UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 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 June 30, 2004

                                       OR
                 ( )  Transition report pursuant to Section  13 or  15(d)
                      of the Securities Exchange Act of 1934
                      for the transition period from __________ to __________.


<TABLE>
<CAPTION>

                  Exact Name of Registrant as specified in its charter;
Commission        State of Incorporation;                                           IRS Employer
File Number       Address and Telephone Number                                      Identification No.
----------        ----------------------------                                      ------------------
<S>              <C>                                                                   <C>
1-14756           Ameren Corporation                                                    43-1723446
                  (Missouri Corporation)
                  1901 Chouteau Avenue
                  St. Louis, Missouri 63103
                  (314) 621-3222

1-2967            Union Electric Company                                                43-0559760
                  (Missouri Corporation)
                  1901 Chouteau Avenue
                  St. Louis, Missouri 63103
                  (314) 621-3222

1-3672            Central Illinois Public Service Company                               37-0211380
                  (Illinois Corporation)
                  607 East Adams Street
                  Springfield, Illinois 62739
                  (217) 523-3600


333-56594         Ameren Energy Generating Company                                      37-1395586
                  (Illinois Corporation)
                  1901 Chouteau Avenue
                  St. Louis, Missouri 63103
                  (314) 621-3222

2-95569           CILCORP Inc.                                                          37-1169387
                  (Illinois Corporation)
                  300 Liberty Street
                  Peoria, Illinois 61602
                  (309) 677-5230

1-2732            Central Illinois Light Company                                        37-0211050
                  (Illinois Corporation)
                  300 Liberty Street
                  Peoria, Illinois 61602
                  (309) 677-5230
</TABLE>

<PAGE>

     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 an accelerated  filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).

     Ameren Corporation                             Yes    (X)       No     ( )
     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)

     The number of shares  outstanding  of each  Registrant's  classes of common
stock as of July 30, 2004, was as follows:

<TABLE>
<CAPTION>
    <S>                                                      <C>
     Ameren Corporation                                       Common stock, $.01 par value - 194,274,842

     Union Electric Company                                   Common stock, $5 par value, held by Ameren Corporation
                                                              (parent company of the Registrant) - 102,123,834

     Central Illinois Public Service Company                  Common stock, no par value, held by Ameren Corporation
                                                              (parent company of the Registrant) - 25,452,373

     Ameren 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) - 2,000

     CILCORP Inc.                                             Common stock, no par value, held by Ameren Corporation
                                                              (parent company of the Registrant) - 1,000

     Central Illinois Light Company                           Common stock, no par value, held by CILCORP Inc. (parent
                                                              company of the Registrant and subsidiary of Ameren
                                                              Corporation) - 13,563,871
</TABLE>

     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. and Central  Illinois  Light  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.

     Prior to the quarterly  report on Form 10-Q for the period ended  September
30, 2003, separate filings were made by each Registrant, except CILCORP Inc. and
Central Illinois Light Company, which made a combined filing. Ameren Corporation
and its subsidiaries changed to a combined filing in order to improve disclosure
and to simplify administrative processes.

                         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 10-Q with the reduced  disclosure  format  allowed  under that
General Instruction.

<PAGE>

<TABLE>
<CAPTION>


                                TABLE OF CONTENTS
                                                                                                                    Page
<S><C>          <C>                                                                                                  <C>
Glossary of Terms and Abbreviations.................................................................................  5

Forward-looking Statements..........................................................................................  8

PART I.          Financial Information

   ITEM 1.       Financial Statements (Unaudited)

                 Ameren Corporation
                 Consolidated Statement of Income...................................................................  9
                 Consolidated Balance Sheet......................................................................... 10
                 Consolidated Statement of Cash Flows............................................................... 11


                 Union Electric Company
                 Consolidated Statement of Income................................................................... 12
                 Consolidated Balance Sheet......................................................................... 13
                 Consolidated Statement of Cash Flows............................................................... 14

                 Central Illinois Public Service Company
                 Statement of Income................................................................................ 15
                 Balance Sheet...................................................................................... 16
                 Statement of Cash Flows............................................................................ 17

                 Ameren Energy Generating Company
                 Statement of Income................................................................................ 18
                 Balance Sheet...................................................................................... 19
                 Statement of Cash Flows............................................................................ 20

                 CILCORP Inc.
                 Consolidated Statement of Income................................................................... 21
                 Consolidated Balance Sheet......................................................................... 22
                 Consolidated Statement of Cash Flows............................................................... 23

                 Central Illinois Light Company
                 Consolidated Statement of Income................................................................... 24
                 Consolidated Balance Sheet......................................................................... 25
                 Consolidated Statement of Cash Flows............................................................... 26

                                       3
<PAGE>

                 Combined Notes to Financial Statements............................................................. 27

   ITEM 2.       Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 53

   ITEM 3.       Quantitative and Qualitative Disclosures About Market Risk......................................... 77

   ITEM 4.       Controls and Procedures............................................................................ 81



PART II.         Other Information

   ITEM 1.       Legal Proceedings.................................................................................. 81

   ITEM 2.       Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities................... 82

   ITEM 4.       Submission of Matters to a Vote of Security Holders................................................ 82

   ITEM 5.       Other Information.................................................................................. 84

   ITEM 6.       Exhibits and Reports on Form 8-K................................................................... 84

SIGNATURES.......................................................................................................... 86
</TABLE>


     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  should be read with the cautionary  statements
     and  important  factors  included  in this  Form  10-Q  under  the  heading
     Forward-looking  Statements.  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.

                                       4


<PAGE>
                       GLOSSARY OF TERMS AND ABBREVIATIONS

     When we refer to our, we or us, it indicates that the referred  information
relates to all  Ameren  Companies.  When we refer to  financing  or  acquisition
activities,  we  are  defining  Ameren  as  the  parent  holding  company.  When
appropriate,  subsidiaries  of Ameren are  specifically  referenced  in order to
distinguish among their different business activities.

AERG - AmerenEnergy  Resources  Generating Company, a subsidiary of CILCO, which
operates a non rate-regulated electric generation business in Illinois and which
was formerly known as Central Illinois Generation, Inc.

AES - The AES Corporation.

AFS - Ameren  Energy  Fuels and  Services  Company,  a  subsidiary  of Resources
Company,  which  procures  fuel and gas and manages  the  related  risks for the
Ameren Companies.

Ameren - Ameren  Corporation and its subsidiaries on a consolidated  basis. When
referring to financing or  acquisition  activities,  Ameren is defined as Ameren
Corporation, the parent.

Ameren  Companies - The individual  Registrants  within the Ameren  consolidated
group.

Ameren Energy - Ameren Energy,  Inc., a subsidiary of Ameren Corporation,  which
serves  as a power  marketing  and risk  management  agent  for UE and Genco for
transactions of primarily less than one year.

Ameren Services - Ameren Services Company,  a subsidiary of Ameren  Corporation,
which provides a variety of support services to Ameren and its subsidiaries.

Capacity factor - A measure  that  indicates  the percent of an  electric  power
generating unit's(s') capacity that was used during a period.

CILCO - Central Illinois Light Company, a subsidiary of CILCORP,  which operates
a  rate-regulated  transmission  and  distribution  business,  a  primarily  non
rate-regulated  electric generation business,  and a rate-regulated  natural gas
distribution  business in Illinois as AmerenCILCO.  CILCO owns all of the common
stock of AERG.

CILCORP - CILCORP Inc., a subsidiary of Ameren Corporation,  which operates as a
holding company for CILCO.

CIPS  -  Central  Illinois  Public  Service  Company,  a  subsidiary  of  Ameren
Corporation,   which  operates  a   rate-regulated   electric  and  natural  gas
transmission and distribution business in Illinois as AmerenCIPS.

Cooling  degree days - The  summation of positive  differences  between the mean
daily  temperature and the 65 degrees  Fahrenheit base. This statistic is useful
as an  indicator  of  demand  for  electricity  for  summer  space  cooling  for
residential and commercial customers.

CT - Combustion turbine generation equipment.

Development  Company  - Ameren  Energy  Development  Company,  a  subsidiary  of
Resources Company and parent of Genco, which develops and constructs  generating
facilities for Genco.

DOE -  Department  of Energy,  a  governmental  agency of the  United  States of
America.

DOJ -  Department  of Justice,  a  governmental  agency of the United  States of
America.

DRPlus - Ameren Corporation's dividend reinvestment and stock purchase plan.

Dynegy - Dynegy Inc., the indirect parent company of Illinois Power.


                                       5
<PAGE>


EEI - Electric Energy, Inc., a 60%-owned subsidiary of Ameren Corporation, which
is 40%  owned by UE and 20%  owned by  Resources  Company,  and  which  operates
electric generation and transmission facilities in Illinois.

EPA -  Environmental  Protection  Agency,  a  governmental  agency of the United
States of America.

Equivalent availability factor - A measure that indicates the percent of time an
electric power generating unit(s) was available for service during a period.

ERISA - Employee Retirement Income Security Act of 1974, as amended.

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 of
America.

FCC - Federal  Communications  Commission,  a governmental  agency of the United
States of America.

FERC - Federal Energy Regulatory Commission, a governmental agency of the United
States of America that, among other things,  regulates  interstate  transmission
and  wholesale  sales of  electricity  and natural  gas and related  matters and
hydroelectric facilities.

FIN  -  FASB  Interpretation  intended  to  clarify  accounting   pronouncements
previously issued by the FASB.

Fitch - Fitch Ratings, a credit rating agency.

FTC - Federal Trade  Commission,  a governmental  agency of the United States of
America.

GAAP - Generally accepted accounting principles in the United States of America.

Genco - Ameren Energy Generating  Company, a subsidiary of Development  Company,
which operates a non rate-regulated electric generation business in Illinois and
Missouri.

GridAmerica  Companies  - UE,  CIPS,  American  Transmission  Systems,  Inc.,  a
subsidiary of FirstEnergy  Corp., and Northern Indiana Public Service Company, a
subsidiary of NiSource, Incorporated.

Hart-Scott-Rodino  Act - Hart-Scott-Rodino  Antitrust  Improvements Act of 1976,
which  establishes  procedures for companies  involved in transactions that meet
certain  criteria  to file a  premerger  notification  with  the FTC and the DOJ
Antitrust Division and establishes prescribed time periods for government review
prior to completing their transaction.

Heating  degree days - The  summation of negative  differences  between the mean
daily  temperature and the 65 degrees  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.

IBEW - International Brotherhood of Electrical Workers.

ICC - Illinois Commerce  Commission,  a state agency that regulates the Illinois
utility businesses and operations of UE, CIPS, CILCO and Illinois Power.

Illinois  Customer Choice Law - Illinois  Electric  Service  Customer Choice and
Rate Relief Law of 1997, which provides for electric utility  restructuring  and
introduces competition into the retail supply of electric energy in Illinois.

Illinois Power - Illinois Power Company,  a wholly owned  subsidiary of Illinova
Corporation, which is a subsidiary of Dynegy.

IUOE - International Union of Operating Engineers.

                                       6

<PAGE>


MAIN - Mid-America  Interconnected  Network,  Inc., one of the regional electric
reliability  councils  organized for  coordinating the planning and operation of
the nation's bulk power supply.

Marketing Company - Ameren Energy Marketing  Company,  a subsidiary of Resources
Company, which markets power for periods primarily over one year.

Medina  Valley  -  AmerenEnergy  Medina  Valley  Cogen  (No.  4),  LLC  and  its
subsidiaries,  which are subsidiaries of Resources Company, which indirectly own
a 40 megawatt, gas-fired electric generation plant.

Midwest ISO - Midwest Independent Transmission System Operator Inc.

Missouri  Environmental  Authority - State Environmental  Improvement and Energy
Resources  Authority of the State of Missouri,  a  governmental  instrumentality
that is authorized to finance environmental projects through the issuance of tax
exempt bonds and notes.

Money  pool -  Borrowing  arrangements  with and among the Ameren  Companies  to
coordinate  and  provide  for  certain   short-term  cash  and  working  capital
requirements. Separate money pools are maintained between rate-regulated and non
rate-regulated  businesses  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.

NRC - Nuclear Regulatory Commission,  a governmental agency of the United States
of America.

NOx - Nitrogen oxide.

NYMEX - New York Mercantile Exchange.

OATT -  Open Access Transmission Tariff.

OCI - Other Comprehensive Income (Loss) as defined by GAAP.

PJM - PJM Interconnection LLC.

PUHCA - Public Utility Holding Company Act of 1935, as amended.

Resources  Company - Ameren  Energy  Resources  Company,  a subsidiary of Ameren
Corporation,   which  consists  of  non  rate-regulated  operations,   including
Development Company, Genco, Marketing Company, AFS and Medina Valley.

RRO - Regional Reliability Organization.

RTO - Regional Transmission Organization.

S&P - Standard and Poor's Inc., a credit rating agency.

SEC - Securities and Exchange  Commission,  a governmental  agency of the United
States of America.

SFAS - Statement of Financial Accounting Standards, the accounting and financial
reporting rules issued by the FASB.

SO2 - Sulfur dioxide.

UE - Union Electric Company, a subsidiary of Ameren Corporation,  which operates
a rate-regulated  electric generation,  transmission and distribution  business,
and a rate-regulated  natural gas distribution business in Missouri and Illinois
as AmerenUE.


                                       7

<PAGE>

FORWARD-LOOKING STATEMENTS


     Statements  made in this report,  which are not based on historical  facts,
are  "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 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  elsewhere in this report and in past and subsequent
filings  with the SEC,  could cause  actual  results to differ  materially  from
management expectations as suggested by such "forward-looking" statements:

o    the closing and timing of Ameren's  acquisition  of Illinois  Power and the
     impact of any  conditions  imposed by regulators  in connection  with their
     approval thereof;
o    the effects of the  stipulation  and agreement  relating to the UE Missouri
     electric  excess  earnings  complaint  case and other  regulatory  actions,
     including changes in regulatory policies;
o    changes in laws and other  governmental  actions,  including  monetary  and
     fiscal policies;
o    the impact on the company of current regulations related to the opportunity
     for customers to choose alternative energy suppliers in Illinois;
o    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;
o    the effects of participation in a FERC-approved RTO,  including  activities
     associated with the Midwest ISO;
o    the  availability of fuel for the production of  electricity,  such as coal
     and natural gas, and purchased power and natural gas for distribution,  and
     the level and  volatility  of future  market  prices for such  commodities,
     including the ability to recover any increased costs;
o    the use of financial and derivative instruments;
o    average rates for electricity in the Midwest;
o    business and economic conditions;
o    the impact of the adoption of new accounting  standards and the application
     of appropriate technical accounting rules and guidance;
o    interest rates and the availability of capital;
o    actions of ratings agencies and the effects of such actions;
o    weather conditions;
o    generation plant construction, installation and performance;
o    operation of nuclear  power  facilities,  including  planned and  unplanned
     outages, and decommissioning costs;
o    the  effects  of  strategic   initiatives,   including   acquisitions   and
     divestitures;
o    the impact of current environmental regulations on utilities and generating
     companies and the  expectation  that more  stringent  requirements  will be
     introduced over time,  which could  potentially  have a negative  financial
     effect;
o    future wages and employee  benefits costs,  including changes in returns on
     benefit plan assets;
o    disruptions  of the  capital  markets  or other  events  making  the Ameren
     Companies' access to necessary capital more difficult or costly;
o    competition from other generating facilities, including new facilities that
     may be developed;
o    difficulties in integrating CILCO and Illinois Power, if consummated,  with
     Ameren's other businesses;
o    changes in the energy markets, environmental laws or regulations,  interest
     rates or other factors adversely  impacting  assumptions in connection with
     the CILCORP and Illinois Power, if consummated, acquisitions;
o    cost and availability of transmission  capacity for the energy generated by
     the Ameren Companies'  generating  facilities or required to satisfy energy
     sales  made  by  the  Ameren  Companies;   and  legal  and   administrative
     proceedings.

     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 publicly  update or revise any
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise.

                                       8
<PAGE>

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<CAPTION>


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                               AMEREN CORPORATION
                        CONSOLIDATED STATEMENT OF INCOME
               (Unaudited) (In millions, except per share amounts)

                                                                 Three Months Ended      Six Months Ended
                                                                       June 30,              June 30,
                                                               ---------------------- ----------------------
                                                                   2004        2003       2004        2003
                                                               ----------  ---------- ----------- ----------
<S><C><C>                                                     <C>         <C>        <C>         <C>
Operating Revenues:
 Electric                                                      $   1,032   $     968  $   1,945   $   1,824
 Gas                                                                 119         118        420         368
 Other                                                                 1           2          3           4
                                                               ----------  ---------- ----------  ----------
     Total operating revenues                                      1,152       1,088      2,368       2,196
                                                               ----------  ---------- ----------  ----------
Operating Expenses:
 Fuel and purchased power                                            282         239        553         471
 Gas purchased for resale                                             75          83        288         264
 Other operations and maintenance                                    343         307        649         599
 Depreciation and amortization                                       132         132        262         256
 Taxes other than income taxes                                        74          77        154         155
                                                               ----------  ---------- ----------  ----------
     Total operating expenses                                        906         838      1,906       1,745
                                                               ----------  ---------- ----------  ----------
Operating Income                                                     246         250        462         451
Other Income and (Deductions):
    Miscellaneous income                                               4           5         12          11
    Miscellaneous expense                                             (4)         (7)        (5)        (10)
                                                               ----------  ---------- ----------  ----------
     Total other income and (deductions)                               -          (2)         7           1
                                                               ----------  ---------- ----------  ----------
Interest Charges and Preferred Dividends:
 Interest                                                             66          69        130         135
 Preferred dividends of subsidiaries                                   2           2          5           5
                                                               ----------  ---------- ----------  ----------
     Net interest charges and preferred dividends                     68          71        135         140
                                                               ----------  ---------- ----------  ----------
Income Before Income Taxes and Cumulative Effect of Change
 in Accounting Principle                                             178         177        334         312
Income Taxes                                                          60          67        119         119
                                                               ----------  ---------- ----------  ----------
Income Before Cumulative Effect of Change in Accounting
 Principle                                                           118         110        215         193
Cumulative Effect of Change in Accounting Principle,
  Net of Income Taxes of $-, $-, $- and $12                            -           -          -          18
                                                               ----------  ---------- ----------  ----------
Net Income                                                     $     118   $     110  $     215   $     211
                                                               ==========  ========== ==========  ==========
Earnings per Common Share - Basic and Diluted:
 Income before cumulative effect of change
  in accounting principle                                      $    0.65   $    0.68  $    1.20   $    1.21
 Cumulative effect of change in accounting
  principle, net of income taxes                                       -           -          -        0.11
                                                               ----------  ---------- ----------  ----------
Earnings per Common Share - Basic and Diluted                  $    0.65   $    0.68  $    1.20   $    1.32
                                                               ==========  ========== ==========  ==========

Dividends per Common Share                                     $   0.635   $   0.635  $    1.27   $    1.27
Average Common Shares Outstanding                                  182.7       161.2      178.5       160.1


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


</TABLE>
                                       9
<PAGE>
<TABLE>
<CAPTION>


                      AMEREN CORPORATION
                  CONSOLIDATED BALANCE SHEET
     (Unaudited) (In millions, except per share amounts)

                                                                      June 30,     December 31,
                                                                        2004          2003
                                                                    -----------    ------------
                                     ASSETS
<S><C><C>                                                          <C>            <C>
Current Assets:
  Cash and cash equivalents                                         $       511    $       111
  Accounts receivables - trade (less allowance for doubtful
    accounts of $12 and $13, respectively)                                  343            326
  Unbilled revenue                                                          258            221
  Miscellaneous accounts and notes receivable                                47            126
  Materials and supplies, at average cost                                   458            487
  Other current assets                                                       35             46
                                                                    ------------   ------------
    Total current assets                                                  1,652          1,317
                                                                    ------------   ------------
Property and Plant, Net                                                  11,052         10,920
Investments and Other Non-Current Assets:
  Investments in leveraged leases                                           153            164
  Nuclear decommissioning trust fund                                        219            212
  Goodwill and other intangibles, net                                       565            574
  Other assets                                                              354            320
                                                                    ------------   ------------
    Total investments and other non-current assets                        1,291          1,270
                                                                    ------------   ------------
Regulatory Assets                                                           682            729
                                                                    ------------   ------------
           TOTAL ASSETS                                             $    14,677    $    14,236
                                                                    ============   ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Current maturities of long-term debt                              $       291    $       498
  Short-term debt                                                            35            161
  Accounts and wages payable                                                273            480
  Taxes accrued                                                             220            103
  Other current liabilities                                                 215            215
                                                                    ------------   ------------
    Total current liabilities                                             1,034          1,457
                                                                    ------------   ------------
Long-term Debt, Net                                                       4,051          4,070
Preferred Stock of Subsidiary Subject to Mandatory Redemption                21             21
Deferred Credits and Other Non-Current Liabilities:
  Accumulated deferred income taxes, net                                  1,775          1,853
  Accumulated deferred investment tax credits                               145            151
  Regulatory liabilities                                                    862            824
  Asset retirement obligations                                              425            413
  Accrued pension liabilities                                               744            699
  Other deferred credits and liabilities                                    175            190
                                                                    ------------   ------------
    Total deferred credits and other non-current liabilities              4,126          4,130
                                                                    ------------   ------------
Preferred Stock of Subsidiaries Not Subject to Mandatory Redemption         182            182
Minority Interest in Consolidated Subsidiaries                               25             22
Commitments and Contingencies (Note 9)
Stockholders' Equity:
  Common stock, $.01 par value, 400.0 shares authorized -
    shares outstanding of 183.3 and 162.9 respectively                        2              2
  Other paid-in capital, principally premium on common stock              3,456          2,552
  Retained earnings                                                       1,835          1,853
  Accumulated other comprehensive income (loss)                             (41)           (44)
  Other                                                                     (14)            (9)
                                                                    ------------   ------------
    Total stockholders' equity                                            5,238          4,354
                                                                    ------------   ------------
           TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY               $    14,677    $    14,236
                                                                    ============   ============


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



</TABLE>

                                       10
<PAGE>
<TABLE>
<CAPTION>
                               AMEREN CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                            (Unaudited) (In millions)

                                                                                       Six Months Ended
                                                                                            June 30,
                                                                                   -------------------------
                                                                                       2004          2003
                                                                                   ----------    -----------

<S><C> <C>                                                                        <C>           <C>
Cash Flows From Operating Activities:
 Net income                                                                        $     215     $      211
 Adjustments to reconcile net income to net cash
   provided by operating activities:
    Cumulative effect of change in accounting principle                                    -            (18)
    Depreciation and amortization                                                        262            256
    Amortization of nuclear fuel                                                          13             16
    Amortization of debt issuance costs and premium/discounts                              5              5
    Deferred income taxes, net                                                            (5)            (9)
    Deferred investment tax credits, net                                                  (6)            (6)
    Coal contract settlement                                                              18              -
    Other                                                                                  1            (11)
       Changes in assets and liabilities, excluding the effects of the acquisitions:
       Receivables, net                                                                  (23)             6
       Materials and supplies                                                             29            (14)
       Accounts and wages payable                                                       (162)          (149)
       Taxes accrued                                                                     117             99
       Assets, other                                                                     (57)            17
       Liabilities, other                                                                 29             27
                                                                                   ----------    -----------
Net cash provided by operating activities                                                436            430
                                                                                   ----------    -----------

Cash Flows From Investing Activities:
 Construction expenditures                                                              (379)          (332)
 Acquisitions, net of cash acquired                                                        -           (489)
 Nuclear fuel expenditures                                                                (5)            (1)
 Other                                                                                    17              6
                                                                                   ----------    -----------
Net cash used in investing activities                                                   (367)          (816)
                                                                                   ----------    -----------

Cash Flows From Financing Activities:
 Dividends on common stock                                                              (232)          (205)
 Capital issuance costs                                                                  (23)           (11)
 Redemptions, repurchases, and maturities:
   Nuclear fuel lease                                                                    (67)           (20)
   Short-term debt                                                                      (126)           (91)
   Long-term debt                                                                       (260)          (420)
 Issuances:
   Common stock                                                                          935            308
   Long-term debt                                                                        104            298
                                                                                   ----------    -----------
Net cash provided by (used in) financing activities                                      331           (141)
                                                                                   ----------    -----------

Net change in cash and cash equivalents                                                  400           (527)
Cash and cash equivalents at beginning of year                                           111              -
                                                                                   ----------    -----------
Cash and cash equivalents at end of period                                         $     511     $     (527)
                                                                                   ==========    ===========

Cash Paid During the Periods:
 Interest                                                                          $     145     $      133
 Income taxes, net                                                                        71            100


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


</TABLE>
                                       11
<PAGE>
<TABLE>
<CAPTION>

               UNION ELECTRIC COMPANY
          CONSOLIDATED STATEMENT OF INCOME
              (Unaudited) (In millions)


                                                           Three Months Ended                Six Months Ended
                                                                 June 30,                        June 30,
                                                      -----------------------------    -----------------------------
                                                          2004            2003             2004            2003
                                                      -------------   -------------    -------------   -------------
<S> <C>                                              <C>             <C>              <C>              <C>
Operating Revenues:
 Electric                                             $        658    $        616     $      1,206    $      1,171
 Gas                                                            25              20               97              85
                                                      -------------   -------------    -------------   -------------
     Total operating revenues                                  683             636            1,303           1,256
                                                      -------------   -------------    -------------   -------------

Operating Expenses:
 Fuel and purchased power                                      139             123              282             265
 Gas purchased for resale                                       14              13               58              52
 Other operations and maintenance                              207             187              400             372
 Depreciation and amortization                                  74              71              146             141
 Taxes other than income taxes                                  56              54              111             107
                                                      -------------   -------------    -------------   -------------
     Total operating expenses                                  490             448              997             937
                                                      -------------   -------------    -------------   -------------

Operating Income                                               193             188              306             319

Other Income and (Deductions):
    Miscellaneous income                                         4               8                9               9
    Miscellaneous expense                                       (4)             (2)              (5)             (3)
                                                      -------------   -------------    -------------   -------------
     Total other income and (deductions)                         -               6                4               6
                                                      -------------   -------------    -------------   -------------

Interest Charges                                                26              26               51              51
                                                      -------------   -------------    -------------   -------------

Income Before Income Taxes                                     167             168              259             274

Income Taxes                                                    58              61               92              99
                                                      -------------   -------------    -------------   -------------

Net Income                                                     109             107              167             175

Preferred Stock Dividends                                        2               2                3               3
                                                      -------------   -------------    -------------   -------------

Net Income Available to Common Stockholder            $        107    $        105     $        164    $        172
                                                      =============   =============    =============   =============


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


                                       12
<PAGE>

<TABLE>
<CAPTION>

                             UNION ELECTRIC COMPANY
                           CONSOLIDATED BALANCE SHEET
               (Unaudited) (In millions, except per share amounts)

                                                                                     June 30,         December 31,
                                                                                       2004               2003
                                                                                   -------------      -------------
                                     ASSETS
<S><C>    <C>                                                                     <C>                <C>
Current Assets:
  Cash and cash equivalents                                                        $         15       $         15
  Accounts receivable - trade (less allowance for doubtful
    accounts of $5 and $6, respectively)                                                    187                172
  Unbilled revenue                                                                          170                111
  Miscellaneous accounts and notes receivable                                                44                117
  Materials and supplies, at average cost                                                   182                175
  Other current assets                                                                       12                 26
                                                                                   -------------      -------------
    Total current assets                                                                    610                616
                                                                                   -------------      -------------
Property and Plant, Net                                                                   6,904              6,758
Investments and Other Non-Current Assets:
  Nuclear decommissioning trust fund                                                        219                212
  Other assets                                                                              259                246
                                                                                   -------------      -------------
    Total investments and other non-current assets                                          478                458
                                                                                   -------------      -------------
Regulatory Assets                                                                           637                685
                                                                                   -------------      -------------
           TOTAL ASSETS                                                            $      8,629       $      8,517
                                                                                   =============      =============


                      LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
  Current maturities of long-term debt                                             $        277       $        344
  Short-term debt                                                                             -                150
  Borrowings from money pool                                                                342                  -
  Accounts and wages payable                                                                175                314
  Taxes accrued                                                                             181                 66
  Other current liabilities                                                                  98                102
                                                                                   -------------      -------------
    Total current liabilities                                                             1,073                976
                                                                                   -------------      -------------
Long-term Debt, Net                                                                       1,762              1,758
Deferred Credits and Other Non-Current Liabilities:
  Accumulated deferred income taxes, net                                                  1,214              1,289
  Accumulated deferred investment tax credits                                               111                114
  Regulatory liabilities                                                                    684                652
  Asset retirement obligations                                                              420                408
  Accrued pension and other postretirement benefits                                         339                317
  Other deferred credits and liabilities                                                     81                 80
                                                                                   -------------      -------------
    Total deferred credits and other non-current liabilities                              2,849              2,860
                                                                                   -------------      -------------
Commitments and Contingencies (Note 9)
Stockholder's Equity:
  Common stock, $5 par value, 150.0 shares authorized - 102.1 shares outstanding            511                511
  Preferred stock not subject to mandatory redemption                                       113                113
  Other paid-in capital, principally premium on common stock                                702                702
  Retained earnings                                                                       1,649              1,630
  Accumulated other comprehensive income (loss)                                             (30)               (33)
                                                                                   -------------      -------------
    Total stockholder's equity                                                            2,945              2,923
                                                                                   -------------      -------------
           TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                              $      8,629       $      8,517
                                                                                   =============      =============


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

</TABLE>

                                       13
<PAGE>
<TABLE>
<CAPTION>


                             UNION ELECTRIC COMPANY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                            (Unaudited) (In millions)

                                                                                      Six Months Ended
                                                                                           June 30,
                                                                                -----------------------------
                                                                                    2004             2003
                                                                                -------------   -------------
<S><C><C>                                                                      <C>             <C>
Cash Flows From Operating Activities:
 Net income                                                                     $        167    $        175
 Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization                                                        146             141
    Amortization of nuclear fuel                                                          13              16
    Amortization of debt issuance costs and premium/discounts                              2               2
    Deferred income taxes, net                                                            (8)            (16)
    Deferred investment tax credits, net                                                  (3)             (3)
    Coal contract settlement                                                              18               -
    Other                                                                                  3              (5)
    Changes in assets and liabilities:
       Receivables, net                                                                  (58)            (40)
       Materials and supplies                                                             (7)             (1)
       Accounts and wages payable                                                       (125)           (147)
       Taxes accrued                                                                     115              94
       Assets, other                                                                       8             (14)
       Liabilities, other                                                                  7              36
                                                                                -------------   -------------
Net cash provided by operating activities                                                278             238
                                                                                -------------   -------------

Cash Flows From Investing Activities:
 Construction expenditures                                                              (253)           (226)
 Nuclear fuel expenditures                                                                (5)             (1)
 Other                                                                                     -               2
                                                                                -------------   -------------
Net cash used in investing activities                                                   (258)           (225)
                                                                                -------------   -------------

Cash Flows From Financing Activities:
 Dividends on common stock                                                              (145)           (165)
 Dividends on preferred stock                                                             (3)             (3)
 Capital issuance costs                                                                   (1)             (3)
 Redemptions, repurchases, and maturities:
   Nuclear fuel lease                                                                    (67)            (20)
   Short-term debt                                                                      (150)            (73)
   Long-term debt                                                                       (100)           (189)
 Issuances:
   Long-term debt                                                                        104             298
   Borrowings from money pool                                                            342             154
                                                                                -------------   -------------
Net cash used in financing activities                                                    (20)             (1)
                                                                                -------------   -------------

Net change in cash and cash equivalents                                                    -              12
Cash and cash equivalents at beginning of year                                            15               9
                                                                                -------------   -------------
Cash and cash equivalents at end of period                                      $         15    $         21
                                                                                =============   =============

Cash Paid During the Periods:
 Interest                                                                       $         50    $         45
 Income taxes, net                                                                        41              74


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


</TABLE>

                                       14
<PAGE>
<TABLE>
<CAPTION>


                     CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
                               STATEMENT OF INCOME
                            (Unaudited) (In millions)


                                                    Three Months Ended             Six Months Ended
                                                        June 30,                       June 30,
                                                ----------------------------     ------------------------
                                                   2004              2003             2004          2003
                                                -----------      -----------    -----------   -----------
<S><C>                                         <C>              <C>            <C>           <C>
Operating Revenues:
 Electric                                       $      139       $      137     $      266    $      269
 Gas                                                    28               30            113           107
                                                -----------      -----------    -----------   -----------
   Total operating revenues                            167              167            379           376
                                                -----------      -----------    -----------   -----------

Operating Expenses:
 Purchased power                                        79               82            159           168
 Gas purchased for resale                               16               18             72            71
 Other operations and maintenance                       35               38             72            80
 Depreciation and amortization                          13               13             26            26
 Taxes other than income taxes                           5                7             14            16
                                                -----------      -----------    -----------   -----------
   Total operating expenses                            148              158            343           361
                                                -----------      -----------    -----------   -----------
Operating Income                                        19                9             36            15

Other Income and (Deductions):
  Miscellaneous income                                   6                7             13            14
  Miscellaneous expense                                 (1)              (1)            (1)           (2)
                                                -----------      -----------    -----------   -----------
   Total other income and (deductions)                   5                6             12            12
                                                -----------      -----------    -----------   -----------

Interest Charges                                         8                9             16            18
                                                -----------      -----------    -----------   -----------
Income Before Income Taxes                              16                6             32             9

