                
                
                ****
                **30**
                
                
                
                39
                
                
                ****
                **7**
                
                
                
                9
                
                
                ****
                **22**
                
                
                
                28CIPS
                ****
                **2**
                
                
                
                3
                
                
                ****
                **6**
                
                
                
                9
                
                
                ****
                **2**
                
                
                
                2
                
                
                ****
                **5**
                
                
                
                6Genco
                ****
                **2**
                
                
                
                2
                
                
                ****
                **4**
                
                
                
                6
                
                
                ****
                **1**
                
                
                
                1
                
                
                ****
                **3**
                
                
                
                3CILCORP
                ****
                **2**
                
                
                
                3
                
                
                ****
                **7**
                
                
                
                8
                
                
                ****
                **2**
                
                
                
                3
                
                
                ****
                **5**
                
                
                
                7IP
                ****
                **1**
                
                
                
                2
                
                
                ****
                **4**
                
                
                
                6
                
                
                ****
                **2**
                
                
                
                3
                
                
                ****
                **8**
                
                
                
                10EEI
                ****
                **1**
                
                
                
                -
                
                
                ****
                **2**
                
                
                
                -
                
                
                ****
                **1**
                
                
                
                -
                
                
                ****
                **1**
                
                
                
                -
 
 (a)
                Includes
                    amounts for Ameren registrant and nonregistrant
                    subsidiaries.
 
 As
          discussed above and in Note 2 –
Rate and Regulatory Matters, the MoPSC issued an order that included approval
          of
          a regulatory tracking mechanism for pension and postretirement benefit
          costs.
          The difference between the level of pension and postretirement benefit
          costs
          incurred by UE under GAAP and the level of such costs built into rates
          effective
          June 4, 2007, will be tracked by means of a regulatory asset or liability,
          as
          applicable. The resulting regulatory asset or liability will be included
          in rate
          base for purposes of setting new rates in UE’s next electric rate case and
          amortized over five years beginning with the effective date of electric
          rates
          approved in UE’s next rate case. As of September 30, 2007, the regulatory
          liability was $6 million.
 
 **NOTE
          12 – SEGMENT INFORMATION**
 
 Ameren
          has three reportable segments:
          Missouri Regulated, Illinois Regulated and Non-rate-regulated Generation.
          The
          Missouri Regulated segment for Ameren includes all the operations of UE’s
          business as described in Note 1 – Summary of Significant Accounting Policies,
          except for
          UE’s
          40% interest in EEI and other non-rate regulated activities,
          which are included in Other. The Illinois Regulated segment for Ameren
          consists
          of the regulated electric and gas transmission and distribution businesses
          of
          CIPS, CILCO, and IP, as described in Note 1 – Summary of Significant Accounting
          Policies. The Non-rate-regulated Generation segment for Ameren primarily
          consists of the operations or activities of Genco, the CILCORP parent company,
          AERG, EEI, and Marketing Company. Other primarily includes Ameren parent
          company
          activities and the leasing activities of CILCORP, AERG, Resources Company,
          and
          CIPSCO Investment Company.
  UE
          has
          one reportable segment: Missouri Regulated. The Missouri Regulated segment
          for
          UE includes all the operations of UE’s business as described in Note 1 – Summary
          of Significant Accounting Policies, except for UE’s 40%
          interest in EEI and other non-rate-regulated activities, which are included
          in
          Other.
 
 CILCORP
          and CILCO have two reportable
          segments: Illinois Regulated and Non-rate-regulated Generation. The Illinois
          Regulated segment for CILCORP and CILCO consists of the regulated electric
          and
          gas transmission and distribution businesses of CILCO. The Non-rate-regulated
          Generation segment for CILCORP and CILCO consists of the generation business
          of
          AERG. Other for CILCORP and CILCO comprises leveraged lease investments,
          parent
          company activity, and minor activities not reported in the Illinois Regulated
          or
          Non-rate-regulated Generation segments for CILCORP.
 55
 
 The
          following table presents information about the reported revenues and net
          income
          of Ameren for the three and nine months ended September 30, 2007 and 2006,
          and
          total assets as of September 30, 2007 and December 31, 2006.
 
 **Three
                    Months**
                
                **Missouri**
                  **Regulated**
                
                
                **Illinois**
                  **Regulated**
                
                
                **Non-rate-regulated
                    Generation**
                
                
                **Other**
                
                
                **Intersegment
                    Eliminations**
                
                
                **Consolidated****2007:**External
                    revenues
                
                **$**
                **934**
                
                
                **$**
                **702**
                
                
                **$**
                **372**
                
                
                **$**
                **(11**
                **)**
                
                **$**
                **-**
                
                
                **$**
                **1,997**Intersegment
                    revenues
                
                ****
                **11**
                
                
                ****
                **21**
                
                
                ****
                **122**
                
                
                ****
                **10**
                
                
                ****
                **(164**
                **)**
                
                ****
                **-**Net
                    income (loss)(a)
                
                ****
                **179**
                
                
                ****
                **(9**
                **)**
                
                ****
                **73**
                
                
                ****
                **1**
                
                
                ****
                **-**
                
                
                ****
                **244****2006:**External
                    revenues
                
                $
                811
                
                
                $
                836
                
                
                $
                256
                
                
                $
                7
                
                
                $
                -
                
                
                $
                1,910Intersegment
                    revenues
                
                
                46
                
                
                
                4
                
                
                
                212
                
                
                
                (1
                )
                
                
                (261
                )
                
                
                -Net
                    income(a)
                
                
                142
                
                
                
                83
                
                
                
                62
                
                
                
                6
                
                
                
                -
                
                
                
                293**Nine
                    Months****2007:**External
                    revenues
                
                **$**
                **2,258**
                
                
                **$**
                **2,503**
                
                
                **$**
                **980**
                
                
                **$**
                **(2**
                **)**
                
                **$**
                **-**
                
                
                **$**
                **5,739**Intersegment
                    revenues
                
                ****
                **34**
                
                
                ****
                **34**
                
                
                ****
                **379**
                
                
                ****
                **30**
                
                
                ****
                **(477**
                **)**
                
                ****
                **-**Net
                    income(a)
                
                ****
                **264**
                
                
                ****
                **45**
                
                
                ****
                **197**
                
                
                ****
                **4**
                
                
                ****
                **-**
                
                
                ****
                **510****2006:**External
                    revenues
                
                $
                2,021
                
                
                $
                2,501
                
                
                $
                703
                
                
                $
                35
                
                
                $
                -
                
                
                $
                5,260Intersegment
                    revenues
                
                
                182
                
                
                
                12
                
                
                
                594
                
                
                
                17
                
                
                
                (805
                )
                
                
                -Net
                    income(a)
                
                
                255
                
                
                
                125
                
                
                
                102
                
                
                
                4
                
                
                
                -
                
                
                
                486**As
                    of September 30, 2007:**Total
                    assets
                
                $
                10,611
                
                
                $
                6,487
                
                
                $
                3,938
                
                
                $
                1,131
                
                
                $
                (1,762
                )
                
                $
                20,405**As
                    of December 31, 2006:**Total
                    assets
                
                $
                10,251
                
                
                $
                6,226
                
                
                $
                3,612
                
                
                $
                1,161
                
                
                $
                (1,672
                )
                
                $
                19,578
 
 (a)
                Represents
                    net income available to common shareholders; 100% of CILCO’s preferred
                    stock dividends are included in the Illinois Regulated
                    segment.
 
 The
          following table presents information about the reported revenues and net
          income
          of UE for the three and nine months ended September 30, 2007 and 2006,
          and total
          assets as of September 30, 2007 and December 31, 2006.
 
 **Three
                    Months**
                **Missouri
                  Regulated**
                
                **Other
                    (a)**
                
                
                **Consolidated**
                  **UE****2007:**Revenues
                
                **$**
                **945**
                
                
                **$**
                **-**
                
                
                **$**
                **945**Net
                    income(b)
                
                ****
                **179**
                
                
                ****
                **13**
                
                
                ****
                **192****2006:**Revenues
                
                $
                857
                
                
                $
                -
                
                
                $
                857Net
                    income(b)
                
                
                142
                
                
                
                23
                
                
                
                165**Nine
                    Months****2007:**Revenues
                
                **$**
                **2,292**
                
                
                **$**
                **-**
                
                
                **$**
                **2,292**Net
                    income(b)
                
                ****
                **264**
                
                
                ****
                **39**
                
                
                ****
                **303****2006:**Revenues
                
                $
                2,203
                
                
                $
                -
                
                
                $
                2,203Net
                    income(b)
                
                
                255
                
                
                
                50
                
                
                
                305**As
                    of September 30, 2007:**Total
                    assets
                
                $
                10,611
                
                
                $
                52
                
                
                $
                10,663**As
                    of December 31, 2006:**Total
                    assets
                
                $
                10,251
                
                
                $
                36
                
                
                $
                10,287
 
 (a)
                Includes
                    40% interest in EEI.
 (b)
                Represents
                    net income available to the common shareholder
                    (Ameren).
 
 The
          following table presents information about the reported revenues and net
          income
          of CILCORP for the three and nine months ended September 30, 2007 and 2006,
          and
          total assets as of September 30, 2007 and December 31, 2006.
 
 **Three
                    Months**
                
                **Illinois**
                  **Regulated**
                
                
                **Non-rate-regulated
                    Generation**
                
                
                **CILCORP**
                  **Other**
                
                
                **Intersegment**
                  **Eliminations**
                
                
                **Consolidated**
                  **CILCORP****2007:**External
                    revenues
                
                **$**
                **142**
                
                
                **$**
                **64**
                
                
                **$**
                **-**
                
                
                **$**
                **-**
                
                
                **$**
                **206**Intersegment
                    revenues
                
                ****
                **-**
                
                
                ****
                **1**
                
                
                ****
                **-**
                
                
                ****
                **(1**
                **)**
                
                ****
                **-**Net
                    income (loss)(a)
                
                ****
                **(4**
                **)**
                
                ****
                **5**
                
                
                ****
                **-**
                
                
                ****
                **-**
                
                
                ****
                **1**
   56
 
 **Three
                    Months**
                
                **Illinois**
                  **Regulated**
                
                
                **Non-rate-regulated
                    Generation**
                
                
                **CILCORP**
                  **Other**
                
                
                **Intersegment**
                  **Eliminations**
                
                
                **Consolidated**
                  **CILCORP****2006:**External
                    revenues
                
                $
                153
                
                
                $
                5
                
                
                $
                -
                
                
                $
                -
                
                
                $
                158Intersegment
                    revenues
                
                
                -
                
                
                
                54
                
                
                
                -
                
                
                
                (54
                )
                
                
                -Net
                    income (loss)(a)
                
                
                12
                
                
                
                2
                
                
                
                (1
                )
                
                
                -
                
                
                
                13**Nine
                    Months****2007:**External
                    revenues
                
                **$**
                **537**
                
                
                **$**
                **202**
                
                
                **$**
                **-**
                
                
                **$**
                **-**
                
                
                **$**
                **739**Intersegment
                    revenues
                
                ****
                **-**
                
                
                ****
                **3**
                
                
                ****
                **-**
                
                
                ****
                **(3**
                **)**
                
                ****
                **-**Net
                    income(a)
                
                ****
                **11**
                
                
                ****
                **23**
                
                
                ****
                **-**
                
                
                ****
                **-**
                
                
                ****
                **34****2006:**External
                    revenues
                
                $
                523
                
                
                $
                23
                
                
                $
                -
                
                
                $
                -
                
                
                $
                546Intersegment
                    revenues
                
                
                -
                
                
                
                139
                
                
                
                -
                
                
                
                (139
                )
                
                
                -Net
                    income (loss)(a)
                
                
                23
                
                
                
                3
                
                
                
                (4
                )
                
                
                -
                
                
                
                22**As
                    of September 30, 2007:**Total
                    assets(b)
                
                $
                1,253
                
                
                $
                1,390
                
                
                $
                4
                
                
                $
                (194
                )
                
                $
                2,453**As
                    of December 31, 2006:**Total
                    assets(b)
                
                $
                1,208
                
                
                $
                1,246
                
                
                $
                4
                
                
                $
                (217
                )
                
                $
                2,241
  (a)
                Represents
                    net income available to the common shareholder (Ameren); 100%
                    of CILCO’s
                    preferred stock dividends are included in the Illinois Regulated
                    segment.
 (b)
                Total
                    assets for Illinois Regulated include an allocation of goodwill
                    and other
                    purchase accounting amounts related to CILCO that are recorded
                    at CILCORP
                    (parent company).
 
 The
          following table presents information about the reported revenues and net
          income
          of CILCO for the three and nine months ended September 30, 2007 and 2006,
          and
          total assets as of September 30, 2007 and December 31, 2006.
 
 **Three
                    Months**
                
                **Illinois**
                  **Regulated**
                
                
                **Non-rate-regulated
                    Generation**
                
                
                **CILCO**
                  **Other**
                
                
                **Intersegment**
                  **Eliminations**
                
                
                **Consolidated**
                  **CILCO****2007:**External
                    revenues
                
                **$**
                **142**
                
                
                **$**
                **64**
                
                
                **$**
                **-**
                
                
                **$**
                **-**
                
                
                **$**
                **206**Intersegment
                    revenues
                
                ****
                **-**
                
                
                ****
                **1**
                
                
                ****
                **-**
                
                
                ****
                **(1**
                **)**
                
                ****
                **-**Net
                    income (loss)(a)
                
                ****
                **(4**
                **)**
                
                ****
                **14**
                
                
                ****
                **-**
                
                
                ****
                **-**
                
                
                ****
                **10****2006:**External
                    revenues
                
                $
                153
                
                
                $
                5
                
                
                $
                (1
                )
                
                $
                -
                
                
                $
                157Intersegment
                    revenues
                
                
                -
                
                
                
                54
                
                
                
                -
                
                
                
                (54
                )
                
                
                -Net
                    income (loss)(a)
                
                
                12
                
                
                
                8
                
                
                
                (1
                )
                
                
                -
                
                
                
                19**Nine
                    Months****2007:**External
                    revenues
                
                **$**
                **537**
                
                
                **$**
                **202**
                
                
                **$**
                **-**
                
                
                **$**
                **-**
                
                
                **$**
                **739**Intersegment
                    revenues
                
                ****
                **-**
                
                
                ****
                **3**
                
                
                ****
                **-**
                
                
                ****
                **(3**
                **)**
                
                ****
                **-**Net
                    income(a)
                
                ****
                **11**
                
                
                ****
                **46**
                
                
                ****
                **-**
                
                
                ****
                **-**
                
                
                ****
                **57****2006:**External
                    revenues
                
                $
                523
                
                
                $
                23
                
                
                $
                -
                
                
                $
                -
                
                
                $
                546Intersegment
                    revenues
                
                
                -
                
                
                
                139
                
                
                
                -
                
                
                
                (139
                )
                
                
                -Net
                    income (loss)(a)
                
                
                23
                
                
                
                24
                
                
                
                (4
                )
                
                
                -
                
                
                
                43**As
                    of September 30, 2007:**Total
                    assets
                
                $
                1,063
                
                
                $
                785
                
                
                $
                1
                
                
                $
                (1
                )
                
                $
                1,848**As
                    of December 31, 2006:**Total
                    assets
                
                $
                1,020
                
                
                $
                642
                
                
                $
                1
                
                
                $
                (22
                )
                
                $
                1,641
 
 (a)
                Represents
                    net income available to the common shareholder (CILCORP); 100%
                    of CILCO’s
                    preferred stock dividends are included in the Illinois Regulated
                    segment.
 
 **ITEM
            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
            OPERATIONS.**
 
 **OVERVIEW**
 
 **Ameren
            Executive Summary**
 
 Ameren’s
            earnings in the third quarter
            of 2007 and the first nine months of 2007 were reduced by the costs associated
            with the Illinois electric settlement agreement, which is discussed below,
            changes in the Ameren Illinois Utilities’ electric rate structure and the
            rising costs of operating and investing in our Missouri and Illinois
            rate-regulated segments, including increased reliability expenditures.
            During
            the third quarter of 2007, these factors more than offset higher margin
            in the
            Missouri and Illinois rate-regulated business segments from warmer
 57
  summer
            weather, the implementation of the June 2007 Missouri electric rate
            order and higher electric margin in Non-rate-regulated Generation due to
            the replacement of below-market power sales contracts that expired in
            2006.
 
 Ameren’s
            earnings in the first nine
            months of 2007 were reduced by $19 million (after taxes), or 9 cents per share,
            as a result of the cost of restoration efforts associated with a severe
            ice
            storm January 2007. Storm-related costs in the first nine months of 2006
            reduced
            net income by an estimated $25 million (after taxes), or 13 cents per
            share. In
            addition, costs related to participation in the MISO Day Two Energy Market
            were
            $10 million (after taxes), or 5 cents per share, higher in the first
            nine months
            of 2007 over the same period in 2006 because of a March 2007 FERC order
            that
            resettled such costs among market participants retroactive to 2005. Ameren’s net
            income in the first quarter of 2007 benefited from the reversal of a
            $10 million
            charge (after taxes), or 5 cents per share, originally recorded in 2006
            related
            to funding for low-income energy assistance and energy efficiency programs
            in
            Illinois. These commitments were terminated in the first quarter of 2007
            as a
            result of credit rating downgrades resulting from Illinois legislative
            actions
            during that period.
 
 In
            late
            August 2007, the Illinois governor signed into law the enabling legislation
            for
            the Illinois electric settlement agreement that was reached among key
            stakeholders in Illinois deigned to address the increase in electric
            rates that
            occurred after the state’s electric rate freeze ended on January 1, 2007, and to
            address the future power procurement process in Illinois. As part of
            the
            Illinois settlement agreement, the electric customers of the Ameren Illinois
            Utilities will receive $488 million in bill credits and refunds and other
            relief
            through 2010 as part of an approximately $1 billion state-wide relief
            package.
            The Ameren Illinois Utilities, Genco and AERG will be funding $150 million,
            in the aggregate, of this program over a four-year period. The total
            impact to
            Ameren’s earnings per share is expected to be about 45 cents per share
            spread across four years, including 26 cents per share in 2007. The Ameren
            Illinois Utilities began sending checks and providing bill credits to
            customers
            in September 2007.  Ameren recorded 18 cents per share of these costs in
            the third quarter of 2007. Other key aspects of the settlement agreement
            are
            currently being implemented including those related to power procurement
            in the
            future.
 
 Ameren’s
            Illinois Regulated business segment experienced a significant earnings
            decline
            during the third quarter and first nine months of 2007 compared with
            2006 due
            to, among other things, its current levels of electric and gas delivery
            service
            rates being insufficient to recover its current costs of providing service
            to
            its customers. In early November 2007, the Ameren Illinois Utilities
            filed
            requests with the ICC for a combined $247 million increase in electric
            and gas
            rates. As the Illinois Regulated business segment’s recent earnings results
            indicate, these rate increase requests are clearly needed by the Ameren
            Illinois
            Utilities and are consistent with the Ameren Illinois Utilities’ need to recover
            their costs of providing safe and reliable service to their customers
            and
            earning a reasonable return on their investments. Earlier this year,
            the Ameren
            Illinois Utilities pledged to keep the overall annual residential electric
            bill
            increases in Illinois to less than 10 percent per year for each utility
            in their
            next rate filings. These Illinois rate filings are consistent with that
            pledge.
            This self-imposed rate increase limit could result in approximately $30
            million
            of the increase request not being phased-in until the second year of
            implementation if the full request is granted by the ICC. The Ameren
            Illinois
            Utilities’ also requested rate mechanisms for bad debt expenses, electric
            infrastructure investments and the decoupling of natural gas revenues
            from
            volumes. The ICC has eleven months to make a decision on these filings.
            With
            rising costs, including fuel and related transportation, purchased power,
            labor
            and material costs, coupled with increased capital and operations and
            maintenance expenditures targeted at enhanced distribution system reliability
            and environmental compliance, Ameren, UE, CIPS, CILCO and IP expect to
            experience regulatory lag until requests to increase rates to recover
            such costs
            are granted by state regulators. As a result, Ameren, UE, CIPS, CILCO
            and IP
            expect to be entering a period where more frequent rate cases will be
            necessary.
 
 **General**
 
 Ameren,
            headquartered in St. Louis, Missouri, is a public utility holding company
            under
            PUHCA 2005 administered by FERC. Ameren’s primary assets are the common stock of
            its subsidiaries. Ameren’s subsidiaries, which are separate, independent legal
            entities with separate businesses, assets and liabilities, operate
            rate-regulated electric generation, transmission and distribution businesses,
            rate-regulated natural gas transmission and distribution businesses and
            non-rate-regulated electric generation businesses in Missouri and Illinois,
            as
            discussed below. Dividends on Ameren’s common stock are dependent on
            distributions made to it by its subsidiaries. Ameren’s principal subsidiaries
            are listed below.
 
 ·
                  UE
                      operates a rate-regulated electric generation, transmission
                      and
                      distribution business, and a rate-regulated natural gas transmission
                      and
                      distribution business in Missouri.
 ·
                  CIPS
                      operates a rate-regulated electric and natural gas transmission
                      and
                      distribution business in Illinois.
 ·
                  Genco
                      operates a non-rate-regulated electric generation
                      business.
  
 58
 ·
                  CILCO,
                      a subsidiary of CILCORP (a holding company), operates a rate-regulated
                      electric and natural gas transmission and distribution business
                      and a
                      non-rate-regulated electric generation business (through its
                      subsidiary,
                      AERG) in Illinois.
 ·
                  IP
                      operates a rate-regulated electric and natural gas transmission
                      and
                      distribution business in Illinois.
 
 In
            addition to presenting results of
            operations and earnings amounts in total, we present certain information
            in
            cents per share. These amounts reflect factors that directly affect Ameren’s
            earnings. We believe this per share information helps readers to understand
            the
            impact of these factors on Ameren’s earnings per share. All references in this
            report to earnings per share are based on average diluted common shares
            outstanding during the applicable period. All tabular dollar amounts
            are in
            millions, unless otherwise indicated.
 
 **RESULTS
            OF OPERATIONS**
 
 **Earnings
            Summary**
 
 Our
            results of operations and financial position are affected by many factors.
            Weather, economic conditions, and the actions of key customers or competitors
            can significantly affect the demand for our services. Our results are
            also
            affected by seasonal fluctuations: winter heating and summer cooling
            demands.
            About 90% of Ameren’s 2006 revenues were directly subject to state or federal
            regulation. This regulation can have a material impact on the price we
            charge
            for our services. Non-rate-regulated sales are subject to market conditions
            for
            power. We principally use coal, nuclear fuel, natural gas, and oil in
            our
            operations. The prices for these commodities can fluctuate significantly
            due to
            the global economic and political environment, weather, supply and demand,
            and
            many other factors. We do not currently have fuel or purchased power
            cost
            recovery mechanisms in Missouri for our electric utility business. We
            do have
            natural gas cost recovery mechanisms for our Illinois and Missouri gas
            delivery
            businesses and purchased power cost recovery mechanisms for our Illinois
            electric delivery businesses. See Note 2 – Rate and Regulatory Matters to our
            financial statements under Part I, Item 1, for a discussion of pending
            and
            recently-decided rate cases and the electric settlement agreement in
            Illinois.
            Fluctuations in interest rates affect our cost of borrowing and our pension
            and
            postretirement benefits costs. We employ various risk management strategies
            to
            reduce our exposure to commodity risk and other risks inherent in our
            business.
            The reliability of our power plants and transmission and distribution
            systems,
            the level of purchased power costs, operating and administrative costs,
            and
            capital investment are key factors that we seek to control to optimize
            our
            results of operations, financial position, and liquidity.
 
 Ameren’s
            net income decreased to $244 million, or $1.18 per share, in the third
            quarter
            of 2007 from $293 million, or $1.42 per share, in the third quarter of
            2006. Net income in the Missouri Regulated and Non-rate-regulated Generation
            segments in the three months ended September 30, 2007, increased by $37
            million
            and $11 million, respectively, from the prior-year period, while net
            earnings in the Illinois Regulated segment declined by $92
            million.
 
 Ameren’s
            net income increased to $510 million, or $2.46 per share, in the first
            nine
            months of 2007 from $486 million, or $2.37 per share, in the first nine
            months of 2006. Net income increased in the Missouri Regulated and
            Non-rate-regulated Generation segments by $9 million and  $95 million,
            respectively, in the first nine months of 2007 compared to the prior-year
            period, while net income in the Illinois Regulated segment decreased
            by $80
            million.
 
 Earnings
            were favorably impacted in the third quarter and first nine months of
            2007 as
            compared with the same periods in 2006 by:
 
 ·
                  higher
                      margins in the Non-rate-regulated Generation segment due to
                      the
                      replacement of below-market power sales contracts, which expired
                      in 2006,
                      with higher-priced contracts;
 ·
                  favorable
                      weather conditions;
 ·
                  the
                      absence of costs in the current-year periods that were incurred
                      in the
                      prior-year periods related to the reservoir breach at UE’s Taum Sauk plant
                      (4 cents per share and
                    9
                      cents per share, respectively);
 ·
                  higher
                      electric rates, lower depreciation expense and decreased income tax
                      expense in the Missouri Regulated segment pursuant to the MoPSC
                      rate order
                      for UE issued in
                    May
                      2007 (9 cents per share and 11 cents per share, respectively);
                      and
 ·
                  the
                      absence of costs associated with outages caused by severe storms
                      in the
                      current year periods that were incurred in the prior-year periods
                      (10
                      cents per share and 13 cents per share,
                      respectively).
 