Income Taxes                                             8                3             14             4
                                                -----------      -----------    -----------   -----------

Net Income                                               8                3             18             5

Preferred Stock Dividends                                -                -              1             1
                                                -----------      -----------    -----------   -----------

Net Income Available to Common Stockholder      $        8       $        3     $       17    $        4
                                                ===========      ===========    ===========   ===========


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

</TABLE>

                                       15
<PAGE>
<TABLE>
<CAPTION>


                     CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
                                  BALANCE SHEET
                            (Unaudited) (In millions)

                                                                                  June 30,         December 31,
                                                                                    2004               2003
                                                                                -------------     -------------
                                     ASSETS
<S><C>                                                                         <C>               <C>
Current Assets:
  Cash and cash equivalents                                                     $          3      $         16
  Accounts receivable - trade (less allowance for doubtful
   accounts of $2 and $1, respectively)                                                   51                48
  Unbilled revenue                                                                        61                64
  Miscellaneous accounts and notes receivable                                             22                22
  Current portion of intercompany note receivable - Genco                                324                49
  Current portion of intercompany tax receivable - Genco                                  12                12
  Materials and supplies, at average cost                                                 42                51
  Other current assets                                                                    12                 6
                                                                                -------------     -------------
    Total current assets                                                                 527               268
                                                                                -------------     -------------
Property and Plant, Net                                                                  951               955
Investments and Other Non-Current Assets:
  Intercompany note receivable - Genco                                                     -               324
  Intercompany tax receivable - Genco                                                    144               150
  Other assets                                                                            23                17
                                                                                -------------     -------------
    Total investments and other non-current assets                                       167               491
                                                                                -------------     -------------
Regulatory Assets                                                                         31                28
                                                                                -------------     -------------
         TOTAL ASSETS                                                           $      1,676      $      1,742
                                                                                =============     =============


                      LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
  Accounts and wages payable                                                    $         74      $         71
  Borrowings from money pool                                                              47               121
  Taxes accrued                                                                           31                19
  Other current liabilities                                                               26                27
                                                                                -------------     -------------
    Total current liabilities                                                            178               238
                                                                                -------------     -------------
Long-term Debt, Net                                                                      485               485
Deferred Credits and Other Non-Current Liabilities:
  Accumulated deferred income taxes, net                                                 269               269
  Accumulated deferred investment tax credits                                             11                11
  Regulatory liabilities                                                                 146               145
  Other deferred credits and liabilities                                                  63                62
                                                                                -------------     -------------
    Total deferred credits and other non-current liabilities                             489               487
                                                                                -------------     -------------
Commitments and Contingencies (Note 9)
Stockholder's Equity:
  Common stock, no par value, 45.0 shares authorized - 25.5 shares outstanding           120               120
  Preferred stock not subject to mandatory redemption                                     50                50
  Retained earnings                                                                      358               369
  Accumulated other comprehensive income (loss)                                           (4)               (7)
                                                                                -------------     -------------
    Total stockholder's equity                                                           524               532
                                                                                -------------     -------------
         TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                             $      1,676      $      1,742
                                                                                =============     =============


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

</TABLE>

                                       16
<PAGE>
<TABLE>
<CAPTION>

                     CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
                             STATEMENT OF CASH FLOWS
                            (Unaudited) (In millions)


                                                                       Six Months Ended
                                                                            June 30,
                                                                    --------------------------
                                                                        2004           2003
                                                                    ------------   -----------
<S> <C> <C>                                                        <C>            <C>
Cash Flows From Operating Activities:
 Net income                                                         $        18    $        5
 Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization                                            26            26
    Deferred income taxes, net                                              (12)          (11)
    Deferred investment tax credits, net                                      -            (1)
    Other                                                                     3            (2)
    Changes in assets and liabilities:
       Receivables, net                                                       -            21
       Materials and supplies                                                 9             8
       Accounts and wages payable                                             3            (1)
       Taxes accrued                                                         12             -
       Assets, other                                                         (7)            7
       Liabilities, other                                                    10             5
                                                                    ------------   -----------
Net cash provided by operating activities                                    62            57
                                                                    ------------   -----------

Cash Flows From Investing Activities:
 Construction expenditures                                                  (21)          (22)
 Intercompany note receivable - Genco                                        49            62
                                                                    ------------   -----------
Net cash provided by investing activities                                    28            40
                                                                    ------------   -----------

Cash Flows From Financing Activities:
 Dividends on common stock                                                  (28)          (39)
 Dividends on preferred stock                                                (1)           (1)
 Repayments to money pool                                                   (74)            -
 Redemptions, repurchases, and maturities:
   Long-term debt                                                             -           (95)
   Borrowings from money pool                                                 -            39
                                                                    ------------   -----------
Net cash used in financing activities                                      (103)          (96)
                                                                    ------------   -----------

Net change in cash and cash equivalents                                     (13)            1
Cash and cash equivalents at beginning of year                               16            17
                                                                    ------------   -----------
Cash and cash equivalents at end of period                          $         3    $       18
                                                                    ============   ===========

Cash Paid During the Periods:
 Interest                                                           $        16    $       20
 Income taxes, net                                                           15            14


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


</TABLE>

                                       17
<PAGE>

<TABLE>
<CAPTION>

                        AMEREN ENERGY GENERATING COMPANY
                               STATEMENT OF INCOME
                            (Unaudited) (In millions)


                                                                         Three Months Ended           Six Months Ended
                                                                             June 30,                     June 30,
                                                                     --------------------------  --------------------------
                                                                        2004            2003          2004         2003
                                                                     -----------    -----------  ------------  ------------
<S><C>                                                              <C>            <C>          <C>           <C>
Operating Revenues:
 Electric                                                            $      208     $      173   $       424   $       379
                                                                     -----------    -----------  ------------  ------------
   Total operating revenues                                                 208            173           424           379
                                                                     -----------    -----------  ------------  ------------

Operating Expenses:
 Fuel and purchased power                                                    90             72           182           160
 Other operations and maintenance                                            44             35            74            68
 Depreciation and amortization                                               19             19            38            37
 Taxes other than income taxes                                                6              6            11            13
                                                                     -----------    -----------  ------------  ------------
   Total operating expenses                                                 159            132           305           278
                                                                     -----------    -----------  ------------  ------------

Operating Income                                                             49             41           119           101

Other Income and (Deductions):
  Miscellaneous expense                                                       -              -            (1)            -
                                                                     -----------    -----------  ------------  ------------
   Total other income and (deductions)                                        -              -            (1)            -
                                                                     -----------    -----------  ------------  ------------

Interest Charges                                                             24             25            47            51
                                                                     -----------    -----------  ------------  ------------

Income Before Income Taxes and Cumulative Effect of Change
  in Accounting Principle                                                    25             16            71            50

Income Taxes                                                                  8              6            25            19
                                                                     -----------    -----------  ------------  ------------

Income Before Cumulative Effect of Change in Accounting
  Principle                                                                  17             10            46            31

Cumulative Effect of Change in Accounting Principle,
  Net of Income Taxes of $-, $-, $- and $12                                   -              -             -            18
                                                                     -----------    -----------  ------------  ------------

Net Income                                                           $       17     $       10   $        46   $        49
                                                                     ===========    ===========  ============  ============


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

</TABLE>

                                       18
<PAGE>
<TABLE>
<CAPTION>
                        AMEREN ENERGY GENERATING COMPANY
                                  BALANCE SHEET
                    (Unaudited) (In millions, except shares)

                                                                                          June 30,        December 31,
                                                                                            2004              2003
                                                                                        -------------     ------------
                                     ASSETS
<S><C>                                                                                  <C>              <C>
Current Assets:
  Cash and cash equivalents                                                              $         -      $         2
  Accounts receivable                                                                             79               88
  Materials and supplies, at average cost                                                         89               90
  Other current assets                                                                             2                4
                                                                                         ------------     ------------
    Total current assets                                                                         170              184
Property and Plant, Net                                                                        1,753            1,774
Other Non-Current Assets                                                                          20               19
                                                                                         ------------     ------------
          TOTAL ASSETS                                                                   $     1,943      $     1,977
                                                                                         ============     ============


                      LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
  Accounts and wages payable                                                             $        55      $        75
  Borrowings from money pool                                                                     156              124
  Current portion of intercompany notes payable - CIPS and Ameren                                358               53
  Current portion of intercompany tax payable - CIPS                                              12               12
  Taxes accrued                                                                                   27               30
  Other current liabilities                                                                       22               23
                                                                                         ------------     ------------
    Total current liabilities                                                                    630              317
                                                                                         ------------     ------------
Long-term Debt, Net                                                                              698              698
Intercompany Notes Payable - CIPS and Ameren                                                       -              358
Deferred Credits and Other Non-Current Liabilities:
  Accumulated deferred income taxes, net                                                         104               99
  Accumulated deferred investment tax credits                                                     13               13
  Intercompany tax payable - CIPS                                                                144              150
  Accrued pension and other postretirement benefits                                               22               19
  Other deferred credits and liabilities                                                           2                2
                                                                                         ------------     ------------
    Total deferred credits and other non-current liabilities                                     285              283
                                                                                         ------------     ------------
Commitments and Contingencies (Note 9)
Stockholder's Equity:
  Common stock, no par value, 10,000 shares authorized - 2,000 shares outstanding                  -                -
  Other paid-in capital                                                                          150              150
  Retained earnings                                                                              181              170
  Accumulated other comprehensive (loss) income                                                   (1)               1
                                                                                         ------------     ------------
    Total stockholder's equity                                                                   330              321
                                                                                         ------------     ------------
          TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                                     $     1,943      $     1,977
                                                                                         ============     ============


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


</TABLE>
                                       19
<PAGE>

<TABLE>
<CAPTION>

                        AMEREN ENERGY GENERATING COMPANY
                             STATEMENT OF CASH FLOWS
                            (Unaudited) (In millions)


                                                                                      Six Months Ended
                                                                                           June 30,
                                                                                  --------------------------
                                                                                      2004          2003
                                                                                  ------------  ------------
<S><C><C>                                                                        <C>           <C>
Cash Flows From Operating Activities:
 Net income                                                                       $        46   $        49
 Adjustments to reconcile net income to net cash
   provided by operating activities:
    Cumulative effect of change in accounting principle                                     -           (18)
    Depreciation and amortization                                                          38            37
    Deferred income taxes, net                                                             18            27
    Other                                                                                  (2)            -
    Changes in assets and liabilities:
       Accounts receivable                                                                  9            (2)
       Materials and supplies                                                               1           (15)
       Taxes accrued                                                                       (3)           66
       Accounts and wages payable                                                         (10)          (17)
       Assets, other                                                                        2             -
       Liabilities, other                                                                 (17)           (1)
                                                                                  ------------  ------------
Net cash provided by operating activities                                                  82           126
                                                                                  ------------  ------------

Cash Flows From Investing Activities:
 Construction expenditures                                                                (28)          (31)
                                                                                  ------------  ------------
Net cash used in investing activities                                                     (28)          (31)
                                                                                  ------------  ------------

Cash Flows From Financing Activities:
 Dividends on common stock                                                                (35)           (2)
 Redemptions, repurchases, and maturities:
   Repayments to money pool                                                                 -           (37)
   Intercompany notes payable - CIPS and Ameren                                           (53)          (51)
 Issuances:
   Borrowings from money pool                                                              32             -
                                                                                  ------------  ------------
Net cash used in financing activities                                                     (56)          (90)
                                                                                  ------------  ------------

Net change in cash and cash equivalents                                                    (2)            5
Cash and cash equivalents at beginning of year                                              2             3
                                                                                  ------------  ------------
Cash and cash equivalents at end of period                                        $         -   $         8
                                                                                  ============  ============

Cash Paid During the Periods:
 Interest                                                                         $        48   $        49
 Income taxes, net paid (refunded)                                                         15           (66)


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

</TABLE>

                                       20

<PAGE>
<TABLE>
<CAPTION>
                                  CILCORP INC.
                        CONSOLIDATED STATEMENT OF INCOME
                            (Unaudited) (In millions)


                                                        ---------------Successor------  ---------Successor---------  | -Predecessor-
                                                           Three            Three            Six           Five      |
                                                           Months           Months          Months        Months     |
                                                           Ended            Ended           Ended         Ended      |
                                                          June 30,         June 30,        June 30,      June 30,    |    January
                                                        ------------    ------------    ------------   ------------  | ------------
                                                            2004             2003            2004          2003      |     2003
                                                        ------------    ------------    ------------   ------------  | ------------
<S><C>                                                 <C>              <C>            <C>            <C>             <C>
Operating Revenues:                                                                                                  |
 Electric                                               $        89     $       125     $       187    $       205   | $        47
 Gas                                                             50              66             191            169   |          58
 Other                                                            1               1               2              2   |           -
                                                        ------------    ------------    ------------   ------------  | ------------
   Total operating revenues                                     140             192             380            376   |         105
                                                        ------------    ------------    ------------   ------------  | ------------
                                                                                                                     |
Operating Expenses:                                                                                                  |
 Fuel and purchased power                                        33              65              78            107   |          24
 Gas purchased for resale                                        31              51             138            134   |          44
 Other operations and maintenance                                47              35              90             57   |          14
 Depreciation and amortization                                   17              22              33             36   |           6
 Taxes other than income taxes                                    5               9              14             17   |           4
                                                        ------------    ------------    ------------   ------------  | ------------
   Total operating expenses                                     133             182             353            351   |          92
                                                        ------------    ------------    ------------   ------------  | ------------
                                                                                                                     |
Operating Income                                                  7              10              27             25   |          13
                                                                                                                     |
Other Income and (Deductions):                                                                                       |
 Miscellaneous expense                                           (1)             (1)             (2)            (1)  |           -
                                                        ------------    ------------    ------------   ------------  | ------------
   Total other income and (deductions)                           (1)             (1)             (2)            (1)  |           -
                                                        ------------    ------------    ------------   ------------  | ------------
                                                                                                                     |
Interest Charges and Preferred Dividends:                                                                            |
 Interest                                                        14              11              26             20   |           5
 Preferred dividends of subsidiaries                              1               1               1              1   |           -
                                                        ------------    ------------    ------------   ------------  | ------------
     Net interest charges and preferred dividends                15              12              27             21   |           5
                                                        ------------    ------------    ------------   ------------  | ------------
                                                                                                                     |
Income Before Income Taxes and Cumulative Effect of                                                                  |
 Change in Accounting Principle                                  (9)             (3)             (2)             3   |           8
                                                                                                                     |
Income Taxes                                                     (5)             (3)             (2)             -   |           3
                                                        ------------    ------------    ------------   ------------  | ------------
                                                                                                                     |
Income Before Cumulative Effect of Change in                                                                         |
 Accounting Principle                                            (4)              -               -              3   |           5
                                                                                                                     |
Cumulative Effect of Change in Accounting Principle,                                                                 |
 Net of Income Taxes of $-, $-, $-, $- and $2                     -               -               -              -   |           4
                                                        ------------    ------------    ------------   ------------  | ------------
                                                                                                                     |
Net Income                                              $        (4)    $         -     $         -    $         3   | $         9
                                                        ============    ============    ============   ============  | ============



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

</TABLE>
                                       21
<PAGE>
<TABLE>
<CAPTION>


                                  CILCORP INC.
                           CONSOLIDATED BALANCE SHEET
                 (Unaudited) (In millions, except shares)

                                                                                              ---------Successor---------
                                                                                              June 30,        December 31,
                                                                                                2004              2003
                                                                                            -------------    -------------

                                     ASSETS
<S>     <C>    <C>                                                                         <C>              <C>
Current Assets:
  Cash and cash equivalents                                                                 $          5     $         11
  Accounts receivables - trade (less allowance for doubtful
    accounts of $4 and $6, respectively)                                                              29               59
  Unbilled revenue                                                                                    22               40
  Miscellaneous accounts and notes receivable                                                          6               16
  Materials and supplies, at average cost                                                            129              154
  Other current assets                                                                                 4                5
                                                                                            -------------    -------------
    Total current assets                                                                             195              285
                                                                                            -------------    -------------
Property and Plant, Net                                                                            1,154            1,127
Investments and Other Non-Current Assets:
  Investments in leveraged leases                                                                    127              130
  Goodwill and other intangibles, net                                                                558              567
  Other assets                                                                                        18               11
                                                                                            -------------    -------------
    Total investments and other non-current assets                                                   703              708
                                                                                            -------------    -------------
Regulatory Assets                                                                                     13               16
                                                                                            -------------    -------------
           TOTAL ASSETS                                                                     $      2,065     $      2,136
                                                                                            =============    =============


                      LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
  Current maturities of long-term debt                                                      $          -     $        100
  Borrowings from money pool                                                                         232              145
  Intercompany note payable - Ameren                                                                  57               46
  Accounts and wages payable                                                                          75              108
  Other current liabilities                                                                           37               38
                                                                                            -------------    -------------
    Total current liabilities                                                                        401              437
                                                                                            -------------    -------------
Long-term Debt, Net                                                                                  646              669
Preferred Stock of Subsidiary Subject to Mandatory Redemption                                         21               21
Deferred Credits and Other Non-Current Liabilities:
  Accumulated deferred income taxes, net                                                             177              181
  Accumulated deferred investment tax credits                                                         11               11
  Regulatory liabilities                                                                              31               24
  Accrued pension and other postretirement benefits                                                  266              259
  Other deferred credits and liabilities                                                              29               37
                                                                                            -------------    -------------
    Total deferred credits and other non-current liabilities                                         514              512
                                                                                            -------------    -------------
Preferred Stock of Subsidiary Not Subject to Mandatory Redemption                                     19               19
Commitments and Contingencies (Note 9)
Stockholder's Equity:
  Common stock, no par value, 10,000 shares authorized - 1,000 shares outstanding                      -                -
  Other paid-in capital                                                                              490              490
  Retained earnings                                                                                  (31)             (13)
  Accumulated other comprehensive income (loss)                                                        5                1
                                                                                            -------------    -------------
    Total stockholder's equity                                                                       464              478
                                                                                            -------------    -------------
           TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                                       $      2,065     $      2,136
                                                                                            =============    =============


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


</TABLE>
                                       22
<PAGE>
<TABLE>
<CAPTION>
                           CILCORP INC.
               CONSOLIDATED STATEMENT OF CASH FLOWS
                    (Unaudited) (In millions)

                                                                   ---------Successor---------    |  --Predecessor--
                                                                       Six            Five        |
                                                                      Months         Months       |
                                                                      Ended          Ended        |
                                                                     June 30,       June 30,      |      January
                                                                   -------------  -------------   |  --------------
                                                                      2004            2003        |       2003
                                                                   -------------  -------------   |  --------------
<S><C>                                                            <C>            <C>                <C>
Cash Flows From Operating Activities:                                                             |
 Net income                                                        $          -   $          3    |  $           9
 Adjustments to reconcile net income to net cash                                                  |
   provided by operating activities:                                                              |
    Cumulative effect of change in accounting principle                       -              -    |             (4)
    Depreciation and amortization                                            33             36    |              6
    Deferred income taxes, net                                                3             (3)   |             (5)
    Deferred investment tax credits, net                                      -             (1)   |              -
    Other                                                                     7            (17)   |              -
    Changes in assets and liabilities:                                                            |
       Receivables, net                                                      66             32    |            (20)
       Materials and supplies                                                25             (8)   |             13
       Accounts and wages payable                                           (26)           (42)   |             20
       Taxes accrued                                                          2             (3)   |             11
       Assets, other                                                         (3)            18    |              6
       Liabilities, other                                                    (4)             4    |             (5)
                                                                   -------------  -------------   |  --------------
Net cash provided by operating activities                                   103             19    |             31
                                                                   -------------  -------------   |  --------------
                                                                                                  |
Cash Flows From Investing Activities:                                                             |
 Construction expenditures                                                  (73)           (38)   |            (16)
 Other                                                                        4              2    |              1
                                                                   -------------  -------------   |  --------------
Net cash used in investing activities                                       (69)           (36)   |            (15)
                                                                   -------------  -------------   |  --------------
                                                                                                  |
Cash Flows From Financing Activities:                                                             |
 Dividends on common stock                                                  (18)             -    |              -
 Redemptions, repurchases, and maturities:                                                        |
  Short-term debt                                                             -              -    |            (10)
  Long-term debt                                                           (120)          (101)   |              -
 Issuances:                                                                                       |
  Borrowings from money pool                                                 87            111    |              -
  Intercompany note payable - Ameren                                         11              -    |              -
                                                                   -------------  -------------   |  --------------
Net cash provided by (used in) financing activities                         (40)            10    |            (10)
                                                                   -------------  -------------   |  --------------
                                                                                                  |
Net change in cash and cash equivalents                                      (6)            (7)   |              6
Cash and cash equivalents at beginning of year                               11             38    |             32
                                                                   -------------  -------------   |  --------------
Cash and cash equivalents at end of period                         $          5   $         31    |  $          38
                                                                   =============  =============   |  ==============
                                                                                                  |
Cash Paid During the Periods:                                                                     |
 Interest                                                          $         20   $          9    |  $           5
 Income taxes, net  (refunded) paid                                          (4)             9    |              -



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

</TABLE>

                                       23
<PAGE>
<TABLE>
<CAPTION>
                         CENTRAL ILLINOIS LIGHT COMPANY
                        CONSOLIDATED STATEMENT OF INCOME
                            (Unaudited) (In millions)

                                                                           Three Months Ended        Six Months Ended
                                                                                 June 30,                   June 30,
                                                                          -----------------------   ----------------------
                                                                            2004         2003          2004        2003
                                                                          ----------  -----------   ----------  ----------
<S><C>                                                                   <C>          <C>          <C>         <C>
Operating Revenues:
 Electric                                                                 $      89    $     125    $     187   $     252
 Gas                                                                             45           47          172         166
                                                                          ----------   ----------   ----------  ----------
   Total operating revenues                                                     134          172          359         418
                                                                          ----------   ----------   ----------  ----------

Operating Expenses:
 Fuel and purchased power                                                        31           62           76         129
 Gas purchased for resale                                                        25           31          119         115
 Other operations and maintenance                                                48           39           95          80
 Depreciation and amortization                                                   16           19           32          37
 Taxes other than income taxes                                                    6            9           14          21
                                                                          ----------   ----------   ----------  ----------
   Total operating expenses                                                     126          160          336         382
                                                                          ----------   ----------   ----------  ----------

Operating Income                                                                  8           12           23          36

Other Income and (Deductions):
 Miscellaneous expense                                                           (2)          (1)          (3)         (1)
                                                                          ----------   ----------   ----------  ----------
   Total other income and (deductions)                                           (2)          (1)          (3)         (1)
                                                                          ----------   ----------   ----------  ----------

Interest Charges                                                                  4            5            7          10
                                                                          ----------   ----------   ----------  ----------

Income Before Income Taxes and Cumulative Effect of Change
  in Accounting Principle                                                         2            6           13          25

Income Taxes                                                                     (1)           1            4           9
                                                                          ----------   ----------   ----------  ----------

Income Before Cumulative Effect of Change in Accounting
  Principle                                                                       3            5            9          16

Cumulative Effect of Change in Accounting Principle,
  Net of Income Taxes of $-, $-, $- and $16                                       -            -            -          24
                                                                          ----------   ----------   ----------  ----------

Net Income                                                                        3            5            9          40

Preferred Stock Dividends                                                         1            1            1           1
                                                                          ----------   ----------   ----------  ----------

Net Income Available to Common Stockholder                                $       2    $       4    $       8   $      39
                                                                          ==========   ==========   ==========  ==========


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

</TABLE>

                                       24
<PAGE>

<TABLE>
<CAPTION>
                         CENTRAL ILLINOIS LIGHT COMPANY
                           CONSOLIDATED BALANCE SHEET
                            (Unaudited) (In millions)

                                                                                    June 30,      December 31,
                                                                                      2004            2003
                                                                                   -----------    ------------
                                     ASSETS
<S><C>     <C>                                                                    <C>            <C>

Current Assets:
  Cash and cash equivalents                                                        $        3     $         8
  Accounts receivable - trade (less allowance for doubtful
    accounts of $4 and $6, respectively)                                                   28              57
  Unbilled revenue                                                                         21              35
  Miscellaneous accounts and notes receivable                                               5              14
  Materials and supplies, at average cost                                                  52              69
  Other current assets                                                                      4               5
                                                                                   -----------    ------------
    Total current assets                                                                  113             188
                                                                                   -----------    ------------
Property and Plant, Net                                                                 1,137           1,101
Other Non-Current Assets                                                                   26              19
Regulatory Assets                                                                          13              16
                                                                                   -----------    ------------
           TOTAL ASSETS                                                            $    1,289     $     1,324
                                                                                   ===========    ============


                      LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
  Current maturities of long-term debt                                             $        -     $       100
  Borrowings from money pool                                                              233             149
  Accounts and wages payable                                                               72             101
  Taxes accrued                                                                             4              13
  Other current liabilities                                                                33              30
                                                                                   -----------    ------------
    Total current liabilities                                                             342             393
                                                                                   -----------    ------------
Long-term Debt, Net                                                                       138             138
Preferred Stock Subject to Mandatory Redemption                                            21              21
Deferred Credits and Other Non-Current Liabilities:
  Accumulated deferred income taxes, net                                                   97             101
  Accumulated deferred investment tax credits                                              11              11
  Regulatory liabilities                                                                  172             167
  Accrued pension and other postretirement benefits                                       145             128
  Other deferred credits and liabilities                                                   19              23
                                                                                   -----------    ------------
    Total deferred credits and other non-current liabilities                              444             430
                                                                                   -----------    ------------
Commitments and Contingencies (Note 9)
Stockholder's Equity:
  Common stock, no par value, 20.0 shares authorized - 13.6 shares outstanding            186             186
  Preferred stock not subject to mandatory redemption                                      19              19
  Other paid-in capital                                                                    52              52
  Retained earnings                                                                        93              95
  Accumulated other comprehensive income (loss)                                            (6)            (10)
                                                                                   -----------    -----------
    Total stockholder's equity                                                            344             342
                                                                                   -----------    ------------
           TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                              $    1,289     $     1,324
                                                                                   ===========    ============


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

</TABLE>

                                       25
<PAGE>
<TABLE>
<CAPTION>
                         CENTRAL ILLINOIS LIGHT COMPANY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                            (Unaudited) (In millions)
                                                                      Six Months Ended
                                                                           June 30,
                                                                   ------------------------
                                                                       2004        2003
                                                                   -----------  -----------
<S><C>                                                            <C>          <C>
Cash Flows From Operating Activities:
 Net income                                                        $        8   $       39
 Adjustments to reconcile net income to net cash
   provided by operating activities:
    Cumulative effect of change in accounting principle                     -          (24)
    Depreciation and amortization                                          32           37
    Deferred income taxes, net                                              4           (5)
    Deferred investment tax credits, net                                    -           (1)
    Other                                                                   7           (2)
    Changes in assets and liabilities:
       Receivables, net                                                    52           10
       Materials and supplies                                              17            5
       Accounts and wages payable                                         (28)           4
       Taxes accrued                                                       (9)         (13)
       Assets, other                                                       (7)           6
       Liabilities, other                                                  18           17
                                                                   -----------  -----------
Net cash provided by operating activities                                  94           73
                                                                   -----------  -----------

Cash Flows From Investing Activities:
 Construction expenditures                                                (73)         (54)
 Other                                                                      1            1
                                                                   -----------  -----------
Net cash used in investing activities                                     (72)         (53)
                                                                   -----------  -----------

Cash Flows From Financing Activities:
 Dividends on common stock                                                (10)         (21)
 Dividends on preferred stock                                              (1)          (1)
 Redemptions, repurchases, and maturities:
    Short-term debt                                                         -          (10)
    Long-term debt                                                       (100)        (101)
 Issuances:
    Borrowings from money pool                                             84           99
                                                                   -----------  -----------
Net cash used in financing activities                                     (27)         (34)
                                                                   -----------  -----------

Net change in cash and cash equivalents                                    (5)         (14)
Cash and cash equivalents at beginning of year                              8           22
                                                                   -----------  -----------
Cash and cash equivalents at end of period                         $        3   $        8
                                                                   ===========  ===========

Cash Paid During the Periods:
 Interest                                                          $        9   $       14
 Income taxes, net                                                          8           11


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

</TABLE>

                                       26
<PAGE>

AMEREN CORPORATION (CONSOLIDATED)
UNION ELECTRIC COMPANY (CONSOLIDATED)
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
AMEREN ENERGY GENERATING COMPANY
CILCORP INC. (CONSOLIDATED)
CENTRAL ILLINOIS LIGHT COMPANY (CONSOLIDATED)

COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2004

NOTE 1 - Summary of Significant Accounting Policies

General

     Ameren,  headquartered in St. Louis,  Missouri, is a public utility holding
company  registered with the SEC under the PUHCA.  Ameren's primary asset is the
common stock of its subsidiaries.  Ameren's subsidiaries operate  rate-regulated
electric generation,  transmission and distribution  businesses,  rate-regulated
natural gas distribution  businesses and non rate-regulated  electric generation
businesses  in Missouri and  Illinois.  Dividends  on Ameren's  common stock are
dependent on distributions  made to it by its subsidiaries.  Ameren's  principal
operating  subsidiaries  are  listed  below.  Also see  Glossary  of  Terms  and
Abbreviations.

o    UE,  also  known as  Union  Electric  Company,  operates  a  rate-regulated
     electric  generation,   transmission  and  distribution   business,  and  a
     rate-regulated  natural gas distribution business in Missouri and Illinois.
     UE was  incorporated  in Missouri in 1922 and is  successor  to a number of
     companies,  the oldest of which was  organized  in 1881.  It is the largest
     electric  utility in the State of Missouri  and  supplies  electric and gas
     service  to a 24,500  square  mile area  located  in  central  and  eastern
     Missouri and west central Illinois.  This area has an estimated  population
     of 3 million and includes the greater St. Louis area. UE supplies  electric
     service to approximately  1.2 million  customers and natural gas service to
     approximately  130,000 customers.  See Note 3 - Rate and Regulatory Matters
     for  information  regarding the proposed  transfer in 2004 of UE's Illinois
     electric and natural gas transmission and distribution businesses to CIPS.

o    CIPS,  also known as Central  Illinois Public Service  Company,  operates a
     rate-regulated  electric  and natural  gas  transmission  and  distribution
     business  in  Illinois.  CIPS was  incorporated  in  Illinois  in 1902.  It
     supplies  electric  and gas  utility  service to  portions  of central  and
     southern Illinois having an estimated population of 1 million in an area of
     approximately  20,000  square  miles.  CIPS  supplies  electric  service to
     approximately  325,000  customers and natural gas service to  approximately
     170,000 customers.

o    Genco,  also  known as Ameren  Energy  Generating  Company,  operates a non
     rate-regulated electric generation business in Illinois and Missouri. Genco
     was  incorporated  in  Illinois  in March  2000,  in  conjunction  with the
     Illinois  Customer Choice Law. Genco  commenced  operations on May 1, 2000,
     when  CIPS  transferred  its  five  coal-fired  power  plants  and  related
     liabilities to Genco at historical net book value. Genco is a subsidiary of
     Development Company, which is a subsidiary of Resources Company, which is a
     subsidiary  of  Ameren.  See  Note  3 - Rate  and  Regulatory  Matters  for
     information  regarding the proposed transfer in 2004 of Genco's CTs located
     in Pinckneyville and Kinmundy, Illinois to UE.

o    CILCO,  also known as Central  Illinois Light  Company,  is a subsidiary of
     CILCORP  (a  holding  company)  and  operates  a  rate-regulated   electric
     transmission  and  distribution  business,  a primarily non  rate-regulated
     electric generation business and a rate-regulated  natural gas distribution
     business in  Illinois.  CILCO was  incorporated  in  Illinois  in 1913.  It
     supplies  electric and gas utility  service to portions of central and east
     central  Illinois in areas of  approximately  3,700 and 4,500 square miles,
     respectively,  with an estimated  population of 1 million.  CILCO  supplies
     electric service to approximately 205,000 customers and natural gas service
     to approximately 210,000 customers.  In October 2003, CILCO transferred its
     coal-fired  plants  and  a  CT  facility,  representing  in  the  aggregate
     approximately 1,100 megawatts of electric generating capacity,  to a wholly
     owned  subsidiary,  known as AERG, as a contribution  in return for all the
     outstanding stock of AERG and AERG's assumption of certain liabilities. The
     net book value of the transferred assets was approximately $378 million and
     no gain or loss was  recognized as the

                                       27

<PAGE>



     transaction was accounted for as a transfer  between  entities under common
     control.  The transfer was made in conjunction  with the Illinois  Customer
     Choice Law. CILCORP was incorporated in Illinois in 1985.

     Ameren  has  various  other  subsidiaries  responsible  for the  short  and
long-term marketing of power, procurement of fuel, management of commodity risks
and providing other shared services. Ameren also has a 60% ownership interest in
EEI through UE, which owns 40%, and Resources  Company,  which owns 20%.  Ameren
consolidates  EEI for  financial  reporting  purposes,  while  UE and  Resources
Company report EEI under the equity method.

     The financial statements of Ameren are prepared on a consolidated basis and
therefore include the accounts of its  majority-owned  subsidiaries.  Results of
CILCORP  and CILCO  reflected  in  Ameren's  consolidated  financial  statements
include the period from the  acquisition  date of January 31, 2003. See Note 2 -
Acquisitions for further information.  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 for a full year. Certain  reclassifications have been made
to prior  year's  financial  statements  to  conform  to 2004  reporting.  These
statements  should be read in conjunction with the financial  statements and the
notes thereto included in the Ameren Companies'  combined 2003 Annual Reports on
Form 10-K and first quarter 2004 Quarterly Reports on Form 10-Q.

Earnings Per Share

     There were no differences  between the basic and diluted earnings per share
amounts  for the three  and six  month  periods  ended  June 30,  2004 and 2003.
Assumed stock option  conversions  increased the number of shares outstanding in
the  diluted  earnings  per share  calculation  by 161,665  shares for the three
months  ended June 30, 2004 (2003 - 306,389  shares) and 230,999  shares for the
six months ended June 30, 2004 (2003 - 273,136 shares). Ameren's equity security
units had no dilutive effect on earnings per share in 2003 and 2004. As only the
Ameren  parent  company has  publicly  held  common  stock,  earnings  per share
calculations  are not relevant and are not presented for any of the subsidiaries
of Ameren.

Accounting Changes and Other Matters

SFAS No.143 - "Accounting for Asset Retirement Obligations"

     We adopted the provisions of SFAS No. 143,  effective January 1, 2003. SFAS
No. 143 provides the accounting  requirements for asset  retirement  obligations
associated  with  tangible,  long-lived  assets.  Upon adoption of the standard,
Ameren and Genco  recognized  a net  after-tax  gain of $18 million in the first
quarter of 2003 for the  cumulative  effect of change in  accounting  principle.
Prior  to  Ameren's  acquisition  of  CILCORP,  predecessor  CILCORP  and  CILCO
recognized  a net  after-tax  gain upon  adoption  of SFAS No. 143 in 2003 of $4
million and $24 million,  respectively,  for the cumulative  effect of change in
accounting  principle.  In addition,  in accordance with SFAS No. 143, estimated
future  removal costs  associated  with  Ameren's,  UE's,  CIPS',  CILCORP's and
CILCO's   rate-regulated   operations  that  had  previously  been  embedded  in
accumulated depreciation were reclassified to a regulatory liability.

     Asset retirement obligations at Ameren and UE increased by approximately $6
million during the quarter  ended,  and $12 million during the six months ended,
June 30, 2004, to reflect the accretion of  obligations  to their present value.
Increases to Genco's,  CILCORP's and CILCO's asset  retirement  obligations were
immaterial  during  these  periods.  Substantially  all of  this  accretion  was
recorded as an increase to regulatory assets.

     In  June  2004,   the  FASB  issued  an   exposure   draft  on  a  proposed
interpretation  of SFAS No. 143. The comment  period on the exposure draft ended
on August 1, 2004. The  interpretation  would clarify that a legal obligation to
perform an asset  retirement  activity that is  conditional on a future event is
within the scope of SFAS No. 143. Accordingly, an

                                       28

<PAGE>

entity would be required to recognize a liability for the fair value of an asset
retirement  obligation  that is conditional on a future event if the liability's
fair value can be estimated reasonably.  The interpretation provides examples of
conditional  asset  retirement  obligations that may need to be recognized under
the provisions of the interpretation,  including asbestos removal. This proposed
interpretation  could require  accrual of additional  liabilities  by the Ameren
Companies  and  could  result  in  increased   expense,   which  while  not  yet
quantifiable, could be material. This proposed interpretation would be effective
for us no later than December 31, 2005.

FIN No. 46 - "Consolidation of Variable Interest Entities"

     In  January   2003,   the  FASB  issued  FIN  No.  46,  which  changed  the
consolidation  requirements  for special purpose entities (SPEs) and non-special
purpose  entities  (non-SPEs) that meet the criteria for designation as variable
interest entities (VIEs). In December 2003, the FASB revised FIN No. 46 (FIN No.
46R) to clarify  certain aspects of FIN No. 46 and modify the effective dates of
the new guidance.  FIN No. 46R provides  guidance on the accounting for entities
that are  controlled  through means other than voting rights by another  entity.
FIN No. 46R  requires a VIE to be  consolidated  by a company if that company is
designated as the primary beneficiary.

     The  Ameren  Companies  do not  have any  interests  in  entities  that are
considered  SPEs.  FIN No. 46R was effective on March 31, 2004 for any interests
Ameren  holds in  non-SPEs.  The adoption of FIN No. 46R did not have a material
impact  on  the  consolidated  financial  statements  of the  Ameren  Companies.
However, in connection with the adoption of FIN No. 46R, we have determined that
the following significant variable interests are held by the Ameren Companies:

     o    EEI.  Ameren has a 60%  ownership  interest  in EEI  through  UE's 40%
          interest and Resources  Company's 20% interest.  Under the FIN No. 46R
          model,  Ameren,  UE and Resources  Company have a variable interest in
          EEI, and Ameren is the primary beneficiary.  Accordingly,  Ameren will
          continue to  consolidate  EEI, and UE will continue to account for its
          investment in EEI under the equity method of  accounting.  The maximum
          exposure  to loss as a result of these  variable  interests  in EEI is
          limited to Ameren's and UE's equity investments in EEI.

     o    Tolling agreement. CILCO has a significant variable interest in Medina
          Valley through a tolling  agreement to purchase  steam,  chilled water
          and  electricity.  We have  concluded  that  CILCO is not the  primary
          beneficiary  of  Medina  Valley,  and  accordingly,   CILCO  does  not
          consolidate Medina Valley. The maximum exposure to loss as a result of
          this variable interest in the tolling agreement is not material.

     o    Leveraged  lease  and  affordable  housing  partnership   investments.
          Ameren,  UE and  CILCORP  have  investments  in  leveraged  lease  and
          affordable   housing   partnership   arrangements  that  are  variable
          interests.  We have concluded that neither Ameren,  UE nor CILCORP are
          the  primary   beneficiary  of  any  of  the  VIEs  related  to  these
          investments.  The  maximum  exposure  to loss  as a  result  of  these
          variable   interests   is   limited  to  the   investments   in  these
          arrangements. At June 30, 2004, Ameren and CILCORP had net investments
          in leveraged leases of $153 million and $127 million, respectively. At
          June 30, 2004,  Ameren,  UE and CILCORP had  investments in affordable
          housing  partnerships  of $19  million,  $7  million  and $7  million,
          respectively.

FASB Staff  Position  SFAS No.  106-1 and FASB Staff  Position  SFAS No. 106-2
"Accounting  and Disclosure  Requirements  Related to the Medicare  Prescription
Drug, Improvement and Modernization Act of 2003"

     On  December 8, 2003,  the  Medicare  Prescription  Drug,  Improvement  and
Modernization  Act  of  2003  (the  Prescription  Drug  Act)  was  enacted.  The
Prescription  Drug Act introduced a prescription  drug benefit to retirees under
Medicare as well as a federal subsidy to sponsors of retiree  healthcare benefit
plans that  provide a benefit  that is at least  actuarially  equivalent  to the
Medicare  prescription drug benefit.  Through its postretirement  benefit plans,
Ameren  provides  retirees  with  prescription  drug coverage that we believe is
actuarially  equivalent to the Medicare  prescription  drug benefit.  In January
2004, the FASB issued FASB Staff Position SFAS No. 106-1 (FSP SFAS 106-1), which
permitted a plan sponsor of a  postretirement  healthcare  plan that  provides a
prescription  drug benefit to make a one-time  election to defer the  accounting
for the effects of the Prescription Drug Act. Ameren made this one-time election
allowed by FSP SFAS 106-1.

     In May 2004,  the FASB issued FASB Staff  Position SFAS No. 106-2 (FSP SFAS
106-2),  which  superceded FSP SFAS 106-1.  FSP SFAS 106-2 provides  guidance on
accounting  for the effects of the Medicare  prescription  drug  legislation  by
employers whose  prescription  drug benefits are  actuarially  equivalent to the
drug  benefit  under  Medicare  Part D.  Ameren  elected to adopt FSP SFAS 106-2
during the second  quarter ended June 30, 2004,  retroactive to January

                                       29

<PAGE>


1, 2004. See Note 12 - Pension and other Postretirement  Benefits for additional
information on the impact of adoption of FSP SFAS 106-2.

Interchange Revenues

     The following table presents the interchange revenues included in Operating
Revenues - Electric  for the three months and six months ended June 30, 2004 and
2003.  See Note 8 - Related Party  Transactions  for  information on sales among
affiliates.
<TABLE>
<CAPTION>
   ================================================================================================================
                                                                    Three Months                  Six Months
   ----------------------------------------------------------------------------------------------------------------
                                                                 2004          2003           2004           2003
                                                                 ----          ----           ----           ----
  <S>                                                           <C>           <C>            <C>          <C>
   Ameren(a)...............................................      $ 81          $ 71           $ 172        $  185
   UE......................................................        71            65             155           167
   CIPS....................................................        10            10              19            18
   Genco...................................................        36            27              75            72
   CILCORP(b)..............................................         9             3              21             8
   CILCO...................................................         9             3              21             8
   ================================================================================================================
</TABLE>
    (a)   Excludes  amounts for CILCORP and CILCO prior to the acquisition  date
          of January  31,  2003;  includes  amounts  for  non-registrant  Ameren
          subsidiaries as well as intercompany eliminations.
    (b)   2003 amounts include January 2003 predecessor  information,  which was
          $3 million.  CILCORP  consolidates  CILCO and therefore includes CILCO
          amounts in its balances.

Purchased Power

     The following  table  presents the  purchased  power  expenses  included in
Operating  Expenses  - Fuel and  Purchased  Power for the three  months  and six
months ended June 30, 2004 and 2003. See Note 8 - Related Party Transactions for
information on affiliate purchased power transactions.
<TABLE>
<CAPTION>
   ================================================================================================================
                                                                    Three Months                  Six Months
   ----------------------------------------------------------------------------------------------------------------
                                                                 2004          2003           2004           2003
                                                                 ----          ----           ----           ----
   <S>                                                          <C>           <C>            <C>          <C>
   Ameren(a)...............................................      $ 80          $ 71           $ 152        $  123
   UE......................................................        46            37              96            82
   CIPS....................................................        79            82             159           168
   Genco...................................................        32            30              70            71
   CILCORP(b)..............................................         8            47              30            87
   CILCO...................................................         8            44              30            84
   ================================================================================================================
</TABLE>
    (a)   Excludes  amounts for CILCORP and CILCO prior to the acquisition  date
          of January  31,  2003;  includes  amounts  for  non-registrant  Ameren
          subsidiaries as well as intercompany eliminations.
    (b)   2003 amounts include January 2003 predecessor  information,  which was
          $12 million.  CILCORP  consolidates CILCO and therefore includes CILCO
          amounts in its balances.

Excise Taxes

     Excise  taxes  reflected on Missouri  electric  and gas, and Illinois  gas,
customer  bills are imposed on us and are recorded  gross in Operating  Revenues
and Taxes Other than Income Taxes.  Excise taxes reflected on Illinois  electric
customer  bills are imposed on the consumer and 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
months and six months ended June 30, 2004 and 2003:
<TABLE>
<CAPTION>
   ================================================================================================================
                                                                    Three Months                  Six Months
   ----------------------------------------------------------------------------------------------------------------
                                                                 2004          2003           2004           2003
                                                                 ----          ----           ----           ----
  <S>                                                           <C>           <C>            <C>          <C>
   Ameren(a)...............................................      $  31         $  31          $  65        $   62
   UE......................................................         27            25             51            47
   CIPS....................................................          2             3              7             8
   Genco...................................................          -             -              -             -
   CILCORP(b)..............................................          2             3              7             9
   CILCO...................................................          2             3              7             9
   ================================================================================================================
</TABLE>
    (a)   Excludes  amounts for CILCORP and CILCO prior to the acquisition  date
          of January 31, 2003.
    (b)   2003 amounts include January 2003 predecessor information which was $2
          million.  CILCORP  consolidates  CILCO and  therefore  includes  CILCO
          amounts in its balances.


                                       30

<PAGE>


NOTE 2 - Acquisitions

CILCORP and Medina Valley

     On  January  31,  2003,  Ameren  completed  the  acquisition  of all of the
outstanding  common stock of CILCORP from AES.  CILCORP is the parent company of
Peoria,  Illinois-based  CILCO.  With the acquisition,  CILCO became an indirect
Ameren  subsidiary,  but  remains  a  separate  utility  company,  operating  as
AmerenCILCO. On February 4, 2003, Ameren also completed the acquisition from AES
of Medina  Valley,  which  indirectly  owns a 40  megawatt,  gas-fired  electric
generation  plant.  The results of operations for CILCORP and Medina Valley were
included  in  Ameren's  consolidated  financial  statements  effective  with the
respective  January and February 2003 acquisition dates. See Note 1 - Summary of
Significant  Accounting  Policies for further information on the presentation of
the results of CILCORP and CILCO in Ameren's consolidated financial statements.

     The purchase  price  allocation  for the  acquisition of CILCORP and Medina
Valley was  finalized in January  2004.  As a result,  goodwill  decreased by $8
million since  December 31, 2003,  primarily due to January 2004  adjustments to
property  and plant,  income tax accounts and accrued  severance  expenses.  The
following  table presents the final estimated fair values of the assets acquired
and liabilities  assumed at the dates of our  acquisitions of CILCORP and Medina
Valley.
<TABLE>
<CAPTION>
   ===================================================================================================
  <S><C>                                                                               <C>
   Current assets.............................................................          $    323
   Property and plant.........................................................             1,162
   Investments and other non-current assets...................................               154
   Specifically-identifiable intangible assets................................                 6
   Goodwill...................................................................               560
   ---------------------------------------------------------------------------------------------------
      Total assets acquired...................................................             2,205
   ---------------------------------------------------------------------------------------------------
   Current liabilities........................................................               189
   Long-term debt, including current maturities...............................               937
   Other non-current liabilities..............................................               521
   ---------------------------------------------------------------------------------------------------
      Total liabilities assumed...............................................             1,647
   ---------------------------------------------------------------------------------------------------
   Preferred stock assumed....................................................                41
   ---------------------------------------------------------------------------------------------------
      Net assets acquired.....................................................          $    517
   ===================================================================================================
</TABLE>

     Specifically-identifiable  intangible assets of $6 million are comprised of
retail customer  contracts,  which are subject to  amortization  with an average
life of 10 years.  Goodwill  of $560  million  (CILCORP - $553  million;  Medina
Valley - $7 million) was  recognized in  connection  with the CILCORP and Medina
Valley acquisitions.  None of this goodwill is expected to be deductible for tax
purposes.

Illinois Power

     On  February 2,  2004,  Ameren  entered  into an  agreement  with Dynegy to
purchase the stock of Decatur,  Illinois-based  Illinois  Power and Dynegy's 20%
ownership interest in EEI. Illinois Power operates a rate-regulated electric and
natural gas transmission and distribution business serving approximately 600,000
electric and 415,000 gas customers in areas contiguous to our existing  Illinois
utility service  territories.  The total transaction value is approximately $2.3
billion,  including  the  assumption of  approximately  $1.8 billion of Illinois
Power debt and  preferred  stock,  with the balance of the purchase  price to be
paid in cash at closing.  Ameren will place $100  million of the cash portion of
the purchase price in a six-year escrow pending resolution of certain contingent
environmental  obligations  of Illinois  Power and other Dynegy  affiliates  for
which Ameren has been  provided  indemnification  by Dynegy.  In addition,  this
transaction  includes a firm capacity power supply contract for Illinois Power's
annual purchase of 2,800  megawatts of electricity  from a subsidiary of Dynegy.
This  contract  will extend  through 2006 and is expected to supply about 70% of
Illinois Power's customer requirements.

     Ameren's  financing plan for this transaction  includes the issuance of new
Ameren common stock. In February 2004,  Ameren issued 19.1 million common shares
that generated net proceeds of $853 million,  and in July 2004, Ameren completed
its  issuance of common  stock for this  transaction  with the  issuance of 10.9
million common shares that generated net proceeds of $445 million. Proceeds from
these sales are  expected to be used to finance the cash portion of the purchase
price, to reduce Illinois Power debt assumed as part of this  transaction and to
pay any related

                                       31

<PAGE>

premiums.  Pending such use, and/or if the acquisition is not completed, we plan
to use  the net  proceeds  to  reduce  present  or  future  indebtedness  and/or
repurchase securities of Ameren or our subsidiaries.

     Upon completion of the acquisition,  expected by the end of 2004,  Illinois
Power will become an Ameren  subsidiary  operating as AmerenIP.  The transaction
remains subject to the approval of the ICC and the SEC under the PUHCA and other
customary closing conditions. Ameren has received approval from the FERC and the
FCC, and the waiting period under the Hart-Scott-Rodino Act has expired.

     In April 2004, the FCC consented to the transfer of control of FCC licenses
held by Illinois Power to Ameren, and the initial 30 calendar day waiting period
expired  without  a  request  by the FTC or DOJ for  additional  information  or
documents  under the  Hart-Scott-Rodino  Act.  In July 2004,  the FERC issued an
order approving Ameren's  acquisition of Illinois Power and Dynegy's interest in
EEI. The  principal  conditions of the FERC's  approval are that Illinois  Power
join the Midwest ISO prior to closing the transaction and 125 megawatts of EEI's
power be sold to a nonaffiliate of Ameren.

     A procedural  schedule has been  adopted in the ICC  proceeding,  which can
permit  an order to be issued  by the fall of 2004.  The ICC  Staff and  several
intervenors  filed testimony in early July expressing  various concerns with the
acquisition  and  objecting  to parts of the  application  filed by  Ameren  and
Illinois Power in March 2004. In late July, Ameren filed testimony responding to
these concerns and  objections.  Hearings in the ICC proceeding are scheduled to
be held in August 2004.  However,  we are unable to predict the ultimate outcome
of the  remaining  regulatory  proceedings  or the  timing of the  final  agency
decisions.

     According to Illinois Power's Annual Report on Form 10-K for the year ended
December 31, 2003, Illinois Power had revenues of $1.6 billion, operating income
of $166 million,  and net income  applicable to its common  shareholder  of $115
million,  and at December 31, 2003, had total assets of $2.8 billion,  excluding
an intercompany  note receivable from its parent company of  approximately  $2.3
billion. Illinois Power files quarterly, annual and current reports with the SEC
pursuant to the Exchange Act.


NOTE 3 - Rate and Regulatory Matters

Intercompany  Transfer of Electric  Generating  Facilities and Illinois  Service
Territory

     As a part of the settlement of the Missouri  electric rate case in 2002, UE
committed  to making  certain  infrastructure  investments  from January 1, 2002
through June 30, 2006 of $2.25 billion to $2.75 billion,  including the addition
of 700  megawatts  of  generation  capacity.  The new  capacity  requirement  is
expected to be  satisfied  by the  additions  in 2002 of 240  megawatts  and the
proposed  transfer  from  Genco to UE,  at net book  value  (approximately  $250
million),  of approximately  550 megawatts of CTs at Pinckneyville and Kinmundy,
Illinois.  In July 2004,  the FERC  approved the  generation  transfer,  but the
transfer remains subject to receipt of SEC approval under the PUHCA. Approval by
the ICC is not required  contingent  upon prior  approval and  execution of UE's
transfer  of its  generation  Illinois  public  utility  operations  to  CIPS as
discussed  below.  Approval  by the  MoPSC is not  required  in  order  for this
transfer to occur.  However,  the MoPSC has  jurisdiction  over UE's  ability to
recover the cost of the  transferred  generating  facilities  from its  electric
customers in its rates. As part of the settlement of the Missouri  electric rate
case in 2002, UE is subject to a rate moratorium providing for no changes in its
electric  rates before June 30,  2006,  subject to certain  statutory  and other
exceptions.

     In May 2003, UE announced its plan to limit its public  utility  operations
to the  state of  Missouri  and to  discontinue  operating  as a public  utility
subject to ICC  regulation.  UE intends to accomplish  this plan by transferring
its   Illinois-based   electric  and  natural  gas  businesses,   including  its
Illinois-based  distribution  assets and certain of its transmission  assets, to
CIPS.  In 2003,  UE's  Illinois  electric  and gas service  territory  generated
revenues of $155  million  and had a net book value of $122  million at December
31, 2003. UE's electric generating  facilities and a certain minor amount of its
electric transmission  facilities in Illinois would not be part of the transfer.
The  transfer was  approved by the FERC in December  2003.  The transfer of UE's
Illinois-based utility businesses will also require the approval of the ICC, the
MoPSC and the SEC under the  provisions  of the PUHCA.  In August 2003, UE filed
with the MoPSC,  and in October and  November  2003,  filed with the ICC and the
SEC, respectively, for authority to transfer UE's Illinois-based utility

                                       32

<PAGE>



businesses,  at net book value,  to CIPS. The filing with the ICC seeks approval
to transfer only UE's Illinois-based  natural gas utility business since the ICC
authorized the transfer of UE's Illinois-based electric utility business to CIPS
in 2000. UE proposes to transfer  approximately  one-half of the assets directly
to  CIPS  in  consideration  for  a  CIPS  subordinated   promissory  note,  and
approximately  one-half  of the assets by means of a dividend  in kind to Ameren
followed by a capital  contribution by Ameren to CIPS. A filing seeking approval
of both the transfer of UE'  Illinois-based  utility  businesses and Genco's CTs
was made with the SEC in October  2003.  If  completed,  the  transfers  will be
accounted  for at  book  value  with  no gain  or  loss  recognition,  which  is
appropriate treatment for transactions of this type by two entities under common
control.

     In January 2004, the MoPSC staff and the Missouri  Office of Public Counsel
filed rebuttal  testimony with the MoPSC expressing  concerns that the transfers
of UE's  Illinois-based  utility  businesses may be detrimental to the public in
Missouri and recommended that the transfers be denied. Hearings occurred in late
March and early  April  2004 and  post-hearing  briefs  were filed in May and in
early June of 2004. The MoPSC is currently deliberating on this matter. See Note
8 - Related  Party  Transactions  for a discussion  of an amendment to the joint
dispatch  agreement  among UE,  Genco and CIPS,  which was  proposed  to address
concerns raised before the MoPSC in this proceeding.

     We  are  unable  to  predict  the  ultimate  outcome  of  these  regulatory
proceedings or the timing of the final decisions of the various agencies.

Federal - Electric Transmission

Regional Transmission Organization

     In  December  1999,  the FERC issued  Order 2000  requiring  all  utilities
subject to FERC  jurisdiction  to state their  intentions for joining a RTO. The
MoPSC issued an order in early 2004 authorizing UE to participate in the Midwest
ISO for a five year  period,  with  participation  after that period  subject to
further  approvals  by the MoPSC.  Subsequently,  the FERC  issued a final order
allowing UE's and CIPS'  participation  in the Midwest ISO.  Under these orders,
the MoPSC continues to set the transmission component of UE's rates to serve its
bundled retail load. CILCO is already a member of the Midwest ISO and previously
transferred  functional  control of its transmission  system to the Midwest ISO.
Genco does not own  transmission  assets,  but pays the  Midwest  ISO to use the
transmission system to transmit power from the Genco generating plants.

     On May 1, 2004,  functional control, but not ownership,  of the UE and CIPS
transmission systems was transferred to the Midwest ISO through GridAmerica LLC,
or Grid America.  The transfer had no  accounting  impact to UE and CIPS because
they continue to own the transmission system assets. The participation by UE and
CIPS in the Midwest ISO is expected to increase  annual  costs by $10 million to
$20 million in the aggregate  and could result in a decrease in annual  revenues
of between $5 million and $10 million in the aggregate.  UE and CIPS may also be
required to expand their transmission systems according to decisions made by the
Midwest ISO rather than their internal planning process.

     As a  part  of the  transfer  of  functional  control  of  UE's  and  CIPS'
transmission  systems to the Midwest ISO,  Ameren  received  $26 million,  which
represented the refund of the $13 million exit fee paid by UE and the $5 million
exit fee paid by CIPS,  which were  expensed  when they left the  Midwest ISO in
2001  plus $1  million  interest  on the exit fees and the  reimbursement  of $7
million that was invested in the proposed  Alliance RTO. These refunds  resulted
in after-tax gains of approximately  $11 million,  $8 million and $3 million for
Ameren, UE and CIPS,  respectively,  which were recorded in other operations and
maintenance expenses.

     Through orders issued during late 2003 and early 2004, the FERC had ordered
the  elimination of regional  through-and-out  rates assessed by the Midwest ISO
and PJM on transmission  service between the Midwest ISO and PJM regions,  to be
effective May 1, 2004.  However,  in March 2004,  the FERC accepted an agreement
among  affected  transmission  owners that retains the regional  through-and-out
rates until December 1, 2004, and provides for continued  negotiations  aimed at
developing a long-term transmission pricing structure to eliminate seams between
the PJM and Midwest ISO regions based on specified pricing principles. Until the
long-term  transmission  pricing  structure has been  established,  UE, CIPS and
CILCO cannot predict the ultimate  impact that such structure will have on their
costs and revenues.

     In March 2004,  the Midwest ISO  tendered for filing at the FERC a proposed
Open  Access  Transmission  and  Energy  Markets  Tariff  (the  "Energy  Markets
Tariff"), which is intended to supercede its existing Open Access Transmission

                                       33

<PAGE>


Tariff.  The Energy  Markets  Tariff  establishes  rates,  terms and  conditions
necessary  for  implementation  of a centralized  security-constrained  economic
dispatch  platform  supported by a day-ahead and real-time energy market design,
including Locational Marginal-Cost Pricing and Financial Transmission Rights for
transmission  service  within the Midwest ISO region.  The Energy Markets Tariff
also  establishes  market  monitoring  and  mitigation  procedures  and codifies
existing resource adequacy  requirements  placed on Midwest ISO members by their
states or applicable RRO. The Midwest ISO initially  proposed to make the Energy
Markets  Tariff  effective  on  December  1,  2004,  subject  to its  ability to
implement  the Energy  Markets  Tariff.  However,  implementation  of the Energy
Markets  Tariff is now  expected to be  effective  on March 1, 2005.  The Energy
Markets  Tariff  has not yet been  accepted  for  filing by the FERC.  Ameren is
unable to  determine  the full impact that the Energy  Markets  Tariff will have
until  further  information  is available  regarding the  implementation  of the
Energy Markets Tariff.

     Until  UE  and  CIPS   achieve  some  degree  of   operational   experience
participating in the Midwest ISO through  GridAmerica,  we are unable to predict
the ultimate impact that such  participation  or ongoing RTO developments at the
FERC or  other  regulatory  authorities  will  have on our  financial  position,
results of operations or liquidity.

New Market Power Analysis Screen Order

     In an order  issued in April  2004,  the FERC  replaced  the Supply  Margin
Assessment  Screen  previously  used  to  review   applications  by  sellers  of
electricity at wholesale for  authorization to sell power at market-based  rates
with two  alternative  measures  of market  power:  (a) an  uncommitted  pivotal
supplier  analysis and (b) an  uncommitted  market share analysis which is to be
prepared on a seasonal basis. If an applicant passes both screens,  a rebuttable
presumption will exist that it lacks  generation  market power. If the applicant
fails  either  screen,  a rebuttable  presumption  will exist that it has market
power.  Under such  circumstances,  the  applicant  may either seek to rebut the
presumption  by  preparing a  delivered  price test  (identifying  the amount of
economic  capacity from  neighboring  areas that can be delivered to the control
area) or propose  mitigation  measures.  Unless some other mitigation measure is
adopted, the applicant's  authority to sell power at market-based rates in areas
in which it has market power will be revoked, and the applicant will be required
to sell at cost-based rates in those areas.

     UE, Genco, CILCO, AERG,  Development Company,  Marketing Company and Medina
Valley currently have  authorization  from the FERC to continue to sell power at
market-based rates. However, the FERC indicated in its April order that it would
apply the new market analysis  screens to pending and future  market-based  rate
applications,  including  three-year  market-based  rate  reviews.  All  of  the
aforementioned  Ameren  entities  currently have  three-year  market-based  rate
reviews pending at the FERC. Until Ameren has evaluated the impact of the FERC's
order with respect to the Ameren  system,  we are unable to predict the ultimate
impact that the new market power analysis  screens will have on Ameren's ability
to sell power at market-based rates.


NOTE 4 - SHORT-TERM BORROWINGS AND LIQUIDITY

     Short-term  borrowings  consist of commercial paper issuances and bank line
of credit drawings with maturities generally within 1 to 45 days. As of June 30,
2004,  Ameren had  short-term  borrowings  totaling $35 million,  $32 million of
which was borrowed by EEI.  The average  short-term  borrowings  at EEI were $10
million for the six months ended June 30, 2004, with a weighted-average interest
rate of 1.7%.  Peak  short-term  borrowings for EEI were $44 million for the six
months June 30,  2004,  with a  weighted-average  interest  rate of 1.7%.  CIPS,
Genco,  CILCORP and CILCO had no external  short-term  borrowings as of June 30,
2004 and December 31, 2003. At December 31, 2003,  Ameren and UE had  short-term
borrowings   outstanding,   which   totaled  $161  million  and  $150   million,
respectively.

     At June 30, 2004, certain of the Ameren Companies had committed bank credit
facilities  totaling  $829 million,  all of which were  available for use by UE,
CIPS,  CILCO and Ameren Services  through a utility money pool  arrangement.  In
addition,  $600  million of the $829  million  was  available  for use by Ameren
directly,  and by most of the non rate-regulated  affiliates including,  but not
limited to, Resources Company,  Genco,  Marketing Company,  AFS, AERG and Ameren
Energy, through a non state-regulated  subsidiary money pool agreement.  We have
money pool agreements with and among our  subsidiaries to coordinate and provide
for certain  short-term  cash and working capital  requirements.  Separate money
pools are maintained between  rate-regulated and non rate-regulated  businesses.
See Note 8 - Related Party Transactions for a detailed  explanation of the money
pool arrangements.  The committed bank credit facilities are used to support our
commercial  paper programs  under which no amounts were  outstanding at June 30,
2004 (December

                                       34

<PAGE>


31, 2003 - $150  million).  Access to our credit  facilities for any of Ameren's
subsidiaries is subject to reduction based on use by affiliates.

     In July  2004,  Ameren  entered  into two new  credit  agreements  for $700
million  in  revolving  credit  facilities  to be  used  for  general  corporate
purposes, including support of Ameren and UE commercial paper programs. The $700
million in new facilities  includes a $350 million  three-year  revolving credit
facility and a $350  million  five-year  revolving  credit  facility.  These new
credit  facilities  replaced  Ameren's  existing $235 million 364-day  revolving
credit facility,  which matured on July 14, 2004, and a $130 million  multi-year
revolving  credit  facility,  which would have matured in July 2005. An existing
Ameren $235 million multi-year  revolving facility,  which matures in July 2006,
remains outstanding and available.

     In May 2004,  UE renewed its 364-day  revolving  facilities  totaling  $154
million that were due to expire that month for an additional one-year term.

     EEI  also  has  two  bank  credit  agreements  totaling  $45  million  with
maturities  through June 2005.  At June 30,  2004,  $32 million was borrowed and
outstanding under these credit facilities.

     Borrowings  under  Ameren's  non  state-regulated   subsidiary  money  pool
agreement  by Genco,  Development  Company  and Medina  Valley,  each an "exempt
wholesale  generator,"  are considered  investments  for purposes of the 50% SEC
aggregate investment limitation. Based on Ameren's aggregate investment in these
"exempt  wholesale  generators"  as of June 30,  2004,  the maximum  permissible
borrowings under Ameren's non state-regulated  subsidiary money pool pursuant to
this limitation for these entities were $705 million.

Indebtedness Provisions and Other Covenants

     Certain of the Ameren Companies' bank credit agreements  contain provisions
which,  among other things,  place  restrictions  on the ability to incur liens,
sell assets and merge with other  entities.  Certain of these credit  agreements
also contain a provision that limits Ameren's,  UE's, CIPS' and/or CILCO's total
indebtedness to 60% of total capitalization pursuant to a calculation defined in
the related  agreement.  As of June 30, 2004, the ratio of total indebtedness to
total capitalization  (calculated in accordance with this provision) for Ameren,
UE, CIPS and CILCO was 45%, 45%, 51% and 52%, respectively. In addition, certain
of these credit agreements  contain  indebtedness  cross-default  provisions and
material  adverse  change  clauses  which  could  trigger a default  under these
facilities  in the  event  that any of  Ameren'  subsidiaries  (subject  to the
definition in the  underlying  credit  agreements),  other than certain  project
finance  subsidiaries,  defaults in indebtedness  in excess of $50 million.  The
credit agreements also require us to meet minimum ERISA funding rules.

     None of the Ameren  Companies'  credit  agreements or financing  agreements
contain credit rating triggers. A $100 million CILCO bank term loan containing a
credit ratings trigger was repaid in February 2004. At June 30, 2004, the Ameren
Companies and EEI were in compliance with their credit agreement  provisions and
covenants.


NOTE 5 - LONG-TERM DEBT AND EQUITY FINANCINGS

Ameren

     In February 2004, Ameren issued,  pursuant to an August 2002 Form S-3 shelf
registration  statement,  19.1 million  shares of its common stock at $45.90 per
share for net proceeds of $853 million. This issuance substantially depleted all
of the  capacity  under the August 2002 shelf  registration  statement.  In June
2004, the SEC declared effective a Form S-3 shelf  registration  statement filed
by Ameren covering the offering from time to time of up to $2 billion of various
forms of securities  including  long-term debt,  trust preferred  securities and
equity securities.  In July 2004, Ameren issued,  pursuant to the June 2004 Form
S-3 shelf  registration  statement,  10.9 million  shares of its common stock at
$42.00 per share for net  proceeds  of $445  million.  The  proceeds  from these
offerings are expected to provide funds  required to pay the cash portion of the
purchase  price for our pending  acquisition  of Illinois  Power and Dynegy's 20
percent interest in EEI, and to reduce Illinois Power debt, assumed as a part of
this  transaction,  and pay related  premiums.  Pending such use,  and/or if the
acquisition is not completed,  we plan to use the net proceeds to reduce present
or future indebtedness

                                       35

<PAGE>

and/or repurchase securities of Ameren or its subsidiaries. A portion of the net
proceeds may also be temporarily invested in short-term instruments.  See Note 2
- Acquisitions for further information.