 Earnings
            were negatively impacted in the third quarter and first nine months of
            2007 as
            compared with the same periods in 2006 by:
 
 ·
                  electric
                      rate relief and customer assistance programs provided to certain
                      Ameren
                      Illinois Utilities’ electric customers under the Illinois settlement
                      agreement  (18 cents per share) described in Note 2 – Rate and
                      Regulatory Matters to our financial statements under Part I,
                      Item 1, of
                      this report;
 ·
                  the
                      elimination of bundled tariffs and the rate redesign in
                      Illinois;
    59
 
 ·
                  higher
                      fuel and related transportation prices (9 cents per share and 23
                      cents per share, respectively);
 ·
                  higher
                      labor and employee benefit costs (4 cents per share and 12
                      cents per
                      share, respectively);
 ·
                  increased
                      depreciation and amortization expense (4 cents per share and 11
                      cents per share, respectively);
 ·
                  higher
                      financing costs (5 cents per share and 13 cents per share,
                      respectively);
                      and
 ·
                  lower emission
                      allowance sales (4 cents per share and 5 cents per share,
                      respectively).
 
 In
            addition to the above items affecting both periods, earnings were impacted
            in
            the first nine months of 2007 as compared with the first nine months
            of 2006 by
            the following items:
 Earnings
              were favorably impacted by:
  ·
                  the
                      reversal of an accrual originally recorded in 2006 in the Illinois
                      Regulated segment for contributions to assist customers through
                      the
                      Illinois Customer Elect electric rate increase phase-in plan
                      (5 cents per
                      share). The commitment to make these contributions was terminated
                      in 2007
                      as a result of credit rating agency downgrades resulting from
                      Illinois
                      legislative actions; and
 ·
                  the
                      lack of FERC fees related to UE’s Osage hydroelectric plant in the
                      current-year period that were incurred in the prior-year period
                      and the
                      capitalization of fees, pursuant to a May 2007 MoPSC order,
                      in the
                      current-year period (2 cents per
                      share).
  Earnings
              were negatively impacted by:
  ·
                  costs
                      associated with electric outages caused by a severe ice storm
                      in January
                      2007 (9 cents per share);
 ·
                  a
                      FERC order in March 2007 that reallocated costs related to
                      participation
                      in the MISO Day Two Energy Market among market participants
                      retroactive to
                      2005 (5 cents per share); and
 ·
                  the
                      cost of UE’s Callaway nuclear plant refueling and maintenance outage in
                      the second quarter of 2007 exceeding the cost of the unplanned outage at
                      the Callaway plant in the second quarter of 2006 (9 cents per
                      share).
 
 An
            increase in the number of common shares outstanding reduced Ameren’s earnings
            per share in the 2007 periods compared with the 2006 periods. Per share
            information presented above is based on average shares outstanding in
            2006.
  Because
            it is a holding company, Ameren’s net income and cash flows are primarily
            generated by its principal subsidiaries: UE, CIPS, Genco, CILCORP and
            IP. The
            following table presents the contribution by Ameren’s principal subsidiaries to
            Ameren’s consolidated net income for the three and nine months ended September
            30, 2007 and 2006:
 
 **Three
                      Months**
                  
                  
                  **Nine
                      Months****2007**
                  
                  
                  **2006**
                  
                  
                  **2007**
                  
                  
                  **2006**Net
                      income (loss):UE(a)
                  
                  **$**
                  **192**
                  
                  
                  $
                  165
                  
                  
                  **$**
                  **303**
                  
                  
                  $
                  305CIPS
                  
                  ****
                  **-**
                  
                  
                  
                  28
                  
                  
                  ****
                  **17**
                  
                  
                  
                  41Genco
                  
                  ****
                  **25**
                  
                  
                  
                  19
                  
                  
                  ****
                  **84**
                  
                  
                  
                  27CILCORP
                  
                  ****
                  **1**
                  
                  
                  
                  13
                  
                  
                  ****
                  **34**
                  
                  
                  
                  22IP
                  
                  ****
                  **(5**
                  **)**
                  
                  
                  42
                  
                  
                  ****
                  **16**
                  
                  
                  
                  61Other(b)
                  
                  ****
                  **31**
                  
                  
                  
                  26
                  
                  
                  ****
                  **56**
                  
                  
                  
                  30Ameren
                      net income
                  
                  **$**
                  **244**
                  
                  
                  $
                  293
                  
                  
                  **$**
                  **510**
                  
                  
                  $
                  486
 
 (a)
                  Includes
                      earnings from a non-rate-regulated 40% interest in
                      EEI.
 (b)
                  Includes
                      earnings from non-rate-regulated operations and a 40% interest
                      in EEI held
                      by Development Company, corporate general and administrative
                      expenses, and
                      intercompany eliminations.
 
 Below
            is a table of income statement
            components by segment for the three and nine months ended September 30,
            2007 and
            2006:
 
 **Missouri**
                    **Regulated**
                  
                  
                  **Illinois**
                    **Regulated**
                  
                  
                  **Non-rate-**
                    **regulated
                      Generation**
                  
                  
                  **Other
                      / Intersegment**
                    **Eliminations**
                  
                  
                  **Total****Three
                      Months 2007:**Electric
                      margin
                  
                  **$**
                  **677**
                  
                  
                  **$**
                  **185**
                  
                  
                  **$**
                  **267**
                  
                  
                  **$**
                  **(14**
                  **)**
                  
                  **$**
                  **1,115**Gas
                      margin
                  
                  ****
                  **9**
                  
                  
                  ****
                  **48**
                  
                  
                  ****
                  **-**
                  
                  
                  ****
                  **-**
                  
                  
                  ****
                  **57**Other
                      revenues
                  
                  ****
                  **2**
                  
                  
                  ****
                  **2**
                  
                  
                  ****
                  **-**
                  
                  
                  ****
                  **(4**
                  **)**
                  
                  ****
                  **-**Other
                      operations and
                      maintenance
                  
                  ****
                  **(222**
                  **)**
                  
                  ****
                  **(142**
                  **)**
                  
                  ****
                  **(79**
                  **)**
                  
                  ****
                  **16**
                  
                  
                  ****
                  **(427**
                  **)**
   60
  
 **Missouri**
                    **Regulated**
                  
                  
                  **Illinois**
                    **Regulated**
                  
                  
                  **Non-rate-regulated
                      Generation**
                  
                  
                  **Other
                      / Intersegment**
                    **Eliminations**
                  
                  
                  **Total****Three
                      Months 2007:**Depreciation
                      and
                      amortization
                  
                  ****
                  **(82**
                  **)**
                  
                  ****
                  **(54**
                  **)**
                  
                  ****
                  **(26**
                  **)**
                  
                  ****
                  **(7**
                  **)**
                  
                  ****
                  **(169**
                  **)**Taxes
                      other than income
                      taxes
                  
                  ****
                  **(69**
                  **)**
                  
                  ****
                  **(23**
                  **)**
                  
                  ****
                  **(6**
                  **)**
                  
                  ****
                  **1**
                  
                  
                  ****
                  **(97**
                  **)**Other
                      income and
                      (expenses)
                  
                  ****
                  **8**
                  
                  
                  ****
                  **5**
                  
                  
                  ****
                  **1**
                  
                  
                  ****
                  **-**
                  
                  
                  ****
                  **14**Interest
                      expense
                  
                  ****
                  **(49**
                  **)**
                  
                  ****
                  **(36**
                  **)**
                  
                  ****
                  **(28**
                  **)**
                  
                  ****
                  **3**
                  
                  
                  ****
                  **(110**
                  **)**Income
                      taxes
                  
                  ****
                  **(94**
                  **)**
                  
                  ****
                  **8**
                  
                  
                  ****
                  **(49**
                  **)**
                  
                  ****
                  **5**
                  
                  
                  ****
                  **(130**
                  **)**Minority
                      interest and preferred dividends
                  
                  ****
                  **(1**
                  **)**
                  
                  ****
                  **(2**
                  **)**
                  
                  ****
                  **(7**
                  **)**
                  
                  ****
                  **1**
                  
                  
                  ****
                  **(9**
                  **)**Net
                      income
                      (loss)
                  
                  **$**
                  **179**
                  
                  
                  **$**
                  **(9**
                  **)**
                  
                  **$**
                  **73**
                  
                  
                  **$**
                  **1**
                  
                  
                  **$**
                  **244****Three
                      Months 2006:**Electric
                      margin
                  
                  $
                  622
                  
                  
                  $
                  319
                  
                  
                  $
                  221
                  
                  
                  $
                  (18
                  )
                  
                  $
                  1,144Gas
                      margin
                  
                  
                  10
                  
                  
                  
                  52
                  
                  
                  
                  -
                  
                  
                  
                  (3
                  )
                  
                  
                  59Other
                      revenues
                  
                  
                  1
                  
                  
                  
                  2
                  
                  
                  
                  1
                  
                  
                  
                  (4
                  )
                  
                  
                  -Other
                      operations and
                      maintenance
                  
                  
                  (214
                  )
                  
                  
                  (133
                  )
                  
                  
                  (65
                  )
                  
                  
                  17
                  
                  
                  
                  (395
                  )Depreciation
                      and
                      amortization
                  
                  
                  (82
                  )
                  
                  
                  (49
                  )
                  
                  
                  (26
                  )
                  
                  
                  (5
                  )
                  
                  
                  (162
                  )Taxes
                      other than income
                      taxes
                  
                  
                  (66
                  )
                  
                  
                  (29
                  )
                  
                  
                  (5
                  )
                  
                  
                  1
                  
                  
                  
                  (99
                  )Other
                      income and
                      (expenses)
                  
                  
                  7
                  
                  
                  
                  3
                  
                  
                  
                  -
                  
                  
                  
                  (1
                  )
                  
                  
                  9Interest
                      expense
                  
                  
                  (43
                  )
                  
                  
                  (25
                  )
                  
                  
                  (26
                  )
                  
                  
                  5
                  
                  
                  
                  (89
                  )Income
                      taxes
                  
                  
                  (93
                  )
                  
                  
                  (55
                  )
                  
                  
                  (27
                  )
                  
                  
                  14
                  
                  
                  
                  (161
                  )Minority
                      interest and preferred dividends
                  
                  
                  -
                  
                  
                  
                  (2
                  )
                  
                  
                  (11
                  )
                  
                  
                  -
                  
                  
                  
                  (13
                  )Net
                      income
                  
                  $
                  142
                  
                  
                  $
                  83
                  
                  
                  $
                  62
                  
                  
                  $
                  6
                  
                  
                  $
                  293**Nine
                      Months 2007:**Electric
                      margin
                  
                  **$**
                  **1,579**
                  
                  
                  **$**
                  **573**
                  
                  
                  **$**
                  **766**
                  
                  
                  **$**
                  **(44**
                  **)**
                  
                  **$**
                  **2,874**Gas
                      margin
                  
                  ****
                  **50**
                  
                  
                  ****
                  **227**
                  
                  
                  ****
                  **-**
                  
                  
                  ****
                  **(4**
                  **)**
                  
                  ****
                  **273**Other
                      revenues
                  
                  ****
                  **2**
                  
                  
                  ****
                  **3**
                  
                  
                  ****
                  **-**
                  
                  
                  ****
                  **(5**
                  **)**
                  
                  ****
                  **-**Other
                      operations and
                      maintenance
                  
                  ****
                  **(668**
                  **)**
                  
                  ****
                  **(398**
                  **)**
                  
                  ****
                  **(239**
                  **)**
                  
                  ****
                  **56**
                  
                  
                  ****
                  **(1,249**
                  **)**Depreciation
                      and
                      amortization
                  
                  ****
                  **(253**
                  **)**
                  
                  ****
                  **(162**
                  **)**
                  
                  ****
                  **(80**
                  **)**
                  
                  ****
                  **(19**
                  **)**
                  
                  ****
                  **(514**
                  **)**Taxes
                      other than income
                      taxes
                  
                  ****
                  **(186**
                  **)**
                  
                  ****
                  **(89**
                  **)**
                  
                  ****
                  **(20**
                  **)**
                  
                  ****
                  **-**
                  
                  
                  ****
                  **(295**
                  **)**Other
                      income and
                      (expenses)
                  
                  ****
                  **25**
                  
                  
                  ****
                  **15**
                  
                  
                  ****
                  **3**
                  
                  
                  ****
                  **1**
                  
                  
                  ****
                  **44**Interest
                      expense
                  
                  ****
                  **(146**
                  **)**
                  
                  ****
                  **(97**
                  **)**
                  
                  ****
                  **(81**
                  **)**
                  
                  ****
                  **8**
                  
                  
                  ****
                  **(316**
                  **)**Income
                      taxes
                  
                  ****
                  **(135**
                  **)**
                  
                  ****
                  **(22**
                  **)**
                  
                  ****
                  **(132**
                  **)**
                  
                  ****
                  **10**
                  
                  
                  ****
                  **(279**
                  **)**Minority
                      interest and preferred dividends
                  
                  ****
                  **(4**
                  **)**
                  
                  ****
                  **(5**
                  **)**
                  
                  ****
                  **(20**
                  **)**
                  
                  ****
                  **1**
                  
                  
                  ****
                  **(28**
                  **)**Net
                      income
                  
                  **$**
                  **264**
                  
                  
                  **$**
                  **45**
                  
                  
                  **$**
                  **197**
                  
                  
                  **$**
                  **4**
                  
                  
                  **$**
                  **510****Nine
                      Months 2006:**Electric
                      margin
                  
                  $
                  1,492
                  
                  
                  $
                  668
                  
                  
                  $
                  570
                  
                  
                  $
                  (46
                  )
                  
                  $
                  2,684Gas
                      margin
                  
                  
                  45
                  
                  
                  
                  222
                  
                  
                  
                  -
                  
                  
                  
                  (4
                  )
                  
                  
                  263Other
                      revenues
                  
                  
                  2
                  
                  
                  
                  1
                  
                  
                  
                  1
                  
                  
                  
                  (4
                  )
                  
                  
                  -Other
                      operations and
                      maintenance
                  
                  
                  (581
                  )
                  
                  
                  (381
                  )
                  
                  
                  (216
                  )
                  
                  
                  37
                  
                  
                  
                  (1,141
                  )Depreciation
                      and
                      amortization
                  
                  
                  (243
                  )
                  
                  
                  (144
                  )
                  
                  
                  (79
                  )
                  
                  
                  (19
                  )
                  
                  
                  (485
                  )Taxes
                      other than income
                      taxes
                  
                  
                  (184
                  )
                  
                  
                  (99
                  )
                  
                  
                  (19
                  )
                  
                  
                  -
                  
                  
                  
                  (302
                  )Other
                      income and
                      (expenses)
                  
                  
                  16
                  
                  
                  
                  9
                  
                  
                  
                  1
                  
                  
                  
                  (1
                  )
                  
                  
                  25Interest
                      expense
                  
                  
                  (123
                  )
                  
                  
                  (70
                  )
                  
                  
                  (77
                  )
                  
                  
                  16
                  
                  
                  
                  (254
                  )Income
                      taxes
                  
                  
                  (165
                  )
                  
                  
                  (76
                  )
                  
                  
                  (56
                  )
                  
                  
                  24
                  
                  
                  
                  (273
                  )Minority
                      interest and preferred dividends
                  
                  
                  (4
                  )
                  
                  
                  (5
                  )
                  
                  
                  (23
                  )
                  
                  
                  1
                  
                  
                  
                  (31
                  )Net
                      income
                  
                  $
                  255
                  
                  
                  $
                  125
                  
                  
                  $
                  102
                  
                  
                  $
                  4
                  
                  
                  $
                  486
 
 **Margins**
 
 The
            following table presents the favorable (unfavorable) variations in the
            registrants’ electric and gas margins for the three and nine months ended
            September 30, 2007, compared with the same periods in 2006. Electric
            margins are
            defined as electric revenues less fuel and purchased power costs. Gas
            margins
            are defined as gas revenues less gas purchased for resale. We consider
            electric,
            interchange and gas margins useful measures to analyze the change in
            profitability of our electric and gas operations between periods. We
            have
            included the analysis below as a complement to the financial information
            we
            provide in accordance with GAAP. However, these margins may not be a
            presentation defined under GAAP and may not be comparable to other companies’
presentations or more useful than the GAAP information we provide elsewhere
            in
            this report.
 
 **Three
                          Months**
                      
                      **Ameren(a)**
                      
                      
                      **UE**
                      
                      
                      **CIPS**
                      
                      
                      **Genco**
                      
                      
                      **CILCORP**
                      
                      
                      **CILCO**
                      
                      
                      **IP**Electric
                          revenue change:Effect
                          of weather on native load (estimate)
                      
                      $
                      59
                      
                      
                      $
                      46
                      
                      
                      $
                      3
                      
                      
                      $
                      -
                      
                      
                      $
                      2
                      
                      
                      $
                      2
                      
                      
                      $
                      8UE
                          electric rate increase
                      
                      
                      15
                      
                      
                      
                      15
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Storm-related
                          outages
                      
                      
                      3
                      
                      
                      
                      2
                      
                      
                      
                      2
                      
                      
                      
                      (2
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1JDA-
                          terminated December 31, 2006
                      
                      
                      -
                      
                      
                      
                      (35
                      )
                      
                      
                      -
                      
                      
                      
                      (23
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Interchange
                          revenues
                      
                      
                      36
                      
                      
                      
                      36
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
   61
  
 **Three
                          Months**
                      
                      **Ameren(a)**
                      
                      
                      **UE**
                      
                      
                      **CIPS**
                      
                      
                      **Genco**
                      
                      
                      **CILCORP**
                      
                      
                      **CILCO**
                      
                      
                      **IP**Elimination
                          of CILCO/AERG intra-companypower
                          supply agreement
                      
                      
                      30
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      30
                      
                      
                      
                      30
                      
                      
                      
                      -Illinois
                          settlement agreement-net ofreimbursement
                      
                      
                      (53
                      )
                      
                      
                      -
                      
                      
                      
                      (8
                      )
                      
                      
                      (20
                      )
                      
                      
                      (14
                      )
                      
                      
                      (14
                      )
                      
                      
                      (11
                      )Illinois rate
                          redesign, generation repricing,
                        growth
                          andother
                      
                      
                      15
                      
                      
                      
                      27
                      
                      
                      
                      (24
                      )
                      
                      
                      7
                      
                      
                      
                      33
                      
                      
                      
                      33
                      
                      
                      
                      (66
                      )Total
                      
                      **$**
                      **105**
                      
                      
                      **$**
                      **91**
                      
                      
                      **$**
                      **(27**
                      **)**
                      
                      **$**
                      **(38**
                      **)**
                      
                      **$**
                      **51**
                      
                      
                      **$**
                      **51**
                      
                      
                      **$**
                      **(68**
                      **)**Fuel
                          and purchased power change:Fuel:Generation
                          and other
                      
                      $
                      (21
                      )
                      
                      $
                      (9
                      )
                      
                      $
                      -
                      
                      
                      $
                      (17
                      )
                      
                      $
                      2
                      
                      
                      $
                      2
                      
                      
                      $
                      -Emission
                          allowancesales
                          (costs)
                      
                      
                      (16
                      )
                      
                      
                      5
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      4
                      
                      
                      
                      3
                      
                      
                      
                      -Mark-to-marketgains
                          (losses)
                      
                      
                      4
                      
                      
                      
                      (1
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Price
                      
                      
                      (30
                      )
                      
                      
                      (25
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (1
                      )
                      
                      
                      (1
                      )
                      
                      
                      -JDA-terminatedDecember
                          31, 2006
                      
                      
                      -
                      
                      
                      
                      23
                      
                      
                      
                      -
                      
                      
                      
                      35
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Purchased
                          power
                      
                      
                      (35
                      )
                      
                      
                      (22
                      )
                      
                      
                      (17
                      )
                      
                      
                      48
                      
                      
                      
                      (27
                      )
                      
                      
                      (27
                      )
                      
                      
                      2Power
                          purchase agreement -
                        Entergy
                          Arkansas, Inc.
                      
                      
                      (8
                      )
                      
                      
                      (8
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Elimination
                          ofCILCO/AERG
                          intra-company
                          power supply agreement
                      
                      
                      (30
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (30
                      )
                      
                      
                      (30
                      )
                      
                      
                      -Storm-related
                          energy costs
                      
                      
                      2
                      
                      
                      
                      1
                      
                      
                      
                      -
                      
                      
                      
                      1
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Total
                          fuel and purchased power change
                      
                      $
                      (134
                      )
                      
                      $
                      (36
                      )
                      
                      $
                      (17
                      )
                      
                      $
                      67
                      
                      
                      $
                      (52
                      )
                      
                      $
                      (53
                      )
                      
                      $
                      2**Net
                          change in electric margins**
                      
                      **$**
                      **(29**
                      **)**
                      
                      **$**
                      **55**
                      
                      
                      **$**
                      **(44**
                      **)**
                      
                      **$**
                      **29**
                      
                      
                      **$**
                      **(1**
                      **)**
                      
                      **$**
                      **(2**
                      **)**
                      
                      **$**
                      **(66**
                      **)****Net
                          change in gas margins**
                      
                      **$**
                      **(2**
                      **)**
                      
                      **$**
                      **(1**
                      **)**
                      
                      **$**
                      **(2**
                      **)**
                      
                      **$**
                      **-**
                      
                      
                      **$**
                      **1**
                      
                      
                      **$**
                      **1**
                      
                      
                      **$**
                      **(1**
                      **)****Nine
                          Months**Electric
                          revenue change:Effect
                          of weather on native load (estimate)
                      
                      $
                      105
                      
                      
                      $
                      67
                      
                      
                      $
                      14
                      
                      
                      $
                      -
                      
                      
                      $
                      8
                      
                      
                      $
                      8
                      
                      
                      $
                      16UE
                          electric rate increase
                      
                      
                      20
                      
                      
                      
                      20
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Storm-related
                          outages
                      
                      
                      9
                      
                      
                      
                      8
                      
                      
                      
                      2
                      
                      
                      
                      (2
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1JDA
                          - terminated December 31, 2006
                      
                      
                      -
                      
                      
                      
                      (156
                      )
                      
                      
                      -
                      
                      
                      
                      (69
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Interchange
                          revenues
                      
                      
                      128
                      
                      
                      
                      128
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Elimination
                          of CILCO/AERG intra-companypower
                          supply agreement
                      
                      
                      83
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      83
                      
                      
                      
                      83
                      
                      
                      
                      -Illinois
                          settlement agreement - net ofreimbursement
                      
                      
                      (53
                      )
                      
                      
                      -
                      
                      
                      
                      (8
                      )
                      
                      
                      (20
                      )
                      
                      
                      (14
                      )
                      
                      
                      (14
                      )
                      
                      
                      (11
                      )FERC-ordered
                          MISO resettlements -March
                          2007
                      
                      
                      16
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      12
                      
                      
                      
                      3
                      
                      
                      
                      3
                      
                      
                      
                      -Illinois
                          rate redesign, generation repricing,
                        growth
                          and other
                      
                      
                      180
                      
                      
                      
                      11
                      
                      
                      
                      28
                      
                      
                      
                      (16
                      )
                      
                      
                      118
                      
                      
                      
                      118
                      
                      
                      
                      (35
                      )Total
                      
                      **$**
                      **488**
                      
                      
                      **$**
                      **78**
                      
                      
                      **$**
                      **36**
                      
                      
                      **$**
                      **(95**
                      **)**
                      
                      **$**
                      **198**
                      
                      
                      **$**
                      **198**
                      
                      
                      **$**
                      **(29**
                      **)**Fuel
                          and purchased power change:Fuel:Generation
                          and other
                      
                      $
                      (16
                      )
                      
                      $
                      12
                      
                      
                      $
                      -
                      
                      
                      $
                      (45
                      )
                      
                      $
                      15
                      
                      
                      $
                      16
                      
                      
                      $
                      -Emission
                          allowance sales (costs)
                      
                      
                      (10
                      )
                      
                      
                      3
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      12
                      
                      
                      
                      8
                      
                      
                      
                      -Mark-to-market
                          gains (losses)
                      
                      
                      11
                      
                      
                      
                      (1
                      )
                      
                      
                      -
                      
                      
                      
                      5
                      
                      
                      
                      1
                      
                      
                      
                      1
                      
                      
                      
                      -Price
                      
                      
                      (72
                      )
                      
                      
                      (60
                      )
                      
                      
                      -
                      
                      
                      
                      (2
                      )
                      
                      
                      (7
                      )
                      
                      
                      (7
                      )
                      
                      
                      -JDA
                          - terminated December 31, 2006
                      
                      
                      -
                      
                      
                      
                      69
                      
                      
                      
                      -
                      
                      
                      
                      156
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Purchased
                          power
                      
                      
                      (77
                      )
                      
                      
                      14
                      
                      
                      
                      (53
                      )
                      
                      
                      90
                      
                      
                      
                      (94
                      )
                      
                      
                      (94
                      )
                      
                      
                      2Power
                          purchase agreement -
                        Entergy
                          Arkansas, Inc.
                      