     In March 2004, the SEC declared effective a Form S-3 registration statement
filed by Ameren in  February  2004,  authorizing  the  offering  of six  million
additional shares of its common stock under DRPlus.  Shares of common stock sold
under the DRPlus  are,  at  Ameren's  option,  newly  issued  shares or 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.  For the six months ended June 30, 2004,  Ameren issued 1.2
million new common shares valued at  approximately  $60 million under its DRPlus
and its 401(k) plans to be used for general corporate purposes.

UE

     UE had a lease agreement, which was scheduled to expire on August 31, 2031,
that  provided  for the  financing  of a portion  of its  nuclear  fuel that was
processed for use or was consumed at UE's Callaway  nuclear  plant.  In February
2004, UE terminated this lease with a final payment of $67 million.

     In  February  and March  2004,  in  connection  with the  delivery  of bond
insurance policies to secure the environmental improvement and pollution control
revenue bonds (Series 1991, 1992, 1998A,  1998B,  1998C, 2000A, 2000B and 2000C)
previously issued by the Missouri Environmental Authority, UE delivered separate
series of its first mortgage bonds (which are subject to fallaway provisions, as
defined in the related  financing  agreements,  similar to those included in its
first  mortgage  bonds which  secure UE's  senior  secured  notes) to secure its
respective  obligations  under the existing  loan  agreements  with the Missouri
Environmental Authority relating to such environmental improvement and pollution
control revenue bonds. As a result, the environmental  improvement and pollution
control revenue bonds were rated Aaa, AAA and AAA by Moody's, S&P's and Fitch's,
respectively.

     In May  2004,  UE  issued,  pursuant  to a  September  2003  Form S-3 shelf
registration  statement,  $104 million of 5.50% senior secured notes due May 15,
2014, with interest payable semi-annually on May 15 and November 15 of each year
beginning in November  2004. UE received net proceeds of $103 million which were
used to redeem and  refinance the $100 million  7.00% first  mortgage  bonds due
2024.  The remaining  proceeds were used to pay for a portion of the  redemption
premium and issuance costs.

CILCORP and CILCO

     In February  2004,  CILCO repaid its secured bank term loan  totaling  $100
million with available  cash and borrowings  from the utility money pool. In May
2004, CILCORP repurchased,  $15 million in principal amount of its 9.375% senior
bonds for approximately $20 million, which included premium and accrued interest
costs. In July 2004,  CILCORP  repurchased $2 million in principal amount of its
9.375%  senior bonds for  approximately  $3 million which  included  premium and
accrued  interest costs. In July 2004, 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 the Company's mandatory sinking fund
redemption requirement for this series of preferred stock for 2004.

     The  amortization  related  to debt  fair  value  adjustments  recorded  in
connection  with the  CILCORP  acquisition  for the  three  month  and six month
periods  ended June 30, 2004 was $2 million  (2003 - $2 million)  and $4 million
(2003 - $3 million),  respectively,  and was recorded in interest expense in the
Consolidated  Statements of Income for Ameren and CILCORP.  In conjunction  with
the  repurchase  of CILCORP's  9.375%  senior bonds in May 2004,  the fair value
adjustment was reduced by $4 million during the second quarter of 2004.

EEI

     In June 2004, EEI repaid its $40 million 7.61% bank term loan due 2004 with
proceeds received from EEI's credit
facilities.

                                       36

<PAGE>

Amortization of Interest-related Costs

     The following  table presents the  amortization  of debt issuance costs and
any premium or discounts  included in interest  expense for the Ameren Companies
for the three months and six months ended June 30, 2004 and 2003, respectively:
<TABLE>
<CAPTION>

   ===========================================================================================================
                                                                Three Months                 Six Months
   -----------------------------------------------------------------------------------------------------------
                                                             2004          2003          2004          2003
                                                             ----          ----          ----          ----
  <S>                                                      <C>            <C>           <C>           <C>
   Ameren(a)(c)........................................     $  5           $  5          $ 10          $  8
   UE..................................................        1              1             2             2
   CIPS................................................        -              -             -             -
   Genco...............................................        1              1             1             1
   CILCORP(b)(c) ......................................        2              2             4             3
   CILCO...............................................        -              -             -             -
   ===========================================================================================================
</TABLE>
    (a)   Excludes  amounts for CILCORP and CILCO prior to the acquisition  date
          of January  31,  2003;  includes  amounts  for  non-registrant  Ameren
          subsidiaries as well as intercompany eliminations.
    (b)   January 2003 predecessor amounts were zero. CILCORP consolidates CILCO
          and therefore includes CILCO amounts in its balances.
    (c)   In  conjunction  with the  acquisition  of CILCORP in 2003,  CILCORP's
          long-term debt was adjusted to fair value.

Indenture Provisions and Other Covenants

UE

     UE's indenture  agreements and Articles of Incorporation  include covenants
and  provisions  related to the issuance of first  mortgage  bonds and preferred
stock. For the issuance of additional first mortgage bonds, earnings coverage of
twice the annual interest charges on first mortgage bonds  outstanding and to be
issued is required.  For the 12 months  ended June 30,  2004,  UE had a coverage
ratio of 8.5 times the  annual  interest  charges  on the first  mortgage  bonds
outstanding,  which would permit UE to issue an  additional  $4 billion of first
mortgage bonds at an assumed interest rate of 7%. For the issuance of additional
preferred stock,  earnings coverage of at least 2.5 times the annual dividend on
preferred stock  outstanding and to be issued is required under UE's Articles of
Incorporation. For the 12 months ended June 30, 2004, UE had a coverage ratio of
73 times the annual dividend  requirement on preferred stock outstanding,  which
would permit UE to issue an  additional  $2.4  billion in preferred  stock at an
assumed  dividend rate of 7%. The ability to issue such securities in the future
will depend on such tests at that time.

     In addition,  UE's mortgage  indenture  contains  certain  provisions which
restrict  the  amount of common  dividends  that can be paid by UE.  Under  this
mortgage  indenture,  $31  million of total  retained  earnings  was  restricted
against the payment of common  dividends,  except for those dividends payable in
common stock, leaving $1.6 billion of free and unrestricted retained earnings at
June 30, 2004.

CIPS

     CIPS' indenture agreements and Articles of Incorporation  include covenants
which must be complied with in order to issue first mortgage bonds and preferred
stock. For the issuance of additional first mortgage bonds, earnings coverage of
twice the annual interest charges on first mortgage bonds  outstanding and to be
issued is required.  For the 12 months ended June 30, 2004,  CIPS had a coverage
ratio of 3.6 times the annual  interest  charges  for one year on the  aggregate
amount  of  first  mortgage  bonds  outstanding  and,  subsequently,   the  most
restrictive  test under the  indenture  agreements  would allow CIPS to issue an
additional $127 million of first mortgage bonds.  For the issuance of additional
preferred stock,  earnings  coverage of 1.5 times annual interest charges on all
long-term debt  outstanding and the annual preferred stock dividends is required
under CIPS'  Articles of  Incorporation.  For the 12 months ended June 30, 2004,
CIPS had a coverage ratio of 2.17 times the sum of the annual  interest  charges
and dividend  requirements on all long-term debt and preferred stock outstanding
as of June 30, 2004, and  consequently had the availability to issue the maximum
amount of preferred  stock allowed,  which is $215 million,  assuming a dividend
rate of 7%. The  ability to issue such  securities  in the future will depend on
coverage ratios at that time.

                                       37

<PAGE>

Genco

     Genco's  senior  note  indenture  includes  provisions  that  require it to
maintain a senior debt  service  coverage  ratio of at least 1.75 to 1 (for both
the prior four fiscal  quarters and projected  next  succeeding  four  six-month
periods) in order to pay dividends to Ameren or to make payments of principal or
interest under certain subordinated indebtedness excluding amounts payable under
its intercompany  note payable with CIPS. For the 12 months ended June 30, 2004,
this ratio was 4.21 to 1. In addition,  the indenture also restricts  Genco from
incurring any additional  indebtedness,  with the exception of certain permitted
indebtedness  as  defined in the  indenture,  unless  its  senior  debt  service
coverage  ratio equals at least 2.5 to 1 for the most recently ended four fiscal
quarters and its senior debt to total  capital  ratio would not exceed 60%, both
after giving effect to the additional  indebtedness on a pro-forma  basis.  This
debt incurrence  requirement is disregarded in the event certain rating agencies
reaffirm the ratings of Genco after considering the additional indebtedness.  As
of June 30, 2004, Genco's senior debt to total capital ratio was 55%.

CILCORP

     Covenants  in CILCORP's  indenture  governing  its $475  million  (original
issuance  amount)  senior notes and bonds require  CILCORP to maintain a debt to
capital ratio of no greater than 0.67 to 1 and an interest  coverage ratio of at
least 2.2 to 1 in order to make any payment of dividends or  intercompany  loans
to  affiliates  other than to its direct and  indirect  subsidiaries,  including
CILCO.  However,  in the event  CILCORP is not in  compliance  with these tests,
CILCORP may only make such  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.  For the 12 months  ended June 30, 2004,  CILCORP's  debt to capital
ratio was 0.63 to 1 and its interest  coverage ratio was 2.5 to 1, calculated in
accordance with related provisions in this indenture.  The common stock of CILCO
is pledged as security to the holders of these senior notes and bonds.

Off-Balance Sheet Arrangements

     At June  30,  2004,  neither  Ameren  nor any of its  subsidiaries  had any
off-balance  sheet financing  arrangements,  other than operating leases entered
into  in  the  ordinary  course  of  business.  Neither  Ameren  nor  any of its
subsidiaries  expects to engage in any significant  off-balance  sheet financing
arrangements in the near future.


NOTE 6 - Other Income and Deductions

     The following  table  presents  Other Income and Deductions for each of the
Ameren  Companies  for the three  months and six months  ended June 30, 2004 and
2003:
<TABLE>
<CAPTION>
   ====================================================================================================================
                                                                     Three Months                 Six Months
   --------------------------------------------------------------------------------------------------------------------
                                                                  2004          2003           2004          2003
                                                                  ----          ----           ----          ----
  <S><C>                                                      <C>             <C>           <C>           <C>
   Ameren:(a)
   Miscellaneous income:
      Interest and dividend income..........................   $     3         $    1        $    5         $    2
      Allowance for equity funds used during construction...         1              -             4              -
      Other.................................................         -              4             3              9
   -------------------------------------------------------------------------------------------------------------------
   Total miscellaneous income...............................   $     4         $    5        $   12         $   11
   -------------------------------------------------------------------------------------------------------------------
   Miscellaneous expense:
      Minority interest in subsidiary.......................   $    (2)        $   (4)       $   (3)        $   (5)
      Other.................................................        (2)            (3)           (2)            (5)
   -------------------------------------------------------------------------------------------------------------------
   Total miscellaneous expense..............................   $    (4)        $   (7)       $   (5)        $  (10)
   ===================================================================================================================
   UE:
   Miscellaneous income:
      Interest and dividend income..........................   $     1         $    -        $    2         $    -
      Equity in earnings of subsidiary......................         2              4             3              5
      Allowance for equity funds used during construction...         1              -             4              -
      Other.................................................         -              4             -              4
   -------------------------------------------------------------------------------------------------------------------
   Total miscellaneous income...............................   $     4         $    8        $    9         $    9
   -------------------------------------------------------------------------------------------------------------------
   Miscellaneous expense:
      Other.................................................   $    (4)        $   (2)       $   (5)        $   (3)
   -------------------------------------------------------------------------------------------------------------------
   Total miscellaneous expense..............................   $    (4)        $   (2)       $   (5)        $   (3)
   -------------------------------------------------------------------------------------------------------------------



                                       38
<PAGE>
   -------------------------------------------------------------------------------------------------------------------
                                                                     Three Months                 Six Months
   -------------------------------------------------------------------------------------------------------------------
                                                                  2004          2003           2004          2003
                                                                  ----          ----           ----          ----
   CIPS:
   Miscellaneous income:
      Interest and dividend income..........................   $     6         $    7        $   13         $   14
   -------------------------------------------------------------------------------------------------------------------
   Total miscellaneous income...............................   $     6         $    7        $   13         $   14
   -------------------------------------------------------------------------------------------------------------------
   Miscellaneous expense:
      Other.................................................   $    (1)        $   (1)       $   (1)        $   (2)
   -------------------------------------------------------------------------------------------------------------------
   Total miscellaneous expense..............................   $    (1)        $   (1)       $   (1)        $   (2)
   ===================================================================================================================
   Genco:
   Miscellaneous expense:
      Other.................................................   $     -         $    -        $   (1)        $    -
   -------------------------------------------------------------------------------------------------------------------
   Total miscellaneous expense..............................   $     -         $    -        $   (1)        $    -
   ===================================================================================================================
   CILCORP:(b)
   Miscellaneous expense:
      Other.................................................   $    (1)        $   (1)       $   (2)        $   (1)
   -------------------------------------------------------------------------------------------------------------------
   Total miscellaneous expense..............................   $    (1)        $   (1)       $   (2)        $   (1)
   ===================================================================================================================
   CILCO:
   Miscellaneous expense:
      Other.................................................   $    (2)        $   (1)       $   (3)        $   (1)
   -------------------------------------------------------------------------------------------------------------------
   Total miscellaneous expense..............................   $    (2)        $   (1)       $   (3)        $   (1)
   ===================================================================================================================
</TABLE>
     (a)  Excludes  amounts for CILCORP and CILCO prior to the acquisition  date
          of January  31,  2003;  includes  amounts  for  non-registrant  Ameren
          subsidiaries as well as intercompany eliminations.
     (b)  January 2003 predecessor amounts were zero. CILCORP consolidates CILCO
          and therefore includes CILCO amounts in its balances.

NOTE 7 - Derivative Financial Instruments

Cash Flow Hedges

     The following  table  presents  balances in certain  accounts for cash flow
hedges as of June 30, 2004:
<TABLE>
<CAPTION>
   ===================================================================================================================
                                                  Ameren       UE     CIPS      Genco      CILCORP(a)       CILCO
   -------------------------------------------------------------------------------------------------------------------
  <S><C>                                          <C>       <C>     <C>        <C>          <C>             <C>
   Balance Sheet:
      Other assets...........................      $  35     $  8    $  6       $  9         $    12         $  12
      Other deferred credits and liabilities.         11       10       -          1               -             -
   Accumulated OCI:
     Power forwards(b).......................         (1)       -       -         (1)              -             -
     Interest rate swaps(c)..................          5        -       -          5               -             -
     Gas swaps and futures contracts(d)......         21        4       6          -              11            11
     Call options(e).........................          3        3       -          -               -             -
   ==================================================================================================================
</TABLE>
     (a)  CILCORP consolidates CILCO and therefore includes CILCO amounts in its
          balances.
     (b)  Represents  the   mark-to-market   loss  for  the  hedged  portion  of
          electricity  price exposure for periods  generally less than one year.
          Certain  contracts  designated as hedges of electricity price exposure
          have terms up to five years.
     (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  a gain  associated  with  natural  gas swaps  and  futures
          contracts.   The  swaps  are  a  partial  hedge  of  our  natural  gas
          requirements  through  October  2007.  CILCO amount  represents a gain
          associated  with a partial hedge of natural gas  requirements  through
          October 2007.
     (e)  Represents  the  mark-to-market  gain of two call  options to purchase
          coal that are accounted for as cash flow hedges.  One of these options
          to purchase coal expires in October 2004 and the other option  expires
          in July 2005.

     The  pre-tax  net  gain or loss on  power  forward  derivative  instruments
included  in  Other  Income  and  Deductions  at  Ameren,  UE and  Genco,  which
represented the impact of discontinued cash flow hedges, the ineffective portion
of cash flow hedges, as well as the reversal of amounts  previously  recorded in
OCI due to transactions  going to delivery or settlement,  was a $2 million gain
for Ameren, $1 million gain for UE and $1 million gain for Genco for the quarter
ended June 30, 2004 (2003 - less than $1 million  gain for Ameren,  less than $1
million  gain for UE, less than $1 million  gain for Genco) and was a $2 million
gain for Ameren,  $1 million  gain for UE and $1 million  gain for Genco for the
six
                                       39
<PAGE>


months  ended June 30,  2004 (2003 - $1 million  loss for  Ameren,  less than $1
million loss for UE, less than $1 million loss for Genco).

Other Derivatives

     The following  table  represents  for the three months and six months ended
June 30, 2004 and 2003,  the net change in market value of option  transactions,
which are used to manage our positions in SO2 allowances,  coal, heating oil and
electricity  or power.  Certain of these  transactions  are treated as non-hedge
transactions  under SFAS No. 133,  "Accounting  for Derivative  Instruments  and
Hedging  Activities."  The net  change in the  market  value of SO2  options  is
recorded in  Operating  Revenues - Electric,  while the net change in the market
value of coal,  heating  oil and  electricity  or power  options is  recorded as
Operating Expenses - Fuel and Purchased Power.
<TABLE>
<CAPTION>

   =================================================================================================================
                    Gains (Losses)(a)                            Three Months                    Six Months
   -----------------------------------------------------------------------------------------------------------------
                                                               2004           2003            2004          2003
                                                               ----           ----            ----          ----
  <S> <C>                                                   <C>            <C>            <C>            <C>
   SO2 options:
       Ameren(b).......................................      $   (1)        $    -         $   (2)        $   (1)
       UE..............................................          (4)             -             (7)             -
       CIPS............................................           -              -              -              -
       Genco...........................................           3              -              5             (1)
       CILCORP(c)......................................           -              -              -              -
       CILCO(c)........................................           -              -              -              -
   =================================================================================================================
</TABLE>
   (a)   Coal,  power and heating oil option gains and losses were less than $1
         million for the periods shown above.
   (b)   Excludes  amounts for CILCORP and CILCO prior to the acquisition  date
         of January  31,  2003;  includes  amounts  for  non-registrant  Ameren
         subsidiaries as well as intercompany eliminations.
   (c)   January 2003 predecessor amounts were zero.


NOTE 8 - 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, 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 14 - Related  Party  Transactions
under Part II, Item 8 of the Ameren Companies' combined Form 10-K for the fiscal
year ended  December  31,  2003.  Below are  updates to  several  related  party
transactions.

Electric Power Supply Agreements

     Under two electric power supply agreements, Genco is obligated to supply to
Marketing  Company,  and Marketing  Company,  in turn, is obligated to supply to
CIPS, all of the energy and capacity  needed by CIPS to offer service for resale
to its native load customers at rates  specified by the ICC and to fulfill CIPS'
other obligations  under all applicable  federal and state tariffs or contracts.
The agreement  between CIPS and Marketing  Company expires on December 31, 2004.
The agreement  between  Genco and Marketing  Company can be terminated by either
party  upon at least  one  year's  notice,  but may not be  terminated  prior to
December 31, 2004. CIPS and Marketing Company filed in July 2004, a request with
the FERC to extend their agreement through December 31, 2006. This extension was
required by the ICC in its order approving Ameren's acquisition of CILCORP.

     In  October  2003,  in  conjunction   with  CILCO's  transfer  to  AERG  of
substantially all of its generating assets,  AERG entered into an electric power
supply  agreement with CILCO to supply CILCO with  sufficient  power to meet its
native load requirements.  This agreement expires on December 31, 2004. AERG and
CILCO have agreed to extend the power  supply  agreement  through  December  31,
2006.  Unlike  the  CIPS-Marketing  Company  agreement,  the  provisions  of the
agreement  between  CILCO and AERG  allow the  parties to extend the term of the
agreement, and Ameren believes that no further FERC action is necessary for such
an extension to become  effective.  The ICC also required this  extension in its
order approving Ameren's acquisition of CILCORP.



                                       40

<PAGE>

Joint Dispatch Agreement

     UE and Genco jointly  dispatch  electric  generation under an amended joint
dispatch agreement. Under the agreement, each affiliate is required to serve its
load  requirements  from its own generation  first, and then allow access to any
available  generation  to its  affiliate.  The joint  dispatch  agreement can be
terminated  by either  party by giving one year's  notice.  To address  concerns
raised  before the MoPSC in the  proceeding  relating  to the  transfer  of UE's
Illinois-based  utility  businesses  to CIPS (see  Note 3 - Rate and  Regulatory
Matters),  UE offered  to seek to amend the joint  dispatch  agreement  so as to
provide UE with a larger  share of the margins on short term sales of power from
the combined  generation of UE and Genco.  In particular,  UE offered to use its
best efforts to obtain all required regulatory  approvals for such an amendment,
but only if the MoPSC  concluded  that this was a  necessary  condition  for its
approval of the transfer of UE's  Illinois-based  utility  businesses.  If made,
such an amendment is expected to provide to UE additional annual margins ranging
from  approximately $7 million to $24 million for UE's share of short term power
sales.  Such an amendment is expected to result in a corresponding  reduction in
Genco's  margins  from its  share of  short  term  power  sales.  However,  this
reduction is expected to be offset by margins  received  from  additional  power
sales by Genco (through  Marketing  Company) to CIPS to serve the transferred UE
Illinois-based  electric utility business. Also as part of the proceeding before
the MoPSC,  UE offered to study  alternatives  to the current use of incremental
costs to price  system  energy  transfers  under  the joint  dispatch  agreement
between UE and Genco, if the MoPSC concluded that this was a necessary condition
for its approval.  As a result of the foregoing,  there is uncertainty as to the
terms  of  the  joint  dispatch  agreement  and  also  as to its  duration.  The
termination  of the  agreement,  or  modifications  to it, could have a material
adverse  effect  on UE or  Genco.  Modifications  to,  or  termination  of,  the
agreement  would not have an  immediate  impact on Ameren  due to UE's  Missouri
electric rate moratorium, which ends June 30, 2006.

Money Pools

     Through the utility money pool, the pool  participants can access committed
credit  facilities at Ameren,  which totaled $600 million at June 30, 2004,  and
were increased to $935 million in July 2004. These facilities are in addition to
UE's $154 million, CIPS' $15 million and CILCO's $60 million in committed credit
facilities which are also available to the utility money pool participants.  The
total amount available to the pool  participants  from the utility money pool at
any given time is reduced by the amount of borrowings by their  affiliates,  but
increased  to the  extent  the pool  participants  have  surplus  funds or other
external  sources  are used to  increase  the  available  amounts.  The  average
interest  rate for  borrowing  under the utility money pool for the three months
ended June 30, 2004 was 1.04%  (2003 - 1.19%) and for the six months  ended June
30, 2004 was 1.02% (2003 - 1.25%).

     At  June  30,   2004,   $600   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 months ended June 30,
2004 was 8.84%  (2003 - 8.84%)  and for the six months  ended June 30,  2004 was
8.84% (2003 - 8.84%).

     CILCORP has been granted  authority by the SEC under the PUHCA to borrow up
to $250 million directly from Ameren in a separate arrangement  unrelated to the
money pools.

Intercompany Promissory Notes

     Genco has  affiliate  notes payable of $324 million and $34 million to CIPS
and Ameren, respectively,  which, by their current terms, have final payments of
principal  and interest due on May 1, 2005.  The note payable to CIPS was issued
in conjunction with the transfer of its electric  generating  assets and related
liabilities to Genco.  Genco and CIPS expect to renew or modify the CIPS note to
extend the principal maturity, which could include continued amortization of the
principal amount.  Such extension could require regulatory  approval.  Genco and
Ameren are currently  evaluating  various  alternatives with respect to the note
payable to Ameren.  In the event the  maturities of these notes are not extended
or restructured, whether due to not obtaining any necessary regulatory approvals
or  otherwise,  Genco may need to access  other  financing  sources  to meet the
maturity  obligation  to the  extent  it does not have cash  available  from its
operating cash flows.  Such sources of financing could include  borrowings under
the non state-regulated  subsidiary money pool, or infusion of equity capital or
new  direct  borrowings  from  Ameren,  all  subject  to  applicable  regulatory
financing authorizations and provisions in Genco's senior note indenture.

                                       41

<PAGE>

UE

     The following  tables present the impact of related party  transactions  on
UE's  Consolidated  Statement of Income and  Consolidated  Balance Sheet,  based
primarily  on the  agreements  discussed  above and in Note 14 -  Related  Party
Transactions  under Part II, Item 8 of the Ameren Companies'  combined Form 10-K
for the year ended December 31, 2003:
<TABLE>
<CAPTION>

   ===================================================================================================================
                     Statement of Income                           Three Months                   Six Months
   -------------------------------------------------------------------------------------------------------------------
                                                                2004           2003          2004           2003
                                                                ----           ----          ----           ----
  <S>  <C>                                                   <C>            <C>            <C>            <C>
   Operating revenues from affiliates:
        Power supply agreement with EEI...................    $    2         $    1         $   2          $   1
        Joint dispatch agreement with Genco...............        28             24            58             56
        Agency agreement with Ameren Energy...............        42             41            95            111
        Gas transportation agreement with Genco...........         -              1             -              1
   -------------------------------------------------------------------------------------------------------------------
        Total operating revenues.........................     $   72         $   67         $ 155          $ 169
   -------------------------------------------------------------------------------------------------------------------
   Fuel and purchased power expenses from affiliates:
        Power supply agreements:
          EEI.............................................    $   17         $   15         $  33          $  28
          Marketing Company...............................         3              3             5              5
        Joint dispatch agreement with Genco...............        12              7            24             18
        Agency agreement with Ameren Energy...............        11             11            30             28
   -------------------------------------------------------------------------------------------------------------------
        Total fuel and purchased power expenses...........    $   43         $   36         $  92          $  79
   -------------------------------------------------------------------------------------------------------------------
   Other operating expenses:
        Support service agreements:
          Ameren Services.................................    $   38         $   41         $  76          $  86
          Ameren Energy...................................         4              5             7             10
          AFS.............................................         1              2             2              4
   -------------------------------------------------------------------------------------------------------------------
        Total other operating expenses....................    $   43         $   48         $  85          $ 100
   -------------------------------------------------------------------------------------------------------------------
   Interest expense:
        Borrowings (advances) related to money pool.......    $    1         $    1         $   1          $   2
   ===================================================================================================================

   ===================================================================================================================
                              Balance Sheet                                   June 30, 2004          December 31, 2003
   -------------------------------------------------------------------------------------------------------------------
   Assets:
        Miscellaneous accounts and notes receivable......................     $    11                $    16
        Advances to money pool...........................................           2                     12
   Liabilities:
        Accounts payable and wages payable...............................     $    69                $    46
        Borrowings from money pool.......................................         342                      -
   ===================================================================================================================

CIPS

     The following  tables present the impact of related party  transactions  on
CIPS'  Statement of Income and Balance Sheet,  based primarily on the agreements
discussed above and in Note 14 - Related Party  Transactions under Part II, Item
8 of the Ameren  Companies'  combined Form 10-K for the year ended  December 31,
2003:

   ===================================================================================================================
                     Statement of Income                            Three Months                  Six Months
   -------------------------------------------------------------------------------------------------------------------
                                                                2004           2003           2004          2003
                                                                ----           ----           ----          ----
   Operating revenues from affiliates:
        Power supply agreements:
          Marketing Company...............................     $   8          $   8          $  16         $  15
          CILCO...........................................         -              2              -             3
   -------------------------------------------------------------------------------------------------------------------
        Total operating revenues..........................     $   8          $  10          $  16         $  18
   -------------------------------------------------------------------------------------------------------------------
   Fuel and purchased power expenses from affiliates:
        Power supply agreements:
          Marketing Company...............................     $  71          $  74          $ 143         $ 153
          EEI.............................................         8              8             16            15
   -------------------------------------------------------------------------------------------------------------------
        Total fuel and purchased power expenses...........     $  79          $  82          $ 159         $ 168
   -------------------------------------------------------------------------------------------------------------------
                                       42

<PAGE>


   ===================================================================================================================
                     Statement of Income                            Three Months                  Six Months
   -------------------------------------------------------------------------------------------------------------------
                                                                2004           2003           2004          2003
                                                                ----           ----           ----          ----
   Other operating expenses:
        Support service agreements:
         Ameren Services..................................     $  12          $  14          $  24         $  29
         AFS..............................................         -              1              -             1
   -------------------------------------------------------------------------------------------------------------------
        Total other operating expenses....................     $  12          $  15          $  24         $  30
   -------------------------------------------------------------------------------------------------------------------
   Interest income:
        Note receivable from Genco........................     $   6          $   7          $  13         $  14
   ===================================================================================================================

   ===================================================================================================================
                              Balance Sheet                                  June 30, 2004          December 31, 2003
   -------------------------------------------------------------------------------------------------------------------
   Assets:
        Miscellaneous accounts and notes receivable...................        $    10                $    10
        Promissory note receivable from Genco(a).......................           324                    373
        Tax receivable from Genco(b)...................................           156                    162
   Liabilities:
        Accounts payable and wages payable.............................       $    47                $    43
        Borrowings from money pool.....................................            47                    121
  ====================================================================================================================
</TABLE>
     (a)  Amount includes current portion of $49 million as of December 31, 2003
          and $324 million as of June 30, 2004.
     (b)  Amount includes current portion of $12 million as of December 31, 2003
          and $12 million as of June 30, 2004.


Genco

     The following  tables present the impact of related party  transactions  on
Genco's Statement of Income and Balance Sheet, based primarily on the agreements
discussed above and in Note 14 - Related Party  Transactions under Part II, Item
8 of the Ameren  Companies'  combined Form 10-K for the year ended  December 31,
2003:
<TABLE>
<CAPTION>

   ===================================================================================================================
                       Statement of Income                             Three Months                Six Months
   -------------------------------------------------------------------------------------------------------------------
                                                                     2004         2003         2004          2003
                                                                     ----         ----         ----          ----
  <S>  <C><C>                                                      <C>           <C>          <C>          <C>
   Operating revenues from affiliates:
        Power supply agreements:
          Marketing Company....................................     $  168        $  143       $  341       $  300
          EEI..................................................          1             1            1            1
        Joint dispatch agreement with UE.......................         12             7           24           18
        Agency agreement with Ameren Energy....................         22            19           49           54
        Operating lease with Development Company...............          2             2            5            5
   -------------------------------------------------------------------------------------------------------------------
        Total operating revenues ..............................     $  205        $  172       $  420       $  378
   -------------------------------------------------------------------------------------------------------------------
   Fuel and purchased power expenses from affiliates:
        Joint dispatch agreement with UE.......................     $   28        $   24       $   58       $   56
        Agency agreement with Ameren Energy....................          3             6           10           15
        Gas transportation agreement with UE...................          -             1            -            1
   -------------------------------------------------------------------------------------------------------------------
        Total fuel and purchased power expenses................     $   31        $   31       $   68       $   72
   -------------------------------------------------------------------------------------------------------------------
   Other operating expenses:
        Support service agreements:
          Ameren Services......................................     $    4        $    4       $    8       $    9
          Ameren Energy........................................          3             2            4            5
          AFS..................................................          1             -            1            1
   -------------------------------------------------------------------------------------------------------------------
        Total other operating expenses.........................     $    8        $    6       $   13       $   15
   -------------------------------------------------------------------------------------------------------------------
   Interest expense:
        Borrowings related to money pool.......................     $    3        $    4       $    6       $    9
        Note payable to CIPS...................................          6             7           13           14
        Note payable to Ameren.................................          -             -            1            1
   ===================================================================================================================


</TABLE>
                                       43

<PAGE>
<TABLE>
<CAPTION>
   ===================================================================================================================
                            Balance Sheet                                 June 30, 2004          December 31, 2003
   -------------------------------------------------------------------------------------------------------------------
  <S>  <C>                                                                  <C>                      <C>
   Assets:
        Miscellaneous accounts and notes receivable.................         $    73                  $    78
   Liabilities:
        Accounts payable and wages payable..........................              23                       22
        Interest payable............................................               7                        7
        Promissory note payable to CIPS(a)..........................             324                      373
        Promissory note payable to Ameren(b)........................              34                       38
        Tax payable to CIPS(c)......................................             156                      162
        Borrowings from money pool..................................             156                      124
   ===================================================================================================================
</TABLE>
     (a)  Amount includes current portion of $49 million as of December 31, 2003
          and $324 million as of June 30, 2004.
     (b)  Amount includes  current portion of $4 million as of December 31, 2003
          and $34 million as of June 30, 2004.
     (c)  Amount includes current portion of $12 million as of December 31, 2003
          and $12 million as of June 30, 2004.