                      
                      (12
                      )
                      
                      
                      (12
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Elimination
                          of CILCO/AERG intra-companypower
                          supply agreement
                      
                      
                      (83
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (83
                      )
                      
                      
                      (83
                      )
                      
                      
                      -FERC-ordered
                          MISO resettlements -March
                          2007
                      
                      
                      (38
                      )
                      
                      
                      (12
                      )
                      
                      
                      (8
                      )
                      
                      
                      -
                      
                      
                      
                      (4
                      )
                      
                      
                      (4
                      )
                      
                      
                      (14
                      )Storm-related
                          energy costs
                      
                      
                      (1
                      )
                      
                      
                      (2
                      )
                      
                      
                      -
                      
                      
                      
                      1
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Total
                          fuel and purchased power change
                      
                      $
                      (298
                      )
                      
                      $
                      11
                      
                      
                      $
                      (61
                      )
                      
                      $
                      205
                      
                      
                      $
                      (160
                      )
                      
                      $
                      (163
                      )
                      
                      $
                      (12
                      )**Net
                          change in electric margins**
                      
                      **$**
                      **190**
                      
                      
                      **$**
                      **89**
                      
                      
                      **$**
                      **(25**
                      **)**
                      
                      **$**
                      **110**
                      
                      
                      **$**
                      **38**
                      
                      
                      **$**
                      **35**
                      
                      
                      **$**
                      **(41**
                      **)****Net
                          change in gas margins**
                      
                      **$**
                      **10**
                      
                      
                      **$**
                      **5**
                      
                      
                      **$**
                      **1**
                      
                      
                      **$**
                      **-**
                      
                      
                      **$**
                      **4**
                      
                      
                      **$**
                      **4**
                      
                      
                      **$**
                      **(1**
                      **)**
 (a)
                    Includes
                        amounts for Ameren registrant and nonregistrant subsidiaries
                        and
                        intercompany eliminations.
 62
 Ameren
  Ameren’s
              electric margin decreased by $29 million for the three months and increased
              by
              $190 million for the nine months ended September 30, 2007, respectively,
              compared with the same periods in 2006. The following items had a favorable
              impact on electric margin for the third quarter and first nine months
              of 2007 as
              compared to the year-ago periods:
 
 ·
                    Non-rate-regulated
                        Generation selling more power at market-based prices in the
                        third quarter
                        and first nine months of 2007 compared with sales at below-market
                        prices
                        pursuant to cost-based power supply agreements, which expired
                        on December
                        31, 2006;
 ·
                    favorable
                        weather conditions increased native load electric margin
                        by an estimated
                        $33 million and  $54 million for the three and nine months ended
                        September 30, 2007, respectively;
 ·
                    UE’s
                        electric rate increase that went into effect June 4, 2007,
                        which increased
                        electric margin by an estimated, $15
                        million and $20 million for the three and nine months ended
                        September 30,
                        2007, respectively;
 ·
                    an
                        increase in margin on interchange sales primarily because
                        of the
                        termination of the JDA on December 31, 2006. This termination
                        of the JDA
                        provided UE with the ability to sell its excess power, originally
                        obligated to Genco under the JDA at cost, in the spot market
                        at higher
                        purchased power prices. This increase was partially offset
                        by higher
                        purchased power costs of $8 million and$12
                        million for the three and nine months ended September 30,
                        2007,
                        respectively, associated with Entergy Arkansas, Inc. See
                        Note 2 – Rate and
                        Regulatory Matters to our financial statements under Part
                        I, Item 1, of
                        this report, for more information on the UE power purchase
                        agreement with
                        Entergy Arkansas, Inc. In addition, increased native load
                        demand, because
                        of warmer weather, reduced excess power available for
                        sale; ·
                    increased
                        revenues as a result of lower than expected line losses at
                        UE;
 ·
                    increased
                        hydroelectric generation, which favorably impacted purchased
                        power
                        cost;
 ·
                    severe
                        storm-related outages that occurred in 2006, which negatively
                        impacted
                        electric sales and resulted in an estimated net reduction
                        in overall
                        electric margin of  $5 million and$8
                        million for the three and nine months ended September 30,
                        2006,
                        respectively;
 ·
                    unrealized
                        mark-to-market net gains on fuel and energy contracts not
                        yet settled
                        increased electric margin by $4 million and $11 million for the three
                        and nine months ended September 30, 2007, respectively;
                        and
 ·
                    decreased
                        fuel costs due to the lack of $4 million in fees levied by
                        the FERC in the
                        nine months ended September 30, 2006, upon completion of
                        its cost study
                        for generation benefits provided to UE’s Osage hydroelectric plant, and
                        the May 2007 MoPSC rate order, which directed UE to transfer
                        $4 million of
                        the total fees to an asset account, which is being amortized
                        over 25
                        years.
 
 The
              following items had an unfavorable impact on electric margin for the
              third
              quarter and first nine months of 2007 as compared to the year-ago
              periods:
 
 ·
                    the
                        combined effect of the elimination of the Ameren Illinois
                        Utilities’
                        bundled tariffs, implementation of new delivery service tariffs
                        including
                        changes in seasonal rates effective January 2, 2007, and
                        the expiration
                        of  power supply
                        contracts;
 ·
                    a
                        15% and 12% increase in coal and related transportation prices
                        for the
                        three and nine months ended September 30, 2007,
                        respectively;
 ·
                    rate
                        relief and customer assistance programs under the Illinois
                        electric
                        settlement agreement reduced electric margin by $53 million.
                        Illinois
                        customer refund payments and credits, including the forgiveness
                        of late
                        payment charges, provided to certain Ameren Illinois Utilities’ electric
                        customers of $159 million for the three and nine months ended
                      September
                        30, 2007, decreased electric revenue. As part of the settlement
                        agreement,
                        Ameren expects to receive reimbursements from non-affiliated
                        generators in
                        Illinois totaling $106 million for the three and nine months
                        ended
                        September 30, 2007;
 ·
                    MISO
                        purchased power costs were $18 million and $29 million higher
                        for the
                        three and nine months ended September 30, 2007, respectively.
                        Costs
                        related to participation in the MISO Day Two Energy Market
                        were higher for
                        the year because of a March 2007 FERC order that resettled
                        costs among
                        market participants retroactive to 2005;
                        and
 ·
                    decreased
                        emission allowance sales of $20 million and $22 million offset
                        by lower
                        emission allowance costs of $4 million and $12 million for
                        the three and
                        nine months ended September 30, 2007,
                        respectively.
  Ameren’s
              gas margin was comparable in the three months ended September 30, 2007,
              with the
              same period in 2006. Ameren’s gas margin increased by $10 million, or 4%, for
              the nine months ended September 30, 2007, compared with the same period
              in 2006
              primarily because of favorable weather conditions as evidenced by a
              14% increase
              in heating degree-days for the nine months ended  September
              30, 2007.
  *Missouri
              Regulated*
 
 UE
 
 UE’s
              electric margin increased $55
              million and $89 million for the three and nine months ended September 30,
              2007, respectively, compared to the same periods in 2006. The following
              items
              had a favorable impact on electric margin
 63
  for
              the third quarter and first nine months of 2007 as
              compared to the year-ago periods:
 ·
                    an
                        increase in margin on interchange sales primarily because
                        of the
                        termination of the JDA on December 31, 2006. This termination
                        of the JDA
                        provided UE with the ability to sell its excess power, originally
                        obligated to Genco under the JDA at cost, in the spot market
                        at higher
                        market prices. This increase was partially offset by increased
                        purchased
                        power costs of $8 million and $12 million for the three and
                        nine months
                        ended September 30, 2007, respectively, associated with an
                        agreement with
                        Entergy Arkansas, Inc. See Note 2 – Rate and Regulatory Matters to our
                        financial statements under Part I, Item 1, of this report,
                        for more
                        information on the UE power purchase agreement with Entergy
                        Arkansas, Inc.
                        In addition, increased native load demand, because of warmer
                        weather,
                        reduced excess power available for
                        sale;
 ·
                    favorable
                        weather conditions increased native load electric margin
                        by an estimated
                        $31 million and $44 million for the three and nine months ended
                        September 30, 2007, respectively;
 ·
                    the
                        electric rate increase that went into effect June 4, 2007,
                        which increased
                        electric margin by an estimated $15 million and $20 million
                        for the three
                        and nine months ended
                      September
                        30, 2007, respectively; ·
                    increased
                        revenues as a result of lower than expected line
                        losses;
 ·
                    increased
                        hydroelectric generation, which favorably impacted purchased
                        power
                        costs;
 ·
                    severe
                        storm-related outages in 2006, which reduced electric margin
                        by $3 million
                        and $6 million for the three and nine months ended September
                        30, 2006,
                        respectively; and
 ·
                    decreased
                        fuel costs due to the lack of $4 million in fees levied by
                        the FERC in the
                        nine months ended September 30, 2006, upon completion of
                        its cost study
                        for generation benefits provided to UE’s Osage hydroelectric plant, and
                        the May 2007 MoPSC rate order, which directed UE to transfer $4
                        million of the total fees to an asset account, which is being
                        amortized
                        over 25 years.
  Factors
              that had an unfavorable impact on electric margin for the three and
              nine months
              ended September 30, 2007, as compared to the same periods in the prior
              year,
              were as follows:
 
 ·
                    a
                        24% and 17% increase in coal and related transportation prices
                        for the
                        three- and nine-month periods ended September 30, 2007,
                        respectively;
 ·
                    MISO
                        costs were $12 million higher for the nine months ended September
                        30,
                        2007, compared to the same period in 2006, due to the March
                        2007 FERC
                        order;
 ·
                    other
                        MISO purchased power costs, excluding the effect of the March
                        2007 FERC
                        order, were $18 million higher for the third quarter of 2007
                        and $9
                        million higher for the nine months endedSeptember
                        30, 2007, compared to the same periods in 2006;
                        and
 ·
                    reduced
                        power plant availability because of planned maintenance
                        activities.
  UE’s
              gas
              margin was comparable in the three months ended September 30, 2007,
              with the
              same period in 2006. UE’s gas margin increased by $5 million, or 11%, for the
              nine months ended September 30, 2007, compared with the same period
              in 2006
              primarily because of favorable weather conditions as evidenced by a
              15% increase
              in heating degree-days for the nine months ended September 30,
              2007.
 
 *Illinois
              Regulated*
 
 Illinois
              Regulated’s electric margin
              declined by $134 million, or 42%, and $95 million, or 14%, for the three
              and nine months ended September 30, 2007, respectively, compared with
              the same
              periods in 2006. Illinois Regulated’s gas margin decreased by $4 million in the
              third quarter of 2007 and increased by $5 million, or 2%, for the nine
              months
              ended September
              30, 2007, compared with the same periods in 2006.
 
 CIPS
 
 CIPS’
electric
              margin decreased by
              $44 million, or 43%, and $25 million, or 12%, for the three and nine
              months
              ended September 30, 2007, respectively, compared to the same periods
              in 2006.
              The following items had an unfavorable impact on electric margin for
              the third
              quarter and first nine months of 2007 as compared to the year-ago
              periods:
 
 ·
                    the
                        combined effect of the elimination of bundled tariffs, implementation
                        of
                        new delivery service tariffs, including changes in seasonal
                        rates
                        effective January 2, 2007, and the expiration of power supply
                        contracts;
 ·
                    the
                        Illinois settlement agreement reduced electric margin by
                        $8 million.
                        Customer refund payments and credits, including the forgiveness
                        of late
                        payment charges, totaled $54 million for the three and nine
                        months ended
                        September 30, 2007, which were reduced by expected reimbursements
                        of $36
                        million due from non-affiliated generators and $10 million
                        due from
                        affiliated generators in Illinois;
                        and
 ·
                    MISO
                        costs increased $8 million for the nine months ended September
                        30, 2007,
                        compared to the same period in 2006, because of a March 2007
                        FERC order
                        that resettled costs among market participants retroactive
                        to
                        2005.
   64
 The
              following items had a favorable impact on electric margin for the third
              quarter
              and first nine months of 2007 as compared to the year-ago periods:
  ·
                    MISO
                        purchased power costs, excluding the effect of the March
                        2007 FERC order
                        discussed above, were $4 million and $16 million lower for the three
                        and nine
                        months
                          ended September 2007, respectively, compared to the same
                          periods in
                          2006;
 ·
                      severe
                          storm-related outages in 2006, which reduced electric margin
                          by $2 million
                          for the three and nine months ended September 30, 2006;
                          and
 ·
                      favorable
                          weather conditions, which increased electric margin by
                          an estimated $5
                          million for the nine months ended September 30,
                          2007.
  CIPS’
gas
                margin decreased by $2 million for the three months ended September
                30, 2007,
                compared with the same period in 2006 primarily because of reduced
                transportation service revenues. CIPS’ gas margin increased by $1 million, or
                2%, for the nine months ended September 30, 2007, primarily because
                of favorable
                weather conditions as evidenced by a 15% inrease in heating degree-days
                for the
                nine months ended September 30, 2007.
 
 CILCO
              (Illinois
              Regulated)
  The
              following table provides a reconciliation of CILCO’s change in electric margin
              by segment to CILCO’s total change in electric margin for the three and nine
              months ended September 30, 2007, as compared with the same periods
              in
              2006:
 
 **Three
                        Months**
                    
                    
                    **Nine
                        Months**CILCO
                        (Illinois Regulated)
                    
                    **$**
                    **(24**
                    **)**
                    
                    **$**
                    **(29**
                    **)**CILCO
                        (AERG)
                    
                    ****
                    **22**
                    
                    
                    ****
                    **64**Total
                        change in electric margin
                    
                    **$**
                    **(2**
                    **)**
                    
                    **$**
                    **35**
  CILCO’s
              (Illinois Regulated) electric margin decreased by $24 million, or 45%,
              and $29
              million, or 23%, for the three and nine months ended September 30,
              2007,
              respectively, compared to the same periods in 2006. The following items had an
              unfavorable impact on electric margin for the third quarter and first
              nine
              months of 2007 as compared to the year-ago periods:
 
 ·
                    the
                        combined effect of the elimination of bundled tariffs, implementation
                        of
                        new delivery service tariffs, including changes in seasonal
                        rates
                        effective January 2, 2007, and the expiration of power supply
                        contracts;
 ·
                    the
                        Illinois settlement agreement reduced electric margin by
                        $5 million.
                        Customer refund payments and credits, including the forgiveness
                        of late
                        payment charges, totaled $32 million for the three and nine
                        months ended
                        September 30, 2007, which were reduced by expected reimbursements
                        of $21
                        million from non-affiliated generators and by $6 million
                        from affiliated
                        generators in Illinois; and
 ·
                    MISO
                        costs increased $4 million for the nine months ended September
                        30, 2007,
                        because of the March 2007 FERC order noted
                        above.
 
 The
              decrease in electric margin was reduced by favorable weather conditions,
              which
              increased electric margin by an estimated $2 million for the nine months
              ended September
              30, 2007.
 
 See
              Non-rate-regulated Generation
              below for an explanation of CILCO’s (AERG) change in electric margin for the
              three and nine months ended September 30, 2007, as compared with the
              same
              periods in 2006.
  CILCO’s
              (Illinois Regulated) gas margin was comparable for the three months
              ended
              September 30, 2007, with the same period in 2006. CILCO’s (Illinois Regulated)
              gas margin increased by $4 million, or 7%, for the nine months ended
              September
              30, 2007, compared with the same period in 2006 primarily because of
              favorable
              weather conditions as evidenced by a 12% increase in heating degree-days
              in the
              first nine months of 2007 and growth in the industrial sector.
 
 IP
 
 IP’s
              electric margin decreased by $66
              million, or 41%, and $41 million, or 13%, for the three and nine months
              ended
              September 30, 2007, respectively, compared with the same periods in
              2006. The
              following items had an unfavorable impact on electric margin for the
              third
              quarter and first nine months of 2007 as compared to the year-ago
              periods:
 
 ·
                    the
                        combined effect of the elimination of bundled tariffs, implementation
                        of
                        new delivery service tariffs, including changes in seasonal
                        rates
                        effective January 2, 2007, and the expiration of power supply
                        contracts;
 ·
                    the
                        Illinois settlement agreement reduced electric margin by
                        $11 million.
                        Customer refund payments and credits, including the forgiveness
                        of late
                        payment charges, totaled $73 million for the three and nine
                        months ended
                        September 30, 2007, which were reduced by expected reimbursements
                        of $49
                        million from non-affiliated generators and by $13 million
                        from affiliated
                        generators in Illinois; and
 ·
                    the
                        March 2007 FERC order, referenced above, reduced IP’s electric margin by
                        $14 million for the nine months ended September 30, 2007,
                        compared to the
                        same period a year ago.
 
 The
              following items had a favorable
              impact on electric margin for the third quarter and first nine months
              of 2007 as
              compared to the year-ago periods:
   65
 
 ·
                    favorable
                        weather conditions, which increased electric margin by an
                        estimated $2
                        million and $4 million for the three and nine months ended
                        September 30,
                        2007, respectively; and
 ·
                    severe
                        storm-related outages in 2006, which reduced electric margin
                        by $1 million
                        for the three and nine months ended September 30,
                        2006.
  IP’s
              gas
              margin was comparable for the three and nine months ended September
              30, 2007,
              compared with the same periods in 2006, primarily because of reduced
              transportation service revenues, partially offset by favorable weather
              conditions as evidenced by a 13% increase in heating degree-days for
              the nine
              months ended September 30, 2007.
 
 *Non-rate-regulated
              Generation*
 
 Non-rate-regulated
              Generation’s
              electric margin increased by $46 million, or 21%, and $196 million,
              or 34%, for
              the three and nine months ended September 30, 2007, respectively, compared
              with
              the same periods in 2006.
 
 Genco
 
 Genco’s
              electric margin increased by
              $29 million, or 33%, and $110 million, or 42%, for the three and nine
              months
              ended September 30, 2007, respectively, compared with the same periods
              in 2006.
              The following items had a favorable impact on electric margin for the
              third
              quarter and first nine months of 2007 as compared to the year-ago
              periods:
 
 ·
                    selling
                        power at market-based prices for the three and nine months
                        ended September
                        30, 2007, compared with selling power at below-market prices
                        pursuant to a
                        cost-based power supply agreement, which expired on December
                        31, 2006.
                        This was offset, in part, by the loss of margin on sales
                        supplied with
                        power acquired through the JDA;
 ·
                    reduced
                        purchased power costs due to the expiration of the
                        JDA;
 ·
                    increased
                        power plant availability due to fewer planned outages this
                        year reduced
                        purchased power costs;
 ·
                    a
                        reduction of mark-to-market losses on fuel contracts in 2007,
                        which
                        amounted to $5 million for the nine months ended September
                        30, 2006;
                        and
 ·
                    MISO
                        costs were $12 million lower for the nine months ended September
                        30, 2007,
                        compared with the same period in 2006, as a result of the
                        March 2007 FERC
                        order.
 
 The
              following items had an
              unfavorable impact on electric margin for the third quarter and first
              nine
              months of 2007 as compared to the year-ago periods:
 
 ·
                    costs
                        of $20 million for the three and nine months ended September
                        30, 2007,
                        pursuant to the Illinois electric settlement agreement discussed
                        above;
                        and
 ·
                    a
                        3% increase in coal and related transportation prices for
                        the three and
                        nine months ended September 30, 2007,
                        respectively.
  CILCO
              (AERG)
 
 For
              the three and nine months ended
              September 30, 2007, AERG’s electric margin increased by $22 million, or 82%, and
              $64 million, or 72%, respectively, compared with the same periods in
              2006. The
              following items had a favorable impact on electric margin for the third
              quarter
              and first nine months of 2007 as compared to the year-ago periods:
 
 ·
                    increased
                        revenues due to selling power at market-based prices in the
                        third quarter
                        of 2007 compared with sales at below-market prices in 2006
                        pursuant to a
                        cost-based power supply agreement, which expired on December
                        31, 2006;
                        and
 ·
                    reduced
                        emission costs of $3 million and $8 million for the three
                        and nine months
                        ended September 30, 2007, respectively, compared with the
                        same prior-year
                        periods.
 
 The
              following items had an
              unfavorable impact on electric margin for the third quarter and first
              nine
              months of 2007 as compared with the year-ago periods:
 
 ·
                    costs
                        of $9 million for the three and nine months ended September
                        30, 2007,
                        pursuant to the Illinois electric settlement agreement discussed
                        above;
 ·
                    revenues
                        and fuel costs decreased due to reduced plant availability
                        because of an
                        extended plant outage; and
 ·
                    a
                        12% increase in coal and related transportation prices for
                        the nine months
                        ended September 30, 2007.
  EEI
 
 EEI’s
              electric margin decreased by
              $36 million, or 35%, and $28 million, or 12%, for the three and nine months
              ended September 30, 2007, respectively, compared with the same periods
              in 2006.
              The following items had an unfavorable impact on electric margin for
              the third
              quarter and first nine months of 2007 as compared to the year-ago
              periods:
 
 ·
                    the
                        lack of emissions allowance sales in 2007, which increased
                        the electric
                        margin by $30 million for the three and nine months ended
                        September 30,
                        2006;
 ·
                    a
                        5% increase in coal and related transportation prices for
                        the three and
                        nine months ended September 30, 2007;
                        and
 ·
                    revenues
                        and fuel costs decreased due to reduced plant availability
                        due to
                        increased unit outages in the three and nine months ended
                        September 30,
                        2007.
 
 
 66
  **Operating
              Expenses and Other Statement of Income Items**
 
 ***Other
              Operations and Maintenance***
 
 *Ameren*
  Three
              months – Other operations and maintenance expenses increased $32 million in
              the
              third quarter of 2007 compared with the third quarter of 2006 primarily
              because
              of higher plant maintenance expenditures of $12 million due to outages
              at
              coal-fired plants, increased distribution system reliability and maintenance
              expenditures, higher labor and employee benefits costs, and increased
              injuries
              and damages expenses. Additionally, as part of the Illinois electric
              settlement
              agreement, we paid $4 million to the IPA in the third quarter of 2007.
              The
              amount of the increase in expenses in the third quarter of 2007 over
              2006 was
              lower than it otherwise would have been because in the third quarter
              of 2006, we
              experienced severe storms in our service territory resulting in expenses
              of $23
              million, while there were no major storms in our service territory
              during the
              third quarter ended September 30, 2007. Additionally, in the third
              quarter of
              2006, Ameren recorded $7 million of costs related to the December 2005
              reservoir
              breach at UE’s Taum Sauk plant with no similar costs recorded in the third
              quarter of 2007.
 
 Nine
              months - Other operations and
              maintenance expenses increased $108 million in the first nine months
              of 2007
              compared with the first nine months of 2006.  Maintenance and labor
              costs associated with the Callaway refueling and maintenance outage
              in the
              second quarter of 2007 added $35 million to other operations and maintenance
              expenses in the period. Higher non-Callaway labor costs, bad debt reserves,
              maintenance at coal-fired plants, the IPA payment described above,
              and
              distribution system reliability expenditures also increased other operations
              and
              maintenance expenses in the first nine months of 2007 compared to the
              year-ago
              period. Reducing the effect of these items was the reversal of an accrual
              of $15
              million established in 2006 for contributions to assist customers through
              the
              Illinois Customer Elect electric rate increase phase-in plan. Additionally,
              in
              the prior-year period, we recognized costs related to the Taum Sauk
              reservoir
              breach of $17 million and noncore property sale losses of $7 million
              at a
              subsidiary of AERG, items which did not recur in 2007. Increased other
              operations and maintenance expenses resulting from a severe ice storm
              in January
              2007 in UE’s and CIPS’ service territories were offset by the absence in 2007 of
              severe summer storms such as those that occurred in the summer of the
              prior
              year.
 
 Variations
              in other operations and maintenance expenses in Ameren’s, CILCORP’s and CILCO’s
              business segments and for the Ameren Companies for the three and nine
              months
              ended September 30, 2007, compared with the same periods in 2006 were
              as
              follows:
  *Missouri
              Regulated*
 
 UE
 
 Three
              months – Other operations and
              maintenance expenses were comparable in the third quarter of 2007 with
              the third
              quarter of 2006. Increased plant maintenance at coal-fired plants from
              scheduled
              outages, increased distribution system reliability and maintenance
              expenditures,
              and insurance premiums paid to an affiliate for replacement power coverage
              in
              the current year third quarter were offset by the absence of costs
              related to
              the Taum Sauk reservoir breach. In addition, there were no severe summer
              storms
              in 2007, which resulted in expenses of $16 million in the third quarter
              of
              2006.
 
 Nine
              months - Other operations and
              maintenance expenses increased $86 million in the first nine months
              of 2007
              compared with the first nine months of 2006 primarily because of ice
              storm
              repair expenditures of approximately $25 million and costs associated
              with the
              Callaway refueling and maintenance outage of $35 million. Increased
              plant
              maintenance at coal-fired plants, increased distribution system reliability
              and
              maintenance expenditures, higher labor costs, and insurance premiums
              for
              replacement power coverage of $14 million paid to an affiliate also
              increased
              other operations and maintenance expenses in the first nine months
              of 2007
              compared with the prior year period. Reducing the effect of these items
              was the
              absence in the current year period of costs related to the Taum Sauk
              reservoir
              breach and the absence of severe summer storms in 2007 such as those
              that
              occurred in the prior year period.
 
 *Illinois
              Regulated*
 
 Other
              operations and maintenance expenses increased $9 million and $17 million
              in the
              Illinois Regulated segment in the three and nine months ended September
              30,
              2007, respectively, compared with the same periods in 2006.
 
 CIPS
 
 Three
              months – Other operations and maintenance expenses were comparable between
              periods as the absence of severe summer storms in 2007, such as those
              that
              occurred in the summer of the prior year, was offset by increased distribution
              system reliability and maintenance expenditures and by higher injuries
              and
              damages expenses.
 
 Nine
              months - Other operations and maintenance expenses increased $7 million
              in the
              first nine months of 2007 compared with the first nine months of 2006
              primarily
              because of increased bad debt reserves as a result of the transition
              to higher
              electric rates in Illinois, and increased distribution system reliability
              expenditures. The reversal in 2007 of the customer assistance program
              accrual of $4
              million,
   67
 established
                in 2006 as noted above, reduced the effect of these increases. The
                impact of a
                severe ice storm in January 2007 was offset by the absence in 2007
                of severe
                summer storms such as those that occurred in the summer of the prior
                year.
 
 CILCO
              (Illinois Regulated)
 
 Three
              months – Other operations and maintenance expenses were comparable between
              periods.
 
 Nine
              months – Other operations and maintenance expenses were comparable between
              periods as an increase in bad debt reserves was offset by the reversal
              of the
              customer assistance program accrual of $3 million established in 2006
              as noted
              above.
 
 IP
 
 Three
              months – Other operations and maintenance expenses increased $6 million in the
              third quarter of 2007 compared with the third quarter of 2006 primarily
              because
              of higher employee benefit costs and increased injuries and damages
              expenses.
              Reducing the unfavorable impact of these items was the absence of severe
              summer
              storms in 2007 such as those that occurred in the summer of 2006.
 
 Nine
              months - Other operations and
              maintenance expenses increased $9 million in the first nine months
              of 2007
              compared with the first nine months of 2006 primarily because of higher
              employee
              benefit costs and increased bad debt reserves. Reducing the effect
              of these
              items was the reversal of the customer assistance program accrual of
              $8 million,
              established in 2006 as noted above, and the absence of severe summer
              storms in
              2007 such as those that occurred in the summer of the prior year.
 
 *Non-rate-regulated
              Generation*
 
 Other
              operations and maintenance expenses increased $14 million and $23 million
              in the
              Non-rate-regulated Generation segment in the three and nine months
              ended  September 30, 2007, respectively, compared
              with the same
              periods in 2006.
  Genco
 
 Three
              months – Other operations and maintenance expenses increased $5 million in the
              third quarter of 2007 compared with the third quarter of 2006 primarily
              because
              of higher plant maintenance costs due to scheduled outages. Additionally,
              as
              part of the Illinois electric settlement agreement, Genco paid $3 million
              to the
              IPA in the third quarter of 2007.
 
 Nine
              months - Other operations and maintenance expenses increased $9 million
              in the
              first nine months of 2007 compared with the first nine months of 2006
              primarily
              because of higher labor costs, the IPA payment, and insurance premiums
              for
              replacement power coverage paid to an affiliate.
 
 CILCORP
              (Parent Company Only)
 
 Three
              months – Other operations and maintenance expenses were comparable between
              periods.
 
 Nine
              months - Other operations and maintenance expenses were comparable
              between
              periods as increased employee benefit costs in the current year period
              were
              offset by the absence of a write-off in 2007, as occurred in the prior
              year
              period, of an intangible asset established in conjunction with Ameren’s
              acquisition of CILCORP.
 
 CILCO
              (AERG)
 
 Three
              months – Other operations and maintenance expenses were comparable between
              periods.
 
 Nine
              months - Other operations and maintenance expenses increased $7 million
              in the
              first nine months of 2007 compared with the first nine months of 2006
              primarily
              because of higher plant maintenance costs due to an extended plant
              outage.
 
 EEI
 
 Three
              and
              nine months - Other operations and maintenance expenses increased $2
              million and
              $5 million in the three and nine months ended September 30, 2007, respectively,
              compared to the prior year periods primarily because of higher plant
              maintenance
              costs.
 
 ***Depreciation
              and Amortization***
 
 *Ameren*
 
 Three
              and nine months – Ameren’s
              depreciation and amortization expenses increased $7 million and $29
              million in
              the three and nine months ended September 30, 2007, respectively, compared
              with
              the same periods in 2006. The increases were primarily because of capital
              additions in 2006 and the start of amortization of a regulatory asset
              in 2007
              associated with acquisition integration costs at IP, as required by
              an ICC
              order.
 
 Variations
              in depreciation and
              amortization expenses in Ameren’s, CILCORP’s and CILCO’s business segments and
              for the Ameren Companies for the three and nine months ended September
              30, 2007,
              compared with the same periods in 2006 were as follows:
   68
 *Missouri
                Regulated*
 
 UE
 
 Three
              months - Depreciation and
              amortization expenses were comparable between periods as increased
              depreciation
              expenses from capital additions were offset by decreased expenses resulting
              from
              the extension of UE’s plants’ useful lives in connection with a MoPSC electric
              rate order issued in May 2007. See Note 2 – Rate and Regulatory Matters under
              Part I, Item 1, of this report for additional information on UE’s electric rate
              order.
 
 Nine
              months – Depreciation and
              amortization expenses increased $9 million in the nine months ended
              September
              30, 2007, primarily because of capital additions in 2006 and early
              2007,
              including CTs purchased in the second quarter of 2006, and storm-related
              expenditures in 2006.
 
 *Illinois
              Regulated*
 
 Depreciation
              and amortization expenses increased $5 million and $18 million in the
              Illinois Regulated segment in the three and nine months ended September
              30,
              2007, respectively, compared with the same periods in 2006.
  CIPS
              & CILCO (Illinois Regulated)
 
 Three
              and nine months - Depreciation
              and amortization expenses were comparable between periods.
 
 IP
 
 Three
              and
              nine months – Depreciation and amortization expenses increased $4 million and
              $15 million in the three and nine months ended September 30, 2007,
              respectively,
              primarily because of amortization in 2007 of $4 million and $12 million
              for the
              three and nine months ended September 30, 2007, respectively, of a
              regulatory
              asset associated with acquisition integration costs, as required by
              an ICC
              order.
 
 *Non-rate-regulated
              Generation*
 
 Three
              and
              nine months - Depreciation and amortization expenses were comparable
              in the
              Non-rate-regulated Generation segment and for Genco, CILCORP (Parent
              Company
              Only), CILCO (AERG) and EEI in the three and nine months ended September
              30,
              2007, with the same periods in 2006.
 
 ***Taxes
              Other Than Income Taxes***
 
 *Ameren*
 
 Three
              months – Ameren’s taxes other
              than income taxes were comparable between periods.
  Nine
              months - Ameren’s taxes other
              than income taxes decreased $7 million in the first nine months of
              2007 compared
              with the first nine months of 2006 primarily because of lower gross
              receipts and
              lower property tax expenses.
 
 Variations
              in taxes other than income
              taxes in Ameren’s, CILCORP’s and CILCO’s business segments and for the Ameren
              Companies for the three and nine months ended September 30, 2007, compared
              with
              the same periods in 2006 were as follows:
 
 *Missouri
              Regulated*
  UE
 
 Three
              and nine months – Taxes other
              than income taxes increased $4 million and $3 million in the third
              quarter and
              first nine months of 2007 compared with the same periods in the prior
              year
              primarily because of increased gross receipts taxes.
  *Illinois
              Regulated*
 
 Taxes
              other than income taxes in the
              Illinois Regulated segment decreased $6 million and $10 million for
              the three
              and nine months ended September 30, 2007, respectively, compared with
              the same
              periods in 2006.
 
 CIPS
 
 Three
              and nine months – Taxes other
              than income taxes decreased $3 million and $6 million for the three
              and nine
              months ended September 30, 2007, respectively, compared with the same
              periods in
              2006, primarily because of lower property tax expenses. The nine-month
              period
              was also impacted by lower gross receipts taxes in 2007.
 
 CILCO
              (Illinois Regulated) &
IP
 
 Three
              and nine months – Taxes other
              than income taxes were comparable between periods.
 
 *Non-rate-regulated
              Generation*
 
 Three
              and
              nine months - Taxes other than income taxes were comparable in the
              Non-rate-regulated Generation segment and for Genco, CILCORP (Parent
              Company
              Only), CILCO (AERG) and EEI in the three and nine months ended September
              30,
              2007, with the same periods in 2006.
 
 ***Other
              Income and Expenses***
 
 *Ameren*
 
 Three
              and nine months – Miscellaneous
              income increased $8 million and $25 million in the three and nine months
              ended
              September 30, 2007, respectively, compared with the same periods in
              2006,
              primarily because of increased
  69
  interest
              income. Miscellaneous income in each period includes
              interest income on industrial development revenue bonds acquired by
              UE in
              conjunction with its purchase of CTs. These amounts are offset by an
              equivalent
              amount of interest expense associated with capital leases for the CTs
              recorded
              in interest charges on Ameren’s and UE’s statements of income. Miscellaneous
              expense increased $3 million and $6
              million in the three and nine months ended September 30, 2007, respectively,
              compared with the same periods in 2006, primarily as a result of contributions
              made to our charitable trust.
  Variations
              in other income and expenses in Ameren’s, CILCORP’s and CILCO’s business
              segments and for the Ameren Companies for the three and nine months
              ended September 30, 2007, compared with the same
              periods in 2006 were as follows:
 *Missouri
              Regulated*
  UE
  Three
              and
              nine months – Miscellaneous income was comparable between the third quarter of
              2007 and the third quarter of 2006. Miscellaneous income increased
              $6 million
              for the nine months ended September 30, 2007, compared with the same
              period in
              2006, primarily as a result of increased interest income. As discussed
              above,
              miscellaneous income includes interest income related to industrial
              development
              revenue bonds that is offset in interest charges on UE’s statement of income.
              These interest amounts were $7 million for the third quarter in both
              2007 and
              2006 and $22 million and $16 million for the nine months ended September
              30,
              2007 and 2006, respectively. Miscellaneous expense was comparable for
              the three
              and nine months ended September 30, 2007, with the same periods in
              2006.
  *Illinois
              Regulated*
  Miscellaneous
              income increased $3 million and $7 million in the Illinois Regulated
              segment in
              the three and nine months ended September 30, 2007, respectively, compared
              with
              the same periods in 2006. Miscellaneous expense was comparable for
              the three-
              and nine-month periods in 2007 compared with the same periods in
              2006.
  CILCO
              (Illinois Regulated) & IP
  Three
              months – Miscellaneous income was comparable at CILCO (Illinois Regulated) in
              the third quarter of 2007 with the same period in the prior year. Miscellaneous
              income increased $2 million at IP in the three months ended September
              30, 2007,
              compared with the same period in 2006 primarily because of increased
              interest
              income. Miscellaneous expense was comparable in the third quarter of
              2007 with
              the same period in 2006.
  Nine
              months - Miscellaneous income increased $2 million and $5 million at CILCO
              (Illinois Regulated) and IP in the nine months ended September 30,
              2007,
              respectively, compared with the same period in 2006 primarily because
              of
              increased interest income. Miscellaneous expense was comparable at
              CILCO
              (Illinois Regulated) and IP between periods.
 
 CIPS
  Three
              and
              nine months - Other income and expenses were comparable between
              periods.
  *Non-rate-regulated
              Generation*
  Other
              income and expenses were comparable in the Non-rate-regulated Generation
              segment
              and at Genco, CILCORP (Parent Company Only), CILCO (AERG) and EEI in
              the three
              and nine months ended September 30, 2007, with the same periods in
              2006.
 
 ***Interest***
 
 *Ameren*
 
 Three
              and
              nine months - Interest expense increased $21 million and $62 million in the
              three and nine months ended September 30, 2007, respectively, compared
              with the
              same periods in 2006, primarily because of increased short-term borrowings
              and
              higher interest rates due to reduced credit ratings and other items
              noted below.
              Interest expense recognized on UE’s capital leases associated with the purchase
              of CTs is offset by an equivalent amount of interest income recorded
              in other
              income and expenses on Ameren’s and UE’s statement of income. With the adoption
              of FIN 48, we also began to record interest associated with uncertain
              tax
              positions as interest expense rather than income tax expense. These
              interest
              charges were $2 million and $9 million for the three and nine months
              ended
              September 30, 2007, respectively.
  Variations
              in interest expense in Ameren’s, CILCORP’s and CILCO’s business segments and for
              the Ameren Companies for the three and nine months ended September
              30, 2007,
              compared with the same periods in 2006, were as follows:
  *Missouri
              Regulated*
 
 UE
 
 Three
              and
              nine months – Interest expense increased $7 million and $23 million for the
              three and nine months ended September 30, 2007, respectively, compared
              with the
              same periods in 2006. The increase in the third quarter was due primarily
              to
              increased interest expense related to the issuance
  70
 
  of
                $425
                million senior secured notes in June 2007. Interest expense increased
                in the
                nine-month period primarily because of increased short-term borrowings
                and
                higher interest rates due to reduced credit ratings and because of
                increased
                interest expense related to the June 2007 debt issuance. As discussed
                above,
                interest charges include interest expense related to capital leases
                that is
                offset in other income and expenses on UE’s statement of income. Interest
                expense recorded in conjunction with the adoption of FIN 48 was $3 million
                for the nine months ended September 30, 2007.
 
 *Illinois
              Regulated*
 
 Interest
              expense increased $11 million and $27 million in the Illinois Regulated
              segment
              in the three and nine months ended September 30, 2007, respectively,
              compared
              with the same periods in 2006.
  CIPS
  Three
              months – Interest expense was comparable between periods.
  Nine
              months – Interest expense increased $5 million for the nine months ended
              September 30, 2007, compared with the same period in 2006, primarily
              because of
              increased short-term borrowings and higher interest rates due to reduced
              credit
              ratings.
  CILCO
              (Illinois Regulated)
  Three
              and
              nine months – Interest expense was comparable between periods.
  IP
 
 Three
              months – Interest expense increased $6 million for the third quarter of 2007,
              compared with the same period in 2006, primarily because of increased
              short-term
              borrowings and higher interest rates resulting from reduced credit
              ratings.
 
 Nine
              months – Interest expense increased $18 million for the nine months ended
              September 30, 2007, compared with the same period in 2006, primarily
              because of
              the issuance of $75 million
              senior secured notes in June 2006 and because of increased short-term
              borrowings
              and higher interest rates due to reduced credit ratings.
  *Non-rate-regulated
              Generation*
 
 Interest
              expense was comparable in the Non-rate-regulated Generation segment
              in the third
              quarter of 2007 with the same period in 2006. Interest expense increased $4
              million in the nine months ended September 30, 2007, compared with
              the same
              period in 2006.
  CILCORP
              (Parent Company Only) & CILCO (AERG)
  Three
              months – Interest expense was comparable between periods.
  Nine
              months - Interest expense increased $2 million and $4 million at CILCORP
              (Parent
              Company Only) and CILCO (AERG) for the nine months ended September
              30, 2007,
              respectively, compared with the same period in 2006, primarily because
              of
              increased short-term borrowings and higher interest rates due to reduced
              credit
              ratings.
 
 Genco
&
EEI
 
 Three
              and
              nine months – Interest expense was comparable between periods.
 
 ***Income
              Taxes***
 
 *Ameren*
 
 Three
              and nine months - Ameren’s
              effective tax rate decreased between 2007 and 2006.
 
 Variations
              in effective tax rates in Ameren’s, CILCORP’s and CILCO’s business segments and
              for the Ameren Companies for the three and nine months ended September
              30, 2007,
              compared with the same periods in 2006 were as follows:
 
 *Missouri
              Regulated*
  UE
 
 Three
              months – The effective tax rate
              decreased in 2007 from 2006 primarily because of an increase in reserves
              for
              uncertain tax positions in 2006 for tax returns filed in previous years,
              along
              with an increase in expenses deductible for tax purposes, which were
              not
              expensed for book purposes in 2007. These decreases were offset by
              lower
              favorable tax return-to-accrual adjustments in 2007 compared to the
              same period
              in 2006.
 
 Nine
              months – The effective tax rate
              decreased in 2007 from 2006, primarily because of the items detailed
              above,
              along with the implementation of changes ordered by the MoPSC in UE’s 2007
              electric rate order. The effective tax rate for the nine-month period
              in 2006
              was increased by the effect of higher non-deductible expenses than
              the same
              period in 2007.
 
 *Illinois
              Regulated*
 
 The
              effective tax rate increased in the Illinois Regulated segment in the
              three
              months ended September 30, 2007, and decreased in the nine months ended
              September 30, 2007,
   71
 compared
                with the same periods in 2006, due to items detailed below.
  CIPS
 
 Three
              and nine months – The effective
              tax rate increased primarily because of unfavorable tax return-to-accrual
              adjustments in 2007 compared to favorable tax return-to-accrual adjustments
              in
              2006.
 
 CILCO
              (Illinois
              Regulated)
 
 Three
              months – The effective tax rate
              increased primarily because of an increase in expenses deductible for
              tax
              purposes that were not expensed for book purposes on a pre-tax loss
              in 2007,
              along with a decrease in reserves for uncertain tax positions in 2006
              for
              returns filed in previous years as compared to no change in reserves
              in
              2007.
 
 Nine
              months – The effective tax rate
              decreased primarily because of an increase in expenses deductible for
              tax, which
              were not expensed for book purposes, along with favorable tax return-to-accrual
              adjustments in 2007 compared with unfavorable tax return-to-accrual
              adjustments
              in 2006.
 
 IP
 
 Three
              months – The effective tax rate
              increased primarily because of favorable tax return-to-accrual adjustments
              on a
              pre-tax book loss in 2007 compared with unfavorable tax
 return-to-accrual
              adjustments in 2006.
 
 Nine
              months – The effective tax rate
              decreased primarily because of favorable tax return-to-accrual adjustments
              in
              2007 compared with unfavorable tax return-to-accrual adjustments in
              2006.
 
 *Non-rate-regulated
              Generation*
 
 The
              effective tax rate increased in the Non-rate-regulated Generation segment
              in the
              three and nine months ended September 30, 2007, compared with the same
              periods
              in 2006, due to items detailed below.
 
 Genco
 
 Three
              and nine months – The effective
              tax rate increased primarily because of lower reserves for uncertain
              tax
              positions in 2006 for tax returns filed in previous years as compared
              to 2007, a
              decrease in 2007 of expenses deductible for tax purposes but not expensed
              for
              book purposes when compared to 2006, and unfavorable tax return-to-accrual
              adjustments in 2007 compared with favorable tax return-to-accrual adjustments
              in
              2006.
  CILCO
              (AERG)
 
 Three
              and nine months – The effective
              tax rate increased primarily because of lower reserves for uncertain
              tax
              positions in 2006 for tax returns filed in prior years, a decrease
              in expenses
              in 2007 that were deductible for tax purposes but not expensed for
              book
              purposes, and unfavorable tax return-to-accrual adjustments in 2007
              compared to
              favorable tax return-to-accrual adjustments in 2006.
 
 CILCORP
              (Parent Company Only)
 
 Three
              and nine months – The effective
              tax rate decreased primarily because of lower favorable tax return-to-accrual
              adjustments in 2007 as compared to 2006.
 
 EEI
 
 Three
              and nine months – The effective
              tax rate decreased primarily because of an increase in expenses deductible
              for
              tax purposes, which were not expensed for book purposes.
 
 **LIQUIDITY
              AND CAPITAL RESOURCES**
 
 The
              tariff-based gross margins of
              Ameren’s rate-regulated utility operating companies (UE, CIPS, CILCO (Illinois
              Regulated) and IP) continue to be the principal source of cash from
              operating
              activities for Ameren and its rate-regulated subsidiaries. A diversified
              retail
              customer mix of primarily rate-regulated residential, commercial and
              industrial
              classes and a commodity mix of gas and electric service provide a reasonably
              predictable source of cash flows for Ameren, UE, CIPS, CILCO (Illinois
              Regulated) and IP. For operating cash flows, Genco and AERG principally
              rely on
              power sales to Marketing Company, which sold power through the Illinois
              power
              procurement auction in September 2006, and is selling power through
              other
              primarily market-based contracts with wholesale and retail customers.
              In
              addition to cash flows from operating activities, the Ameren Companies
              use
              available cash, money pool or other short-term borrowings from affiliates,
              commercial paper, or credit facilities to support normal operations
              and other
              temporary capital requirements. The use of operating cash flows and
              short-term
              borrowings to fund capital expenditures and other investments may periodically
              result in a working capital deficit, as was the case at September 30,
              2007, for
              Ameren, UE, Genco, CILCORP, CILCO, and IP. The Ameren Companies will
              reduce
              their short-term borrowings with cash from operations or discretionarily
              with
              long-term borrowings and in the case of Ameren subsidiaries, equity
              infusions
              from
   72
   Ameren.
              The Ameren Companies will incur significant capital expenditures over
              the next
              five years for compliance with environmental regulations or to make
              significant
              investments in their electric and gas utility infrastructure to improve
              overall
              system reliability. Expenditures are expected to be funded with debt.
              See Note 2
– Rate and Regulatory Matters to our financial statements under Part
              I, Item 1,
              of this report for a discussion of the Illinois electric settlement
              agreement
              that among other things,
              will change the process for power procurement in Illinois in the future
              and will
              impact future cash flows of the Ameren Companies, except UE. The settlement
              resulted in customer refunds and credits during the third quarter of
              2007, and
              will result in further monthly credits to customers through 2010. The
              Ameren
              Illinois Utilities will receive reimbursement for a majority of these
              refunds
              and credits from Illinois power generators, including Genco and CILCO
              (AERG).
 
 The
              following table presents netcash provided
              by (used in)
              operating, investing and financing activities for the nine months ended
              September 30, 2007 and 2006:
 
 **Net
                        Cash Provided By**
                      **Operating
                        Activities**
                    
                    
                    **Net
                        Cash Used In**
                      **Investing
                        Activities**
                    
                    
                    **Net
                        Cash Provided By**
                      **(Used
                        In) Financing Activities****2007**
                    
                    
                    **2006**
                    
                    
                    **Variance**
                    
                    
                    **2007**
                    
                    
                    **2006**
                    
                    
                    **Variance**
                    
                    
                    **2007**
                    
                    
                    **2006**
                    
                    
                    **Variance**Ameren(a)
                    
                    **$**
                    **920**
                    
                    
                    $
                    1,069
                    
                    
                    $
                    (149
                    )
                    
                    **$**
                    **(1,093**
                    **)**
                    
                    $
                    (1,044
                    )
                    
                    $
                    (49
                    )
                    
                    **$**
                    **206**
                    
                    
                    $
                    (87
                    )
                    
                    $
                    293UE
                    
                    ****
                    **519**
                    
                    
                    
                    620
                    
                    
                    
                    (101
                    )
                    
                    ****
                    **(535**
                    **)**
                    
                    
                    (611
                    )
                    
                    
                    76
                    
                    
                    ****
                    **15**
                    
                    
                    
                    (27
                    )
                    
                    
                    42CIPS
                    
                    ****
                    **11**
                    
                    
                    
                    127
                    
                    
                    
                    (116
                    )
                    
                    ****
                    **(115**
                    **)**
                    
                    
                    (47
                    )
                    
                    
                    (68
                    )
                    
                    ****
                    **99**
                    
                    
                    
                    (80
                    )
                    
                    
                    179Genco
                    
                    ****
                    **153**
                    
                    
                    
                    49
                    
                    
                    
                    104
                    
                    
                    ****
                    **(137**
                    **)**
                    
                    
                    (83
                    )
                    
                    
                    (54
                    )
                    
                    ****
                    **(15**
                    **)**
                    
                    
                    36
                    
                    
                    
                    (51
                    )CILCORP
                    
                    ****
                    **20**
                    
                    
                    
                    104
                    
                    
                    
                    (84
                    )
                    
                    ****
                    **(141**
                    **)**
                    
                    
                    (33
                    )
                    
                    
                    (108
                    )
                    
                    ****
                    **201**
                    
                    
                    
                    (71
                    )
                    
                    
                    272CILCO
                    
                    ****
                    **48**
                    
                    
                    
                    127
                    
                    
                    
                    (79
                    )
                    
                    ****
                    **(141**
                    **)**
                    
                    
                    (75
                    )
                    
                    
                    (66
                    )
                    
                    ****
                    **162**
                    
                    
                    
                    (52
                    )
                    
                    
                    214IP
                    
                    ****
                    **23**
                    
                    
                    
                    108
                    
                    
                    
                    (85
                    )
                    
                    ****
                    **(133**
                    **)**
                    
                    
                    (129
                    )
                    
                    
                    (4
                    )
                    
                    ****
                    **110**
                    
                    
                    
                    21
                    
                    
                    
                    89
 
 **(a)**
                    Includes
                        amounts for Ameren registrant and nonregistrant subsidiaries
                        and
                        intercompany eliminations.
 
 **Cash
              Flows from Operating Activities**
 
 Ameren’s
              cash from operating
              activities decreased in the first nine months of 2007, as compared
              with the
              first nine months of 2006. The Illinois electric settlement agreement
              resulted
              in $45 million of customer refunds and program funding. Under the terms
              of the
              settlement agreement, the Ameren Illinois Utilities will receive reimbursements
              from Illinois electricity generators in future months for a majority
              of these
              expenditures. See Note 2 – Rate and Regulatory Matters under Part I, Item 1, of
              this report for a complete discussion of the Illinois electric settlement
              agreement. Working capital investment increased because the collection
              of higher
              electric rates from Illinois electric customers lagged payments for
              power
              purchases. A decrease in income taxes paid (net of refunds) of $59
              million
              benefited cash flows from operations in the first nine months of 2007.
              Increases
              in electric and gas margins also benefited operating cash flows, but
              were
              reduced by higher operations and maintenance expenses as discussed
              in Results of
              Operations, primarily as a result of the Callaway nuclear plant refueling
              and
              maintenance outage and storm-related outage repairs.
 