CILCORP

     The following  tables present the impact of related party  transactions  on
CILCORP's Consolidated Statement of Income and Consolidated Balance Sheet, based
primarily  on the  agreements  discussed  above and in Note 14 -  Related  Party
Transactions  under Part II, Item 8 of the Ameren Companies'  combined Form 10-K
for the year ended December 31, 2003:
<TABLE>
<CAPTION>

   ==================================================================================================================
                    Statement of Income(a)(b)                          Three Months                Six Months
   ------------------------------------------------------------------------------------------------------------------
                                                                     2004         2003         2004          2003
                                                                     ----         ----         ----          ----
  <S>  <C>                                                         <C>          <C>          <C>          <C>
   Operating revenues from affiliates:
        Gas supply and services agreement with Medina
          Valley...............................................     $    -       $    3       $    -       $   10
   ------------------------------------------------------------------------------------------------------------------
        Total operating revenues...............................     $    -       $    3       $    -       $   10
   ------------------------------------------------------------------------------------------------------------------
   Fuel and purchased power expenses from affiliates:
        Executory tolling agreement with Medina Valley.........     $    7       $    6       $   17       $   15
        Power purchase agreement with CIPS.....................          -            2            -            3
   ------------------------------------------------------------------------------------------------------------------
        Total fuel and purchased power expenses................     $    7       $    8       $   17       $   18
   ------------------------------------------------------------------------------------------------------------------
   Other operating expenses:
        Support services agreements:
          Ameren Services......................................     $   12       $    1       $   25       $    1
          AFS..................................................          1            1            1            1
   ------------------------------------------------------------------------------------------------------------------
     Total other operating expenses............................     $   13       $    2       $   26       $    2
   ------------------------------------------------------------------------------------------------------------------
   Interest expense:
        Note payable to Ameren.................................     $    1       $    -       $    2       $    -
        Borrowings related to money pool.......................          1            -            2            -
   ==================================================================================================================
</TABLE>
     (a)  2003  amounts  include  January  2003  predecessor  information  which
          included $2 million in operating  revenues and $3 million in purchased
          power  associated  with the executory  tolling  agreement  with Medina
          Valley.
     (b)  CILCORP consolidates CILCO and therefore includes CILCO amounts in its
          balances.
<TABLE>
<CAPTION>

   ===================================================================================================================
                             Balance Sheet(a)                               June 30, 2004        December 31, 2003
   -------------------------------------------------------------------------------------------------------------------
  <S>  <C>                                                                   <C>                  <C>
   Assets:
        Miscellaneous accounts and notes receivable....................        $    5              $     8
   Liabilities:
        Accounts payable...............................................       $    23              $    16
        Note payable to Ameren.........................................            57                   46
        Borrowings from money pool.....................................           232                  145
   ===================================================================================================================
</TABLE>
     (a)  CILCORP consolidates CILCO and therefore includes CILCO amounts in its
          balances.

CILCO

     The following  tables present the impact of related party  transactions  on
CILCO's Consolidated  Statement of Income and on the Consolidated Balance Sheet,
based  primarily  on the  various  agreements  discussed  above and in Note 14 -

                                       44

<PAGE>
Related  Party  Transactions  under  Part II,  Item 8 of the  Ameren  Companies'
combined Form 10-K for the year ended December 31, 2003:
<TABLE>
<CAPTION>
   ===================================================================================================================
                       Statement of Income                             Three Months                Six Months
   ----------------------------------------------------------------------------------------------------- -------------
                                                                    2004          2003         2004          2003
                                                                    ----          ----         ----          ----

  <S>  <C><C>                                                     <C>           <C>          <C>          <C>
   Fuel and purchased power expenses from affiliates:
        Executory tolling agreement with Medina Valley........     $    7        $    6       $   17       $   16
        Power purchase agreement with CIPS....................          -             2            -            3
   -------------------------------------------------------------------------------------------------------------------
        Total fuel and purchased power expenses...............     $    7        $    8       $   17       $   19
   -------------------------------------------------------------------------------------------------------------------
   Other operating expenses:
        Support services agreements:
          Ameren Services.....................................     $   12        $    1       $   24       $    1
          AFS.................................................          -             1            -            1
   -------------------------------------------------------------------------------------------------------------------
        Total other operating expenses........................     $   12        $    2       $   24       $    2
   -------------------------------------------------------------------------------------------------------------------
   Interest expense:
        Borrowings related to money pool......................     $    1        $    -       $    2       $    -
   ===================================================================================================================
   ===================================================================================================================
                           Balance Sheet                                 June 30, 2004           December 31, 2003
   -------------------------------------------------------------------------------------------------------------------
   Assets:
        Miscellaneous accounts and notes receivable...............        $    5                    $    6
   Liabilities:
        Accounts payable .........................................        $   23                    $   23
        Borrowings from money pool................................           233                       149
   ===================================================================================================================
</TABLE>

NOTE 9 - Commitments and Contingencies

     Reference is made to Note 15 - Commitments and Contingencies under Part II,
Item 8 of the Ameren  Companies'  combined  Form 10-K for the fiscal  year ended
December 31, 2003.

Callaway Nuclear Plant

     The following table presents  insurance  coverage at UE's Callaway  nuclear
plant at June 30, 2004:
<TABLE>
<CAPTION>
   ===================================================================================================================
                                                                 Maximum                  Maximum Assessments
               Type and Source of Coverage                      Coverages                for Single Incidents
   -------------------------------------------------------------------------------------------------------------------
 <S>   <C>                                                  <C>                          <C>
  Public liability:
        American Nuclear Insurers......................      $      300                   $          -
        Pool participation.............................          10,461                            101(a)
                                                         -------------------------------------------------------------
                                                             $   10,761(b)                $        101
   Nuclear worker liability:
        American Nuclear Insurers......................      $      300(c)                $          4
   Property damage:
        Nuclear Electric Insurance Ltd.................      $    2,750(d)                $         21
   Replacement power:
        Nuclear Electric Insurance Ltd.................      $      490(e)                $          7
   ===================================================================================================================
</TABLE>
     (a)  Retrospective premium under the Price-Anderson liability provisions of
          the Atomic  Energy Act of 1954, as amended  (Price-Anderson).  This is
          subject  to  retrospective  assessment  with  respect  to loss from an
          incident  at any  U.S.  reactor,  payable  at $10  million  per  year.
          Price-Anderson  expired  in August  2002 and the  temporary  extension
          expired  December  31,  2003.  Until  Price-Anderson  is renewed,  its
          provisions continue to apply to existing nuclear plants.
     (b)  Limit of liability for each incident under Price-Anderson.
     (c)  Industry limit for potential  liability from workers claiming exposure
          to the hazards of nuclear radiation.
     (d)  Includes premature decommissioning costs.
     (e)  Weekly  indemnity of $3.5 million for 52 weeks,  which commences after
          the first eight weeks of an outage, plus $2.8 million per week for 110
          weeks thereafter.

     Price-Anderson  limits the liability for claims from an incident  involving
any licensed U.S. nuclear facility. The limit is based on the number of licensed
reactors and is adjusted at least every five years based on the  Consumer  Price
Index.  Utilities  owning 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.

                                       45
<PAGE>


     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 not available, we
self-insure the risk. Although we have no reason to anticipate a serious nuclear
incident,  if one did  occur,  it could  have a  material,  but  indeterminable,
adverse effect on our financial position, results of operations or liquidity.

Environmental Matters

Clean Air Act

     The EPA issued a rule in October 1998  requiring 22 eastern  states and the
District of Columbia to reduce  emissions of NOx in order to reduce ozone in the
eastern United States.  Among other things,  the EPA's rule establishes an ozone
season,  which runs from May through  September,  and a NOx emission  budget for
each  state,  including  Illinois.  The EPA rule  requires  states to  implement
controls  sufficient to meet their NOx budget by May 31, 2004. In February 2002,
the EPA proposed  similar rules for Missouri.  These rules were finalized in the
spring of 2004.  The  compliance  date for the Missouri rules is May 1, 2007. UE
has filed an appeal of these rules with the United States Court of Appeals.

     In mid-December  2003, the EPA issued proposed  regulations with respect to
SO2 and NOx emissions  (the "Clean Air Interstate  Rule") and mercury  emissions
from  coal-fired  power  plants.  The  new  rules,  if  adopted,   will  require
significant  additional  reductions in these  emissions from our power plants in
phases,  beginning in 2010.  The rules are  currently  under a public review and
comment period and may change before being issued as final.  The following table
presents preliminary  estimated capital costs based on current technology on the
Ameren systems to comply with the Clean Air  Interstate  and mercury  rules,  as
proposed:
<TABLE>
<CAPTION>

   ===================================================================================================================
                                                              By 2010                          2011 - 2015
   -------------------------------------------------------------------------------------------------------------------
  <S>                                             <C>                                <C>
   Ameren......................................    $1.1 billion to $1.4 billion       $375 million to $510 million
   UE..........................................    $660 million to $860 million       $175 million to $230 million
   CIPS........................................                  -                                  -
   Genco.......................................    $280 million to $370 million       $160 million to $220 million
   CILCORP(a)..................................    $110 million to $150 million        $40 million to $60 million
   CILCO.......................................    $110 million to $150 million        $40 million to $60 million
   ===================================================================================================================
</TABLE>
    (a)  CILCORP consolidates CILCO and therefore includes CILCO amounts in its
         balances.

Emission Credits

     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.  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  having
excess allowances or from allowance banks. Our generating facilities comply with
the SO2 limits through the use and purchase of allowances, the use of low sulfur
fuels or 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  applies to all electric  generating
units in  Illinois  beginning  in 2004  and in the  eastern  third  of  Missouri
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 and selective catalytic reduction (SCR) systems.

     As of June 30, 2004, UE, Genco and CILCO held 1.7 million,  0.5 million and
0.3 million tons, respectively,  of SO2 emission allowances for use between 2004
and 2012. Each company possesses additional allowances for use in periods beyond
2012. As of June 30, 2004,  UE, Genco and CILCO  Illinois  facilities  expect to
hold 290,  26,200 and  8,300,  respectively,  of NOx  emission  allowances  with
vintages  from 2004 to 2007.  The  Illinois  EPA is still  determining  some NOx
emission  allowances  allocations  for this period and 2008. UE, Genco and CILCO
expect to use a substantial  portion of the SO2 and NOx  allowances  for ongoing
operations.  Allocations of NOx  allowances for Missouri  facilities are pending
the finalization of rules by Missouri regulators. New environmental regulations,
including the Clean Air


                                       46

<PAGE>

Interstate Rule, the timing of the installation of pollution  control  equipment
and  level of  operations  will  have a  significant  impact  on the  amount  of
allowances actually required for ongoing operations.

Noise-related Matters

     On  October 28,  2003,  Genco  filed a  rulemaking  proceeding  before  the
Illinois  Pollution Control Board (IPCB) seeking site specific noise limitations
for its CTs in Elgin,  Illinois.  The new limitations  would allow Genco to meet
Illinois noise  requirements in a newly proposed  residential  area. On July 22,
2004, the Illinois Pollution Control Board adopted a final rule that establishes
site-specific noise limitations for Genco's CTs in Elgin, Illinois so that Genco
will be able to comply with Illinois noise regulations. No further litigation or
rulemaking action by Genco is necessary.

Asbestos-Related Litigation

     Ameren,  UE,  CIPS,  Genco and CILCO have been named,  along with  numerous
other  parties,  in a number  of  lawsuits  which  have  been  filed by  certain
plaintiffs claiming varying degrees of injury from asbestos exposure.  Most have
been filed in the Circuit Court of Madison County, Illinois. The number of total
defendants  named in each case is significant  with as many as 110 parties named
in a case to as few as six. However,  the average number of parties is 60 in the
cases that were pending as of June 30, 2004.

     The claims filed against  Ameren,  UE, CIPS,  Genco and CILCO allege injury
from  asbestos  exposure  during  the  plaintiffs'  activities  at our  electric
generating  plants.  In the case of CIPS,  its  former  plants  are now owned by
Genco,  and in the case of CILCO,  most of its  former  plants  are now owned by
AERG.  As a part of the  transfer of  ownership of the  generating  plants,  the
transferor (CIPS or CILCO) has contractually  agreed to indemnify the transferee
(Genco or AERG) for liabilities associated with asbestos-related  claims arising
from activities prior to the transfer. Each lawsuit seeks unspecified damages in
excess of $50,000,  which, if proved,  typically would be shared among the named
defendants.

     From April 1, 2004 through June 30, 2004,  seven  additional  lawsuits were
filed  against  Ameren,  UE and CIPS,  mostly in the  Circuit  Court of  Madison
County,  Illinois,  two  lawsuits  were  dismissed  and five were  settled.  The
following table presents the status as of June 30, 2004 of the  asbestos-related
lawsuits that have been filed against the Ameren Companies:

<TABLE>
<CAPTION>
   ===================================================================================================================
                                                                  Specifically Named as Defendant
                                               -----------------------------------------------------------------------
                                    Total(a)     Ameren        UE         CIPS           Genco            CILCO
   -------------------------------------------------------------------------------------------------------------------
  <S>                                 <C>         <C>        <C>           <C>             <C>             <C>
   Filed..........................     195   |     18         134           77              2               15
   Settled........................      42   |      -          31           16              -                1
   Dismissed......................      72   |      3          53           22              -                2
   Pending........................      81   |     15          50           39              2               12
   ===================================================================================================================
</TABLE>
     (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.

     Ameren,  UE, CIPS,  Genco and CILCO believe that the final  disposition  of
these  proceedings  will not have a material  adverse effect on their  financial
position, results of operations or liquidity.

Other Matters

Enron Litigation Settlement

     In May 2001, CILCO and Enron Power Marketing,  Inc. (EPMI), a subsidiary of
Enron Corp. (Enron),  entered into a master agreement for electric purchases and
sales,  which covered energy  transactions  scheduled for deliveries  during the
period of 2001 to 2003.  In November  2001,  EPMI  demanded  that CILCO post $28
million in collateral  based on  mark-to-market  exposure of open  transactions.
Also in November  2001,  CILCO notified EPMI that events of default had occurred
under the master  agreement  and pursuant to the  termination  provisions of the
master agreement declared the master agreement terminated effective December 20,
2001.  Enron and EPMI filed Chapter 11 bankruptcy  petitions in December 2001 in
the U.S.  Bankruptcy  Court for the Southern  District of New York.  In December
2002,  EPMI filed a complaint  against  AES,  Constellation  New  Energy,  Inc.,
formerly  known as AES New Energy Inc., and CILCO in the U.S.  Bankruptcy  Court
seeking $31 million.  As a result of court ordered  mediation of this matter, an
agreement in


                                       47

<PAGE>

principal  was reached among the parties in June 2004,  which upon  finalization
and approval by the U.S.  Bankruptcy Court, will settle the outstanding claim by
requiring CILCO to pay approximately $21 million to Enron or its subsidiary. The
settlement payment is expected to be made during the fourth quarter of 2004. The
payment will also settle an unrelated  dispute  between  CILCO and another Enron
subsidiary,  Enron  North  America  Corp.  (ENA) over  ENA's  failure to deliver
natural gas to CILCO  pursuant to  transactions  entered into in May and October
2001. AES, in conjunction with its sale of CILCORP to Ameren in 2003,  agreed to
indemnify  Ameren  against the  after-tax  cost of all  liabilities,  which will
include  the  settlement  payment,  legal fees and  expenses,  incurred by CILCO
relating to the Enron  claim.  Ameren  assigned  its  indemnification  rights to
CILCO.  As a result,  this  settlement  will have no earnings  impact on Ameren,
CILCORP or CILCO.

Labor-related Matters

     On June 18, 2003, 20 retirees and surviving  spouses of retirees of various
Ameren companies (the plaintiffs)  filed a complaint in the U.S. District Court,
Southern  District of  Illinois,  against  Ameren,  UE,  CIPS,  Genco and Ameren
Services,  and against our Retiree Medical Plan (the  defendants).  The retirees
were  members  of  various  local  labor  unions of the IBEW and the  IUOE.  The
complaint, referred to as Barnett, et al. vs Ameren Corporation, et al., alleges
the following:

o    the labor  organizations which represented the plaintiffs have historically
     negotiated  retiree medical  benefits with the defendants and that pursuant
     to the negotiated  collective  bargaining  agreements and other  negotiated
     documents,  the plaintiffs are guaranteed medical benefits at no cost or at
     a fixed maximum cost during their retirement;
o    Ameren has unilaterally  announced that,  beginning in 2004,  retirees must
     pay a portion of their own  healthcare  premiums  and either an  increasing
     portion  of  their  dependents'   premiums  or  newly  imposed  dependents'
     premiums,  and that surviving  spouses will be paying increased amounts for
     their medical benefits;
o    the defendants'  actions deprive the plaintiffs of vested benefits and thus
     violate  ERISA  and  the  Labor  Management  Relations  Act  of  1947,  and
     constitute a breach of the defendants' fiduciary duties; and
o    the  defendants  are  estopped  from  changing  the  plan  benefits.  (This
     allegation was subsequently dropped from the amended complaints referred to
     below).

     The plaintiffs filed the complaint on behalf of themselves, other similarly
situated former non-management employees and their surviving spouses who retired
from January 1, 1992 through  October 1, 2002,  and on behalf of all  subsequent
non-management  retirees and their surviving  spouses whose medical benefits are
reduced or are  threatened  with  reduction.  The  plaintiffs  seek to have this
lawsuit  certified as a class action,  seek  injunctive  relief and  declaratory
relief,  seek actual damages for any amounts they are made to pay as a result of
the defendants' actions, and seek payment of attorney fees and costs. An amended
complaint  that added three  plaintiffs  was filed July 15, 2003. In response to
the Court's ruling on the  defendants'  motions to dismiss various counts of the
complaint, a second amended complaint was filed on December 15, 2003, clarifying
some of the allegations,  adding two and dropping two plaintiffs, and adding the
Ameren Group Medical Plan as a defendant.  On April 27, 2004,  the Court granted
the  defendants'  motion to dismiss one of the counts brought in connection with
the amended  complaint  which alleges the defendants  breached  their  fiduciary
duties under ERISA.  In July 2004,  the Court denied the  plaintiffs'  motion to
certify  this  lawsuit as a class  action.  However,  the  plaintiffs  requested
reconsideration  of the Court's  order denying  class  certification.  In August
2004,  the  defendants  filed a motion for  summary  judgment.  We are unable to
predict  the  outcome  of this  lawsuit  or the  impact  of the  outcome  on our
financial position, results of operations or liquidity.

     Certain  employees of CILCO are  represented by the IBEW.  These  employees
comprise 4% of Ameren's  workforce.  Labor  agreements  covering these employees
expire  August 29, 2004.  Labor  agreements  covering the  remaining UE and CIPS
employees  represented  by IBEW and the IUOE  expire in June 2006 and June 2007.
CILCO has  presented  its best and final  offer  and we cannot  predict  whether
negotiations concerning this offer will be accepted.

Leveraged Leases

     Ameren owns  interests  in assets  which have been  financed  as  leveraged
leases.  One of these  leveraged  leases is a $10 million net investment at June
30, 2004,  in an aircraft  leased to Delta Air Lines.  Delta Air Lines  reported
significant operating losses and disclosed in its Form 10-Q filing for the three
months  ended  March  31,  2004,  that  there is a  possibility  of  filing  for
bankruptcy if the company cannot achieve a competitive  cost  structure,  regain
sustained  profitability  and access the capital markets under acceptable terms.
Ameren  could  lose all or a portion  of its  investment


                                       48
<PAGE>

in the Delta Air Lines  lease in the event of a  bankruptcy  or default by Delta
Air Lines or any  voluntary  restructuring  of the lease.  As of June 30,  2004,
Delta Air Lines was current in its lease payments related to this lease.


NOTE 10 - 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
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 2015. UE has
sufficient storage capacity at its Callaway nuclear plant until 2019 and 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 over the life of the plant, based
on an assumed  40-year life,  ending with  expiration  of the plant's  operating
license in 2024. The Callaway nuclear plant site is assumed to be decommissioned
based  on   immediate   dismantlement   method   and   removal   from   service.
Decommissioning   costs,   including   decontamination,   dismantling  and  site
restoration,  are  estimated  to be $536 million in current year dollars and are
expected  to  escalate   approximately   3.5%  per  year   through  the  end  of
decommissioning  activity in 2033.  Decommissioning costs are charged to cost of
services  used to establish  electric  rates for UE's  customers and amounted to
approximately  $7 million in each of the years 2003, 2002 and 2001.  Every three
years,  the  MoPSC  and  ICC  require  UE  to  file  updated  cost  studies  for
decommissioning  its Callaway  nuclear plant, and electric rates may be adjusted
at such times to reflect  changed  estimates.  The latest  studies were filed in
2002.  Costs collected from customers are deposited in an external trust fund to
provide for the Callaway  nuclear  plant's  decommissioning.  Fund  earnings are
expected  to  average   approximately   8.6%   annually   through  the  date  of
decommissioning. If the assumed return on trust assets is not earned, we believe
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 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 the regulatory asset recorded in connection with the adoption of SFAS No.
143.  Upon the  completion  of UE's  transfer of its  Illinois  electric and gas
utility  businesses  to CIPS,  which is  subject to the  receipt  of  regulatory
approvals,  the assets and  liabilities  related to the Illinois  portion of the
decommissioning  trust fund will be transferred  to Missouri.  See Note 3 - Rate
and Regulatory Matters for further information.


NOTE 11 - Stockholders' Equity

Paid-In Capital

     Ameren's  paid-in  capital  increased  by $904  million as of June 30, 2004
compared to December 31, 2003. Ameren received net proceeds of $853 million from
the issuance of 19.1 million  shares of its common  stock in February  2004.  In
addition,  during the six months ended June 30, 2004, Ameren, pursuant to a Form
S-3 registration statement, issued 1.3 million new shares of common stock valued
at $60 million under its DRPlus and its 401(k) plans.  Ameren's  paid-in capital
decreased  $9  million  due to the  cashless  exercise  of stock  options by its
employees  in the first  six  months of 2004.  See Note 5 -  Long-term  Debt and
Equity Financings for further information.

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 stockholders. A reconciliation of

                                       49

<PAGE>


net income to  comprehensive  income for the three  months and six months  ended
June 30, 2004 and 2003 is shown below for the Ameren Companies:
<TABLE>
<CAPTION>
   =================================================================================================================
                                                                      Three Months Ended         Six Months Ended
   -----------------------------------------------------------------------------------------------------------------
                                                                      2004         2003         2004         2003
                                                                      ----         ----         ----         ----

  <S>  <C>                                                        <C>          <C>         <C>           <C>
   Ameren:(a)
   Net income...................................................   $  118      $   110      $   215      $   211
   Unrealized gain (loss) on derivative hedging instruments,
     net of taxes (benefit) of $3, $(2), $3, $(2)...............        6           (4)           6           (5)
   Reclassification adjustments  for gains (losses) included in
     net income, net of taxes (benefit) of $(1), $-, $(1), $(1)        (3)           -           (3)          (2)
   -----------------------------------------------------------------------------------------------------------------
        Total comprehensive income, net of taxes................   $  121      $   106      $   218      $   204
   =================================================================================================================
   UE:
   Net income...................................................   $  109      $   107      $   167      $   175
   Unrealized gain (loss) on derivative hedging instruments,
   net of taxes (benefit) of $-, $(1), $1, $(1).................        1           (2)           3           (2)
   Reclassification adjustments  for gains (losses) included in
   net income, net of taxes (benefit) of $-, $-, $-, $-.........        -            -            -           (1)
   -----------------------------------------------------------------------------------------------------------------
        Total comprehensive income, net of taxes................   $  110      $   105      $   170      $   172
   =================================================================================================================
   CIPS:
   Net income...................................................   $    8      $     3      $    18      $     5
   Unrealized gain (loss) on derivative hedging instruments,
   net of taxes (benefit) of $1, $(1), $2, $(1).................        1           (2)           4           (2)
   Reclassification adjustments  for gains (losses) included in
   net income, net of taxes (benefit) of $-, $-, $-, $-.........        -            -           (1)           -
   -----------------------------------------------------------------------------------------------------------------
        Total comprehensive income, net of taxes................   $    9      $     1      $    21      $     3
   =================================================================================================================
   Genco:
   Net income...................................................   $   17      $    10      $    46      $    49
   Unrealized gain (loss) on derivative hedging instruments,
   net of taxes (benefit) of $-, $-, $(1), $-...................        -            -           (1)           -
   Reclassification adjustments  for gains (losses) included in
   net income, net of taxes (benefit) of $-, $-, $-, $-.........       (1)           -           (1)           -
   -----------------------------------------------------------------------------------------------------------------
        Total comprehensive income, net of taxes................  $    16      $    10      $    44      $    49
   =================================================================================================================
   CILCORP: (b)
   Net income (loss)............................................  $    (4)     $     -      $     -      $    12
   Unrealized gain (loss) on derivative hedging instruments,
   net of taxes (benefit) of $1, $-, $2, $(1)...................        3            -            6           (1)
   Reclassification adjustments  for gains (losses) included in
   net income, net of taxes (benefit) of $(1), $-, $(1), $-.....       (2)           -           (2)           -
   -----------------------------------------------------------------------------------------------------------------
        Total comprehensive income (loss), net of taxes.........  $    (3)     $     -      $     4      $    11
   =================================================================================================================
   CILCO:
   Net income...................................................  $     3      $     5      $     9      $    40
   Unrealized gain (loss) on derivative hedging instruments,
   net of taxes (benefit) of $1, $-, $2, $(1)...................        3            -            6           (1)
   Reclassification adjustments  for gains (losses) included in
   net income, net of taxes (benefit) of $(1), $-, $(1), $-.....       (2)           -           (2)           -
   -----------------------------------------------------------------------------------------------------------------
        Total comprehensive income, net of taxes................  $     4      $     5      $    13      $    39
   =================================================================================================================

</TABLE>
(a)  Excludes  amounts for CILCORP  and CILCO prior to the  acquisition  date of
     January  31,  2003  and   includes   amounts  for   non-registrant   Ameren
     subsidiaries as well as intercompany eliminations.
(b)  2003 amounts include January 2003 predecessor information,  which was zero.
     CILCORP  consolidates  CILCO and  therefore  includes  CILCO amounts in its
     balances.

                                       50

Outstanding Shares of Common Stock

     The following  table  reconciles  the  outstanding  shares of Ameren common
stock for the three months and six months ended June 30, 2004 and 2003:

<TABLE>
<CAPTION>
   ================================================================================================================
                                                                Three Months Ended             Six Months Ended
   ----------------------------------------------------------------------------------------------------------------
<S>                                                            <C>          <C>              <C>         <C>
                                                                 2004         2003             2004        2003
                                                                 ----         ----             ----        ----
   Shares outstanding at beginning of period.............       182.5        161.1            162.9       154.1
   Shares issued.........................................         0.8          0.6             20.4         7.6
   ----------------------------------------------------------------------------------------------------------------
   Shares outstanding at end of period                          183.3        161.7            183.3       161.7
   ================================================================================================================
</TABLE>

NOTE 12 - PENSION AND OTHER POSTRETIREMENT BENEFITS

     In December 2003, the FASB issued SFAS No. 132 (Revised 2003),  "Employers'
Disclosures about Pensions and Other  Postretirement  Benefits (SFAS No. 132R),"
which  retains  the  disclosure  requirements  in  SFAS  No.  132  and  contains
additional requirements. These additional requirements include disclosures about
a plan sponsor's  investment  strategies,  detailed  information of plan assets,
expected  future  cash flow  requirements,  and interim  disclosures  related to
periodic  benefit  cost.  The  following  table  presents  Ameren's net periodic
benefit  costs  (and the  components  of those  costs)  for  pension  and  other
postretirement  benefits for the three months and six months ended June 30, 2004
and 2003:

<TABLE>
<CAPTION>
   ==================================================================================================================
                                                     Pension Benefits                  Postretirement Benefits
   ------------------------------------------------------------------------------------------------------------------
                                              Three Months       Six Months        Three Months        Six Months
                                             ------------------------------------------------------------------------
<S>                                        <C>     <C>       <C>       <C>      <C>      <C>      <C>       <C>
                                             2004     2003      2004     2003      2004     2003     2004      2003
                                             ----     ----      ----     ----      ----     ----     ----      ----
   Service cost..........................   $  10   $    9    $   21   $   19    $    3   $    3   $    7    $    6
   Interest cost.........................      31       32        63       66        12       15       28        30
   Expected return on plan assets........     (29)     (31)      (59)     (64)       (7)      (8)     (16)      (16)
   Amortization cost:
     Transition obligation...............       -        -         -        -         1        1        2         2
     Prior service cost..................       3        2         6        4        (1)      (1)      (2)       (2)
     Losses..............................       6        2        12        4         7        8       17        17
   ------------------------------------------------------------------------------------------------------------------
   Net periodic benefit cost.............      21       14        43       29        15       18       36        37
   ==================================================================================================================
</TABLE>

     The total amount of our contributions paid, and expected to be paid, do not
differ significantly from amounts previously disclosed.

     Ameren   adopted  FSP  SFAS  106-2  during  the  second  quarter  of  2004,
retroactive to January 1, 2004,  which resulted in the  recognition of a federal
subsidy for postretirement  benefit costs related to prescription drug benefits.
See Note 1 - Summary  of  Significant  Accounting  Policies.  The effect of this
subsidy was a reduction of various components of Ameren's, and principally UE's,
net  periodic  postretirement  benefit  costs for the  second  quarter  of 2004.
Interest  costs  and  amortization  losses  were  reduced  by $4  million  each,
partially  offset by a  reduction  in the  expected  return on plan assets of $2
million.  The  subsidy-related  reduction in  Ameren's,  and  principally  UE's,
accumulated postretirement benefit obligation was $71 million.

     UE, CIPS,  Genco,  CILCORP and CILCO are participants in Ameren's plans and
are responsible for their  proportional  share of the pension benefit costs. The
following table presents the pension costs incurred for the three months and six
months ended June 30, 2004 and 2003:

<TABLE>
<CAPTION>
   ===================================================================================================================
                                                                           Three Months             Six Months
   -------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>         <C>         <C>          <C>
                                                                         2004        2003        2004         2003
                                                                         ----        ----        ----         ----
   Ameren(a)........................................................   $   21      $   14      $   43       $   29
   UE...............................................................       13           7          26           19
   CIPS.............................................................        3           2           6            4
   Genco............................................................        2           1           4            3
   CILCORP(b).......................................................        2           2           4            2
   CILCO............................................................        3           4           8            6
   ===================================================================================================================
</TABLE>
(a)  Excludes  amounts for CILCORP  and CILCO prior to the  acquisition  date of
     January 31, 2003; includes amounts for non-registrant Ameren subsidiaries.
(b)  CILCORP  consolidates  CILCO and  therefore  includes  CILCO amounts in its
     balances.

                                       51

<PAGE>


     UE, CIPS,  Genco,  CILCORP and CILCO are participants in Ameren's plans and
are  responsible  for their  proportional  share of the  postretirement  benefit
costs.  The following table presents the  postretirement  costs incurred for the
three months and six months ended June 30, 2004 and 2003:

<TABLE>
<CAPTION>

   ==================================================================================================================
                                                                           Three Months             Six Months
   ------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>         <C>         <C>          <C>
                                                                         2004        2003        2004         2003
                                                                         ----        ----        ----         ----
   Ameren(a)........................................................    $  15       $  18       $  36        $  37
   UE...............................................................        8          14          22           25
   CIPS.............................................................        3           2           4            4
   Genco............................................................        1           -           2            2
   CILCORP(b).......................................................        2           2           5            5
   CILCO............................................................        4           4           9            9
   ===================================================================================================================
</TABLE>

(a)  Excludes  amounts for CILCORP  and CILCO prior to the  acquisition  date of
     January 31, 2003; includes amounts for non-registrant Ameren subsidiaries.
(b)  Includes  predecessor  information for January 2003.  CILCORP  consolidates
     CILCO and therefore includes CILCO amounts in its balances.


NOTE 13 - Segment Information

     As discussed in the Ameren Companies combined Form 10-K for the fiscal year
ended  December 31,  2003,  Ameren's two  reportable  segments  are: (1) Utility
Operations,  which  generates  electricity and transmits and distributes gas and
electricity;  and (2) Other,  which is comprised of the parent holding  company,
Ameren Corporation.

     The table below presents segment  information  about the reported  revenues
and net income of Ameren for the three months and six months ended June 30, 2004
and 2003:

<TABLE>
<CAPTION>

   ==================================================================================================================
                                      Utility                               Reconciling
                                     Operations            Other             Items (a)                 Total
   ------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                 <C>                <C>                    <C>
   Three months 2004:
     Operating revenues.......       $   1,435           $      -           $   (283)              $   1,152
     Net income...............             115                  3                  -                     118
   ------------------------------------------------------------------------------------------------------------------
   Three months 2003: (b)
     Operating revenues.......       $   1,345           $      -           $   (257)              $   1,088
     Net income...............             114                 (4)                 -                     110
   ------------------------------------------------------------------------------------------------------------------
   Six months 2004:
     Operating revenues.......       $   2,948           $      -           $   (580)              $   2,368
     Net income...............             212                  3                  -                     215
   ------------------------------------------------------------------------------------------------------------------
   Six months 2003: (b)
     Operating revenues.......       $   2,727           $      -           $   (531)              $   2,196
     Net income...............             221                (10)                 -                     211
   ==================================================================================================================
</TABLE>

(a)  Elimination of intercompany revenues.
(b)  Excludes  amounts for CILCORP  and CILCO prior to the  acquisition  date of
     January 31, 2003;  includes amounts for non-registrant  Ameren subsidiaries
     as well as intercompany eliminations.