 At
              UE, cash from operating activities
              decreased in the first nine months of 2007, compared with the first
              nine months
              of 2006. Increased storm repair costs and increased other operations
              and
              maintenance expenses as a result of the Callaway nuclear plant refueling
              and
              maintenance outage were only partially offset by increased electric
              and gas
              margins, as discussed in Results of Operations. In addition, there
              was an
              increase in accounts receivable, primarily because of higher prices
              for
              interchange power sales and warmer summer weather. Compared to the
              prior-year
              period, decreases in cash paid for Taum Sauk-related costs (net of insurance
              recoveries) of $24 million, and a decrease in income tax payments (net
              of
              refunds) of $97 million benefited cash flows from operations.
 
 At
              CIPS,
              cash from operating activities decreased in the first nine months of
              2007,
              compared with the first nine months of 2006. Operating cash flows were
              lower,
              primarily because of
              $15
              million of customer refunds and program funding related to the Illinois
              electric
              settlement agreement, and increased other operations and maintenance
              expenses.
              Under the terms of the settlement agreement, CIPS will receive reimbursements
              from Illinois electricity generators in future months for a portion
              of these
              expenditures. See Note 2 – Rate and Regulatory Matters for a complete discussion
              of the Illinois electric settlement agreement. Working capital investment
              increased because the collection of higher electric rates from customers
              lagged
              payments for power purchases, and past due customer accounts increased
              due to
              higher rates and uncertainty about future rate relief programs. Income
              tax
              payments (net of refunds) decreased $26 million, benefiting cash flows
              from
              operations.
 
 Genco’s
              cash from operating
              activities increased in the first nine months of 2007 compared to the
              2006
              period, primarily because of an increase in electric margins, as discussed
              in Results of Operations, and a reduction in cash spent for fuel inventory
              due
              to large cash outlays made in 2006 to replenish coal inventory after
              disruptions
              in rail deliveries caused by train derailments. Reducing these increases
              in cash
              from operating activities was an increase in income tax payments (net
              of
              refunds) of $23 million.
 
 Cash
              from operating activities
              decreased for CILCORP and CILCO in the nine months ended September
              30,
              2007,
  73
 compared
              with the same period of 2006. The positive cash effect of increased
              electric
              margins discussed in Results of Operations was more than offset by
              $9 million of
              customer refunds and program funding related to the Illinois electric
              settlement
              agreement. Under the terms of the settlement agreement, CILCO will
              receive
              reimbursements from Illinois electricity generators in future months
              for a
              portion of these expenditures. See Note 2 – Rate and Regulatory Matters for a
              complete discussion of the Illinois electric settlement agreement.
              Working
              capital investment increased because the collection of higher electric
              rates
              from customers lagged payments for power purchases, and past due customer
              accounts increased due to higher rates and uncertainty about future
              rate relief
              programs. In addition, Income tax payments (net of refunds) increased
              $21
              million and $18 million for CILCORP and CILCO, respectively.
 
 IP’s
              cash from operating activities
              decreased in the nine months ended September 30, 2007, compared with
              the same
              period in 2006. The Illinois electric settlement agreement resulted
              in $21
              million of customer refunds and program funding. Under the terms of
              the
              settlement agreement, IP will receive reimbursements from Illinois
              electricity
              generators in future months for a portion of these expenditures. See
              Note 2 –
Rate and Regulatory Matters for a complete discussion of the Illinois
              electric
              settlement agreement. Working capital investment increased because
              the
              collection of higher electric rates from customers lagged payments
              for power
              purchases, and past due customer accounts increased due to higher rates
              and
              uncertainty about future rate relief programs. Storm repair costs increased
              $11
              million compared to the prior year, and income tax payments (net of
              refunds)
              increased by $32 million, further reducing cash flows from
              operations.
 
 **Cash
              Flows from Investing Activities**
 
 Ameren
              had an increase in cash used
              in investing activities in the first nine months of 2007 compared to the
              first nine months of 2006. Net cash used for capital expenditures increased
              in
              2007 as a result of increased storm repair costs, power plant scrubber
              projects
              and upgrades at various power plants. These expenditures were offset
              by the lack
              of CT acquisitions in 2007 as occurred in 2006. The absence in 2007
              of $11
              million of proceeds from sales of non-core properties received in 2006
              also
              contributed to the increase in cash used in investing activities. A
              decrease in
              purchases of emission allowances was partially offset by fewer sales
              of emission
              allowances resulting in a $19 million net benefit to investing cash
              flows.
 
 UE’s
              cash used in investing activities
              decreased in the first nine months of 2007, compared to the same period
              in 2006,
              principally because of the $292 million expended for CT purchases in
              2006,
              partially offset by a $152 million increase in capital expenditures
              in the first
              nine months of 2007 as compared with the first nine months of 2006.
              The
              increased capital expenditures in 2007 were related to storm repair
              costs, a
              power plant scrubber project, and other power plant upgrades. In the
              2006
              period, UE received proceeds of $67 million from an intercompany note
              related to the transfer of UE’s Illinois territory to CIPS, which had reduced
              cash used in investing activities in the same period in 2006.
 
 CIPS
              had an increase in its net use of
              cash from investing activities during 2007 as compared to the same
              period in
              2006. The net $68 million increase was primarily due to an increase
              in money
              pool advances. In the 2007 period, CIPS made net advances of $94 million
              compared to $18 million in the 2006 period. Reducing this increase in net
              use of cash from investing activities, capital expenditures decreased
              by $5
              million compared to the prior year.
 
 Genco’s
              cash used in investing
              activities increased in the first nine months of 2007 compared with
              the 2006
              period. Capital expenditures increased $73 million, principally due
              to a
              scrubber project at one of its power plants and various plant upgrades,
              while
              emission allowance purchases decreased by $19 million.
 
 CILCORP’s
              and CILCO’s cash used in
              investing activities increased in the nine months ended September 30,
              2007,
              compared with the same period in 2006. Cash flow used in investing
              activities
              increased as a result of a $108 million increase in capital expenditures,
              primarily due to a power plant scrubber project and plant upgrades
              at AERG. The
              absence in 2007 of $11 million of proceeds received in 2006 from the
              sale of
              leveraged leases, and (for CILCORP only) the absence in 2007 of a 2006
              note
              receivable payment from Resources Company in the amount of $42 million
              related
              to the 2005 transfer of leveraged leases from CILCORP to Resources
              Company also
              resulted in an increase in cash used in investing activities. The receipt
              of a
              $42 million repayment of prior-year money pool advances and a $12 million
              reduction of emission allowance purchases reduced cash flows used in
              investing
              activities in the 2007 period compared to 2006.
 
 IP’s
              cash used in investing activities
              increased in the first nine months of 2007 compared to the same period
              in 2006
              as a result of increased capital expenditures.
 
 See
              Note 8 – Commitments and
              Contingencies to our financial statements under Part I, Item 1, of
              this report
              for a discussion of future environmental capital expenditure
              estimates.
 
 We
              continually review our power
              supply needs. As a result, we could modify plans for generation capacity,
              which
              could include changing the times when certain assets will be added
              to or removed
              from our portfolio, the type of generation asset technology that will
              be
              employed, and whether capacity
   74
   may
              be
              purchased, among other things. Any changes that we may
              plan
              to make for future generating needs could result in significant capital
              expenditures or losses being incurred, which could be material.
 
 **Cash
              Flows from Financing Activities**
 
 Cash
              provided by financing activities
              increased for Ameren in the first nine months of 2007 from the year-ago
              period.
              Cash from financing activities increased as a result of a
 $425
              million debt issuance in June 2007 by UE, which was larger than the
              prior year’s
              issuances that totaled $232 million. The proceeds of the $425 million
              offering
              were used to reduce short-tem debt at UE. Overall, short-term debt
              increased  $432 million year-over-year at Ameren. The increased
              short-term debt was used to pay maturing long-term notes and to fund
              working
              capital requirements at Ameren’s subsidiaries. Cash was reduced by a $7 million
              decrease in common stock issuances and a $327 million increase in long-term
              debt
              redemptions, repurchases and maturities, including the maturity of
              $350 million
              in notes at Ameren Corporation in the first nine months of 2007.
  UE
              had a
              net source of cash from financing activities in the first nine months
              of 2007,
              compared to a net use of cash in the same period of the prior year.
              Contributing
              to the increase was the issuance of $425 million in long-term debt
              in June 2007.
              The proceeds were used to reduce short-term debt. Overall, short-term
              debt
              decreased $142 million in 2007 compared to an increase of $128 million
              in 2006.
              Short-term borrowings were used in 2007 to fund working capital requirements
              and
              increased capital expenditures, and in 2006 principally to fund the
              acquisition
              of CTs. A $92 million increase in dividend payments and $20 million
              of net
              repayments on an intercompany borrowing arrangement with Ameren reduced
              cash
              provided by financing activities in the first nine months of 2007 compared
              to
              the same period in 2006.
 
 CIPS
              had a net source of cash from
              financing activities for the nine months ended September 30, 2007,
              compared to a
              net use of cash for the first nine months of 2006. Cash from financing
              activities increased as a result of a $100 million net increase in
              short-tem
              debt, a $50 million decrease in dividends paid, a $20 million reduction
              in
              long-term debt maturities, and the absence in 2007 of a 2006 intercompany
              note
              payment to UE in the amount of $67 million. Reducing these positive
              effects was
              the absence in 2007 of $61 million in proceeds from long-term debt
              issuances in
              2006.
 
 Genco
              had a net use of cash from
              financing activities for the nine months ended September 30, 2007,
              compared to a
              net source of cash for the first nine months of 2006. The increase
              in cash used
              in financing activities in 2007 was a result of a $20 million increase
              in
              dividend payments and a $75 million capital contribution received in
              2007
              compared to $150 million received in 2006. Reducing the net cash used
              in
              financing activities was a net increase in short-term debt of $75 million
              in the
              first nine months of 2007 compared to the same period in 2006.
 
 CILCORP
              and CILCO had a net source of
              cash from financing activities for the nine months ended September
              30, 2007,
              compared to a net use of cash for the first nine months of 2006. Short-term
              debt
              increased year-over-year by $325 million for CILCORP and $200 million for
              CILCO. Dividends were not paid by either company in 2007, compared
              to $50
              million and $65 million paid in 2006 by CILCORP and CILCO, respectively.
              Also
              benefiting cash in 2007 compared to 2006 was the absence of money pool
              repayments in 2007, compared to 2006 repayments of $92 million at CILCORP
              and
              $99 million at CILCO. In addition, there was a $14 million capital
              contribution
              received by CILCO in 2007 from CILCORP. Cash flows from financing activities
              were reduced by a $43 million increase in CILCORP note repayments,
              a $96 million
              reduction in long-term debt proceeds at both CILCORP and CILCO, and
              increased
              redemptions, repurchases, and maturities of long-term debt of $18 million
              and
              $30 million at CILCORP and CILCO, respectively.
 
 IP
              had a net increase in cash from
              financing activities in the first nine months of 2007, compared to
              the same
              period of the prior year. Cash benefited by $125 million of short-term
              debt
              borrowings in 2007 compared to none in 2006, a $17 million net increase in
              money pool borrowings, and by the lack of $17 million in TFN overfunding.
              These
              benefits to cash were reduced by the lack of long-term debt proceeds
              in 2007,
              compared to $75 million in 2006.
 
 *Short-term
              Borrowings and Liquidity*
 
 Short-term
              borrowings typically consist
              of drawings under committed bank credit facilities and commercial paper
              issuances. For additional information on credit facilities, short-term
              borrowing
              activity, relevant interest rates, and borrowings under Ameren’s utility and
              non-state-regulated subsidiary money pool arrangements, see Note 3
– Credit
              Facilities and Liquidity to our financial statements under Part I,
              Item 1, of
              this report.
 
 
 75
  The
              following table presents the various committed bank credit facilities
              of the
              Ameren Companies and AERG and their availability as of September 30,
              2007:
 
 **Credit
                        Facility**
                    **Expiration**
                    **Amount
                        Committed**
                    
                    
                    **Amount
                        Available****Ameren,
                        UE and Genco:**Multiyear
                        revolving(a)
                    July
                        2010
                    $
                    1,150
                    
                    
                    $
                    728**CIPS,
                        CILCORP, CILCO, IP and AERG:**2007
                        Multiyear revolving(b)
                    January
                        2010
                    
                    500
                    
                    
                    
                    -2006
                        Multiyear revolving(c)
                    January
                        2010
                    
                    500
                    
                    
                    
                    125
 
 (a)
                    Ameren
                        Companies may access this credit facility through intercompany
                        borrowing
                        arrangements. The maximum amount directly available to Ameren,
                        UE and
                        Genco under the facility is $1.15 billion, $500 million and
                        $150 million,
                        respectively.
 (b)
                    The
                        maximum amount available to each borrower at September 30,
                        2007, including
                        for the issuance of letters of credit, was limited as follows:
                        CILCORP
                        -  $125 million, IP - $200 million and AERG -$100
                        million. CIPS and CILCO have the option of permanently reducing
                        their
                        ability to borrow under the 2006 $500 million credit facility
                        and shifting
                        such capacity, up to the same limits, to the 2007 $500 million
                        credit
                        facility. In July 2007, CILCO shifted $75 million of its
                        sublimit under
                        the 2006 $500 million credit facility to this
                        facility.
 (c)
                    The
                        maximum amount available to each borrower at September 30,
                        2007, including
                        for issuance of letters of credit, was limited as follows:
                        CIPS
                        - $135 million, CILCORP - $50 million, CILCO -$150
                        million, IP - $150 million and AERG - $200 million. In July
                        2007, CILCO
                        shifted $75 million of its capacity under this facility to
                        the 2007 $500
                        million credit facility. Accordingly, as of October 31, 2007,
                        CILCO had a
                        sublimit of $75 million under this facility and a $75 million
                        sublimit
                        under the 2007 credit facility.
 
 In
              addition to committed credit facilities, a further source of liquidity
              for the
              Ameren Companies from time to time is available cash and cash
              equivalents.
 
 The
              issuance of short-term debt
              securities by Ameren’s utility subsidiaries is subject to approval by FERC under
              the Federal Power Act. In March 2006, FERC issued an order authorizing
              these
              subsidiaries to issue short-term debt securities subject to the following
              limits
              on outstanding balances: UE - $1 billion; CIPS - $250 million; and
              CILCO - $250
              million. The authorization was effective as of April 1, 2006, and terminates
              on
              March 31, 2008. IP has unlimited short-term debt authorization from
              FERC.
  Genco
              is
              authorized by FERC in its March 2006 order to have up to $300 million
              of
              short-term debt outstanding at any time. AERG and EEI have unlimited
              short-term
              debt authorization from FERC.
 
 With
              the
              repeal of PUHCA 1935, the issuance of short-term unsecured debt securities
              by
              Ameren and CILCORP, which was previously subject to SEC approval under
              PUHCA
              1935, is no longer subject to approval by any regulatory body.
 
 The
              Ameren Companies continually
              evaluate the adequacy and appropriateness of their credit arrangements
              given
              changing business conditions. When business conditions warrant, changes
              may be
              made to existing credit agreements or other short-term borrowing
              arrangements.
  *Long-term
              Debt and Equity*
 
 The
              following table presents the
              issuances of common stock and the issuances, redemptions, repurchases
              and
              maturities of long-term debt (net of any issuance discounts and including
              any
              redemption premiums) and preferred stock for the nine months ended
              September 30,
              2007 and 2006, for the Ameren Companies. For additional information
              related to
              the terms and uses of these issuances and the sources of funds and
              terms for the
              redemptions, see Note 4 – Long-term Debt and Equity Financings to our financial
              statements under Part I, Item 1, of this report.
 
 **Nine
                        Months****Month
                        Issued, Redeemed,**
                      **Repurchased
                        or Matured**
                    
                    **2007**
                    
                    
                    **2006****Issuances***Long-term
                        debt***UE:**6.40%
                        Senior secured notes due
                        2017
                    June
                    
                    **$**
                    **425**
                    
                    
                    **$**
                    **-****CIPS:**6.70%
                        Senior secured notes due
                        2036
                    June
                    
                    ****
                    **-**
                    
                    
                    
                    61**CILCO:**6.20%
                        Senior secured notes due
                        2016
                    June
                    
                    ****
                    **-**
                    
                    
                    
                    546.70%
                        Senior secured notes due
                        2036
                    June
                    
                    ****
                    **-**
                    
                    
                    
                    42**IP:**6.25%
                        Senior secured notes due
                        2016
                    June
                    
                    ****
                    **-**
                    
                    
                    
                    75Total
                        Ameren long-term debt issuances
                    
                    
                    **$**
                    **425**
                    
                    
                    $
                    232
 
 76
 **Nine
                        Months****Month
                        Issued, Redeemed,**
                      **Repurchased
                        or Matured**
                    
                    **2007**
                    
                    
                    **2006***Common
                        stock***Ameren:**DRPlus
                        and
                        401(k)
                    Various
                    
                    **$**
                    **71**
                    
                    
                    $
                    78Total
                        common stock issuances
                    
                    
                    **$**
                    **71**
                    
                    
                    $
                    78Total
                        Ameren long-term debt and common stock issuances
                    
                    
                    **$**
                    **496**
                    
                    
                    $
                    310**Redemptions,
                        Repurchases and Maturities***Long-term
                        debt***Ameren:**2002
                        5.70% notes due
                        2007
                    February
                    
                    **$**
                    **100**
                    
                    
                    $
                    -Senior
                        notes due
                        2007
                    May
                    
                    ****
                    **250**
                    
                    
                    
                    -**CIPS:**7.05%
                        First mortgage bonds due
                        2006
                    June
                    
                    ****
                    **-**
                    
                    
                    
                    20**CILCORP:**9.375%
                        Senior notes due
                        2029
                    March/April
                    
                    ****
                    **-**
                    
                    
                    
                    12**CILCO:**7.73%
                        First Mortgage bonds due
                        2025
                    July
                    
                    
                    -
                    
                    
                    
                    207.50%
                        First mortgage bonds due
                        2007
                    January
                    
                    ****
                    **50**
                    
                    
                    
                    -**IP:**Note
                        payable to IP
                        SPT:5.65%
                        Series due
                        2008
                    Various
                    
                    ****
                    **65**
                    
                    
                    
                    -5.54%
                        Series due
                        2007
                    Various
                    
                    ****
                    **-**
                    
                    
                    
                    86*Preferred
                        Stock***CILCO:**5.85%
                        Series
                    July
                    
                    
                    1
                    
                    
                    
                    1Total
                        Ameren long-term debt and preferred stock redemptions, repurchases
                        and
                      maturities
                    
                    
                    **$**
                    **466**
                    
                    
                    $
                    139
  The
              following table presents the
              authorized amounts under Form S-3 shelf registration statements filed
              and
              declared effective for certain Ameren Companies as of September
              30, 2007:
 
 **Effective**
                      **Date**
                    
                    **Authorized**
                      **Amount**
                    
                    
                    **Issued**
                    
                    
                    **Available**Ameren
                    June
                        2004
                    
                    $
                    2,000
                    
                    
                    $
                    459
                    
                    
                    $
                    1,541UE
                    October
                        2005
                    
                    
                    1,000
                    
                    
                    
                    685
                    
                    
                    
                    315CIPS
                    May
                        2001
                    
                    
                    250
                    
                    
                    
                    211
                    
                    
                    
                    39
 
 In
              March 2004, the SEC declared
              effective a Form S-3 registration statement filed by Ameren in February
              2004,
              authorizing the offering of 6 million additional shares of its common
              stock
              under DRPlus. Shares of common stock sold under DRPlus are, at Ameren’s option,
              newly issued shares, treasury shares, or shares purchased in the open
              market or
              in privately
              negotiated transactions. Ameren is currently selling newly issued shares
              of its
              common stock under DRPlus.
 
 Ameren
              is also currently selling newly
              issued shares of its common stock under certain of its 401(k) plans
              pursuant to
              effective SEC Form S-8 registration statements. Under DRPlus and its
              401(k)
              plans, Ameren issued a total of 1.4 million new shares of common stock
              valued at $71 million in the nine months ended September 30, 2007.
 
 Ameren,
              UE and CIPS may sell all or a
              portion of the remaining securities registered under their effective
              registration statements if market conditions and capital requirements
              warrant
              such a sale. Any offer and sale will be made only by means of a prospectus
              that
              meets the requirements
              of the Securities Act of 1933 and the rules and regulations
              thereunder.
 
 **Indebtedness
              Provisions and Other Covenants**
 
 See
              Note 3 – Credit Facilities and
              Liquidity to our financial statements under Part I, Item 1, of this
              report for a
              discussion of the covenants and provisions contained in our bank credit
              facilities and applicable cross-default provisions. Also
              see
              Note 4 – Long-term Debt and Equity Financings to our financial statements under
              Part I, Item 1, of this report for a discussion of covenants and provisions
              contained in certain of the Ameren Companies’ indenture agreements and articles
              of incorporation.
 
 At
              September 30, 2007, the Ameren
              Companies were in compliance with their credit facility, indenture,
              and articles
              of incorporation provisions and covenants.
 
 We
              consider access to short-term and
              long-term capital markets a significant source of funding for capital
              requirements not satisfied by our operating cash flows. Inability to
              raise
              capital on favorable terms, particularly during times of uncertainty
              in the
              capital markets, could negatively affect our ability to maintain and
              expand our
              businesses. After assessing our current operating performance, liquidity,
              and
              credit ratings (see Credit Ratings below), we believe that we will
              continue to
              have access to the capital markets. However, events beyond our control
              may
              create uncertainty in the capital markets or make our access to the
              capital
              markets uncertain or limited. Such events would increase our cost
              of
   77
 capital
              and adversely affect our ability to access the capital markets.
 
 **Dividends**
 
 The
              amount and timing of dividends
              payable on Ameren’s common stock are within the sole discretion of Ameren’s
              board of directors. The board of directors has not set specific targets
              or
              payout parameters when declaring common stock dividends. However, the
              board
              considers various issues, including Ameren’s historical earnings and cash flow,
              projected earnings, projected cash flow and potential cash flow requirements,
              dividend payout rates at other utilities, return on investments with
              similar
              risk characteristics, impacts of regulatory orders or legislation and
              overall
              business considerations.
 
 See
              Note 3 – Credit Facilities and
              Liquidity and Note 4 – Long-term Debt and Equity Financings to our financial
              statements under Part I, Item 1, of this report for a discussion of
              covenants
              and provisions contained in certain of the Ameren Companies’ financial
              agreements and articles of incorporation that would restrict the Ameren
              Companies’ payment of dividends in certain circumstances. At September 30, 2007,
              except as discussed below with respect to the 2007 $500 million credit
              facility
              and the 2006 $500 million credit facility, none of these circumstances
              existed
              at the Ameren Companies and, as a result, they were allowed to pay
              dividends.
 
 The
              2007 $500 million credit facility
              and 2006 $500 million credit facility limit CIPS, CILCORP, CILCO and IP to
              common and preferred stock dividend payments of $10 million per year each
              if CIPS’, CILCO’s or IP’s senior secured long-term debt securities or first
              mortgage bonds, or CILCORP’s senior unsecured long-term debt securities, have
              received a below investment-grade credit rating from either Moody’s or S&P.
              With respect to AERG, which currently is not rated by Moody’s or S&P, the
              common and preferred stock dividend restriction will not apply if its
              ratio of
              consolidated total debt to consolidated operating cash flow, pursuant
              to a
              calculation defined in the facilities, is less than or equal to 3.0 to 1.
              On July 26, 2006, Moody’s downgraded CILCORP’s senior unsecured credit rating to
              below investment-grade, causing it to be subject to this dividend payment
              limitation. As of September
              30, 2007, AERG was in compliance with the debt-to-operating cash flow
              ratio test
              in the 2007 and 2006 $500 million credit facilities. The other borrowers
              thereunder are not currently limited in their dividend payments by
              this
              provision of the 2007 or 2006 $500 million credit facilities.
 
 The
              following table presents dividends paid by Ameren Corporation and by
              Ameren’s
              subsidiaries to their respective parents for the nine months ended
              September 30,
              2007 and 2006.
 
 **Nine
                        Months****2007**
                    
                    
                    **2006**UE
                    
                    **$**
                    **246**
                    
                    
                    $
                    154CIPS
                    
                    ****
                    **-**
                    
                    
                    
                    50Genco
                    
                    ****
                    **113**
                    
                    
                    
                    93CILCORP(a)
                    
                    ****
                    **-**
                    
                    
                    
                    50Nonregistrants
                    
                    ****
                    **36**
                    
                    
                    
                    44Dividends
                        paid by Ameren
                    
                    **$**
                    **395**
                    
                    
                    $
                    391
 
 (a)
                    CILCO
                        paid to CILCORP dividends of $50 million for the nine months
                        ended
                        September 30, 2006.
 
 **Contractual
              Obligations**
 
 For
              a complete listing of our
              obligations and commitments, see Contractual Obligations under Part
              II, Item 7
              and Note 14 – Commitments and Contingencies under Part II, Item 8 of the Form
              10-K, and Other Obligations in Note 8 – Commitments and Contingencies under Part
              I, Item 1, of this report. See Note 11 – Retirement Benefits to our financial
              statements under Part I, Item 1, of this report for information regarding
              expected minimum funding levels for our pension plan. See also Note
              1 – Summary
              of Significant Accounting Policies to our financial statements under
              Part I,
              Item 1, of this report for the unrecognized tax benefits under the
              provisions of
              FIN 48.
 