                                       52

<PAGE>

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

OVERVIEW

Executive Summary

     Despite some challenges  during the second quarter of 2004, Ameren was able
to once again deliver solid financial results.  The second quarter 2004 earnings
were reduced by the  incremental  costs Ameren  incurred in connection  with the
scheduled  refueling and  maintenance  outage at its Callaway  nuclear  plant. A
similar  Callaway outage did not occur in 2003. In addition,  the second quarter
was  negatively  impacted by earnings per share dilution  principally  caused by
Ameren's  issuance of common shares to prefund the Illinois  Power  acquisition.
Despite these  factors,  second  quarter  earnings  benefited from solid organic
growth,  a return to more normal summer  weather,  stronger  power  prices,  the
refund of a Midwest ISO exit fee and a focus on cost control.

     A major  effort  taking  place at Ameren in the first  half of 2004 was the
work towards completion of the Illinois Power  acquisition.  In early July 2004,
Ameren  completed the equity financing for the acquisition of Illinois Power and
the  additional  20%  interest in EEI from Dynegy.  Ameren  continues to proceed
through the regulatory  approval process. As a result of the progress to date in
the regulatory approval process,  Ameren believes the Illinois Power acquisition
remains on target to close by the end of this year.

General

     Ameren,  headquartered in St. Louis,  Missouri, is a public utility holding
company  registered with the SEC under the PUHCA.  Ameren's primary asset is the
common stock of its subsidiaries.  Ameren's subsidiaries operate  rate-regulated
electric generation,  transmission and distribution  businesses,  rate-regulated
natural gas distribution  businesses and non rate-regulated  electric generation
businesses  in Missouri and  Illinois.  Dividends  on Ameren's  common stock are
dependent on distributions made to it by its subsidiaries.  See Note 1 - Summary
of Significant  Accounting  Policies to our financial  statements  under Part I,
Item 1 of this  report for a detailed  description  of our  principal  operating
subsidiaries. Also see the Glossary of Terms and Abbreviations.

o    UE,  also  known as  Union  Electric  Company,  operates  a  rate-regulated
     electric   generation,   transmission  and  distribution   business  and  a
     rate-regulated natural gas distribution business in Missouri and Illinois.

o    CIPS,  also known as Central  Illinois Public Service  Company,  operates a
     rate-regulated  electric  and natural  gas  transmission  and  distribution
     business in Illinois.

o    Genco,  also  known as Ameren  Energy  Generating  Company,  operates a non
     rate-regulated electric generation business in Illinois and Missouri.

o    CILCO,  also known as Central  Illinois Light  Company,  is a subsidiary of
     CILCORP (a holding  company)  and was  acquired  on January  31,  2003.  It
     operates a rate-regulated  electric transmission and distribution business,
     a  primarily  non  rate-regulated   electric   generation  business  and  a
     rate-regulated natural gas distribution business in Illinois.

     The financial statements of Ameren are prepared on a consolidated basis and
therefore include the accounts of its  majority-owned  subsidiaries.  Results of
CILCORP  and CILCO  reflected  in  Ameren's  consolidated  financial  statements
include the period from the  acquisition  date of January 31, 2003. See Note 2 -
Acquisitions to our financial statements under Part I, Item 1 of this report for
further  information.   All  significant  intercompany  transactions  have  been
eliminated.  All  tabular  dollar  amounts  are in  millions,  unless  otherwise
indicated.

     In addition to  presenting  results of operations  and earnings  amounts in
total,  certain measures are expressed in cents per share. These amounts reflect
factors  that  directly  impact  Ameren's  earnings.  We believe  this per share
information is useful because it enables readers to better understand the impact
of these factors on our earnings.  All references in this report of earnings per
share are on the basis of diluted shares.

                                       53

<PAGE>

Illinois Power Acquisition

     On  February  2, 2004,  Ameren  entered  into an  agreement  with Dynegy to
purchase the stock of Decatur,  Illinois-based  Illinois  Power and Dynegy's 20%
ownership interest in EEI. Illinois Power operates a rate-regulated electric and
natural gas transmission and distribution business serving approximately 600,000
electric and 415,000 gas customers in areas contiguous to our existing  Illinois
utility service  territories.  The total transaction value is approximately $2.3
billion,  including  the  assumption of  approximately  $1.8 billion of Illinois
Power debt and  preferred  stock,  with the balance of the purchase  price to be
paid in cash at closing.  Ameren will place $100  million of the cash portion of
the purchase price in a six-year escrow pending resolution of certain contingent
environmental  obligations  of Illinois  Power and other Dynegy  affiliates  for
which Ameren has been  provided  indemnification  by Dynegy.  In addition,  this
transaction  includes a firm capacity power supply contract for Illinois Power's
annual purchase of 2,800  megawatts of electricity  from a subsidiary of Dynegy.
This  contract  will extend  through 2006 and is expected to supply about 70% of
Illinois Power's customer requirements.

     In February  2004,  Ameren issued 19.1 million common shares that generated
net  proceeds of $853  million,  and in July 2004,  Ameren  issued 10.9  million
common shares that  generated net proceeds of $445 million.  Proceeds from these
sales are expected to be used to finance the cash portion of the purchase price,
to reduce Illinois Power debt assumed as part of this transaction and to pay any
related premiums.  Pending such use, and/or if the acquisition is not completed,
Ameren  plans to use the net proceeds to reduce  present or future  indebtedness
and/or repurchase  securities of Ameren or its subsidiaries.  However,  prior to
the closing of the acquisition of Illinois Power,  Ameren expects the new common
shares to be dilutive to earnings per share.

     Upon completion of the acquisition,  expected by the end of 2004,  Illinois
Power will become an Ameren  subsidiary  operating as AmerenIP.  The transaction
remains subject to the approval of the ICC and the SEC under the PUHCA and other
customary closing  conditions.  In April 2004, the FCC consented to the transfer
of control of FCC licenses held by Illinois Power to Ameren,  and the initial 30
calendar  day  waiting  period  expired  without a request by the FTC or DOJ for
additional  information or documents  under the  Hart-Scott-Rodino  Act. In July
2004, the FERC issued an order approving Ameren's  acquisition of Illinois Power
and Dynegy's  interest in EEI. The principal  conditions of the FERC's  approval
were that Illinois Power join the Midwest ISO prior to closing and 125 megawatts
of EEI's power be sold to a  nonaffiliate  annually.  A procedural  schedule has
been  adopted in the ICC  proceeding,  which can permit an order to be issued by
the fall of 2004. The ICC Staff and several intervenors filed testimony in early
July expressing  various concerns with the acquisition and objecting to parts of
the  application  filed by Ameren and Illinois Power in March 2004.  Hearings in
the ICC  proceeding  are  scheduled  to be held in August  2004.  As a result of
progress  to  date  in  the  regulatory  approval  processes,   we  believe  the
acquisition  remains  on  target  to close by the end of 2004.  However,  we are
unable to predict the ultimate outcome of the remaining  regulatory  proceedings
or the timing of the final agency decisions.

     According to Illinois Power's Annual Report on Form 10-K for the year ended
December 31, 2003, Illinois Power had revenues of $1.6 billion, operating income
of $166 million,  and net income  applicable to its common  shareholder  of $115
million,  and at December 31, 2003, had total assets of $2.8 billion,  excluding
an intercompany  note receivable from its parent company of  approximately  $2.3
billion. Illinois Power files quarterly, annual and current reports with the SEC
pursuant to the Exchange Act.

     Ameren  expects  the  acquisition  of  Illinois  Power to be  accretive  to
earnings in the first two years of ownership  based on a variety of  assumptions
related to power prices,  interest  rates,  synergies and  regulatory  outcomes,
among other things. Although Ameren has entered into fixed price power contracts
for  approximately  70%  of  Illinois  Power's  energy  supply  needs,  Ameren's
expectations  for Illinois  Power's  earnings  through 2006 remain  sensitive to
changing energy prices for Illinois Power's entire power supply  requirements as
a result of purchase accounting, as well as other assumptions.

                                       54

<PAGE>

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  impact the demand for our services.  Our results
are also affected by seasonal  fluctuations  caused by winter heating and summer
cooling  demand.  With  over  90%  of  Ameren's  revenues  directly  subject  to
regulation by various state and federal  agencies,  decisions by regulators  can
have a  material  impact  on the  price  we  charge  for our  services.  Our non
rate-regulated  sales are subject to market conditions for power. We principally
utilize coal,  nuclear fuel,  natural gas and oil in our operations.  The prices
for these commodities can fluctuate  significantly due to the world economic and
political environment, weather, supply and demand levels and many other factors.
We do not have fuel or purchased  power cost recovery  mechanisms in Missouri or
Illinois for our electric utility  businesses,  but we do have gas cost recovery
mechanisms in each state for our gas delivery businesses. The electric rates for
UE are set through June 2006,  and are set for CIPS and CILCO through the end of
2006 such that cost decreases or increases will not be immediately  reflected in
rates.  In addition,  the gas delivery  rates for UE in Missouri are set through
June 2006.  Fluctuations  in interest  rates  impact our cost of  borrowing  and
pension  and  postretirement   benefits.   We  employ  various  risk  management
strategies  in order to try to reduce our exposure to commodity  risks and other
risks  inherent  in our  business.  The  reliability  of our  power  plants  and
transmission  and  distribution  systems and the level of purchased  power cost,
operating and  administrative  costs and capital investment are key factors that
we seek to control in order to optimize  our results of  operations,  cash flows
and financial position.

     Ameren's net income  increased $8 million to $118 million,  or 65 cents per
share,  in the second quarter of 2004 from $110 million,  or 68 cents per share,
in the second  quarter of 2003.  The change in net income  between 2003 and 2004
was primarily due to organic growth in our service  territory,  a return to more
normal  early  summer  weather  versus the mild  weather  of 2003 and  increased
margins  on  interchange  sales,  principally  due to higher  power  prices.  In
addition,  second quarter net income benefited from a FERC-ordered refund of $18
million in exit fees,  previously  paid by UE and CIPS to the Midwest ISO in May
2004,  upon their  re-entry  into the Midwest ISO.  Partially  offsetting  these
benefits  were  increased  fuel and  purchased  power and other  operations  and
maintenance  costs  principally  as a  result  of UE's  Callaway  nuclear  plant
refueling  and  maintenance  outage.  Net income for Ameren was also  reduced by
increased  employee  benefit  costs and  decreased  sales of  emission  credits.
Increased common shares  outstanding,  primarily due to a February 2004 offering
in order to prefund a portion of the equity  financing  for the  Illinois  Power
acquisition, reduced earnings per share in the first six months of 2004.

     Ameren's  net income  increased  $4 million to $215  million,  or $1.20 per
share for the six months  ended June 30, 2004  compared to year-ago  earnings of
$211 million,  or $1.32 per share. In the first six months of 2003, Ameren's net
income  included a net cumulative  effect  after-tax gain of $18 million,  or 11
cents per share,  associated with the adoption of SFAS No. 143,  "Accounting for
Asset Retirement  Obligations."  The net SFAS No. 143 gain resulted  principally
from  the  elimination  of  non-legal   obligation  costs  of  removal  for  non
rate-regulated assets from accumulated depreciation.

     The following  table  presents the net  cumulative  effect  after-tax  gain
recorded at each of the Ameren Companies upon adoption of SFAS No. 143:

<TABLE>
<CAPTION>

   ===================================================================================================================
                      Net Cumulative Effect After-Tax Gain
   ------------------------------------------------------------------------------------------------------------------
<S>                                                                                                  <C>
   Ameren(a)...............................................................................           $   18
   UE......................................................................................                -
   CIPS....................................................................................                -
   Genco...................................................................................               18
   CILCORP(b)..............................................................................                4
   CILCO...................................................................................               24
   ===================================================================================================================
</TABLE>

(a)  Excludes  amounts for CILCORP  and CILCO prior to the  acquisition  date of
     January 31, 2003;  includes amounts for non-registrant  Ameren subsidiaries
     as well as intercompany eliminations.
(b)  Represents  predecessor  information  recorded in January 2003 prior to the
     acquisition  date of  January  31,  2003.  CILCORP  consolidates  CILCO and
     therefore includes CILCO amounts in its balances.

     Excluding  the  net  cumulative  effect  after-tax  gain  discussed  above,
Ameren's  net income  increased  $22 million for the first six months of 2004 as
compared to the same period in 2003.  The change in net income was primarily due
to

                                       55

<PAGE>
organic  growth in  revenues  due to a  recovering  economy,  favorable  weather
conditions  in the  second  quarter  of the  current  year,  increased  sales of
emission  credits,  the Midwest ISO refund and results of CILCORP being included
for an  additional  month in 2004.  Partially  offsetting  these  benefits  were
increased fuel and purchased power and other operations and maintenance costs as
a result of the Callaway  nuclear plant outage,  and increased  employee benefit
costs.  Increased common shares  outstanding  reduced earnings per share for the
first six months of 2004 as compared to the same period in 2003 for Ameren.

     As a holding  company,  Ameren's  net income  and cash flows are  primarily
generated  by its  principal  subsidiaries,  UE, CIPS,  Genco and  CILCORP.  The
following table presents the contribution by Ameren's principal  subsidiaries to
Ameren's  consolidated net income for the three months and six months ended June
30, 2004 and 2003:

<TABLE>
<CAPTION>
   ===================================================================================================================
                                                                  Three Months                   Six Months
   ------------------------------------------------------------------------------------------------------------------
                                                              2004           2003            2004           2003
                                                              ----           ----            ----           ----
<S>                                                       <C>            <C>             <C>            <C>
  Net income:
         UE(a)..........................................   $   107        $   105         $   164        $   172
         CIPS...........................................         8              3              17              4
         Genco(a).......................................        17             10              46             49
         CILCORP(b).....................................        (4)             -               -              3
         Other(c).......................................       (10)            (8)            (12)           (17)
   ------------------------------------------------------------------------------------------------------------------
   Ameren net income....................................   $   118        $   110         $   215        $   211
   ===================================================================================================================
</TABLE>

(a)  Includes  earnings  from  interchange  sales by Ameren Energy that provided
     approximately  $16  million and $33 million of UE's net income in the three
     and six months ended June 30, 2004, respectively,  (2003 - second quarter -
     $11 million;  year-to-date - $33 million) and  approximately $8 million and
     $18  million of Genco's  net income in the three and six months  ended June
     30, 2004, respectively (2003 - second quarter - $5 million;  year-to-date -
     $17 million).
(b)  Excludes  net income  prior to the  acquisition  date of January 31,  2003.
     January 2003 predecessor amount was $9 million.  CILCORP consolidates CILCO
     and therefore includes CILCO amounts in its balances.
(c)  Includes  corporate general and administrative  expenses,  transition costs
     associated  with the  CILCORP  acquisition,  and other  non  rate-regulated
     operations.

Electric Operations

     The  following  table  presents the favorable  (unfavorable)  variations in
electric  margins,  defined as electric  revenues less fuel and purchased power,
for the three  months and six months ended June 30,  2004,  from the  comparable
periods in 2003. We consider  electric  margin to be a useful measure to analyze
the change in profitability of our electric  operations between periods and have
included  the  below  analysis  as a  complement  to our  financial  information
provided  in  accordance  with  GAAP.  However,  electric  margin  may  not be a
presentation  defined under GAAP and may not be comparable to other companies or
more useful than the GAAP information we are providing.

     The variation  for Ameren  reflects the  contribution  from CILCORP for the
January  2004  period  as a  separate  line  item,  which  allows  other  margin
components  to be  comparable  year over year as we owned  CILCORP for only five
months in the first six months of 2003.  The  variations  in  CILCORP  and CILCO
electric margins are for the three months and six months ended June 30, 2004, as
compared to the same periods in 2003.
<TABLE>
<CAPTION>
   ===================================================================================================================
                                              Ameren(a)       UE       CIPS      Genco       CILCORP(b)      CILCO
   ------------------------------------------------------------------------------------------------------------------
                 Three Months
<S>                                           <C>        <C>        <C>       <C>           <C>           <C>
   Electric revenue change:
      Effect of weather (estimate).........    $    32    $    24    $    2    $     -       $     4       $     4
      Growth and other (estimate)..........         32         22         -         26           (46)          (46)
      Rate reductions......................        (10)       (10)        -          -             -             -
      Interchange revenues.................         24          6         -          9             6             6
      EEI..................................        (14)         -         -          -             -             -
   ------------------------------------------------------------------------------------------------------------------
   Total ..................................    $    64    $    42    $    2    $    35       $   (36)      $   (36)
   ------------------------------------------------------------------------------------------------------------------
   Fuel and purchased power change:
      Fuel:
          Generation and other.............    $   (20)   $     1    $    -    $   (14)      $    (6)      $    (4)
          Price............................        (11)        (8)        -         (2)           (1)           (1)
      Purchased power......................         (9)        (9)        3         (2)           39            36
      EEI .................................         (3)         -         -          -             -             -
   ------------------------------------------------------------------------------------------------------------------
   Total ..................................    $   (43)   $   (16)   $    3    $   (18)      $    32       $    31
   ------------------------------------------------------------------------------------------------------------------
   Net change in electric margins..........    $    21    $    26    $    5    $    17       $    (4)      $    (5)
   ------------------------------------------------------------------------------------------------------------------
</TABLE>
                                       56
<PAGE>
<TABLE>
<CAPTION>

   ------------------------------------------------------------------------------------------------------------------
                                              Ameren(a)       UE       CIPS      Genco       CILCORP(b)      CILCO
   ------------------------------------------------------------------------------------------------------------------
                  Six Months
<S>                                           <C>        <C>        <C>       <C>           <C>           <C>
   Electric revenue change:
      CILCORP - January 2004...............    $    47    $     -    $    -    $     -       $     -       $     -
      Effect of weather (estimate).........         18         14         -          -             3             3
      Growth and other (estimate)..........         87         50        (4)        42           (81)          (81)
      Rate reductions......................        (17)       (17)        -          -             -             -
      Interchange revenues.................         (1)       (12)        1          3            13            13
      EEI..................................        (13)         -         -          -             -             -
   ------------------------------------------------------------------------------------------------------------------
   Total ..................................    $   121    $    35     $  (3)   $    45       $   (65)      $   (65)
   ------------------------------------------------------------------------------------------------------------------
   Fuel and purchased power change:
      CILCORP - January 2004...............    $   (24)   $     -     $   -    $     -       $     -       $     -
      Fuel:
        Generation and other...............        (21)         9         -        (19)          (10)           (7)
        Price..............................        (16)       (12)        -         (4)            6             6
      Purchased power......................        (15)       (14)        9          1            57            54
      EEI .................................         (6)         -         -          -             -             -
   ------------------------------------------------------------------------------------------------------------------
   Total ..................................    $   (82)   $   (17)   $    9    $   (22)      $    53       $    53
   ------------------------------------------------------------------------------------------------------------------
   Net change in electric margins..........    $    39    $    18    $    6    $    23       $   (12)      $   (12)
   ==================================================================================================================
</TABLE>

(a)  Excludes  amounts for CILCORP  and CILCO prior to the  acquisition  date of
     January 31, 2003;  includes amounts for non-registrant  Ameren subsidiaries
     as well as intercompany eliminations.

(b)  Includes  predecessor  information for January 2003.  CILCORP  consolidates
     CILCO and therefore includes CILCO amounts in its balances.

Ameren

     Ameren's electric margin increased $21 million for the three months and $39
million for the six months ended June 30, 2004,  compared to the same periods in
2003.  Excluding the  additional  month of CILCORP  results in the current year,
electric  margin  increased  $16 million for the six months ended June 30, 2004.
The  increase in electric  margin for the six months  ended June 30,  2004,  was
primarily  attributable  to organic  sales  growth.  Sales of  emission  credits
decreased $7 million in the current  quarter,  but  increased $7 million for the
first six months of 2004 as compared to 2003.  The second quarter of the current
year also benefited from favorable weather conditions and increased  interchange
margins as compared to 2003.  The  increases to electric  margin were  partially
offset by electric rate  reductions and an increase in fuel and purchased  power
primarily due to the Callaway outage and higher fuel prices.

     The favorable  weather  conditions in the second quarter were primarily due
to a return to more normal early summer weather  conditions in 2004 versus 2003.
Cooling degree days were  approximately 75% higher in the second quarter of 2004
in our  overall  service  territory  compared  to the  same  period  in 2003 and
approximately  20%  higher  compared  to  normal  conditions.   Residential  and
commercial  sales rose 15% and 6%,  respectively,  during the quarter due to the
weather  and  organic  growth.  For the six  months  ended  June 30,  2004,  the
favorable  weather  conditions in the second  quarter were  partially  offset by
warmer  winter  weather in the first quarter of 2004.  Heating  degree days were
approximately  9% less in the first three months of 2004 in our overall  service
territory compared to the same period in 2003 and approximately 6% less compared
to normal conditions.

     Rate reductions resulting from the 2002 UE electric rate case settlement in
Missouri  negatively impacted electric revenues during the current year periods.
Annual  reductions  of $50 million,  $30 million and $30 million were  effective
April 1, 2002, April 1, 2003 and April 1, 2004, respectively.

     Interchange  margins  increased  $11  million  for the  three  months,  but
decreased  $2 million for the six months  ended June 30,  2004,  compared to the
same  periods  in 2003.  Higher  power  prices  and  improved  coal-fired  plant
generation in the second quarter  partially  offset  decreased  availability  of
low-cost  generation  due to the  Callaway  outage.  During the second  quarter,
Ameren's base load coal electric  generating  stations  increased  their average
capacity factors to 75%, up from 61% in the comparable  prior year quarter,  and
equivalent availability factors increased to 85% from 77% in the same quarter of
the prior year.  Average realized power prices on interchange sales increased to
approximately   $35  per  megawatthour  in  the  second  quarter  of  2004  from
approximately $29 per megawatthour in the second quarter of 2003.  Average power
prices for the six month  periods  ended June 30, 2004 and June 30,  2003,  were
comparable.

                                       57

<PAGE>


     Ameren's  fuel and  purchased  power  increased  $43 million in the quarter
ended June 30, 2004 and $58 million,  excluding the additional month of CILCORP,
in the six months  ended June 30,  2004,  compared to the same  periods in 2003.
This increase in both periods was due to increased power purchases  necessitated
by the Callaway  nuclear plant outage and increased  fuel prices.  See Operating
Expenses and Other Statement of Income Items below for further discussion of the
Callaway nuclear plant outage.

UE

     UE's  electric  margin  increased  $26 million for the three months and $18
million for the six months ended June 30, 2004,  as compared to the same periods
in 2003.  Favorable  weather  conditions  and  organic  sales  growth  increased
electric  margin in the second quarter and first six months of 2004, as compared
to 2003.  Residential and commercial  sales increased 15% and 7%,  respectively,
during the second  quarter due to the weather  and  organic  growth.  The second
quarter of 2004 also benefited from increased  interchange margins.  Interchange
margins  increased  $7  million  for the three  months  ended  June 30,  2004 as
compared  to  the  same  period  in  2003.  Higher  power  prices  and  improved
availability of coal-fired plants in the second quarter of 2004 more than offset
decreased  availability of generation due to the Callaway  nuclear plant outage.
The first half of 2004 also included an increase in sales of emission credits of
$16 million over the prior year  primarily  resulting from activity in the first
quarter of this year.  Partially  offsetting these increases to margin were rate
reductions  resulting  from the 2002  Missouri  electric  rate  case  settlement
mentioned  above.  Lower power prices  during the first quarter of 2004 than the
strong first quarter of 2003 primarily  contributed to a decrease in interchange
margin for the six month period ended June 30, 2004.

     Fuel and purchased  power  increased $16 million in the second  quarter and
$17 million for the first six months of 2004.  Purchased  power increased due to
the Callaway  outage  during the second  quarter of 2004 as well as an unplanned
outage during the first quarter of 2004.  The increase in fuel costs in 2004 was
principally  due to  weather-driven  demand and  increased  utilization  of UE's
coal-fired  plants due to outages at the  Callaway  plant as well as higher fuel
prices.

CIPS

     CIPS'  electric  margin  increased  $5 million for the three  months and $6
million for the six months ended June 30, 2004,  compared to the same periods in
2003.  Increases in electric  margin for the three and six month periods in 2004
were primarily attributable to organic sales growth.  Residential and commercial
sales  increased  18% and 3%,  respectively,  during the second  quarter  due to
organic growth and favorable weather conditions.

Genco

     Genco's  electric margin increased $17 million for the three months and $23
million in the six months ended June 30,  2004,  as compared to the same periods
in 2003. Increases in electric margin were primarily attributable to an increase
in wholesale margins due to sales to new customers coupled with increased use of
lower cost  generation  available  as a result of fewer power  plant  outages in
2004.  The  increase  in  wholesale  margin was in  addition  to an  increase in
interchange margins principally due to higher power prices in the second quarter
of 2004.  Interchange  margins  increased  $4 million for the three months ended
June 30, 2004, primarily due to higher power prices. However, lower power prices
during the first  quarter of 2004,  as compared to the strong  first  quarter of
2003,  resulted in interchange margins being comparable for the six months ended
June 30, 2004 to the same period in the prior year.

CILCORP and CILCO

     Electric margin decreased $4 million at CILCORP and $5 million at CILCO for
the three months ended June 30, 2004,  and decreased $12 million at both CILCORP
and CILCO for the six  months  ended  June 30,  2004,  as  compared  to the same
periods in 2003.  Decreases in electric  margin were primarily  attributable  to
reduced revenues of approximately  $85 million due to two large CILCO industrial
customers  switching to Marketing Company in July and October 2003 and transfers
of other non rate-regulated customers to Marketing Company,  partially offset by
favorable  weather  conditions.  Fuel and purchased power also decreased for the
three  months and six months  ended June 30,  2004,  due to  customer  switching
within the Ameren Companies.

                                       58

<PAGE>

Gas Operations

     The  following  table  presents the  favorable  variations  in gas margins,
defined as gas revenues less gas purchased for resale,  for the three months and
six months ended June 30, 2004, from the comparable periods in 2003. We consider
gas margin to be a useful measure to analyze the change in  profitability of our
gas operations between periods and have included the table below as a complement
to our financial  information  provided in accordance  with GAAP.  However,  gas
margin may not be a presentation defined under GAAP and may not be comparable to
other companies or more useful than the GAAP information we are providing.

<TABLE>
<CAPTION>
   ===================================================================================================================
                                                              Three Months                      Six Months
   -------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                              <C>
   Ameren(a).......................................            $       9                       $      28
   UE..............................................                    4                               6
   CIPS............................................                    -                               5
   Genco...........................................                    -                               -
   CILCORP(b)......................................                    4                               4
   CILCO...........................................                    4                               2
   ===================================================================================================================
</TABLE>
(a)  Excludes  amounts for CILCORP  and CILCO prior to the  acquisition  date of
     January 31, 2003;  includes amounts for non-registrant  Ameren subsidiaries
     as well as intercompany eliminations.
(b)  Includes  predecessor  information for January 2003.  CILCORP  consolidates
     CILCO and therefore includes CILCO amounts in its balances.

     Gas margins at Ameren, UE, CIPS, CILCORP and CILCO increased during the six
months ended June 30, 2004, primarily due to delivery rate increases,  partially
offset by milder winter weather  conditions.  Ameren's margin also increased $13
million due to the  additional  month of CILCORP  results in the  current  year.
Excluding the  additional  month of CILCORP in the current year,  Ameren's sales
were  down 4% for the six  months  ended  June 30,  2004 as a result of the mild
winter weather conditions.

     Increases in the three month period ended June 30, 2004, were due primarily
to rate increases.  The following table presents the effect of gas delivery rate
increases  on revenues  for the three months and six months ended June 30, 2004,
from the comparable periods in 2003:

<TABLE>
<CAPTION>
   ===================================================================================================================
                                                              Three Months                      Six Months
   -------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                             <C>
   Ameren..........................................            $       6                       $      15
   UE..............................................                    3                               6
   CIPS............................................                    1                               5
   Genco...........................................                    -                               -
   CILCORP.........................................                    2                               4
   CILCO...........................................                    2                               4
   ===================================================================================================================
</TABLE>

Operating Expenses and Other Statement of Income Items

     The  following  table  presents the favorable  (unfavorable)  variations in
operating and other  expenses for the three months and six months ended June 30,
2004, from the comparable period in 2003:

<TABLE>
<CAPTION>
   ===================================================================================================================
                                              Ameren(a)       UE       CIPS      Genco       CILCORP(b)      CILCO
   ------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>        <C>      <C>           <C>            <C>
                   Three Months
      Other operations and maintenance....... $   (36)     $  (20)    $   3    $   (9)       $   (12)       $   (9)
      Depreciation and amortization..........       -          (3)        -         -              5             3
      Taxes other than income taxes..........       3          (2)        2         -              4             3
      Other income and deductions............       2          (6)       (1)        -              -            (1)
      Interest...............................       3           -         1         1             (3)            1
      Income taxes...........................       7           3        (5)       (2)             2             2
   -------------------------------------------------------------------------------------------------------------------
                    Six Months
      Other operations and maintenance....... $   (50)     $  (28)    $   8    $   (6)       $   (19)       $  (15)
      Depreciation and amortization..........      (6)         (5)        -        (1)             9             5
      Taxes other than income taxes..........       1          (4)        2         2              7             7
      Other income and deductions............       6          (2)        -        (1)            (1)           (2)
      Interest...............................       5           -         2         4             (1)            3
      Income taxes...........................       -           7       (10)       (6)             5             5
   ===================================================================================================================
</TABLE>
(a)  Excludes  amounts for CILCORP  and CILCO prior to the  acquisition  date of
     January 31, 2003.  Includes amounts for non-registrant  Ameren subsidiaries
     as well as intercompany eliminations.
(b)  Includes  predecessor  information for January 2003.

                                       59

<PAGE>

Other Operations and Maintenance

     Ameren's other  operations and maintenance  expenses  increased $36 million
for the three months and $50 million for the six months ended June 30, 2004,  as
compared to the same periods in 2003.  Excluding the additional month of CILCORP
results in the current year of $15 million,  expenses  increased $35 million for
the six months ended June 30, 2004.

     Expenses at Ameren and UE increased  primarily due to increased power plant
maintenance  expenses as a result of the outage at UE's  Callaway  nuclear plant
during the second  quarter of 2004.  The outage  lasted 64 days and  resulted in
incremental  maintenance costs of approximately  $40 million.  Refueling outages
occur  approximately  every 18 months and typically  include the  replacement of
fuel and the  performance of  maintenance  and  inspections.  The last refueling
outage  occurred  in the  fall of  2002.  In  addition  to the  Callaway  outage
expenses,  employee  benefit costs were higher at Ameren during both the quarter
and the six months  ended June 30, 2004.  The adoption in the second  quarter of
2004,  retroactive  to January 1, 2004,  of FASB Staff  Position  SFAS No. 106-2
resulted in the  recognition  of  nontaxable  federal  subsidies  expected to be
provided under the Medicare  Prescription  Drug,  Improvement and  Modernization
Act,  which  partially  offset  employee  benefit  cost  increases in the second
quarter of 2004.  See Note 1 - Summary of  Significant  Accounting  Policies and
Note 12 - Pension and Other Postretirement  Benefits to our financial statements
under  Part I, Item 1 of this  report for  further  information.  UE's  employee
benefit  costs  decreased  for the  second  quarter  of 2004 as a result  of the
recording of the subsidy and were  comparable  to the prior year amounts for the
six months ended June 30, 2004.  Ameren, UE and CIPS benefited during the second
quarter of 2004 from the refund to UE, referenced above, of previously paid exit
fees upon its re-entry into the Midwest ISO.

     CIPS' other  operations  and  maintenance  expenses  decreased in the three
months and six months  ended June 30,  2004,  as compared to the same periods in
2003, primarily due to CIPS' portion of the Midwest ISO exit fee refund.

     Genco's,  CILCORP's and CILCO's other  operations and maintenance  expenses
increased in the three months and six months ended June 30, 2004, as compared to
the same periods in 2003, primarily due to higher employee benefit costs.

Depreciation and Amortization

     Ameren's  depreciation  and  amortization  expenses were  comparable to the
prior year for the three months and six months  ended June 30,  2004,  excluding
the  additional  month of CILCORP  expenses  in the current  year ($6  million).
Depreciation and amortization expenses at CIPS and Genco were also comparable in
the second quarter and first six months of 2004 to the same periods in 2003.

     UE's depreciation and amortization expenses increased in the second quarter
and for the first six months of 2004,  as compared to the same  periods in 2003,
primarily due to capital additions.

     Depreciation  and  amortization  expenses at CILCORP and CILCO decreased in
the three  months and six months  ended June 30,  2004,  as compared to the same
periods  in  2003,  primarily  due to  property  retirements  exceeding  capital
additions.

Taxes Other Than Income Taxes

     Taxes other than  income  taxes  decreased  at Ameren and CIPS in the three
months and six months  ended June 30,  2004,  as compared to the same periods in
2003, primarily due to decreased property taxes.

     UE's taxes other than income  taxes  increased  in the three months and six
months ended June 30, 2004,  as compared to the same periods in 2003,  primarily
due to higher gross  receipts  taxes as a result of increased  utility  sales in
2004.

     Genco's taxes other than income taxes  decreased in the first six months of
2004, as compared to 2003,  primarily due to favorable  property tax assessments
in the current  year.  Taxes other than income  taxes for the second  quarter of
2004 were comparable to the same period in the prior year.

                                       60

<PAGE>

     Taxes other than income taxes  decreased at CILCORP and CILCO in the second
quarter and first six months ended June 30, 2004, as compared to 2003, primarily
due to  reduced  gross  receipts  taxes as a result of  customers  switching  to
Marketing Company.

Other Income and Deductions

     Ameren's  other income and  deductions  increased in the second quarter and
first six months of 2004, as compared to the same periods in 2003, primarily due
to  increased  interest  income as a result of investing  the proceeds  from the
February 2004 equity offering.