 Subsequent
              to December 31, 2006,
              obligations related to the procurement of coal and related transportation,
              natural gas and nuclear fuel materially changed at Ameren, UE, CIPS,
              Genco,
              CILCORP, CILCO and IP to $5,560 million, $1,759 million, $400 million,
              $356
              million, $1,346 million, $1,346 million and $1,527 million, respectively,
              as of
              September 30, 2007. The Ameren Companies adopted the provisions of
              FIN 48 on
              January 1, 2007. The amount of unrecognized tax benefits under the
              provisions of
              FIN 48 are $155 million, $58 million, $15 million, $36 million, $18
              million, $18
              million and $12 million for Ameren, UE, CIPS, Genco, CILCORP, CILCO
              and IP,
              respectively. UE also entered into a commitment to purchase heavy forgings
              during 2007. As of September 30, 2007, UE’s commitment to purchase heavy
              forgings totaled $88 million. Total obligations at September 30, 2007,
              for
              Ameren, UE, CIPS, Genco, CILCORP, CILCO and IP were $6,415 million,
              $2,301
              million, $445 million, $392 million, $1,409 million, $1,409 million and
              $1,680 million, respectively.
  As
              a
              result of the Illinois electric settlement agreement reached in July
              2007 and
              the enactment of related legislation into law, which occurred on August
              28,
              2007, the Ameren Illinois Utilities, Genco and AERG agreed to make
              aggregate
              contributions of $150 million over a four-year period, with $60 million
              coming from the Ameren Illinois Utilities (CIPS - $21 million; CILCO
              - $11
              million; IP - $28 million), $62 million
   78
 
 from
                Genco and $28 million from AERG. Ameren, CIPS, CILCO (Illinois Regulated),
                IP,
                Genco and CILCO (AERG) incurred charges to earnings of $59 million,
                $8
                million, $5 million,
 $11
                million, $24 million and $11 million, respectively, under the terms
                of the
                settlement agreement during the quarter ended September 30, 2007.
                At September
                30, 2007, Ameren, CIPS, CILCO (Illinois Regulated) and IP had receivable
                balances from nonaffiliated Illinois generators for reimbursement
                of customer
                rate relief and program funding of $108 million, $37 million, $21
                million and
                $50 million, respectively. See Note 2 – Rate and Regulatory Matters under Part
                I, Item 1, of this report for additional information regarding the
                Illinois
                electric settlement agreement.
 
 **Credit
              Ratings**
 
 The
              following table presents the
              principal credit ratings of the Ameren Companies by Moody’s, S&P and Fitch
              effective on the date of this report:
  **Moody’s**
                    **S&P**
                    **Fitch****Ameren:**Issuer/corporate
                        credit rating
                    Baa2
                    BBB-
                    BBB+Unsecured
                        debt
                    Baa2
                    BB+
                    BBB+Commercial
                        paper
                    P-2
                    A-3
                    F2**UE:**Issuer/corporate
                        credit rating
                    Baa1
                    BBB-
                    A-Secured
                        debt
                    A3
                    BBB
                    A+Commercial
                        paper
                    P-2
                    A-3
                    F2**CIPS:**Issuer/corporate
                        credit rating
                    Ba1
                    BB
                    BB+Secured
                        debt
                    Baa3
                    BBB
                    BBB**Genco:**Issuer/corporate
                        credit rating
                    -
                    BBB-
                    BBB+Unsecured
                        debt
                    Baa2
                    BBB-
                    BBB+**CILCORP:**Issuer/corporate
                        credit rating
                    -
                    BB
                    BB+Unsecured
                        debt
                    Ba2
                    B+
                    BB+**CILCO:**Issuer/corporate
                        credit rating
                    Ba1
                    BB
                    BB+Secured
                        debt
                    Baa2
                    BBB
                    BBB**IP:**Issuer/corporate
                        credit rating
                    Ba1
                    BB
                    BB+Secured
                        debt
                    Baa3
                    BBB-
                    BBB
 
 During
              March and April of 2007, Moody’s, S&P, and Fitch downgraded various credit
              ratings of certain of the Ameren Companies. Depending on the specific
              credit
              rating agency action and the specific legal entities affected, the
              downgrade of
              these credit ratings was a result of the actions of various Illinois
              state
              legislators, including passage of forms of legislation that would have
              rolled
              back and frozen the electric rates of CIPS, CILCO and IP, and in the
              case of UE
              was prompted by higher costs, lower financial metrics and a continued
              challenging regulatory environment in Missouri.
 
 On
              August 1, 2007, Fitch changed the
              rating outlook at Ameren to stable. In addition, Fitch revised the
              rating watch
              on CIPS, CILCORP, CILCO and IP to positive. The positive watch followed
              the
              announcement of the Illinois electric settlement agreement.  See Note
              2 – Rate and Regulatory Matters to our financial statements under Part
              I, Item 1
              of this report for further discussion of the Illinois settlement
              agreement.
 
 On
              August
              29, 2007, Moody’s changed the rating outlook at Ameren and Genco to stable. The
              rating outlook of CIPS, CILCORP, CILCO, and IP was upgraded to positive.
              These
              actions were prompted by the Illinois electric settlement agreement.
              Moody’s
              stated that “the settlement significantly reduces the likelihood of a rate
              freeze being enacted in Illinois and provides the foundation for a
              potentially
              improving political and regulatory environment for investor-owned-utilities
              in
              the state.”
 
 On
              August
              29, 2007, S&P issued a research update in response to the Illinois
              settlement agreement, as discussed above. The outlook on the ratings
              of Ameren,
              UE and Genco was changed to stable. The outlook on the ratings of CIPS,
              CILCORP,
              CILCO, and IP was upgraded to positive. On September 6, 2007, S&P upgraded
              its senior secured debt ratings of UE, CIPS, and CILCO from “BBB-” to “BBB” as a
              result of changes in its first mortgage bond rating methodology.
 
 Any
              adverse change in the Ameren
              Companies’ credit ratings may reduce access to capital and trigger additional
              collateral postings and prepayments. Such changes may also increase
              the cost of
              borrowing and fuel, power and gas supply, among other things, resulting
              in a
              negative impact on earnings. Collateral postings and prepayments made
              as of the
              end of the third quarter of 2007 were $76 million, $4 million, $8
              million, $27 million, $27 million, and $33 million at Ameren, UE,
              CIPS, CILCORP, CILCO and IP, respectively, resulting from our reduced
              corporate and issuer credit ratings. Sub-investment-grade issuer or
              senior
              unsecured debt ratings (lower than “BBB-” or “Baa3”) at September 30, 2007,
              could have resulted in Ameren, UE, CIPS, CILCORP, CILCO or IP being
              required to post additional collateral or other assurances for certain
              trade
              obligations amounting to $160 million, $43 million, $16 million, $20
              million,
              $22 million, $22 million, and $39 million, respectively. In addition,
              the cost
              of borrowing under our credit facilities can increase or decrease depending
              upon
              the credit ratings of the borrower. A credit rating is not a recommendation
              to
              buy, sell or hold securities. It should be evaluated independently
              of any other
              rating. Ratings are subject to revision or withdrawal at any time by
              the rating
              organization.
 
 **OUTLOOK**
 
 Below
              are some key events and trends
              that may affect the Ameren Companies’ financial condition, results of
              operations, or liquidity in 2007 and beyond.
 
 79
 
 **Revenues**
 
 ·
                    The
                        earnings of UE, CIPS, CILCO and IP are largely determined
                        by the
                        regulation of their rates by state agencies. With rising
                        costs, including
                        fuel and related transportation, purchased power, labor and
                        material
                        costs, coupled with increased capital and operations and
                        maintenance
                        expenditures targeted at enhanced distribution system reliability
                        and
                        environmental compliance, Ameren, UE, CIPS, CILCO and IP
                        expect to
                        experience regulatory lag until requests to increase rates
                        to recover such
                        costs are granted by state regulators. As a result, Ameren,
                        UE, CIPS,
                        CILCO and IP expect to be entering into a period where more
                        frequent rate
                        cases will be necessary. The Ameren Illinois Utilities filed
                        delivery
                        service rate cases with the ICC in November 2007 due to inadequate
                        recovery of costs and low returns on equity being experienced
                        in 2007.
                        CIPS, CILCO and IP requested to increase their annual revenues
                        for
                        electric delivery service by $180 million in the aggregate
                        (CIPS - $31
                        million, CILCO - $10 million and IP - $139 million). The
                        electric rate
                        increase requests were based on an 11% return on equity,
                        a capital
                        structure composed of 51 to 53 percent equity, an aggregate
                        rate base for
                        the Ameren Illinois Utilities of $2.1 billion and a test
                        year ended
                        December 31, 2006, with certain prospective updates.  In addition,
                        CIPS, CILCO and IP filed requests with the ICC in November
                        2007 to
                        increase their annual revenues for natural gas delivery service
                        by $67
                        million in the aggregate (CIPS - $15 million increase, CILCO
                        - $4 million
                        decrease and IP - $56 million increase). The natural gas
                        rate change
                        requests were based on an 11% return on equity, a capital structure
                        composed of 51 to 53 percent equity, an aggregate rate base
                        for the Ameren
                        Illinois Utilities of $0.9 billion and a test year ended
                        December 31,
                        2006, with certain prospective updates. The ICC has until
                        October 2008 to
                        render a decision in these rate cases. UE is actively considering
                        the
                        timing of its next electric rate case filing in
                        Missouri.
 ·
                    In
                        current and future rate cases, UE, CIPS, CILCO and IP will
                        also seek cost
                        recovery mechanisms from their state regulators to reduce
                        regulatory lag.
                        In their electric and natural gas delivery service rate cases
                        filed in
                        November 2007, the Ameren Illinois Utilities requested ICC
                        approval to
                        implement rate adjustment mechanisms for bad debt expenses,
                        electric
                        infrastructure investments and the decoupling of natural
                        gas revenues from
                        sales volumes.  In July 2005, a law was enacted that enables the
                        MoPSC to put in place fuel, purchased power, and environmental
                        cost
                        recovery mechanisms for Missouri’s utilities. Rules for the fuel and
                        purchased power cost recovery mechanism were approved by
                        the MoPSC in
                        September 2006. Detailed rules for the environmental cost
                        recovery
                        mechanism are being developed and expected to be effective
                        in the first
                        half of 2008.
 ·
                    Average
                        residential electric rates for CIPS, CILCO and IP increased
                        significantly
                        following the expiration of a rate freeze at the end of 2006.
                        Electric
                        rates rose because of the increased cost of power purchased
                        on behalf of
                        the Ameren Illinois Utilities’ customers and an increase in electric
                        delivery service rates. Due to the magnitude of these increases,
                        a
                        comprehensive settlement agreement was reached with key stakeholders
                        in
                        Illinois that provides approximately $1 billion of funding
                        for rate relief
                        for certain electric customers in Illinois, including approximately
                        $488
                        million to customers of the Ameren Illinois Utilities. Pursuant
                        to the
                        settlement agreement, the Ameren Illinois Utilities, Genco
                        and AERG agreed
                        to make aggregate contributions of $150 million over a four-year
                        period,
                        with $60 million coming from the Ameren Illinois Utilities
                        (CIPS - $21
                        million; CILCO - $11 million;IP
                        - $28 million), $62 million from Genco and $28 million from
                        AERG. To fund
                        these contributions, the Ameren Illinois Utilities, Genco
                        and AERG will
                        need to increase their respective
                        borrowings.
 ·
                    As
                        part of the Illinois electric settlement agreement and related
                        legislation, the reverse auction used for power procurement in
                        Illinois was discontinued and replaced with a new power procurement
                        process led by the IPA, beginning in 2009. In 2008, utilities
                        will
                        contract for necessary baseload, intermediate and peaking
                        power
                        requirements through a request-for-proposal process, subject
                        to ICC review
                        and approval. Existing supply contracts from the September
                        2006 reverse
                        auction will remain in place. The impact of the new procurement
                        process in
                        Illinois is uncertain.
 ·
                    The
                        MoPSC issued an order, as clarified, granting UE a $43 million
                        increase in
                        base rates for electric service with new electric rates effective
                        June 4,
                        2007.  This order included provisions to extend UE's Callaway nuclear
                        plant and fossil generation plant lives and to change the
                        income tax
                        method associated with cost of property removal.  Such provisions are
                        expected to decrease Ameren's and UE's expenses by $58 million
                        annually.  The MoPSC also approved a stipulation and agreement
                        authorizing an increase in UE’s annual natural gas delivery revenues of $6
                        million, effective April 1, 2007. UE agreed not to file a
                        natural gas
                        delivery rate case before March 15,
                        2010.
 ·
                    See
                        Note 2 – Rate and Regulatory Matters to our financial statements under
                        Part I, Item 1, of this report for a further discussion of
                        Illinois and
                        Missouri rate matters.
 ·
                    Very
                        volatile power prices in the Midwest affect the amount of
                        revenues Ameren,
                        UE, Genco, CILCO (through AERG) and EEI can generate by marketing
                        power
                        into the wholesale and spot markets and influence the cost
                        of power
                        purchased in the spot markets.
 ·
                    The
                        availability and performance of UE’s, Genco’s, AERG’s and EEI’s electric
                        generation fleet can materially impact their revenues. UE,
                        Genco and CILCO
                        are seeking to raise the equivalent availability and capacity
    80
  factors
                      of their power plants through greater investments and a process
                      improvement program. ·
                    All
                        but 5 million megawatthours of Genco and AERG’s pre-2006 wholesale and
                        retail electric power supply agreements expired during 2006.
                        In 2007, 1
                        million megawatthours of these agreements will expire and
                        another 2
                        million contracted megawatthours will expire in 2008. These
                        agreements had
                        an average embedded selling price of $36 per megawatthour.
                        These
                        agreements are being replaced with market-based sales. The
                        Non-rate-regulated Generation segment expects to generate
                        31 million
                        megawatthours of power in 2007 (Genco –17
                        million, AERG – 6 million, EEI – 8
                        million).
 ·
                    The
                        marketing strategy for Non-rate-regulated Generation is to
                        optimize
                        generation output in a low risk manner to minimize earnings
                        and cash flow
                        volatility, while capitalizing on its low-cost generation
                        fleet to provide
                        for solid, sustainable returns. Through a mix of physical
                        and financial
                        sales contracts, including contracts resulting
                        from the Illinois 2006 power procurement auction and the
                        Illinois electric
                        settlement agreement, the Non-rate-regulated Generation segment
                        has sold
                        approximately 90% of its expected 2007 generation output
                        at an average
                        price of $51 per megawatthour (fiscal year 2008 - 75%, or
                        24 million
                        megawatthours; fiscal year 2009 - 55%, or 18 million megawatthours).
                        Expected sales in 2007 include an estimated 7.6 million megawatthours
                        of
                        power sold through the 2006 Illinois power procurement auction
                        at about
                        $65 per megawatthour (2008 - 6.8 million, 2009 - 4.3
                        million).
 ·
                      The
                          future development of ancillary services and capacity markets
                          in MISO
                          could increase the electric margins of UE, Genco, AERG
                          and EEI. 
                          Ancillary services are services necessary to support the
                          transmission of
                          energy from generation resources to loads while maintaining
                          reliable
                          operation of the transmission provider's transmission system.  A
                          capacity market allows participants to purchase or sell
                          capacity products
                          that meet reliability requirements. MISO is currently in
                          the process of
                          developing a centralized regional wholesale ancillary services
                          market,
                          which is expected to begin during 2008. In September 2007,
                          MISO filed a
                          new proposed ancillary services market tariff with the
                          FERC subject to
                          normal FERC procedural review. We expect MISO will begin
                          development of a
                          capacity market once its ancillary services market is in
                          place.
 ·
                      We
                          expect continued economic growth in our service territory
                          to benefit
                          energy demand in 2007 and beyond, but higher energy prices
                          could result in
                          reduced demand from customers, especially in Illinois.
                          Future energy
                          efficiency programs developed by UE, CIPS, CILCO and IP
                          could also result
                          in reduced demand for our electric generation and our electric
                          and gas
                          transmission and distribution
                          services.
  **Fuel
              and Purchased Power**
  ·
                    In
                        2006, 85% of Ameren’s electric generation (UE - 77%, Genco - 97%, CILCO -
                        99%, EEI – 100%) was supplied by its coal-fired power plants. About
                        93% of
                        the coal used by these plants (UE - 97%, Genco - 87%, CILCO
                        - 69%, EEI -
                        100%) was delivered by railroads from the Powder River Basin
                        in Wyoming.
                        In the past, deliveries from the Powder River Basin have
                        been restricted
                        because of rail maintenance, weather and derailments. As
                        of September 30,
                        2007, coal inventories for UE, Genco, AERG and EEI were adequate,
                        and
                        consistent with historical levels. Disruptions in coal deliveries
                        could
                        cause UE, Genco, AERG and EEI to pursue a strategy that could
                        include
                        reducing sales of power during low-margin periods, buying
                        higher-cost
                        fuels to generate required electricity, and purchasing power
                        from other
                        sources. ·
                    Ameren’s
                        coal and related transportation costs are expected to increase
                        15% to 20%
                        in 2007 over 2006 and 5% to 10% in 2008. Further increases
                        are expected
                        beyond 2008.  Ameren’s nuclear fuel costs are also expected to
                        rise over the next few years. In addition, power generation
                        from
                        higher-cost, gas-fired plants is expected to increase in
                        the next few
                        years. See Item 3 - Quantitative and Qualitative Disclosures
                        about Market
                        Risk in Part I of this report for information about the percentage
                        of fuel
                        and transportation requirements that are price-hedged for
                        2007 through
                        2011.
 ·
                    Ameren’s
                        coal and related transportation costs are expected to increase
                        15% to 20%
                        in 2007 over 2006 and 5% to 10% in 2008. Further increases
                        are expected
                        beyond 2008.  Ameren’s nuclear fuel costs are also expected to
                        rise over the next few years. In addition, power generation
                        from
                        higher-cost, gas-fired plants is expected to increase in
                        the next few
                        years. See Item 3 - Quantitative and Qualitative Disclosures
                        about Market
                        Risk in Part I of this report for information about the percentage
                        of fuel
                        and transportation requirements that are price-hedged for
                        2007 through
                        2011.
 ·
                    In
                        2007, Ameren and IP will experience higher year-over-year
                        purchased power
                        expenses as the amortization of certain favorable purchase
                        accounting
                        adjustments associated with the IP acquisition was completed
                        in
                        2006.
 ·
                    In
                        2007, Ameren expects to reduce levels of emission allowance
                        sales in order
                        to retain remaining allowances for future environmental compliance
                        needs.
  **Other
              Costs**
 
 ·
                    In
                        December 2005, there was a breach of the upper reservoir
                        at UE’s Taum Sauk
                        pumped-storage hydroelectric facility. This resulted in significant
                        flooding in the local area, which damaged a state park. In
                        February 2007,
                        UE submitted plans and an environmental report to FERC to
                        rebuild the
                        upper reservoir at its Taum Sauk plant, assuming successful
                        resolution of
                        outstanding issues with authorities of the state of Missouri.
                        UE received
                        approval from FERC to rebuild the upper reservoir in August
                        2007 and hired
                        a contractor in November 2007. Should the Taum Sauk plant
                        be rebuilt, UE
                        would expect it to be out of service through at least the
                        fall of 2009, if
                        not longer. UE has accepted responsibility for the effects
                        of the
                        incident. At this time, UE believes that substantially all
                        of the damage
                        and liabilities (but not penalties or lost electric margins)
 
  81
   caused
                      by the breach, including rebuilding the plant, will be covered
                      by
                      insurance. Under UE’s insurance policies, all claims by or against UE are
                      subject to review by its insurance carriers. As a result of
                      this breach,
                      UE is engaged in litigation initiated by certain private parties
                      and by
                      authorities in the state of Missouri. UE is currently in discussions
                      with
                      state authorities to resolve outstanding issues associated
                      with this
                      incident. The Taum Sauk incident is also under investigation
                      at the MoPSC.
                      We are unable to determine the impact the breach may have on
                      Ameren’s and
                      UE’s results of operations, financial position, or liquidity beyond
                      those
                      amounts already recognized. See Note 2 – Rate and Regulatory Matters and
                      Note 8 - Commitments and Contingencies to our financial statements
                      under
                      Part I, Item 1, of this report for a further discussion of
                      Taum Sauk
                      matters. ·
                    UE’s
                        Callaway nuclear plant’s next scheduled refueling and maintenance outage
                        is in the fall of 2008 and is expected to last 30 days. During
                        an outage,
                        which occurs every18
                        months, maintenance and purchased
                        power
 costs
                          increase, and the amount of excess power available for
                          sale decreases,
                          versus non-outage years.
 ·
                      Over
                          the next few years, we expect rising employee benefit costs
                          as well as
                          higher insurance and security costs associated with additional
                          measures we
                          have taken, or may need to take, at UE’s Callaway nuclear plant and at our
                          other facilities. Insurance premiums may also increase
                          as a result of the
                          Taum Sauk incident, among other
                          things.
 ·
                      Bad
                          debts may increase due to rising electric and gas
                          rates. ·
                      Genco
                          expects its annual depreciation expense will decrease by
                          $12 million
                          annually based on a depreciation study completed in September
                          2007.
 ·
                      We
                          are currently undertaking cost reduction and control initiatives
                          associated with the strategic sourcing of purchases and
                          streamlining of
                          all aspects of our business.
  **Capital
              Expenditures**
 
 ·
                    The
                        EPA has issued more stringent emission limits on all coal-fired
                        power
                        plants. Between 2007 and 2016, Ameren expects that certain
                        Ameren
                        Companies will be required to invest between $3.5 billion
                        and $4.5 billion
                        to retrofit their power plants with pollution control equipment.
                        Costs for
                        these types of projects continue to escalate. These investments
                        will also
                        result in decreased plant availability during construction
                        and
                        significantly higher ongoing operating expenses. Approximately
                        50% of this
                        investment will be in Ameren’s regulated UE operations, and it is
                        therefore expected to be recoverable from ratepayers. The
                        recoverability
                        of amounts expended in non-rate-regulated operations will
                        depend on
                        whether market prices for power adjust as a result of this
                        increased
                        investment.
 ·
                    Future
                        federal and state legislation or regulations that mandate
                        limits on the
                        emission of greenhouse gases would result in significant
                        increases in
                        capital expenditures and operating costs. The costs to comply
                        with future
                        legislation or regulations could be so expensive that Ameren
                        and other
                        similarly-situated electric power generators may be forced
                        to close some
                        coal-fired facilities. Ameren will provide a report on how
                        it is
                        responding to rising regulatory, competitive, and public
                        pressure to
                        significantly reduce carbon dioxide and other emissions from
                        current and
                        proposed power plant operations. The report will include
                        Ameren’s climate
                        change strategy and activities, current greenhouse gas emissions,
                        and
                        analysis with respect to plausible future greenhouse gas
                        scenarios. Ameren
                        will issue this report in mid-December 2007. Investments
                        to control carbon
                        emissions at Ameren’s coal-fired plants would significantly increase
                        future capital expenditures and operations and maintenance
                        expenses.
 ·
                    UE
                        continues to evaluate its longer-term needs for new baseload
                        and peaking
                        electric generation capacity. At this time, UE does not expect
                        to require
                        new baseload generation capacity until at least 2018. However,
                        due to the
                        significant time required to plan, acquire permits for and
                        build a
                        baseload power plant, UE is actively studying future plant
                        alternatives,
                        including those that would use coal or nuclear fuel. In 2007,
                        UE signed an
                        agreement with UniStar Nuclear to assist UE in the preparation
                        of a
                        combined construction and operating license application (COLA)
                        for filing
                        with the NRC. A COLA describes how a nuclear plant would
                        be designed,
                        constructed and operated. In addition, UE has also signed
                        contracts for
                        certain long lead-time equipment. Preparing a COLA and entering
                        into these
                        contracts does not mean a decision has been made to build
                        a nuclear plant.
                        They are only the first steps in the regulatory licensing
                        and procurement
                        process. UE and UniStar Nuclear must submit the COLA to the
                        NRC in 2008 to
                        be eligible for incentives available under provisions of
                        the 2005 Energy
                        Policy Act.
 ·
                    Over
                        the next few years, we expect to make significant investments
                        in our
                        electric and gas infrastructure and incur increased operations
                        and
                        maintenance expenses to improve overall system reliability.
                        We are
                        projecting higher labor and material costs for these capital
                        expenditures.
                        UE announced in July 2007 plans to spend $300 million over
                        three years for
                        underground cabling and reliability improvement, $135 million
                        ($45 million
                        per year) for tree-trimming, and $84 million over three years
                        (approximately $28 million per year) for circuit and device
                        inspection and
                        repair. We would expect these costs or investments to be
                        recovered in
                        rates.
 ·
                    Increased
                        investments for environmental compliance, reliability improvement
                        and new
                        baseload capacity will result in higher financing
                        costs.
   82
  **Affiliate
              Transactions**
 
 ·
                    As
                        a result of the termination of the JDA on December 31, 2006,
                        UE and Genco
                        no longer have the obligation to provide power to each other.
                        UE is able
                        to sell any excess power it has at market prices, which we
                        believe will
                        most likely be higher than the prices paid to it by Genco.
                        Genco will no
                        longer receive the margins on sales that it made, which were
                        fulfilled
                        with power from UE. The electric rate order issued in May
                        2007 by the
                        MoPSC incorporated the net decrease in UE’s revenue requirement from
                        increased margins expected to result from the termination
                        of the JDA. See
                        Note 7 - Related Party Transactions to our financial statements
                        under Part
                        I, Item 1, of this report for a discussion of the effects
                        of terminating
                        the JDA.
 
 **Other**
 
 ·
                    In
                        2006, Ameren realized gains on sales of noncore properties,
                        including
                        leveraged leases. The net benefit of these sales to Ameren
                        in 2006 was 16
                        cents per share. Ameren continues to pursue the sale of its
                        interests in
                        its remaining three leveraged lease assets. Ameren does not
                        expect to
                        achieve similar sales levels of noncore properties in 2007.
 
 The
                above
                items could have a material impact on our results of operations,
                financial
                position, or liquidity. Additionally,
                in the ordinary course of business, we evaluate strategies to enhance
                our
                results of operations, financial position, or liquidity. These strategies
                may
                include acquisitions, divestitures, opportunities to reduce costs
                or increase
                revenues, and other strategic initiatives to increase Ameren’s shareholder
                value. We are unable to predict which, if any, of these initiatives
                will be
                executed. The execution of these initiatives may have a material
                impact on our
                future results of operations, financial position, or
                liquidity.
  **REGULATORY
              MATTERS**
 
 See
              Note 2 – Rate and Regulatory
              Matters to our financial statements under Part I, Item 1, of this
              report.
 
 **ITEM
              3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
              RISK.**
 
 Market
              risk is the risk of changes in
              value of a physical asset or a financial instrument, derivative or
              nonderivative, caused by fluctuations in market variables such as interest
              rates, commodity prices and equity security prices. A derivative is
              a contract
              whose value is dependent on, or derived from, the value of some underlying
              asset. The following discussion of our risk management activities includes
              forward-looking statements that involve risks and uncertainties. Actual
              results
              could differ materially from those projected in the forward-looking
              statements.
              We handle market risks in accordance with established policies, which
              may
              include entering into various derivative transactions. In the normal
              course of
              business, we also face risks that are either nonfinancial or nonquantifiable.
              Such risks, principally business, legal and operational risks, are
              not part of
              the following discussion.
 
 Our
              risk management objective is to
              optimize our physical generating assets and pursue market opportunities
              within
              prudent risk parameters. Our risk management policies are set by a
              risk
              management steering committee, which is composed of senior-level Ameren
              officers.
 
 Except
              as discussed below, there have
              been no material changes to the quantitative and qualitative disclosures
              about
              market risk in the Form 10-K. See Item 7A under Part II of the Form
              10-K for a
              more detailed discussion of our market risks.
 
 **Interest
              Rate Risk**
 
 We
              are exposed to market risk through
              changes in interest rates. The following table presents the estimated
              increase
              in our annual interest expense and decrease in net income if interest
              rates were
              to increase by 1% on variable-rate debt outstanding at September 30,
              2007:
 
 **Interest
                        Expense**
                    
                    
                    **Net
                        Income(a)**Ameren
                    
                    $
                    20
                    
                    
                    $
                    (13
                    )UE
                    
                    
                    6
                    
                    
                    
                    (4
                    )CIPS
                    
                    
                    2
                    
                    
                    
                    (1
                    )Genco
                    
                    
                    1
                    
                    
                    
                    (1
                    )CILCORP
                    
                    
                    5
                    
                    
                    
                    (3
                    )CILCO
                    
                    
                    4
                    
                    
                    
                    (2
                    )IP
                    
                    
                    6
                    
                    
                    
                    (4
                    )
 
 (a)
                    Calculations
                        are based on an effective tax rate of
                        38%.
  The
              estimated changes above do not consider potential reduced overall economic
              activity that would exist in such an environment. In the event of a
              significant
              change in interest rates, management would probably act to further
              mitigate our
              exposure to this market risk. However, due to the uncertainty of the
              specific
              actions that would be taken and their possible effects, this sensitivity
              analysis assumes no change in our financial structure.
  
 83
 **Credit
              Risk**
 
 Credit
              risk represents the loss that would be recognized if counterparties
              fail to
              perform as contracted. NYMEX-traded futures contracts are supported
              by the
              financial and credit quality of the clearing members of the NYMEX and
              have
              nominal credit risk. In all other transactions, we are exposed to credit
              risk in
              the event of nonperformance by the counterparties to the
              transaction.
 
 Our
              physical and financial instruments are subject to credit risk consisting
              of
              trade accounts receivable and executory contracts with market risk
              exposures.
              The risk associated with trade receivables is mitigated by the large
              number of
              customers in a broad range of industry groups who make up our customer
              base. At
              September 30, 2007, no nonaffiliated customer represented more than
              10%, in the
              aggregate, of our accounts receivable. Our revenues are primarily derived
              from
              sales or delivery of electricity and natural gas to customers in Missouri
              and
              Illinois. UE, CIPS, Genco, CILCO, AERG, IP, AFS and Marketing Company
              may have
              credit exposure associated with power purchase and sale activity with
              nonaffiliated companies. These companies also have credit exposure
              to
              affiliates. At September 30, 2007, UE’s, CIPS’, Genco’s, CILCO’s, AERG’s, IP’s,
              AFS’ and Marketing Company’s combined credit exposure to nonaffiliated
              non-investment-grade trading purchases and sales was each less than
              $1 million,
              net of collateral (2006 – less than $1 million). We establish credit limits for
              these counterparties and monitor the appropriateness of these limits
              on an
              ongoing basis through a credit risk management program that involves
              daily
              exposure reporting to senior management,
              master trading and netting agreements, and credit support, such as
              letters of
              credit and parental guarantees. We also analyze each counterparty’s financial
              condition before we enter into sales, forwards, swaps, futures or option
              contracts, and we monitor counterparty exposure associated with our
              leveraged
              leases. We estimate our credit exposure to MISO associated with the
              MISO Day Two
              Energy Market to be $32 million at September 30, 2007 (2006 - $35
              million).
 
 The
              Ameren Illinois Utilities will be
              exposed to credit risk in the event of nonperformance by the parties
              contributing to the Illinois comprehensive rate relief and assistance
              programs
              under the Illinois settlement agreement, which will provide $488 million
              in rate
              relief over a four-year period to certain electric customers of the
              Ameren
              Illinois Utilities. Under funding agreements among the parties contributing
              to
              the rate relief and assistance programs, at the end of each month,
              the Ameren
              Illinois Utilities will bill the participating generators for their
              proportionate share of that month’s rate relief and assistance, which is due in
              30 days, or drawn from the funds provided by the generators’ escrow. See Note 2
– Rate and Regulatory Matters to our financial statements under Part
              I, Item 1
              of this report for additional information.
 
 **Equity
              Price Risk**
 
 Our
              costs
              of providing defined benefit retirement and postretirement benefit
              plans are
              dependent upon a number of factors, including the rate of return on
              plan assets.
              To the extent the value of plan assets declines, the effect would be
              reflected
              in net income and OCI, and in the amount of cash required to be contributed
              to
              the plans.
 
 **Commodity
              Price Risk**
  We
              are
              exposed to changes in market prices for electricity, fuel, and natural
              gas.
              UE’s, Genco’s, AERG’s and EEI’s risks of changes in prices for power sales are
              partially hedged through sales agreements. Genco, AERG and EEI also
              seek to sell
              power forward to wholesale, municipal and industrial customers to limit
              exposure
              to changing prices. We also attempt to mitigate financial risks through
              structured risk management programs and policies, which include structured
              forward-hedging programs, and the use of derivative financial instruments
              (primarily forward contracts, futures contracts, option contracts,
              and financial
              swap contracts). However, a portion of the generation capacity of UE,
              Genco,
              AERG and EEI is not contracted through physical or financial hedge
              arrangements
              and is therefore exposed to volatility in market prices.
 
 The
              following table shows how our earnings might decrease if power prices
              were to
              decrease by 1% on unhedged economic generation for the remainder of
              2007 through
              2010:
 
 **Net
                        Income(a)**Ameren
                    
                    $
                    (23
                    )UE
                    
                    
                    (9
                    )Genco
                    
                    
                    (7
                    )CILCO
                        (AERG)
                    
                    
                    (2
                    )EEI
                    
                    
                    (6
                    )
 
 (a)
                    Calculations
                        are based on an effective tax rate of
                        38%
 
 Ameren
              also utilizes its portfolio management and trading capabilities both
              to manage
              risk and to deploy risk capital to generate additional returns. Due
              to our
              physical presence in the market, we are able to identify and pursue
              opportunities which can generate additional returns through portfolio
              management
              and trading activities. All of this activity is performed within a
              controlled
              risk management process. We establish value at risk (VaR) and stop-loss
              limits
              that are intended to prevent any negative material financial
              impact.
 
 Similar
              techniques are used to manage
              risks associated with fuel exposures for generation. Most UE, Genco,
              AERG and
              EEI fuel supply contracts are physical forward contracts. UE, Genco,
              AERG and
              EEI do not have a provision similar to the PGA clause for electric
              operations,
              so UE, Genco, AERG and EEI have entered into long-term contracts with
              various
              suppliers to purchase coal and nuclear fuel to manage their
   84
   exposure
              to fuel prices. The coal hedging strategy is intended to secure a reliable
              coal
              supply while reducing exposure to commodity price volatility. Price
              and
              volumetric risk mitigation is accomplished primarily through periodic
              bid
              procedures, whereby the amount of coal purchased is determined by the
              current
              market prices and the minimum and maximum coal purchase guidelines
              for the given
              year. We generally purchase coal up to five years in advance, but we
              may
              purchase coal beyond five years to take advantage of favorable deals
              or market
              conditions. The strategy also allows for the decision not to purchase
              coal to
              avoid unfavorable market conditions.
 
 Transportation
              costs for coal and
              natural gas can be a significant portion of fuel costs. We typically
              hedge coal
              transportation forward to provide supply certainty and to mitigate
              transportation price volatility. The natural gas transportation expenses
              for the
              distribution utility companies and the gas-fired generation units are
              controlled
              by FERC via published tariffs with rights to extend the contracts from
              year to
              year. Depending on our competitive position, we are able in some instances
              to
              negotiate discounts to these tariffs for our requirements.
  The
              following table presents the
              percentages of the projected required supply of coal and coal transportation
              for
              our coal-fired power plants, nuclear fuel for UE’s Callaway nuclear plant,
              natural gas for our CTs and retail distribution, as appropriate, and
              purchased
              power needs of CIPS, CILCO and IP, which own no generation, that are
              price-hedged over the remainder of 2007 through 2011:
 
 **2007**
                    
                    
                    **2008**
                    
                    
                    ****
                    **2009**–**2011****Ameren:**Coal
                    
                    ****
                    **100**
                    **%**
                    
                    
                    98
                    %
                    
                    
                    51
                    %Coal
                        transportation
                    
                    ****
                    **100**
                    
                    
                    
                    96
                    
                    
                    
                    44Nuclear
                        fuel
                    
                    ****
                    **100**
                    
                    
                    
                    100
                    
                    
                    
                    73Natural
                        gas for generation
                    
                    ****
                    **100**
                    
                    
                    
                    19
                    
                    
                    
                    -Natural
                        gas for distribution
                    
                    **(a)**
                    
                    
                    
                    26
                    
                    
                    
                    12Purchased
                        power for Illinois Regulated(b)
                    
                    ****
                    **100**
                    
                    
                    
                    91
                    
                    
                    
                    60**UE:**Coal
                    
                    ****
                    **100**
                    **%**
                    
                    
                    99
                    %
                    
                    
                    54
                    %Coal
                        transportation
                    
                    ****
                    **100**
                    
                    
                    
                    97
                    
                    
                    
                    62Nuclear
                        fuel
                    
                    ****
                    **100**
                    
                    
                    
                    100
                    
                    
                    
                    73Natural
                        gas for generation
                    
                    ****
                    **100**
                    
                    
                    
                    14
                    
                    
                    
                    -Natural
                        gas for distribution
                    
                    **(a)**
                    
                    
                    
                    58
                    
                    
                    
                    9**CIPS:**Natural
                        gas for distribution
                    
                    **(a)**
                    
                    
                    
                    23
                    %
                    
                    
                    14
                    %Purchased
                        power(b)
                    
                    ****
                    **100**
                    **%**
                    
                    
                    91
                    
                    
                    
                    60**Genco:**Coal
                    
                    ****
                    **100**
                    **%**
                    
                    
                    100
                    %
                    
                    
                    47
                    %Coal
                        transportation
                    
                    ****
                    **100**
                    
                    
                    
                    98
                    
                    
                    
                    32Natural
                        gas for generation
                    
                    ****
                    **100**
                    
                    
                    
                    17
                    
                    
                    
                    -**CILCORP/CILCO:**Coal
                        (AERG)
                    
                    ****
                    **100**
                    **%**
                    
                    
                    83
                    %
                    
                    
                    41
                    %Coal
                        transportation (AERG)
                    
                    ****
                    **100**
                    
                    
                    
                    79
                    
                    
                    
                    24Natural
                        gas for distribution
                    
                    **(a)**
                    
                    
                    
                    20
                    
                    
                    
                    10Purchased
                        power(b)
                    
                    ****
                    **100**
                    
                    
                    
                    91
                    
                    
                    
                    60**IP:**Natural
                        gas for distribution
                    
                    **(a)**
                    
                    
                    
                    23
                    %
                    
                    
                    13
                    %Purchased
                        power(b)
                    
                    ****
                    **100**
                    **%**
                    
                    
                    91
                    
                    
                    
                    60**EEI:**Coal
                    
                    ****
                    **100**
                    **%**
                    
                    
                    100
                    %
                    
                    
                    55
                    %Coal
                        transportation
                    
                    ****
                    **100**
                    
                    
                    
                    100
                    
                    
                    
                    -
 
 (a)
                    The
                        year 2007 is non-applicable for this table. The year 2008
                        represents
                        November 2007 through March 2008. This continues each successive
                        year
                        through March 2011.
 (b)
                    Represents
                        the percentage of purchased power price-hedged for fixed-price
                        residential
                        and small commercial customers with less than 1 megawatt
                        of demand and
                        includes the financial contracts that the Ameren Illinois
                        Utilities
                        entered into with Marketing Company, effective August 28,
                        2007, as part of
                        the Illinois electric settlement agreement. Larger customers
                        are
                        purchasing power from the competitive markets. See Note 2
– Rate and
                        Regulatory Matters under Part I, Item 1, of this report for
                        a discussion
                        of these financial contracts and the new power procurement
                        process
                        pursuant to the Illinois electric settlement
                        agreement.
  
 85
 The
              following table shows how our total
              fuel expense might increase and how our net income might decrease if
              coal and
              coal transportation costs were to increase by 1% on any requirements
              not
              currently covered by fixed-price contracts for the five-year period
              2007 through
              2011:
 
 **Coal**
                    
                    
                    **Transportation****Fuel**
                      **Expense**
                    
                    
                    **Net**
                      **Income**(a)
                    
                    
                    **Fuel**
                      **Expense**
                    
                    
                    **Net**
                      **Income**(a)Ameren(b)
                    
                    $
                    11
                    
                    
                    $
                    (7
                    )
                    
                    $
                    15
                    
                    
                    $
                    (10
                    )UE
                    
                    
                    4
                    
                    
                    
                    (3
                    )
                    
                    
                    6
                    
                    
                    
                    (4
                    )Genco
                    
                    
                    4
                    
                    
                    
                    (2
                    )
                    
                    
                    3
                    
                    
                    
                    (2
                    )CILCORP
                    
                    
                    2
                    
                    
                    
                    (1
                    )
                    
                    
                    2
                    
                    
                    
                    (1
                    )CILCO
                        (AERG)
                    
                    
                    2
                    
                    
                    
                    (1
                    )
                    
                    
                    2
                    
                    
                    
                    (1
                    )EEI
                    
                    
                    1
                    
                    
                    
                    (1
                    )
                    
                    
                    4
                    
                    
                    
                    (3
                    )
 
 (a)
                    Calculations
                        are based on an effective tax rate of
                        38%.
 (b)
                    Includes
                        amounts for Ameren registrant and nonregistrant
                        subsidiaries.
 
 In
              the
              event of a significant change in coal and coal transportation prices,
              UE, Genco,
              AERG and EEI would probably take actions to further mitigate their
              exposure to
              this market risk. However, due to the uncertainty of the specific actions
              that
              would be taken and their possible effects, this sensitivity analysis
              assumes no
              change in our financial structure or fuel sources.
  See
              Note
              8 – Commitments and Contingencies to our financial statements under Part
              I, Item
              1, of this report for further information regarding the long-term commitments
              for the procurement of coal, natural gas and nuclear fuel.
  **Fair
              Value of Contracts**
 
 Most
              of our commodity contracts qualify
              for treatment as normal purchases and sales. We use derivatives principally
              to
              manage the risk of changes in market prices for natural gas, fuel,
              electricity
              and emission allowances. The following table presents the favorable
              (unfavorable) changes in the fair value of all derivative contracts
              marked-to-market during the three and nine months ended September 30,
              2007. The
              sources used to determine the fair value of these contracts were active
              quotes,
              other external sources, and other modeling and valuation methods. All
              of these
              contracts have maturities of less than five years.
 
 **Ameren(a)**
                    
                    
                    **UE**
                    
                    
                    **CIPS**
                    
                    
                    **Genco(b)**
                    
                    
                    **CILCORP/**
                      **CILCO**
                    
                    
                    **IP****Three
                        Months**Fair
                        value of contracts at beginning of period, net
                    
                    $
                    52
                    
                    
                    $
                    5
                    
                    
                    $
                    -
                    
                    
                    $
                    (2
                    )
                    
                    $
                    3
                    
                    
                    $
                    (15
                    )Contracts
                        realized or otherwise settled during the period
                    
                    
                    (25
                    )
                    
                    
                    (1
                    )
                    
                    
                    2
                    
                    
                    
                    -
                    
                    
                    
                    4
                    
                    
                    
                    18Changes
                        in fair values attributable to changes in valuation technique
                        and
                        assumptions
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Fair
                        value of new contracts entered into during the period
                    
                    
                    7
                    
                    
                    
                    11
                    
                    
                    
                    -
                    
                    
                    
                    (1
                    )
                    
                    
                    (1
                    )
                    
                    
                    -Other
                        changes in fair value
                    
                    
                    4
                    
                    
                    
                    (6
                    )
                    
                    
                    (6
                    )
                    
                    
                    1
                    
                    
                    
                    (6
                    )
                    
                    
                    (19
                    )Fair
                        value of contracts outstanding at end of period, net
                    
                    $
                    38
                    
                    
                    $
                    9
                    
                    
                    $
                    (4
                    )
                    
                    $
                    (2
                    )
                    
                    $
                    -
                    
                    
                    $
                    (16
                    )**Nine
                        Months**Fair
                        value of contracts at beginning of period, net
                    
                    $
                    41
                    
                    
                    $
                    9
                    
                    
                    $
                    (7
                    )
                    
                    $
                    (1
                    )
                    
                    $
                    (3
                    )
                    
                    $
                    (34
                    )Contracts
                        realized or otherwise settled during the period
                    
                    
                    (16
                    )
                    
                    
                    (4
                    )
                    
                    
                    5
                    
                    
                    
                    -
                    
                    
                    
                    7
                    
                    
                    
                    36Changes
                        in fair values attributable to changes in valuation technique
                        and
                        assumptions
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Fair
                        value of new contracts entered into during the period
                    
                    
                    15
                    
                    
                    
                    6
                    
                    
                    
                    -
                    
                    
                    
                    (1
                    )
                    
                    
                    (4
                    )
                    
                    
                    (7
                    )Other
                        changes in fair value
                    
                    
                    (2
                    )
                    
                    
                    (2
                    )
                    
                    
                    (2
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (11
                    )Fair
                        value of contracts outstanding at end of period, net
                    
                    $
                    38
                    
                    
                    $
                    9
                    
                    
                    $
                    (4
                    )
                    
                    $
                    (2
                    )
                    
                    $
                    -
                    
                    
                    $
                    (16
                    )
 
 (a)
                    Includes
                        amounts for Ameren registrant and nonregistrant subsidiaries
                        and
                        intercompany eliminations.
 (b)
                    In
                        conjunction with the new power supply agreement between Marketing
                        Company
                        and Genco that went into effect January 1, 2007, the mark-to-market
                        value
                        of hedges entered into during 2006 for Genco was transferred
                        from Genco to
                        Marketing Company.
 
 The
              following table presents maturities of derivative contracts as of September
              30,
              2007:
 
 **Sources
                        of Fair Value**
                    
                    **Maturity**
                      **Less
                        than**
                      **1
                        Year**
                    
                    
                    **Maturity**
                      **1-3
                        Years**
                    
                    
                    **Maturity**
                      **4-5
                        Years**
                    
                    
                    **Maturity
                        in**
                      **Excess
                        of**
                      **5
                        Years**
                    
                    
                    **Total**
                      **Fair
                        Value****Ameren:**Prices
                        actively
                        quoted
                    
                    $
                    8
                    
                    
                    $
                    (1
                    )
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    7Prices
                        provided by other external sources(a)
                    
                    
                    (23
                    )
                    
                    
                    (1
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (24
                    )Prices
                        based on models and other valuation methods(b)
                    
                    
                    39
                    
                    
                    
                    16
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    55Total
                    
                    $
                    24
                    
                    
                    $
                    14
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    38**UE:**Prices
                        actively
                        quoted
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Prices
                        provided by other external sources(a)
                    
                    
                    (1
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (1
                    )Prices
                        based on models and other valuation methods(b)
                    
                    
                    8
                    
                    
                    
                    2
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    10Total
                    
                    $
                    7
                    
                    
                    $
                    2
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    9
   86
 **Sources
                        of Fair Value**
                    
                    **Maturity**
                      **Less
                        than**
                      **1
                        Year**
                    
                    
                    **Maturity**
                      **1-3
                        Years**
                    
                    
                    **Maturity**
                      **4-5
                        Years**
                    
                    
                    **Maturity
                        in**
                      **Excess
                        of**
                      **5
                        Years**
                    
                    
                    **Total**
                      **Fair
                        Value**
 **CIPS:**Prices
                        actively
                        quoted
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Prices
                        provided by other external sources(a)
                    
                    
                    (2
                    )
                    
                    
                    (1
                    )
                    
                    
                    (1
                    )
                    
                    
                    -
                    
                    
                    
                    (4
                    )Prices
                        based on models and other valuation methods(b)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    $
                    (2
                    )
                    
                    $
                    (1
                    )
                    
                    $
                    (1
                    )
                    
                    $
                    -
                    
                    
                    $
                    (4
                    )**Genco:**Prices
                        actively
                        quoted
                    
                    $
                    (1
                    )
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    (1
                    )Prices
                        provided by other external sources(a)
                    
                    
                    (1
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (1
                    )Prices
                        based on models and other valuation methods(b)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    $
                    (2
                    )
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    (2
                    )**CILCORP/CILCO:**Prices
                        actively
                        quoted
                    
                    $
                    1
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    1Prices
                        provided by other external sources(a)
                    
                    
                    (1
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (1
                    )Prices
                        based on models and other valuation methods(b)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
 **IP:**Prices
                        actively
                        quoted
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Prices
                        provided by other external sources(a)
                    
                    
                    (17
                    )
                    
                    
                    1
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (16
                    )Prices
                        based on models and other valuation methods(b)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    $
                    (17
                    )
                    
                    $
                    1
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    (16
                    )
 
 (a)
                    Principally
                        fixed price for floating over-the-counter power swaps, power
                        forwards and
                        fixed price for floating over-the-counter natural gas
                        swaps.
 (b)
                    Principally
                        coal and SO2
                        option values
                        based on a Black-Scholes model that includes information
                        from external
                        sources and our estimates. Also includes interruptible power
                        forward and
                        option contract values based on our
                        estimates.
 
 **ITEM
              4. CONTROLS AND PROCEDURES.**
 
 (a)
                    Evaluation
                        of Disclosure Controls and
                        Procedures
 
 As
              of
              September 30, 2007, evaluations were performed, under the supervision
              and with
              the participation of management, including the principal executive
              officer and
              principal financial officer of each of the Ameren Companies, of the
              effectiveness of the design and operation of such registrant’s disclosure
              controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
              of the
              Exchange Act). Based upon those evaluations, the principal executive
              officer and
              principal financial officer of each of the Ameren Companies have concluded
              that
              such disclosure controls and procedures are effective to provide assurance
              that
              information required to be disclosed in such registrant’s reports filed or
              submitted under the Exchange Act is recorded, processed, summarized
              and reported
              within the time periods specified in the SEC’s rules and forms and such
              information is accumulated and communicated to its management, including
              its
              principal executive and principal financial officers, to allow timely
              decisions
              regarding required disclosure.
 
 (b)
                    Change
                        in Internal Controls
 
 There
              has
              been no change in the Ameren Companies’ internal control over financial
              reporting during their most recent fiscal quarter that has materially
              affected,
              or is reasonably likely to materially affect, their internal control
              over
              financial reporting.
 
 **PART
              II. OTHER INFORMATION**
 
 **ITEM
              1. LEGAL PROCEEDINGS.**
 
 We
              are
              involved in legal and administrative proceedings before various courts
              and
              agencies with respect to matters that arise in the ordinary course
              of business,
              some of which involve sub­stantial amounts of money. We believe that the
              final disposition of these proceedings, except as otherwise disclosed
              in this
              report, will not have a material adverse effect on our results of operations,
              financial position, or liquidity. Risk of loss is mitigated, in some
              cases, by
              insurance or contractual or statutory indemnification. We believe that
              we have
              established appropriate reserves for potential losses.
 