     Other income and deductions at UE decreased in the second quarter and first
six months of 2004, as compared to the same periods in 2003,  primarily due to a
net decrease in earnings from UE's ownership  interest in EEI and donations made
in 2004.

     Other  income  and  deductions  at CIPS,  Genco,  CILCORP  and  CILCO  were
comparable  in the  second  quarter  and  first  six  months of 2004 to the same
periods in 2003.

Interest

     Interest  expense  decreased at Ameren in the second  quarter and first six
months of 2004,  as compared to the same periods in 2003,  primarily  due to the
redemption  of  Ameren  floating  rate  notes  at the  end of  2003,  as well as
redemptions of long-term debt during 2003 at its subsidiaries as noted below.

     Interest  expense  decreased  at CIPS in the second  quarter  and first six
months of 2004,  as compared to the same periods of 2003,  primarily  due to the
maturity or redemption of first mortgage bonds in the second quarter of 2003.

     Genco's  interest  expense was reduced in the second  quarter and first six
months of 2004,  as compared  to the same  periods of 2003,  primarily  due to a
reduction in principal amounts  outstanding on intercompany  promissory notes to
CIPS  and  Ameren   along  with   decreased   borrowings   from   Ameren's   non
state-regulated subsidiary money pool.

     Interest  expense  decreased  at CILCO in the second  quarter and first six
months of 2004,  as compared to the same periods of 2003,  primarily  due to the
redemption of long-term debt in the second quarter of 2003 and the first quarter
of 2004.

     Interest  expense  increased at CILCORP in the second quarter and first six
months  of 2004 due to  increased  non  state-regulated  subsidiary  money  pool
borrowings,  partially offset by redemptions of debt at CILCO and repurchases of
CILCORP debt.

     UE's interest  expense was  comparable in the second  quarter and first six
months of 2004 to the same periods in 2003.

Income Taxes

     Income tax expense was flat at Ameren for the first six months of 2004,  as
compared to the same period in 2003. Higher pre-tax income was offset by a lower
effective tax rate at Ameren for the second  quarter of 2004, as compared to the
same period in 2003,  primarily due to the recording of the expected  nontaxable
federal  Medicare  subsidy in the second  quarter of 2004 and the  exercising of
stock options by our employees in the first six months of 2004,  which  resulted
in lower taxable income, but no income statement expense.

     Income tax expense  increased  at CIPS and Genco in the second  quarter and
first six months of 2004, as compared to the same periods in 2003, primarily due
to higher pre-tax income.  Income tax expense decreased at UE, CILCORP and CILCO
primarily due to lower pre-tax income in 2004.  UE's effective tax rate was also
impacted by the recording of the expected nontaxable federal Medicare subsidy.

                                       61

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     The tariff-based gross margins of Ameren's rate-regulated utility operating
companies 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. In addition, we plan to utilize short-term debt to support
normal operations and other capital requirements.

     The  following  table  presents net cash  provided by (used in)  operating,
investing  and financing  activities  for the six months ended June 30, 2004 and
2003:

<TABLE>
<CAPTION>

   ===================================================================================================================
                         Net Cash Provided By             Net Cash Provided By             Net Cash Provided By
                               (Used In)                        (Used In)                        (Used In)
                         Operating Activities             Investing Activities             Financing Activities
   -------------------------------------------------------------------------------------------------------------------
<S>                  <C>      <C>        <C>         <C>      <C>       <C>          <C>       <C>        <C>
                      2004       2003     Variance     2004      2003    Variance      2004       2003     Variance
                    --------------------------------------------------------------------------------------------------
   Ameren(a)........ $  436    $   43       $    6   $  (367)  $  (816)    $  449     $  331    $  (141)     $   472
   UE...............    278       238           40      (258)     (225)       (33)       (20)        (1)         (19)
   CIPS.............     62        57            5        28        40        (12)      (103)       (96)          (7)
   Genco............     82       126          (44)      (28)      (31)         3        (56)       (90)          34
   CILCORP(b).......    103        50           53       (69)      (51)       (18)       (40)         -          (40)
   CILCO............     94        73           21       (72)      (53)       (19)       (27)       (34)           7
   ===================================================================================================================
</TABLE>

(a)  Excludes  amounts for CILCORP  and CILCO prior to the  acquisition  date of
     January 31, 2003;  includes amounts for non-registrant  Ameren subsidiaries
     as well as intercompany eliminations.
(b)  2003  amounts  include  January  2003  predecessor   information.   CILCORP
     consolidates CILCO and therefore includes CILCO amounts in its balances.


Cash Flows from Operating Activities

     Cash  flows  provided  by  operating  activities  increased  for all Ameren
Companies,  except Genco, for the six months ended June 30, 2004, as compared to
the same  period in 2003.  The  increase  in cash flows  provided  by  operating
activities  for Ameren  was due to  increased  earnings  resulting  from  warmer
weather  in the  second  quarter of 2004  compared  to the same  period in 2003,
stronger power prices that benefited  interchange margins,  solid organic growth
in  Ameren's  service  territory,  partially  offset  by costs  of the  Callaway
refueling  outage.  Ameren's and UE's cash flows from operating  activities also
increased  due to $18  million of cash  received in the first six months of 2004
related to UE's settlement of a dispute over mine reclamation issues with a coal
supplier.  In addition,  Ameren  operating  cash flows  benefited in 2004 by $18
million (UE - $13  million,  CIPS - $5  million)  from a refund of exit fees for
costs  incurred  related to  entering  an RTO and $8 million  from the return of
other amounts (UE - $4 million, CIPS - $2 million).

     Increases in cash flows from  operating  activities in the first six months
of 2004, compared to the same period in 2003, were partially offset by a net use
of cash for changes in working capital  requirements.  Significant  uses of cash
for the period ended June 30, 2004,  compared to 2003,  included higher accounts
receivables  in the current period due to warmer weather in the first six months
of 2004  compared  to 2003  and  lower  accounts  payable  due to  reduced  days
outstanding.  The net cash used for working capital  requirements  was partially
offset by lower  income  taxes  paid due to  timing  differences  and  decreased
materials and supplies inventories  resulting from decreased natural gas volumes
being put into storage during the winter injection period.

     Cash flows from  operating  activities  increased for UE, CILCORP and CILCO
for the six months  ended June 30,  2004,  compared  to the same period in 2003,
primarily due to the working capital changes,  partially offset by decreased net
earnings.  UE's cash from operating activities also benefited from the timing of
income tax payments and the Midwest ISO refund.  CIPS' cash flows from operating
activities  increased  for the first six  months of 2004,  compared  to the same
period in 2003,  principally  due to increased  earnings  associated  with lower
purchased  power costs and the Midwest ISO exit fee refund.  These benefits were
partially  offset by working  capital  changes  principally due to reduced taxes
paid due to the timing of payments and  increased  accounts  receivable in 2004.
Genco's cash flows from operating  activities  decreased in the first six months
of 2004,  compared to the same period in 2003,  due to working  capital  changes
primarily  resulting  from  reduced  taxes paid in the six months ended June 30,
2004,  compared to the same period in the prior year.

                                       62

<PAGE>

Cash Flows from Investing Activities

     Cash flows from  investing  activities  increased  for Ameren and Genco and
decreased for UE, CIPS, CILCORP and CILCO for the six months ended June 30, 2004
as  compared  to the same  period  in 2003.  Ameren's  decrease  in cash used in
investing  activities  was  primarily  due to $489  million in cash paid for the
acquisitions  of  CILCORP  and  Medina  Valley  in  early  2003.  Excluding  the
acquisition  costs  described  above,  Ameren's  cash  flows  used in  investing
activities  increased by approximately $40 million for the six months ended June
30,  2004  compared  to the same  period  in 2003.  The  increase  in  investing
activities for Ameren was principally due to higher construction expenditures at
UE, CILCORP and CILCO. UE's  construction  expenditures for the six months ended
June 30, 2004 primarily  included  upgrades and replacement of condenser bundles
and low pressure rotor equipment  related to the refueling  outage in the second
quarter of 2004 at UE's Callaway nuclear plant. In addition,  UE's  construction
expenditures included upgrades at UE's various other power plants and additional
construction expenditures for new transmission and distribution lines. CILCORP's
and CILCO's  construction  expenditures  were  primarily  related to power plant
upgrades  that were made in order for  CILCO's  non  rate-regulated  subsidiary,
AERG,  to have more  flexibility  in fuel  supply  for power  generation  in the
future.  Cash flows provided by investing  activities for CIPS decreased for the
six months ended June 30, 2004,  compared to the same period in 2003,  primarily
due to lower cash receipts  related to CIPS'  intercompany  note receivable with
Genco in the first six months of 2004, which totaled $49 million compared to $62
million in the first six months of 2003.  Genco's decrease in cash flows used in
investing activities  primarily resulted from reduced construction  expenditures
in the first six months of 2004  compared  to the same  period in 2003.  Genco's
construction  expenditures in 2004 included costs primarily  associated with the
replacement of a turbine generator at one of its power plants.

     We  continually  review our  generation  portfolio and expected  electrical
needs, and as a result, we could modify our plan for generation capacity,  which
could  include  the timing of when  certain  assets will be added to, or removed
from,  our  portfolio,  the type of  generation  asset  technology  that will be
employed, or whether capacity may be purchased,  among other things. Any changes
that we 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

Ameren

     Ameren's cash flows from financing  activities increased for the six months
ended June 30, 2004, as compared to the same period in 2003.  In February  2004,
Ameren  received  net proceeds of $853 million from the issuance of 19.1 million
common shares.  The proceeds are  ultimately  expected to be utilized to pay the
cash portion of the purchase  price for Ameren's  acquisition  of Illinois Power
and Dynegy's 20%  interest in EEI and to reduce  Illinois  Power debt assumed as
part of this transaction and pay related  premiums.  During the first six months
of 2004,  these proceeds were  indirectly used to repay a $100 million bank term
loan at CILCO, repay short term debt of approximately $181 million, and invested
in  short-term  investments.  The common  stock  proceeds  received in the first
quarter  of 2003 were used to fund a portion of the  acquisitions  of CILCORP in
January 2003 and Medina Valley in February 2003.  See Note 2 -  Acquisitions  to
our  financial  statements  under  Part I,  Item 1 of this  report  for  further
explanation.  In  addition,  Ameren's  increase  in cash  flows  from  financing
activities was due to the decrease in redemptions, repurchases and maturities of
long-term debt totaling $260 million in the first six months of 2004 compared to
$420 million in the same period in 2003.

     The increase in cash flows from  financing  activities at Ameren  described
above was partially  offset by an increase in the  redemptions,  repurchases and
maturities of short-term  debt, as well as the  termination of UE's nuclear fuel
lease,  totaling $193 million in the first six months of 2004,  compared to $111
million  in the same  period in 2003.  Due to the  increase  in number of common
shares outstanding,  Ameren's dividend payments on common stock increased during
the six months ended June 30, 2004,  compared to the same period in 2003,  which
also caused a decrease in Ameren's cash flows from financing activities.

UE

     UE's cash  flows from  financing  activities  decreased  for the six months
ended June 30,  2004,  as  compared to the same  period in 2003.  In 2004,  cash
provided by borrowings  from the utility money pool  arrangement of $342 million
was  partially  offset  by the $217  million  of cash  used for  repurchases  of
short-term  debt and the  nuclear  fuel  lease

                                       63

<PAGE>

termination  payment.  The lease  agreement,  which was  scheduled  to expire on
August 31, 2031,  provided  for the  financing of a portion of UE's nuclear fuel
that was processed for use or was consumed at UE's Callaway nuclear plant.

CIPS

     CIPS' cash flows from  financing  activities  decreased  for the six months
ended June 30, 2004, principally due to $74 million of repayments to the utility
money pool  arrangement  in 2004 compared to $39 million of borrowings  from the
money pool  arrangement  in 2003. The net decrease in cash provided by the money
pool  arrangement  in 2004 was partially  offset by a decrease in redemptions of
long-term debt in the first six months of 2004, compared to same period in 2003,
and reduced dividend  contributions to Ameren,  which totaled $28 million in the
first six months of 2004, compared to $39 million in the same period of 2003.

Genco

     Genco's cash flows from financing  activities  increased for the six months
ended June 30, 2004,  as compared to the same period in 2003,  primarily  due to
borrowings from the non  state-regulated  subsidiary money pool arrangement that
totaled $32 million in 2004 compared to repayments to the money pool arrangement
of $37 million in 2003.  The increase in cash flows was offset by an increase in
dividends  paid to Ameren,  which  totaled  $35  million in 2004  compared to $2
million in 2003.

     Genco has  affiliate  notes payable of $324 million and $34 million to CIPS
and Ameren, respectively,  which, by their current terms, have final payments of
principal  and interest due on May 1, 2005.  The note payable to CIPS was issued
in conjunction with the transfer of its electric  generating  assets and related
liabilities to Genco.  Genco and CIPS expect to renew or modify the CIPS note to
extend the principal maturity, which could include continued amortization of the
principal amount.  However,  such extension could require  regulatory  approval.
Genco and Ameren are currently  evaluating various  alternatives with respect to
the note payable to Ameren.  In the event the  maturities of these notes are not
extended or  restructured,  Genco may need to access other financing  sources to
meet the maturity  obligation to the extent it does not have cash available from
its operating  cash flows.  Such sources of financing  could include  borrowings
under the non  state-regulated  subsidiary  money  pool,  or  infusion of equity
capital  or new  direct  borrowings  from  Ameren,  all  subject  to  applicable
regulatory   financing   authorizations  and  provisions  in  Genco's  borrowing
agreements.

CILCORP

     CILCORP's cash flows from financing activities decreased for the six months
ended June 30,  2004,  as compared to the same period in 2003.  The decrease was
primarily due to an increase in repurchases of long-term  debt.  Borrowings from
the non  state-regulated  subsidiary  money pool  arrangement  that  totaled $87
million in 2004 were the primary  source of funds for the  repurchase of CILCO's
$100  million  secured  bank term loan.  Dividends  of $18  million in 2004 also
contributed  to the  increase  in cash  used  by  financing  activities  in 2004
compared to 2003.

CILCO

     CILCO's cash flows from financing  activities  increased for the six months
ended June 30, 2004,  as compared to the same period in 2003,  primarily  due to
reduced  redemptions  and  repurchases of short-term  debt and reduced  dividend
contributions made to CILCORP in 2004 compared to 2003. CILCO's increase in cash
flows  from  financing  activities  was offset by  reduced  borrowings  from the
utility money pool  arrangement in 2004 compared to the same period in 2003. The
proceeds  received by CILCO from the money pool arrangement along with available
cash in the first  quarter of 2004 were used to repay  CILCO's $100 million bank
term loan facility.

Short-term Borrowings and Liquidity

     Short-term  borrowings  consist of commercial paper issuances and bank line
of credit drawings with maturities generally within 1 to 45 days. As of June 30,
2004,  Ameren had  short-term  borrowings  totaling  $35  million,  of which $32
million was borrowed at EEI. The average  short-term  borrowings at EEI were $10
million for the six months ended June 30, 2004, with a weighted-average interest
rate of 1.7%.  Peak  short-term  borrowings for EEI were $44 million for the six
months ended June 30, 2004, with a weighted-average interest rate of 1.7%. CIPS,
Genco,  CILCORP and CILCO had no  short-term  borrowings as of June 30, 2004 and
December  31, 2003.  At December  31,  2003,  Ameren and

                                       64

<PAGE>

UE were the only Ameren  Companies that had short-term  borrowings  outstanding,
which totaled $161 million and $150 million, respectively.

     In July  2004,  Ameren  entered  into two new  credit  agreements  for $700
million  in  revolving  credit  facilities  to be  used  for  general  corporate
purposes, including support of Ameren and UE commercial paper programs. The $700
million in new facilities  includes a $350 million  three-year  revolving credit
facility and a $350  million  five-year  revolving  credit  facility.  These new
credit  facilities  replaced  Ameren's  existing $235 million 364-day  revolving
credit  facility,  which  matured in July 2004,  and a $130  million  multi-year
revolving  credit  facility,  which would have matured in July 2005. An existing
Ameren $235 million multi-year revolving credit facility,  which matures in July
2006, remains outstanding and available.

     At July 31, 2004, certain of the Ameren Companies had committed bank credit
facilities that totaled $1.2 billion, all of which were available for use by UE,
CIPS,  CILCO and Ameren Services  through a utility money pool  arrangement.  In
addition,  $935  million of the $1.2  billion  was  available  for use by Ameren
directly  and  most  of the non  rate-regulated  affiliates  including,  but not
limited to, Resources Company,  Genco,  Marketing Company,  AFS, AERG and Ameren
Energy, through a non state-regulated  subsidiary money pool agreement.  We have
money pool agreements with and among our  subsidiaries to coordinate and provide
for certain  short-term  cash and working capital  requirements.  Separate money
pools are maintained between  rate-regulated and non rate-regulated  businesses.
See Note 8 - Related Party  Transactions to our financial  statements under Part
I,  Item  1 of  this  report  for a  detailed  explanation  of  the  money  pool
arrangements.  The  committed  bank  credit  facilities  are used to support our
commercial paper programs under which there were no amounts  outstanding at June
30, 2004 (December 31, 2003 - $150 million). Access to our credit facilities for
any of Ameren's subsidiaries is subject to reduction based on use by affiliates.

     The following table presents the various committed credit facilities of the
Ameren Companies and EEI as of July 31, 2004:

<TABLE>
<CAPTION>

   ===================================================================================================================
             Credit Facility                    Expiration            Amount Committed           Amount Available
   -------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                        <C>                         <C>
   Ameren:(a)
       Multi-year revolving............          July 2006              $      235                 $    235
       Multi-year revolving............          July 2007                     350                      350
       Multi-year revolving............          July 2009                     350                      350
   -------------------------------------------------------------------------------------------------------------------
   UE:
       Various 364-day revolving.......      through July 2005                 154                      154
   -------------------------------------------------------------------------------------------------------------------
   CIPS:
      Two 364-day revolving............      through July 2005                  15                       15
   -------------------------------------------------------------------------------------------------------------------
   CILCO:
       Three 364-day revolving.........      through June 2005                  60                       60
   -------------------------------------------------------------------------------------------------------------------
   EEI:
       Two bank credit facilities......      through June 2005                  45                       17
   -------------------------------------------------------------------------------------------------------------------
         Total ........................                                 $    1,209                 $  1,181
   ===================================================================================================================
</TABLE>

(a)  CILCORP  and Genco may access the credit  facilities  through  intercompany
     borrowing arrangements.

     In addition to committed credit  facilities,  a further source of liquidity
for the Ameren Companies is available cash and cash equivalents.

     Ameren  and UE are  authorized  by the  SEC  under  PUHCA  to have up to an
aggregate of $1.5 billion and $1 billion,  respectively, of short-term unsecured
debt instruments  outstanding at any time. In addition,  CIPS, CILCORP and CILCO
each have PUHCA  authority  to have up to an  aggregate  of $250 million each of
short-term  unsecured  debt  instruments  outstanding  at  any  time.  Genco  is
authorized by the FERC to have up to $300 million of short-term debt outstanding
at any time.

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 for the six
months ended June 30, 2004 and 2003. For additional  information  related to the

                                       65

<PAGE>

terms and uses of these  issuances  and the  sources  of funds and terms for the
redemptions,  see Note 5 - Long-term Debt and Equity Financings to our financial
statements under Part I, Item 1 of this report.

<TABLE>
<CAPTION>

   =====================================================================================================================

                                                                                                      Six Months
                                                                                                    Ended June 30,
                                                                 Month Issued, Redeemed,      --------------------------
                                                                  Repurchased or Matured         2004          2003
   ---------------------------------------------------------------------------------------------------------------------

                                                                 <C>                      <C>           <C>
   Issuances
   Long-term debt
   UE:
       5.50% Senior secured notes due 2014..................               May                $   104        $    -
       4.75% Senior secured notes due 2015..................              April                     -           114
       5.50% Senior secured notes due 2034..................              March                     -           184
   ---------------------------------------------------------------------------------------------------------------------
   Total Ameren long-term debt issuances....................                                  $   104        $  298
   ---------------------------------------------------------------------------------------------------------------------
   Common stock
   Ameren:
       6,325,000 Shares at $40.50...........................             January              $     -        $  256
       19,063,181 Shares at $45.90..........................             February                 875             -
       DRPlus and 401(k)(a).................................             Various                   60            52
   ----------------------------------------------------------------------------------------------------------------------
   Total Ameren common stock issuances......................                                  $   935        $  308
   ----------------------------------------------------------------------------------------------------------------------
   Total Ameren long-term debt and common stock issuances...                                  $ 1,039        $  606
   ======================================================================================================================
   Redemptions, Repurchases and Maturities
   Long-term debt
   UE:
       7.00% First mortgage bonds due 2024..................               June               $   100        $    -
       81/4% First mortgage bonds due 2022..................               April                    -           104
       8.00% First mortgage bonds due 2022..................               May                      -            85
   CIPS:
       6.99% Series 97-1 first mortgage bonds due 2003......              March               $     -        $    5
       6 3/8% Series Z first mortgage bonds due 2003........              April                     -            40
       7 1/2% Series X first mortgage bonds due 2003........              April                     -            50
   CILCORP:
       9.375% Senior bonds due 2029.........................               May                     20             -
   CILCO:
       Secured bank term loan...............................             February                 100             -
       6.82% First mortgage bonds due 2003..................             February                   -            25
       8.20% First mortgage bonds due 2022..................              April                     -            65
       7.80% Two series of first mortgage bonds due 2023....              April                     -            10
   EEI:
       2000 Bank term loan, 7.61% due 2004..................               June                    40             -
   Medina Valley:
       Secured term loan due 2019...........................               June                     -            36
   ----------------------------------------------------------------------------------------------------------------------
        Total Ameren long-term debt redemptions,
           repurchases and maturities.......................                                  $   260        $  420
   ======================================================================================================================
</TABLE>

(a)  Includes  issuances of common stock of 1.2 million  shares in the first six
     months of 2004 and 1.3 million shares in the first six months of 2003 under
     our DRPlus and in connection with our 401(k) plans.

Ameren

     In June 2004,  the SEC  declared  effective  a Form S-3 shelf  registration
statement  filed by Ameren  covering the offering  from time to time of up to $2
billion of various forms of securities including long-term debt, trust preferred
securities and equity securities.  In July 2004, Ameren issued,  pursuant to the
June 2004 Form S-3 shelf  registration  statement,  10.9  million  shares of its
common stock at $42.00 per share for net proceeds of $445 million.  The proceeds
from these  offerings  are  expected to provide  funds  required to pay the cash
portion of the purchase price for our pending  acquisition of Illinois Power and
Dynegy's 20 percent interest in EEI, and to reduce Illinois Power debt,  assumed
as a part of this  transaction,  and pay  related  premiums.  Pending  such use,
and/or if the  acquisition is not completed,  we plan

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<PAGE>

to use  the net  proceeds  to  reduce  present  or  future  indebtedness  and/or
repurchase  securities  of Ameren  or its  subsidiaries.  A  portion  of the net
proceeds may also be temporarily invested in short-term instruments.  See Note 2
- Acquisitions to our financial  statements  under Part I, Item 1 of this report
for further information.

     In March 2004, the SEC declared effective a Form S-3 registration statement
filed by Ameren in  February  2004,  authorizing  the  offering  of six  million
additional shares of its common stock under DRPlus.  Shares of common stock sold
under the DRPlus  are,  at  Ameren's  option,  newly  issued  shares or 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.  For the six months ended June 30, 2004, Ameren received net
proceeds of  approximately  $60 million from the issuance of  approximately  1.2
million new common  shares  under its DRPlus and its 401(k) plans to be used for
general corporate purposes.

UE

     UE  issued  securities  totaling  $104  million  in 2004,  pursuant  to the
September  2003  Form  S-3  shelf  registration  statement  with the  amount  of
securities  remaining  available  for issuance at June 30, 2004,  totaling  $696
million.

Indebtedness Provisions, Other Covenants and Off Balance Sheet Arrangements

     See  Note  4  -  Short-term  Borrowings  and  Liquidity  to  our  financial
statements  under  Part  I,  Item  1 of  this  report  for a  discussion  of the
indebtedness  provisions  contained  in certain of the  Ameren  Companies'  bank
credit facilities. Also see Note 5 - Long-term Debt and Equity Financings to our
financial  statements  under Part I, Item 1 of this report for a  discussion  of
off-balance sheet arrangements and of the covenants and provisions  contained in
certain  of  the  Ameren  Companies'   indenture   agreements  and  Articles  of
Incorporation.

     At June 30, 2004, the Ameren  Companies and EEI were in compliance with the
provisions and covenants of their credit agreements,  indentures and Articles of
Incorporation.

     We rely on our  short-term and long-term  capital  markets as a significant
source of funding for capital  requirements  not satisfied by our operating cash
flows.  Our inability to raise capital on favorable terms,  particularly  during
times of uncertainty in the capital markets, could negatively impact our ability
to maintain or grow our  businesses.  Based on our current  credit  ratings,  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 such
that our cost of capital  would  increase  or our  ability to access the capital
markets would be adversely affected.  All of the Ameren Companies expect to fund
maturities of long-term debt and contractual  obligations  through a combination
of cash flow from operations and external financing.

Dividends

     The amount and timing of  dividends  payable on Ameren's  common  stock are
within the sole  discretion of Ameren's  Board of Directors.  Ameren's  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  historic  earnings and cash flow,  projected  earnings,  cash flow and
potential  cash flow  requirements,  dividend  payout rates at other  utilities,
return on investments  with similar risk  characteristics  and overall  business
considerations.  Dividends paid by Ameren to  stockholders  during the first six
months of 2004  totaled  $232 million or $1.27 per share (2003 - $205 million or
$1.27 per share).

     UE's Board of  Directors'  declared  quarterly  preferred  stock  dividends
totaling $1 million  payable August 15, 2004, to  shareholders of record on July
20, 2004. CIPS' Board of Directors' declared quarterly preferred stock dividends
in the amount of $1 million  payable  September  30, 2004,  to  shareholders  of
record on September 15, 2004.  CILCO's Board of  Directors'  declared  quarterly
preferred stock dividends  totaling $1 million,  which was paid on July 1, 2004,
to shareholders of record on June 4, 2004.

     Certain of our financial agreements and corporate  organizational documents
contain covenants and conditions that, among other things,  provide restrictions
on  the  Ameren  Companies'  payment  of  dividends.   Ameren  would  experience
restrictions  on  dividend  payments  if it were to  defer  contract  adjustment
payments on its equity  security  units.  UE would  experience  restrictions  on
dividend  payments  if it were to  extend  or  defer  interest  payments  on its
subordinated

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<PAGE>

debentures. CIPS has provisions restricting dividend payments based on ratios of
common stock to total  capitalization  along with provisions  related to certain
operating  expenses  and  accumulations  of earned  surplus.  Genco's  indenture
includes  restrictions  which  prohibit  making any  dividend  payments  if debt
service coverage ratios are below a defined threshold.  CILCORP has restrictions
in the event leverage ratio and interest  coverage ratio  thresholds are not met
or if  CILCORP's  senior  long-term  debt  does not have  specified  ratings  as
described in its indenture. CILCO has restrictions on dividend payments relative
to the  ratio  of its  balance  of  retained  earnings  to the  annual  dividend
requirement  on its preferred  stock and amounts to be set aside for any sinking
fund retirement of its 5.85% Series preferred stock.

     The  following  table  presents  dividends  paid  directly or indirectly to
Ameren by its subsidiaries for the six months ended June 30, 2004 and 2003:

<TABLE>
<CAPTION>

   ===================================================================================================================
                                                                                  Six Months Ended June 30,
   -------------------------------------------------------------------------------------------------------------------
                                                                                  2004                 2003
                                                                                  ----                 ----
<S>                                                                         <C>                  <C>
   UE..................................................................      $     145            $     165
   CIPS................................................................             28                   39
   Genco...............................................................             35                    2
   CILCORP (parent company only)(a)....................................              -                  (22)
   CILCO...............................................................             10                   22
   Non-registrants.....................................................             14                   (1)
   -------------------------------------------------------------------------------------------------------------------
   Dividends paid to Ameren............................................      $     232            $     205
   ===================================================================================================================
</TABLE>

(a)  Indicates funds retained from CILCO dividend.

Credit Ratings

     On July 30,  2004,  Standard  & Poor's  Ratings  Services  affirmed  its A-
long-term corporate credit ratings on Ameren, UE, CIPS, Genco, CILCORP and CILCO
and removed the ratings from  CreditWatch  with negative  implications.  The A-2
short-term  credit  for Ameren and UE were not on  CreditWatch.  The  outlook is
negative for the long-term ratings.

     On July 8, 2004,  Moody's  confirmed  Ameren's A3 senior unsecured debt and
bank loan ratings along with its A3 issuer  rating.  Moody's  rating outlook for
these ratings was stable.  This rating  action  concluded the review of Ameren's
long-term  ratings  that was  initiated on February 4, 2004 in  connection  with
Ameren's  agreement to purchase  Illinois  Power from Dynegy.  Ameren's  Prime-2
rating for short term debt,  including  commercial  paper, was not under review,
and was affirmed.

     Any adverse change in the Ameren Companies' credit ratings may reduce their
access to  capital  and/or  increase  the  costs of  borrowings  resulting  in a
negative impact on earnings.  At June 30, 2004, if the Ameren  Companies were to
receive a  sub-investment  grade  rating (less than BBB- or Baa3),  Ameren,  UE,
CIPS,  Genco,  CILCORP and CILCO could have been required to post collateral for
certain trade obligations  amounting to $65 million, $29 million, $1 million, $6
million,  $2 million  and $2 million,  respectively.  In  addition,  the cost of
borrowing under our credit facilities would increase or decrease based on credit
ratings. A credit rating is not a recommendation to buy, sell or hold securities
and should be evaluated  independently of any other rating.  Ratings are subject
to revision or withdrawal at any time by the assigning rating organization.


OUTLOOK

     We expect the following industry-wide trends and company-specific issues to
impact earnings in 2004 and beyond:

o    Economic   conditions,   which  principally   impact  native  load  demand,
     particularly  from our  industrial  customers,  were  weak for the past few
     years, but improved in 2003 and early 2004.
o    Ameren, UE and CIPS have historically achieved  weather-adjusted  growth in
     their native electric  residential and commercial load of  approximately 2%
     per year and expect this trend to continue for at least the next few years.
o    Electric rates in UE's, CIPS' and CILCO's Illinois service  territories are
     legislatively  fixed  through  January  1,  2007.  An  electric  rate  case
     settlement  in UE's  Missouri  service  territory  has  resulted  in annual
     reductions  of $50  million,  $30 million and $30 million on April 1, 2002,
     April 1, 2003, and April 1, 2004, respectively. In addition, electric rates
     in  Missouri  cannot  change  prior to July 1,  2006,  subject  to  certain
     exclusions outlined in UE's rate settlement.

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<PAGE>

o    The ICC is currently  conducting  workshops  seeking input from  interested
     parties on the  framework for retail rate  determination  and the framework
     for  generation  procurement by customers  after the current  Illinois rate
     freeze ends in 2006. We believe the ICC will make a final decision on these
     matters in 2005.
o    Power  prices in the Midwest  impact the amount of revenues  UE,  Genco and
     CILCO can  generate  by  marketing  any excess  power into the  interchange
     markets.  Power  prices in the  Midwest  also  impact  the cost of power we
     purchase in the interchange markets.  There continues to be overcapacity in
     peaking generation in the Midwest.  However, power prices increased in 2004
     and 2003 relative to 2002, due in part to higher prices for natural gas.
o    Increased expenses associated with rising employee benefit costs and higher
     insurance and security costs  associated  with  additional  measures UE has
     taken,  or may  have to take,  at its  Callaway  nuclear  plant  and  other
     operating plants related to world events.
o    UE's  Callaway  nuclear  plant will have a refueling  outage in the fall of
     2005.  Refueling outages occur  approximately every 18 months and typically
     include the  replacement of fuel and the  performance  of  maintenance  and
     inspections.  Routine refueling  outages have  historically  lasted 30 - 35
     days. If inspections discover items requiring additional  maintenance,  the
     outage period could be longer, and cost significantly  more, than expected.
     UE's fall 2005  refueling  outage is  expected  to last 70 - 75 days and is
     expected  to be  higher  in  cost  due to  the  installation  of new  steam
     generator units.
o    In January 2004,  the MoPSC  approved a settlement  with UE  authorizing an
     annual gas delivery rate increase of approximately $13 million,  which went
     into effect on February 15, 2004. The settlement provides that gas delivery
     rates cannot change prior to July 1, 2006,  subject to certain  exclusions.
     In October 2003, the ICC issued orders awarding CILCO an increase in annual
     gas  delivery  rates of $9 million and  awarding  CIPS and UE  increases in
     annual gas delivery rates of $7 million and $2 million,  respectively  that
     went into effect in November 2003.
o    In the second quarter of 2004, UE received a refund of $13 million and CIPS
     received  a refund of $5 million  upon  entering  the  Midwest  ISO.  These
     refunds were for fees  previously  paid to exit the Midwest  ISO.  However,
     Ameren,  UE and CIPS will incur higher ongoing operation costs and may lose
     some revenue as a result of  participating in the Midwest ISO. See Note 3 -
     Rate and Regulatory Matters to our financial  statements under Part I, Item
     1 of this report for additional information.
o    Ameren,  CILCORP and CILCO expect to realize  further  CILCORP  integration
     synergies associated with reduced overhead expenses and lower fuel costs.
o    Ameren  expects  the  acquisition  of  Illinois  Power to be  accretive  to
     earnings  in the  first  two  years  of  ownership  based on a  variety  of
     assumptions related to power prices, interest rates, expected synergies and
     regulatory  outcomes,  among other things.  While Ameren has  contractually
     fixed the cash outlays for  approximately  70% of Illinois  Power's  energy
     supple needs,  expectations for Illinois Power earnings remain sensitive to
     changing   energy   prices  for  Illinois   Power's   entire  power  supply
     requirements,  and other  assumptions.  In February 2004,  Ameren sold 19.1
     million  shares of new  common  stock and in July 2004,  sold 10.9  million
     shares of new Ameren common  stock.  Proceeds from these sales are expected
     to ultimately be used to finance the cash portion of the purchase  price of
     Illinois  Power and  Dynegy's  20%  interest in EEI and to reduce  Illinois
     Power  debt  assumed  as  part  of this  transaction  and  pay any  related
     premiums.  However,  prior to the  closing of the  acquisition  of Illinois
     Power,  Ameren expects the new common shares to be dilutive to earnings per
     share.