 For
              additional information on legal and
              administrative proceedings, see Note 2 – Rate and Regulatory Matters, Note 7 –
Related Party Transactions and Note 8 – Commitments and Contingencies to our
              financial statements under Part I, Item 1, and Item 1A, Risk Factors,
              below of
              this report.
   87
 
 **ITEM
              1A. RISK FACTORS.**
 
 The
              Form
              10-K includes a detailed discussion of our risk factors. The information
              presented below updates and should be read in conjunction with the
              risk factors
              and information disclosed in the Form 10-K.
 
 **The
              electric and gas rates that UE,
              CIPS, CILCO and IP are allowed to charge are determined through regulatory
              proceedings and are subject to legislative actions which are largely
              outside of
              our control. Where these events result in the inability of UE, CIPS,
              CILCO** **or
              IP to recover their respective costs and earn an appropriate return
              on
              investment, it could have a material adverse effect on our future results
              of
              operations, financial position or liquidity.**
 
 The
              rates that certain Ameren
              Companies are allowed to charge for their services are the single most
              important
              item influencing the results of operations, financial position, and
              liquidity of
              the Ameren Companies. The electric and gas utility industry is highly
              regulated.
              The regulation of the rates
              that we charge our customers is determined, in large part, by governmental
              entities outside of our control, including the MoPSC, the ICC, and
              FERC.
              Decisions made by these entities could have a material adverse effect
              on our
              results of operations, financial position, or liquidity.
 
 Increased
              costs and investments, when
              combined with rate reductions and moratoriums, have caused decreased
              returns in
              Ameren’s utility businesses. With rising costs, including fuel and related
              transportation, purchased power, labor and material costs, coupled
              with
              increased capital and operations and maintenance expenditures targeted
              at
              enhanced distribution system reliability and environmental compliance,
              Ameren,
              UE, CIPS, CILCO and IP expect to experience regulatory lag until rate
              relief is
              granted from state regulators. As a result, Ameren, UE, CIPS, CILCO
              and IP
              expect to be entering a period where more frequent rate cases will be
              necessary.  Ameren remains subject to competitive, economic,
              political, legislative and regulatory pressures that could have a material
              adverse effect on our results of operations, financial position, or
              liquidity.
 
 **Illinois**
  A
              provision of the Illinois Customer Choice Law related to the restructuring
              of
              the Illinois electric industry put a rate freeze into effect through
              January 1,
              2007, for CIPS, CILCO and IP. CIPS, CILCO and IP filed rate cases with
              the ICC
              in December 2005 requesting a modification of their electric delivery
              service
              rates effective January 2, 2007. In November 2006, the ICC issued an
              order that
              approved an aggregate revenue increase of $97 million effective January
              2, 2007
              (CIPS - an $8 million decrease, CILCO - a $21 million increase and
              IP -
              an $84
              million increase) based on an allowed return on equity of 10%. In May
              2007, the
              ICC issued an order disallowing the recovery of certain administrative
              and
              general expenses totaling $50 million. Because of the ICC’s cost disallowances
              and regulatory lag, the Ameren Illinois Utilities are not expected
              to earn their
              allowed return on equity of 10% in 2007. Most customers were taking
              service
              under a frozen bundled electric rate in 2006, which included the cost
              of power,
              so these delivery service revenue changes do not directly correspond
              to a change
              in CIPS’, CILCO’s or IP’s revenues or earnings under the new electric delivery
              service rates that became effective January 2, 2007.
  Due
              to
              inadequate recovery of costs and low returns on equity being experienced
              in
              2007, CIPS, CILCO and IP filed requests with the ICC in November 2007
              to
              increase their annual revenues for electric delivery service by $180
              million in the aggregate (CIPS - $31 million, CILCO - $10 million and
              IP - $139
              million).  The electric rate increase requests were based on an 11%
              return on equity, a capital structure composed of 51 to 53 percent
              equity, an
              aggregate rate base for the Ameren Illinois Utilities of $2.1 billion
              and a test
              year ended December
              31, 2006, with certain prospective updates.  In addition, CIPS, CILCO and
              IP filed requests with the ICC in November 2007 to increase their annual
              revenues for natural gas delivery service by $67 million in the aggregate
              (CIPS
              - $15 million increase, CILCO - $4 million decrease and IP - $56 million
              increase). The natural gas rate change requests were based on an 11% return
              on equity, a capital structure composed of 51 to 53 percent equity,
              an aggregate
              rate base for the Ameren Illinois Utilities of $0.9 billion and a test
              year ended December
              31, 2006, with certain prospective updates. The ICC has until October
              2008 to
              render a decision in these rate cases and could materially reduce the
              amount of
              the increase requested, or even reduce rates.
 
 *Electric
              Settlement Agreement*
  Consistent
              with the Illinois Customer Choice Law that froze electric rates for
              CIPS, CILCO
              and IP through January 1, 2007, these companies entered into power
              supply
              contracts that expired on December 31, 2006. In January 2006, the ICC
              approved a
              framework for CIPS, CILCO and IP to procure power for use by their
              customers
              through an auction. It also approved the related tariffs to collect
              these costs
              from customers for the period commencing January 2, 2007. In accordance
              with the
              January 2006 ICC order, a power procurement auction was held in September
              2006.
              New electric rates for CIPS, CILCO and IP went into effect on January
              2, 2007,
              reflecting delivery service tariffs approved by the ICC in November
              2006 and
              full cost recovery of power purchased
   88
 on
              behalf
              of Ameren Illinois Utilities’ customers in the September 2006
              auction.
 
 Due
              to the magnitude of these rate
              increases, various legislators supported legislation that would have
              reduced and
              frozen the electric rates of CIPS, CILCO and IP at the rates that were
              in effect
              prior to January 2, 2007, and would have imposed a tax on electric
              generation in
              Illinois to help fund customer assistance programs. The Illinois governor
              also
              supported rate rollback and freeze legislation. The rate rollback and
              freeze
              legislation would have prevented the Ameren Illinois Utilities from
              recovering
              from retail customers substantial portions of the cost of electric
              energy the
              Ameren Illinois Utilities are purchasing under wholesale contracts
              entered into
              as a result of the September 2006 auction, and would have caused the
              Ameren
              Illinois Utilities to under-recover their delivery service costs until
              the ICC
              could approve higher delivery service rates.
 
 As
              a result of these concerns, in
              July 2007, an agreement was reached among key stakeholders in Illinois
              that
              addresses the increase in electric rates and the future power procurement
              process. The settlement agreement was subject to enactment of legislation
              into
              law, which occurred on August 28, 2007. Ameren, on behalf of Marketing
              Company,
              Genco and AERG, the Ameren Illinois Utilities, Exelon, on behalf of
              Exelon
              Generation Company LLC, Commonwealth Edison Company, Exelon’s Illinois electric
              utility subsidiary, Dynegy Holdings, Inc., Midwest Generation, LLC,
              and
              MidAmerican Energy Company agreed to contribute an aggregate of
              approximately $1 billion over four years to fund both rate relief programs
              and the IPA. The agreement provides that if legislation is enacted
              in Illinois
              before August 1, 2011 freezing or reducing retail electric rates or
              imposing or
              authorizing a new tax, special assessment or fee on generation of electricity,
              then the remaining funding commitments will expire and any funds set
              aside in
              support of those commitments will be refunded to the utilities and
              electric
              generators. Also pursuant to the agreement, all pending litigation
              and
              regulatory actions by the Illinois attorney general relating to the
              reverse
              auction procurement process, which was used to determine market-based
              rates
              effective January 1, 2007, and the electric space heating marketing
              practices of
              the Ameren Illinois utilities were withdrawn with prejudice.
 
 Although
              we cannot fully predict the
              effect of the implementation of the settlement agreement and related
              comprehensive rate relief program on Ameren, the Ameren Illinois Utilities,
              Genco or AERG, we believe the settlement agreement significantly reduces
              the
              risk that legislation will be enacted into law that reduces and freezes
              electric
              rates of CIPS, CILCO and IP to rates that were in effect prior to January
              2,
              2007, or that imposes a tax on electric generation in Illinois. The
              following
              factors resulting from implementation of the Illinois electric settlement
              agreement could have a material adverse effect on the results of operations,
              financial position or liquidity of Ameren, the Ameren Illinois Utilities,
              Genco
              or AERG:
 
 ·
                    uncertainty
                        as to the implementation of the new power procurement process
                        in Illinois
                        for 2008 and 2009, including ICC review and approval requirements,
                        the
                        role of the IPA, and the ability of the Ameren Illinois Utilities
                        to
                        lease, or invest in, generation
                        facilities;
 ·
                    the
                        increase in short-term or long-term borrowings by the Ameren
                        Illinois
                        Utilities, Genco and AERG to fund contributions under the
                        settlement
                        agreement;
 ·
                    the
                        failure by the electric generators that are party to the
                        settlement
                        agreement to perform in a timely manner under their respective
                        funding
                        agreements, which permit the Ameren Illinois Utilities to
                        seek
                        reimbursement for a portion of the rate relief that will
                        be provided to
                        certain of their electric customers;
                        and
 ·
                    the
                        extent to which Genco and AERG will be successful in making
                        future sales
                        to supply a portion of Illinois’ total electric demand through the revised
                        power procurement mechanism.
  If,
              notwithstanding the Illinois settlement agreement, any decision is
              made or
              action occurs that impairs the ability of CIPS, CILCO and IP to fully
              recover
              purchased power or distribution costs from their electric customers
              in a timely
              manner, and such decision or action is not promptly enjoined, it could
              result in
              material adverse consequences to Ameren, CIPS, CILCORP, CILCO and
              IP.
 
 **Missouri**
 
 With
              the expiration of multiyear
              electric and gas rate moratoriums, effective July 1, 2006, UE filed
              requests
              with the MoPSC in July 2006 for an electric rate increase of $361 million
              and
              for a natural gas delivery rate increase of $11 million. In March 2007,
              a
              stipulation and agreement was approved by the MoPSC authorizing an
              increase in
              annual natural gas delivery revenues of $6 million, effective April
              1, 2007. As
              part of this stipulation and agreement, UE agreed not to file a natural
              gas
              delivery rate case before March 15, 2010. This agreement does not prevent
              UE
              from filing to recover infrastructure costs through a statutory infrastructure
              system replacement surcharge (ISRS) during this three-year rate moratorium.
              The
              return on equity to be used by UE for purposes of any future ISRS tariff
              filing
              is 10.0%.
 
 In
              May 2007, the MoPSC issued an
              order authorizing a $43 million increase in UE’s base rates for electric service
              based on a return on equity of 10.2%. The MoPSC denied UE’s and other
              intervenors’ applications for rehearing with respect to certain aspects of the
              MoPSC
   89
   rate
              order. In July 2007, UE appealed certain aspects of the MoPSC decision,
              principally the 10.2% return on equity granted by the MoPSC, to the
              Circuit
              Court of Cole County in Jefferson City, Missouri. The Office of Public
              Counsel
              and the Missouri attorney general, who were both intervenors in the
              electric
              rate case, also appealed certain aspects of the MoPSC decision to the
              Circuit
              Court of Cole County. We cannot predict the outcome of these appeals
              of the
              MoPSC rate order. Any change in electric or gas rates may not directly
              correspond to a change in UE’s earnings.
 
 **Increased
              federal and state
              environmental regulation will cause UE, Genco, CILCO (through AERG)
              and EEI to
              incur large capital expenditures and to incur increased operating costs.
              Future
              limits on greenhouse gas emissions would likely require UE, Genco,
              CILCO
              (through AERG) and EEI to incur significant additional increases in
              capital
              expenditures and operating costs and could result in the closures of
              coal-fired
              generating plants.**
  About
              61%
              of Ameren’s generating capacity is coal-fired and about 85% of its electric
              generation was produced by its coal-fired plants in 2006. The remaining
              electric
              generation comes from nuclear, gas-fired, hydroelectric, and oil-fired
              power
              plants. In May 2005, the EPA issued final regulations with respect
              to SO2,
              NOx,
              and mercury
              emissions from coal-fired power plants. These regulations require significant
              additional reductions in the emissions from
              UE,
              Genco, AERG and EEI power plants in phases, beginning in 2009. Preliminary
              estimates of aggregate capital compliance expenditures for UE, Genco,
              and EEI
              range from $3.5
              billion to $4.5 billion by 2016.
  Missouri
              rules, which substantially follow the federal regulations and became
              effective
              in April 2007, are expected to reduce mercury emissions 81% by 2018
              and reduce
              NOx
              emissions
              30% and SO2
              emissions 75% by 2015.
  Illinois
              has adopted rules for mercury emissions that are significantly stricter
              than the
              federal regulations. In 2006, Genco, CILCO, EEI, and the Illinois EPA
              entered
              into an agreement that was incorporated into Illinois’ mercury emission
              regulations. Under the regulations, Illinois generators may defer until
              2015 the
              requirement to reduce mercury emissions by 90% in exchange for accelerated
              installation of NOx
              and SO2
              controls. Genco,
              AERG and EEI will begin putting into service equipment designed to
              reduce
              mercury emissions in 2009. When fully implemented, it is estimated
              that these
              rules will reduce mercury emissions 90%, NOx
              emissions 50% and
              SO2
              emissions
              70% by 2015 in Illinois.
  Future
              initiatives regarding greenhouse gas emissions and global warming continue
              to be
              the subject of much debate. As a result of our diverse fuel portfolio,
              our
              contribution to greenhouse gases varies among our generating facilities.
              Coal-fired power plants, however, are significant sources of carbon
              dioxide, a
              principal greenhouse gas. Six electric power sector trade associations,
              including the Edison Electric Institute, of which Ameren is a member,
              and the
              TVA, signed a Memorandum of Understanding (MOU) with the DOE in December
              2004
              calling for a 3% to 5% voluntary decrease in carbon intensity
              by******the utility sector between 2002 and 2012.
              Currently, Ameren is considering various initiatives to comply with
              the MOU,
              including increased generation at nuclear and hydroelectric power plants,
              increased efficiency measures at our coal-fired units, and investments
              in
              renewable energy and carbon sequestration projects.
  Future
              federal and state legislation or regulations that mandate limits on
              the emission
              of greenhouse gases would result in significant increases in capital
              expenditures and operating costs. The costs to comply with future legislation
              or
              regulations could be so expensive that Ameren and other similarly situated
              electric power generators may be forced to close some coal-fired facilities.
              Mandatory limits could have a material adverse impact on Ameren’s, UE’s,
              Genco’s, AERG’s and EEI’s results of operations, financial position, or
              liquidity.
 
 The
              EPA has been conducting an
              enforcement initiative to determine whether modifications at a number
              of
              coal-fired power plants owned by electric utilities in the United States
              are
              subject to New Source Review requirements or New Source Performance
              Standards
              under the Clean Air Act. The EPA’s inquiries focus on whether the best available
              emission control technology was or should have been used at such power
              plants
              when major maintenance or capital improvements were made.
 
 In
              April 2005, Genco received a
              request from the EPA for information pursuant to Section 114(a) of
              the Clean Air
              Act seeking detailed operating and maintenance history data with respect
              to its
              Meredosia, Hutsonville, Coffeen and Newton facilities, EEI’s Joppa facility, and
              AERG’s E.D. Edwards and Duck Creek facilities. In December 2006, the EPA
              issued
              a second Section 114(a) request to Genco regarding projects at the
              Newton
              facility. All of these facilities are coal-fired power plants. We are
              currently
              in discussions with the EPA and the state of Illinois regarding resolution
              of
              these matters, but we are unable to predict the outcome of these discussions.
              Resolution of the matters could have a material adverse impact on the
              future
              results of operations, financial position, or liquidity of Ameren,
              Genco, AERG
              and EEI. A resolution could result in increased capital expenditures,
              increased
              operations and maintenance expenses, and fines or penalties. We believe
              that any
              potential resolution would likely require the installation of control
              technology, some of which is already
   90
  planned
              for compliance with other regulatory requirements such as the Clean
              Air
              Interstate Rule and the Illinois mercury emission rules.
  New
              environmental regulations, voluntary compliance guidelines, enforcement
              initiatives, or legislation could result in a significant increase
              in capital
              expenditures and operating costs, decreased revenues, increased financing
              requirements, penalties and closure of power plants for UE, Genco,
              CILCO
              (through AERG) and EEI. Although costs incurred by UE would be eligible
              for
              recovery in rates over time, subject to MoPSC approval in a rate proceeding,
              there is no similar mechanism for recovery of costs by Genco, AERG
              or EEI in
              Illinois. We are unable to predict the ultimate impact of these matters
              on our
              results of operations, financial position or liquidity.
  **ITEM
              2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
              PROCEEDS.**
  The
              following table presents Ameren Corporation’s purchases of equity securities
              reportable under Item 703 of Regulation S-K:
 
 **Period**
                    
                    **(a)
                        Total Number**
                      **of
                        Shares**
                      **(or
                        Units)**
                      **Purchased(a)**
                    
                    
                    **(b)
                        Average Price**
                      **Paid
                        per Share**
                      **(or
                        Unit)**
                    
                    
                    **(c)
                        Total Number of Shares**
                      **(or
                        Units) Purchased as Part**
                      **of
                        Publicly Announced Plans**
                      **or
                        Programs**
                    
                    
                    **(d)
                        Maximum Number (or**
                      **Approximate
                        Dollar Value) of**
                      **Shares
                        (or Units) that May Yet**
                      **Be
                        Purchased Under the Plans**
                      **or
                        Programs**July
                        1 – July 31,
                        2007
                    
                    
                    2,950
                    
                    
                    $
                    49.11
                    
                    
                    
                    -
                    
                    
                    
                    -August
                        1 – August 31,
                        2007
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -September
                        1 – September 30, 2007
                    
                    
                    4,625
                    
                    
                    
                    53.58
                    
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    
                    7,575
                    
                    
                    $
                    51.84
                    
                    
                    
                    -
                    
                    
                    
                    -
 
 (a)
                    These
                        shares of Ameren common stock were purchased by Ameren in
                        open-market
                        transactions in satisfaction of Ameren’s obligation upon the exercise by
                        employees of options issued under Ameren’s Long-term Incentive Plan of
                        1998, as amended. Ameren does not have any publicly announced
                        equity
                        securities repurchase plans or
                        programs.
  The
              following table presents CILCO’s purchases of equity securities reportable under
              Item 703 of Regulation S-K:
 
 **Period**
                    
                    **(a)
                        Total Number**
                      **of
                        Shares**
                      **(or
                        Units)**
                      **Purchased(a)**
                    
                    
                    **(b)
                        Average Price**
                      **Paid
                        per Share**
                      **(or
                        Unit)**
                    
                    
                    **(c)
                        Total Number of Shares**
                      **(or
                        Units) Purchased as Part of Publicly Announced Plans or
                        Programs**
                    
                    
                    **(d)
                        Maximum Number (or Approximate Dollar Value) of Shares (or
                        Units) that May
                        Yet Be Purchased Under the Plans or Programs**July
                        1 – July 31,
                        2007
                    
                    
                    11,000
                    
                    
                    $
                    100.00
                    
                    
                    
                    -
                    
                    
                    
                    -August
                        1 – August 31,
                        2007
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -September
                        1 – September 30, 2007
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    
                    11,000
                    
                    
                    $
                    100.00
                    
                    
                    
                    -
                    
                    
                    
                    -
 
 (a)
                    CILCO
                        redeemed these shares of its 5.85% Class A preferred stock
                        to satisfy the
                        mandatory sinking fund redemption requirement for this series
                        of preferred
                        stock for 2007. CILCO does not have any publicly announced
                        equity
                        securities repurchase plans or
                        programs.
 
 None
              of
              the other registrants purchased equity securities reportable under
              Item 703 of
              Regulation S-K during the July 1 to September 30, 2007 period.
 
 **ITEM
              6. EXHIBITS.**
 
 The
              documents listed below are being filed on behalf of the Ameren Companies
              as
              indicated.
 
 **Exhibit**
                      **Designation**
                    **Registrant(s)**
                    **Nature
                        of Exhibit****Statement
                        re: Computation of Ratios**12.1
                    Ameren
                    Ameren’s
                        Statement of Computation of Ratio of Earnings to Fixed
                        Charges12.2
                    UE
                    UE’s
                        Statement of Computation of Ratio of Earnings to Fixed Charges
                        and
                      Combined
                        Fixed Chargesand
                        Preferred Stock Dividend Requirements12.3
                    CIPS
                    CIPS’
                        Statement of Computation of Ratio of Earnings to Fixed Charges
                        and
                      Combined
                        Fixed Charges and Preferred Stock Dividend Requirements12.4
                    Genco
                    Genco’s
                        Statement of Computation of Ratio of Earnings to Fixed
                        Charges12.5
                    CILCORP
                    CILCORP’s
                        Statement of Computation of Ratio of Earnings to Fixed
                        Charges12.6
                    CILCO
                    CILCO’s
                        Statement of Computation of Ratio of Earnings to Fixed Charges
                        and
                      Combined
                        Fixed Charges and Preferred Stock Dividend
                        Requirements
   91
   **Exhibit**
                      **Designation**
                    **Registrant(s)**
                    **Nature
                        of Exhibit**
 12.7
                    IP
                    IP’s
                        Statement of Computation of Ratio of Earnings to Fixed Charges
                        and
                        Combined
                      Fixed
                        Charges and Preferred Stock Dividend Requirements**Rule
                        13a-14(a) / 15d-14(a) Certifications**31.1
                    Ameren
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Executive
                        Officer of
                        Ameren31.2
                    Ameren
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Financial
                        Officer of
                        Ameren31.3
                    UE
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Executive
                        Officer of
                        UE31.4
                    UE
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Financial
                        Officer of
                        UE31.5
                    CIPS
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Executive
                        Officer of
                        CIPS31.6
                    CIPS
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Financial
                        Officer of
                        CIPS
 31.7
                    Genco
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Executive
                        Officer of
                        Genco31.8
                    Genco
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Financial
                        Officer of
                        Genco31.9
                    CILCORP
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Executive
                        Officer of
                        CILCORP31.10
                    CILCORP
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Financial
                        Officer of
                        CILCORP31.11
                    CILCO
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Executive
                        Officer of
                        CILCO31.12
                    CILCO
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Financial
                        Officer of
                        CILCO31.13
                    IP
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Executive
                        Officer of
                        IP31.14
                    IP
                    Rule
                        13a-14(a)/15d-14(a) Certification of Principal Financial
                        Officer of
                        IP**Section
                        1350 Certifications**32.1
                    Ameren
                    Section
                        1350 Certification of Principal Executive Officer and Principal
                        Financial
                      Officer
                        of Ameren32.2
                    UE
                    Section
                        1350 Certification of Principal Executive Officer and Principal
                        Financial
                      Officer
                        of UE32.3
                    CIPS
                    Section
                        1350 Certification of Principal Executive Officer and Principal
                        Financial
                      Officer
                        of CIPS32.4
                    Genco
                    Section
                        1350 Certification of Principal Executive Officer and Principal
                        Financial
                      Officer
                        of Genco32.5
                    CILCORP
                    Section
                        1350 Certification of Principal Executive Officer and Principal
                        Financial
                      Officer
                        of CILCORP32.6
                    CILCO
                    Section
                        1350 Certification of Principal Executive Officer and Principal
                        Financial
                      Officer
                        of CILCO32.7
                    IP
                    Section
                        1350 Certification of Principal Executive Officer and Principal
                        Financial
                      Officer
                        of IP
 92
 **SIGNATURES**
 
 Pursuant
              to the requirements of the
              Exchange Act, each registrant has duly caused this report to be signed
              on its
              behalf by the undersigned thereunto duly authorized. The signature
              for each
              undersigned company shall be deemed to relate only to matters having
              reference
              to such company or its subsidiaries.
 
 AMEREN
              CORPORATION
 (Registrant)
  /s/
              Martin J.
              Lyons
 Martin
              J.
              Lyons
 **Vice President and
              Controller
 (Principal Accounting Officer)
 
 
 
 
 UNION
              ELECTRIC
              COMPANY
 (Registrant)
  /s/
              Martin J.
              Lyons
 Martin J. Lyons
 ****Vice
              President and
 Principal
              Accounting Officer
 (Principal
              Accounting Officer)
 
 
 
 
 CENTRAL
              ILLINOIS PUBLIC SERVICE COMPANY
 (Registrant)
  /s/
              Martin J.
              Lyons
 Martin J. Lyons
 **Vice
              President and
              Controller
 (Principal Accounting Officer)
 
 
 
 
 AMEREN
              ENERGY GENERATING COMPANY
 (Registrant)
 
 /s/
              Martin J.
              Lyons
 Martin J. Lyons
 **Vice
              President and Controller
 (Principal
              Accounting Officer)
 
 
 
 
 
 93
 
 CILCORP
              INC.
 (Registrant)
 
 /s/
              Martin J.
              Lyons
 Martin
              J. Lyons
 **Vice President and
              Controller
 (Principal Accounting
              Officer)
 
 
 
 
 CENTRAL
              ILLINOIS LIGHT COMPANY
 (Registrant)
  /s/
              Martin J.
              Lyons
 Martin
              J. Lyons
 **Vice
              President and Controller
 (Principal
              Accounting Officer)
 
 
 
 
 ILLINOIS
              POWER COMPANY
 (Registrant)
 
 /s/
              Martin J.
              Lyons
 Martin
              J. Lyons
 **Vice
              President and Controller
 (Principal
              Accounting Officer)
 
 
 
 Date:  November
              9, 2007
 
 
 94
    
 
 
 
   
  
 
    
    
  
 
  
      
 
 
 
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