     In the ordinary course of business,  we evaluate  strategies to enhance our
financial  position,  results of operations and liquidity.  These strategies may
include potential acquisitions,  divestitures, and opportunities to reduce costs
or  increase  revenues,  and other  strategic  initiatives  in order to increase
Ameren's  shareholder  value.  We are unable to predict which,  if any, of these
initiatives will be executed,  as well as the impact these  initiatives may have
on our future financial  position,  results of operations or liquidity,  however
the impact could be material.


RISK FACTORS

     Ameren may not be able to complete its  acquisition of Illinois  Power.  If
Ameren does not  complete  the  acquisition,  dilution to its earnings per share
will result  unless Ameren is able to otherwise use the proceeds from the common
stock it issued in  February  and July  2004,  so as to avoid or  mitigate  such
dilution.

     On  February  2, 2004,  Ameren  entered  into an  agreement  with Dynegy to
purchase the stock of Illinois Power and Dynegy's 20% ownership interest in EEI.
The  total  transaction  value is  approximately  $2.3  billion,  including  the
assumption of  approximately  $1.8 billion of Illinois  Power debt and preferred
stock. Ameren's financing plan for this

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<PAGE>

transaction  includes the issuance of new Ameren common stock. In February 2004,
Ameren  issued 19.1 million  common  shares that  generated net proceeds of $853
million,  and in July 2004,  Ameren  issued  10.9  million  common  shares  that
generated net proceeds of $445  million.  Proceeds from these sales are expected
to be used to finance the cash portion of the purchase price, to reduce Illinois
Power debt assumed as part of this transaction and to pay any related  premiums.
Pending such use, and /or if the  acquisition is not  completed,  we plan to use
the net proceeds to reduce  present or future  indebtedness  and /or  repurchase
securities of Ameren or our subsidiaries.  The acquisition is subject to various
regulatory approvals,  including the ICC and the SEC and other customary closing
conditions. See Note 3 - Rate and Regulatory Matters to our financial statements
under Part I, Item 1 of this  report for  information  as to the status of these
regulatory proceedings.  On April 14, 2004, the FCC consented to the transfer of
control;  on April 30, 2004,  the initial 30 calendar day waiting period expired
without a request  by the FTC or DOJ for  additional  information  or  documents
under  the  Hart-Scott-Rodino  Act;  and in July  2004,  the FERC  approved  the
acquisition  of Illinois  Power and  Dynegy's 20%  ownership  interest in EEI by
Ameren.  Although Ameren expects to complete the transaction by the end of 2004,
it cannot be certain that all of the required approvals will be obtained, or the
other closing  conditions will be satisfied,  within that time frame, if at all,
or without terms and conditions  that may have a material  adverse effect on our
operations. Ameren is also relying on the ability of Dynegy to close the sale of
Illinois Power when the required approvals are received.  If Ameren is unable to
complete the acquisition,  the issuance of the common stock in February and July
2004,  will result in dilution to Ameren's  earnings per share unless it is able
to otherwise use the proceeds from the common stock it issued,  in a manner that
will avoid or mitigate such dilution.

     If Ameren is able to complete its acquisition of Illinois Power, Ameren may
not be able to  successfully  integrate it into its other  businesses or achieve
the benefits it anticipates.

     If Ameren completes the acquisition of Illinois Power, it cannot assure you
that it will be able to  successfully  integrate  Illinois  Power with its other
businesses.  The  integration of Illinois Power with its other  businesses  will
present  significant  challenges  and,  as a result,  Ameren  may not be able to
operate the combined company as effectively as expected. Ameren may also fail to
achieve  the  anticipated  benefits  of the  acquisition  as  quickly or as cost
effectively  as anticipated or may not be able to achieve those benefits at all.
While  Ameren  expects that this  acquisition  will be accretive to earnings per
share in the first full year of operation  after the  transaction  is completed,
this  expectation  is  based on  important  assumptions,  including  assumptions
related to expected financing  arrangements,  interest rates,  market prices for
power, synergies and regulatory outcomes,  which may ultimately be incorrect. As
a result, if Ameren is unable to integrate its businesses effectively or achieve
the benefits  anticipated,  our financial  position,  results of operations  and
liquidity may be materially adversely affected.

     The electric and gas rates that certain of the Ameren Companies are allowed
to charge in Missouri  and  Illinois  are largely set through  2006.  This "rate
freeze," along with other actions of regulators,  can  significantly  affect our
earnings, liquidity and business activities and are largely outside our control.

     The rates that  certain of the Ameren  Companies  are allowed to charge for
their  services are the single most  important  item  influencing  the financial
position,  results of operations and liquidity of the Ameren  Companies.  We are
highly regulated and the regulation of the rates that we charge our customers is
determined, in large part, outside of our control by governmental organizations,
including the MoPSC, the ICC and the FERC.  Ameren,  UE, CIPS, Genco and CILCORP
are also subject to  regulation  by the SEC under the PUHCA.  Decisions  made by
these regulators could have a material impact on our financial position, results
of operations and liquidity.

     As a part of the settlement of UE's Missouri electric rate case in 2002, UE
is subject to a rate  moratorium  providing for no changes in its electric rates
in  Missouri  before  July 1,  2006,  subject  to  limited  statutory  and other
exceptions.  A rate  reduction of $30 million went into effect on April 1, 2004,
which is the last  portion of the $110 million  rate  reduction  included in the
stipulation entered into as part of the settlement of the Missouri electric rate
case.  In addition,  as a provision of the Illinois  legislation  related to the
restructuring of the Illinois electric  industry,  a rate freeze is in effect in
Illinois  through  January 1, 2007.  This Illinois  legislation  also contains a
provision  requiring that earnings from the Illinois  jurisdiction  in excess of
certain levels be shared equally with UE's, CIPS' and CILCO's Illinois customers
through 2006.  This Illinois  legislation is also  applicable to Illinois Power.
Furthermore, as part of the settlement of UE's Missouri gas rate case, which was
approved  by the MoPSC on  January  13,  2004,  UE  agreed to a rate  moratorium
providing  for no  changes  in its gas  delivery  rates  prior to July 1,  2006,
subject to certain  exceptions  (the  increased  rates  approved  as part of the
settlement  became  effective  on  February  15,  2004).  The  ICC is  currently
conducting  workshops seeking input from interested parties on the framework for
retail rate  determination  and the  framework  for  generation

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<PAGE>

procurement by customers after the current Illinois rate freeze ends in 2006. We
believe the ICC will make a decision on these matters in 2005.

     As a part of the settlement of UE's Missouri electric rate case in 2002, UE
also undertook to use  commercially  reasonable  efforts to make critical energy
infrastructure  investments  of $2.25  billion to $2.75  billion from January 1,
2002 through June 30, 2006, including,  among other things, the addition of more
than 700 megawatts of new generation  capacity (240 megawatts of which was added
in 2002) and the replacement of steam generators at UE's Callaway nuclear plant.
The amount of energy  infrastructure  investment through June 2006, described in
the  settlement  is  consistent  with  UE's  previously  disclosed  estimate  of
construction expenditures UE expects to make over the same time period. However,
UE's agreement to a rate  moratorium  will result in these capital  expenditures
not becoming  recoverable  in rates,  or earning a return,  before July 1, 2006.
Therefore,  UE's  undertakings  with  respect  to making  energy  infrastructure
investments and funding new programs,  coupled with the rate reductions and rate
moratorium described above, could result in increased financing requirements for
UE and thus have a material impact on our liquidity.

     The Ameren Companies do not have the benefit of a fuel adjustment clause in
either Missouri or Illinois for their electric  operations that would allow them
to recover  increased  fuel and power costs from  customers.  Therefore,  to the
extent  that we have not  hedged  our fuel and power  costs,  we are  exposed to
changes in fuel and power prices to the extent fuel for our electric  generating
facilities  and power must be  purchased  on the open  market in order for us to
serve our customers.

     Steps taken and being  considered at the federal and state levels  continue
to change the structure of the electric industry and utility regulation.  At the
federal level, the FERC has been mandating  changes in the regulatory  framework
in which  transmission-owning  public  utilities,  such as UE,  CIPS  and  CILCO
operate.  In  Missouri,  where a majority of our retail  electric  revenues  are
currently derived,  restructuring bills have been introduced in the past, but no
legislation has been passed. Based on historical information in Illinois Power's
Annual  Reports  on Form  10-K  for the  year  ended  December  31,  2003,  upon
completion of the acquisition of Illinois Power,  over 50% of Ameren's  electric
revenues will be derived in Illinois.  The Illinois Customer Choice Law provides
for electric  utility  restructuring  and retail  direct  access.  Retail direct
access, which allows customers to choose their electric generation supplier, was
first offered to Illinois residential  customers on May 1, 2002. Although retail
direct access in Illinois has not had a negative effect on Ameren's  revenues or
liquidity,  we expect  competitive  forces in the electric supply segment of our
business to continue to increase.

     The  potential  negative  consequences  associated  with  further  electric
industry  restructuring  in our  service  territories,  if it  occurs,  could be
significant  and could include the impairment  and writedown of certain  assets,
including  generation related plant and net regulatory  assets,  lower revenues,
reduced profit margins and increased costs of capital and operations expenses.

     Increased  federal and state  environmental  regulation  could  require UE,
Genco and CILCO to incur  large  capital  expenditures  and  increase  operating
costs.

     Approximately  65% of  Ameren's  generating  capacity  is  coal-fired.  The
balance is nuclear,  gas-fired, hydro and oil-fired. The EPA has recently issued
proposed  regulations  with  respect  to SO2,  NOx and  mercury  emissions  from
coal-fired power plants. These new rules, if adopted,  would require significant
additional  reductions  in these  emissions  from our power  plants  in  phases,
beginning in 2010.  The rules are  currently  under a public  review and comment
period,  and may change before being issued as final late in 2004 or early 2005.
Preliminary estimates of capital costs based on current technology on the Ameren
systems  to comply  with the SO2 and NOx  rules,  as  proposed,  range from $400
million to $600 million by 2010, with an additional $500 million to $800 million
by 2015. The proposed  mercury  regulations  contain a number of options and the
final control requirements are highly uncertain.  Ameren anticipates  additional
capital  costs to comply with the mercury rules could range from $300 million to
$500  million by 2010,  with UE  incurring  approximately  half of the costs and
Genco  incurring most of the remaining  costs.  Depending upon the final mercury
rules,  additional  amounts  could be required to comply with  mercury  rules by
2018.

     In addition,  Illinois has developed a NOx control  regulation  for utility
generating plant boilers  consistent with an EPA program aimed at reducing ozone
levels in the eastern United States.  In February 2002, the EPA proposed similar
rules for  Missouri.  Ameren  currently  estimates  that the  remaining  capital
expenditures could range from $210 million to

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<PAGE>

$250  million  between  2004  and 2008 in order to  comply  with the  final  NOx
regulations in Missouri and Illinois. This estimate includes the assumption that
these rules will  require the  installation  of  selective  catalytic  reduction
technology on some units, as well as additional controls.

     We are  unable to  predict  the  ultimate  effect of any new  environmental
regulations, guidelines, enforcement initiatives or legislation on our financial
position,  results of operations  or  liquidity.  Any of these factors would add
significant  pollution  control  costs to UE's,  Genco's and CILCO's  generating
assets and therefore, could also increase financing requirements for some of the
Ameren  Companies.  While costs incurred by UE would be eligible for recovery in
rates,  subject to MoPSC or ICC  approval,  as  applicable,  there is no similar
mechanism for recovery of costs by Genco or CILCO in Illinois.

     UE's and CIPS' participation in a RTO could increase costs, reduce revenues
and reduce UE's and CIPS' control over their transmission assets.

     In  December  1999,  the FERC issued  Order 2000  requiring  all  utilities
subject to FERC  jurisdiction  to state their  intentions for joining a RTO. The
MoPSC issued an order in early 2004 authorizing UE to participate in the Midwest
ISO for a five year  period,  with  participation  after that period  subject to
further  approvals  by the MoPSC.  Subsequently,  the FERC  issued a final order
allowing UE's and CIPS'  participation  in the Midwest ISO.  Under these orders,
the MoPSC continues to set the transmission component of UE's rates to serve its
bundled retail load. CILCO is already a member of the Midwest ISO and previously
transferred functional control of its transmission system to the Midwest ISO.

     On May 1, 2004,  functional control of the UE and CIPS transmission systems
was transferred to the Midwest ISO through GridAmerica LLC, or Grid America. The
participation  by UE and CIPS in the Midwest ISO is expected to increase  annual
costs by $10  million to $20  million  in the  aggregate  and could  result in a
decrease  in annual  revenues  of  between  $5  million  and $10  million in the
aggregate. UE and CIPS may also be required to expand their transmission systems
according  to  decisions  made by a RTO  rather  than  their  internal  planning
process.  In addition,  we are unable to determine the full impact of the Energy
Markets Tariff  tendered by the Midwest ISO for filing at the FERC in March 2004
(discussed in Note 3 - Rate and Regulatory  Matters to our financial  statements
under Part I, Item 1 of this  report)  until  further  information  is available
regarding the implementation of the Energy Markets Tariff.

     Until  UE  and  CIPS   achieve  some  degree  of   operational   experience
participating in the Midwest ISO through  GridAmerica,  we are unable to predict
the ultimate impact that such  participation  or ongoing RTO developments at the
FERC or  other  regulatory  authorities  will  have on our  financial  position,
results of operations or liquidity.

     The  inability  of UE and CIPS to recover  "through  and out"  transmission
revenues could result in a material net revenue reduction.

     Through orders issued during late 2003 and early 2004, the FERC had ordered
the  elimination of regional  through-and-out  rates assessed by the Midwest ISO
that involved transmission service between the Midwest ISO and PJM regions to be
effective  May 1,  2004.  However,  on March  19,  2004,  the FERC  accepted  an
agreement  among  affected   transmission   owners  that  retains  the  regional
through-and-out  rates  until  December  1, 2004,  and  provides  for  continued
negotiations aimed at developing a long-term  transmission  pricing structure to
eliminate  seams  between the PJM and Midwest  ISO  regions  based on  specified
pricing principles.  Until the long-term transmission pricing structure has been
established,  UE and CIPS cannot predict the ultimate impact that such structure
will have on their costs and revenues.

     The substance  and  implementation  of standard  market design rules by the
FERC is uncertain and may  adversely  affect the way in which UE, CIPS and CILCO
operate their transmission assets.

     On July 31, 2002, the FERC issued its standard market design NOPR. The NOPR
proposes  a number of  changes  to the way the  current  wholesale  transmission
service and energy  markets are operated.  Specifically,  the NOPR proposes that
all  jurisdictional  transmission  facilities  be placed under the control of an
independent   transmission   provider  (similar  to  a  RTO),   proposes  a  new
transmission  service tariff that provides a single form of transmission service
for all users of the  transmission  system  including  bundled  retail load, and
proposes  a new  energy  market  and  congestion  management  system  that  uses
locational  marginal  pricing as its basis. In our initial comments on the NOPR,
which were filed at the FERC on November 15, 2002, we expressed our concern with
the potential impact of the proposed rules in their current form on the cost and
reliability  of service  to retail  customers.  We also  proposed  that  certain
modifications  be made to

                                       72

<PAGE>

the proposed rules in order to protect  transmission owners from the possibility
of trapped transmission costs that might not be recoverable from ratepayers as a
result of inconsistent  regulatory policies. We filed additional comments on the
remaining sections of the NOPR during the first quarter of 2003.

     In April 2003, the FERC issued a "white paper" reflecting comments received
in response to the NOPR. More  specifically,  the white paper indicated that the
FERC will not  assert  jurisdiction  over the  transmission  rate  component  of
bundled  retail service and will insure that existing  bundled retail  customers
retain  their  existing  transmission  rights and retain  rights for future load
growth in its final rule. Moreover,  the white paper acknowledged that the final
rule will  provide  the states  with input on  resource  adequacy  requirements,
allocation of firm transmission rights, and transmission planning. The FERC also
requested   input  on  the   flexibility   and   timing  of  the  final   rule's
implementation.

     Although  issuance of the final rule is  uncertain  and its  implementation
schedule is still unknown,  the Midwest ISO was in the process of implementing a
separate  market  design  similar to the proposed  market design in the NOPR. In
July 2003,  the Midwest  ISO filed with the FERC a revised  OATT  codifying  the
terms and  conditions  under  which it will  implement  the new  market  design.
Thereafter,  on October 17, 2003, the Midwest ISO filed a motion to withdraw its
revised OATT. On October 29, 2003,  the FERC issued a series of orders  granting
the motion for  withdrawal  of the  revised  OATT and  providing  guidance to be
followed by the  Midwest ISO in  developing  a new energy  market  design in the
future.  In March  2004,  the  Midwest  ISO  tendered  for  filing at the FERC a
proposed Energy Markets Tariff, which is intended to supercede its existing OATT
(see Note 3 - Rate and Regulatory Matters to our financial statements under Item
I, Part 1 of this  report).  Until the FERC  issues a final rule and the Midwest
ISO  finalizes  its new market  design,  we are unable to predict  the  ultimate
impact of the NOPR or the Midwest ISO new market design on our future  financial
position, results of operations or liquidity.

     The market-based rate authority currently held by UE, Genco, CILCO, AERG,
Development  Company,  Marketing  Company and Medina  Valley  could be partially
revoked as a result of FERC's new market power analysis screen order.

     In an order  issued in April  2004,  the FERC  replaced  the Supply  Margin
Assessment  Screen  previously  used  to  review   applications  by  sellers  of
electricity at wholesale for  authorization to sell power at market-based  rates
with two  alternative  measures  of market  power:  (a) an  uncommitted  pivotal
supplier  analysis and (b) an  uncommitted  market share analysis which is to be
prepared on a seasonal basis. If an applicant passes both screens,  a rebuttable
presumption will exist that it lacks  generation  market power. If the applicant
fails  either  screen,  a rebuttable  presumption  will exist that it has market
power.  Under such  circumstances,  the  applicant  may either seek to rebut the
presumption  by  preparing a  delivered  price test  (identifying  the amount of
economic  capacity from  neighboring  areas that can be delivered to the control
area) or propose  mitigation  measures.  Unless some other mitigation measure is
adopted, the applicant's  authority to sell power at market-based rates in areas
in which it has market power will be revoked, and the applicant will be required
to sell at cost-based rates in those areas.

     UE, Genco, CILCO, AERG,  Development Company,  Marketing Company and Medina
Valley currently have  authorization  from the FERC to continue to sell power at
market-based rates. However, the FERC indicated in its April order that it would
apply the new market analysis  screens to pending and future  market-based  rate
applications,  including  three-year  market-based  rate  reviews.  All  of  the
aforementioned  Ameren  entities  currently have  three-year  market-based  rate
reviews pending at the FERC. Until Ameren has evaluated the impact of the FERC's
order with respect to the Ameren  system,  we are unable to predict the ultimate
impact that the new market power analysis  screens will have on Ameren's ability
to sell power at market-based rates.

     Increasing  costs  associated  with our defined benefit  retirement  plans,
healthcare  plans and other employee  related  benefits may adversely affect our
results of operations, liquidity and financial position.

     The Ameren Companies made cash  contributions  totaling $25 million and $31
million to defined benefit retirement plans during 2003 and 2002,  respectively.
In  addition,  a minimum  pension  liability  was recorded at December 31, 2002,
which  resulted in an after-tax  charge to OCI and a reduction in  stockholders'
equity for Ameren of $102  million.  At December 31, 2003,  the minimum  pension
liability  was  reduced,  resulting  in OCI of $46  million  and an  increase in
stockholders' equity. The Ameren Companies expect to be required under the ERISA
to fund an average of  approximately  $115  million  annually  from 2005 through
2008, in order to maintain  minimum funding levels for our pension plans.  These
amounts are estimates  and may change based on actual stock market  performance,
changes in

                                       73

<PAGE>

interest rates,  and any pertinent  changes in government  regulations,  each of
which could also result in a requirement to record an additional minimum pension
liability.  Furthermore,  if Ameren completes its acquisition of Illinois Power,
we could incur material  funding  requirements  with respect to Illinois Power's
existing defined benefit retirement plans.

     In  addition  to the  costs of our  retirement  plans,  the  costs to us of
providing  healthcare  benefits to our  employees  and retirees  have  increased
substantially  in recent  years.  We believe  that our employee  benefit  costs,
including  costs  related  to  healthcare  plans for our  employees  and  former
employees,  will continue to rise. The increasing costs and funding requirements
associated with our defined benefit retirement plans, healthcare plans and other
employee  benefits may adversely affect our results of operations,  liquidity or
financial position.

     UE's,  Genco's and CILCO's  electric  generating  facilities are subject to
operational risks that could result in unscheduled plant outages,  unanticipated
operation and maintenance expenses and increased power purchase costs.

     UE,  CILCO,  Genco,  AERG,  Medina  Valley  and EEI own and  operate  coal,
nuclear,  gas-fired,  hydro and  oil-fired  generating  facilities  constituting
approximately  14,600  megawatts  (net) of  installed  capability.  Operation of
electric generating facilities involves certain risks which can adversely affect
energy output and efficiency levels. Included among these risks are:

o    increased  prices for fuel and fuel  transportation  as existing  contracts
     expire,
o    facility shutdowns due to a breakdown or failure of equipment or processes,
o    longer than anticipated maintenance outages,
o    disruptions in the delivery of fuel and lack of adequate inventories,
o    labor disputes,
o    inability to comply with regulatory or permit requirements,
o    disruptions in the delivery of electricity,
o    increased  capital  expenditures  requirements,   including  those  due  to
     environmental regulation,
o    operator error, and
o    unusual or adverse weather conditions,  including  catastrophic events such
     as  fires,  explosions,  floods  or  other  similar  occurrences  affecting
     electric generating facilities.

     A  substantial  portion  of  Genco's  and  AERG's  generating  capacity  is
committed under affiliate contracts which expire over the next several years.

     Genco and AERG have several  electric power supply  agreements  under which
Genco and AERG directly or indirectly  supply the full  requirements of UE, CIPS
and CILCO, including the following:

o    Under two electric power supply agreements, Genco is obligated to supply to
     Marketing Company,  and Marketing Company,  in turn, is obligated to supply
     to CIPS, all of the energy and capacity needed by CIPS to offer service for
     resale to its native load customers and to fulfill CIPS' other  obligations
     under all applicable federal and state tariffs or contracts.  Any power not
     used by CIPS is sold by Marketing Company under various long-term wholesale
     and retail contracts.  The agreement between CIPS and Marketing Company was
     originally set to expire on December 31, 2004. The agreement  between Genco
     and  Marketing  Company can be terminated by either party upon at least one
     year's notice,  but may not be terminated  prior to December 31, 2004. CIPS
     and Marketing Company filed in July 2004, a request with the FERC to extend
     their agreement  through  December 31, 2006. This extension was required by
     the ICC in its order approving Ameren's acquisition of CILCORP.
o    AERG has an  electric  power  supply  agreement  with  CILCO to  supply  it
     sufficient power to meet its native load  requirements.  This agreement was
     originally  set to expire on December 31, 2004.  AERG and CILCO have agreed
     to extend the power supply agreement  through December 31, 2006. Unlike the
     CIPS-Marketing  Company agreement,  the provisions of the agreement between
     CILCO and AERG allow the parties to extend the term of the  agreement,  and
     Ameren  believes  that no  further  FERC  action is  necessary  for such an
     extension to become effective. The ICC required this extension in its order
     approving Ameren's acquisition of CILCORP.

     Midwest  power  markets  have  experienced  high  levels  of  new  capacity
development  over the last several years,  which, in part,  have  contributed to
soft long-term power prices in this region. Owners of generating capacity in the

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<PAGE>

Midwest are  actively  seeking  markets for their  energy and  capacity and have
asked our regulators to closely  scrutinize power supply  arrangements among our
subsidiaries  when we have  sought  approval  to enter into  them.  It cannot be
predicted whether obtaining extensions on other long-term replacement power sale
contracts for the energy and capacity currently committed under these agreements
when they expire will be  successful.  To the extent Genco or AERG cannot secure
extensions or other  long-term  replacement  power sale contracts for the energy
and  capacity  currently  committed  under  these  agreements,   our  generating
subsidiaries  and  Marketing  Company  will face  competition  from other  power
suppliers in the Midwest and will be exposed to price risk.

     Genco  participates  with  UE in  an  agreement  to  jointly  dispatch  its
generating  facilities  with those of UE, which  thereby  produces  benefits and
efficiencies  for both generating  parties.  Pending or future federal and state
regulatory proceedings and policies may evolve in ways that could impact Genco's
ability to continue to participate in these  affiliate  transactions  on current
terms. For example,  as a result of the pending MoPSC proceeding relating to the
transfer of UE's Illinois-based utility business, there is uncertainty as to the
terms  of  the  joint  dispatch  agreement  and  also  as to its  duration.  The
termination  of the  agreement,  or  modifications  to it, could have a material
adverse effect on UE or Genco.

     Genco's and CILCO's  electric  generating  facilities  must compete for the
sale of energy and capacity, which exposes them to price risk.

     As owners  of non  rate-regulated  electric  generating  facilities,  Genco
(4,800 megawatts) and AERG (1,100 megawatts) will not have any recovery of their
costs or any  specified  rate of return set by a regulatory  body.  Of these non
rate-regulated electric generating facilities, approximately 3,500 megawatts are
currently under full requirements  contracts with our affiliates,  including the
contracts referred to in the immediately preceding risk factor. The remainder of
the generating capacity must compete for the sale of energy and capacity.  UE is
currently  seeking  regulatory  approval  of  the  transfer  by  Genco  to it of
approximately  550 megawatts of CTs at  Pinckneyville  and  Kinmundy,  Illinois,
which transfer is expected to occur in 2004, with the result that those CTs will
no longer be non rate-regulated.

     To the extent electric capacity  generated by these facilities is not under
contract to be sold,  either now or in the future,  the  revenues and results of
operations of these non rate-regulated subsidiaries will generally depend on the
prices that they can obtain for energy and  capacity in  Illinois  and  adjacent
markets.  Among the factors that could  influence  such prices (all of which are
beyond our control to a significant degree) are:

o    the current and future market prices for natural gas, fuel oil and coal,
o    current and forward prices for the sale of electricity,
o    the  extent  of  additional   supplies  of  electric  energy  from  current
     competitors or new market entrants,
o    the pace of  deregulation  in our market area and the slowing  expansion of
     deregulated markets,
o    the regulatory and pricing structures  developed for Midwest energy markets
     as they continue to evolve and the pace of development of regional  markets
     for energy and capacity outside of bilateral contracts,
o    future  pricing  for,  and  availability  of,   transmission   services  on
     transmission  systems,  the effect of RTOs,  development  and export energy
     transmission  constraints,  which could limit the ability to sell energy in
     markets adjacent to Illinois,
o    the rate of growth in electricity usage as a result of population  changes,
     regional  economic   conditions  and  the  implementation  of  conservation
     programs, and
o    climate conditions prevailing in the Midwest market from time to time.

     UE's  ownership  and  operation of a nuclear  generating  facility  creates
business, financial and waste disposal risks.

     UE owns the Callaway nuclear plant,  which represents  approximately 14% of
UE's  generation  capability.  Therefore,  UE is subject to the risks of nuclear
generation, which include the following:

o    the potential harmful effects on the environment and human health resulting
     from the  operation of nuclear  facilities  and the  storage,  handling and
     disposal of radioactive materials,
o    limitations on the amounts and types of insurance commercially available to
     cover losses that might arise in connection with UE's nuclear operations or
     those of others in the United States,
o    uncertainties  with  respect to  contingencies  and  assessment  amounts if
     insurance coverage is inadequate,

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<PAGE>

o    increased public and governmental concerns over the adequacy of security at
     nuclear power plants, and
o    uncertainties  with respect to the  technological  and financial aspects of
     decommissioning  nuclear  plants at the end of their  licensed  lives (UE's
     facility operating license for the Callaway nuclear plant expires in 2024),
     and
o    costly and extended outages from scheduled or unscheduled maintenance.

     The NRC has broad  authority  under  federal  law to impose  licensing  and
safety related requirements for the operation of nuclear generation  facilities.
In the event of  non-compliance,  the NRC has the  authority  to impose fines or
shut down a unit, or both,  depending upon its assessment of the severity of the
situation, until compliance is achieved. Revised safety requirements promulgated
by the NRC could necessitate  substantial capital expenditures at nuclear plants
such as UE's.  In  addition,  although UE has no reason to  anticipate a serious
nuclear  incident  at its plant,  if an incident  did occur,  it could harm UE's
results of  operations  or  financial  position.  A major  incident at a nuclear
facility  anywhere in the world  could  cause the NRC to limit or  prohibit  the
operation or licensing of any domestic nuclear unit.

     Operating  performance at UE's Callaway nuclear plant has recently resulted
in unscheduled plant outages and the extension of Callaway's scheduled refueling
and  maintenance  outage  in 2004.  In  addition,  Ameren  and UE have  incurred
significant  unanticipated replacement power and maintenance costs. As a result,
the  operating  performance  at UE's  Callaway  nuclear  plant has  declined  as
compared to its past  operating  performance  and the operating  performance  of
other nuclear plants in the United States. Ameren and UE are actively working to
address  factors  leading to the decline in  Callaway's  operating  performance,
including   management  and  supervision  of  operating   personnel,   equipment
reliability,  maintenance worker practices,  engineering performance and overall
organizational effectiveness. However, Ameren and UE cannot predict whether such
efforts will result in an overall improvement of operations at Callaway. Efforts
taken are  expected  to  result  in  incremental  operating  costs at  Callaway.
Further,  additional  unscheduled  or extended  outages at Callaway could have a
material effect on the financial position,  results of operations and cash flows
of Ameren and UE.


     Our energy risk management strategies may not be effective in managing fuel
and electricity  pricing risks, which could result in unanticipated  liabilities
to us or increased volatility of our earnings.

     We are  exposed  to  changes  in  market  prices  for  natural  gas,  fuel,
electricity and emission credits.  Prices for natural gas, fuel, electricity and
emission  credits may fluctuate  substantially  over relatively short periods of
time and expose us to  commodity  price  risk.  We utilize  derivatives  such as
forward contracts,  futures contracts,  options and swaps to manage these risks.
We attempt to manage our exposure from these activities  through  enforcement of
established  risk limits and risk  management  procedures.  We cannot assure you
that these  strategies  will be successful in managing our pricing risk, or that
they will not result in net  liabilities to us as a result of future  volatility
in these markets.

     In  addition,  although we  routinely  enter into  contracts  to offset our
positions (i.e., to hedge our exposure to the risks of demand, market effects of
weather  and changes in  commodity  prices),  we do not always  hedge the entire
exposure of our operations from commodity  price  volatility.  Furthermore,  our
ability to hedge our exposure to commodity  price  volatility  depends on liquid
commodity  markets.  As a  result,  to the  extent  the  commodity  markets  are
illiquid,  we may not be able to execute our risk management  strategies,  which
could result in greater open  positions than we would prefer at a given time. To
the extent that open positions exist,  fluctuating  commodity prices can improve
or diminish our financial results and financial position.

     Our  businesses  are  dependent on our ability to  successfully  access the
capital markets. We may not have access to sufficient capital in the amounts and
at the times needed.

     We  rely on  access  to  short-term  and  long-term  capital  markets  as a
significant  source of  liquidity  and  funding  for  capital  requirements  not
satisfied  by our  operating  cash  flows.  The  inability  to raise  capital on
favorable  terms,  particularly  during  times  of  uncertainty  in the  capital
markets,   could  negatively  impact  our  ability  to  maintain  and  grow  our
businesses.  Based  on our  current  credit  ratings,  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  such that our cost of
capital  would  increase or our ability to access the capital  markets  would be
adversely affected.

                                       76

<PAGE>

REGULATORY MATTERS

     See Note 2 - Acquisitions,  Note 3 - Rate and Regulatory Matters and Note 8
- Related Party Transactions to our financial statements under Part I, Item 1 of
this report.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     Market risk represents the risk of changes in value of a physical  contract
or a financial instrument, derivative or non-derivative,  caused by fluctuations
in market variables such as interest rates. 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  non-financial  or  non-quantifiable.   Such  risks  principally  include
business,  legal and operational  risks and are not represented in the following
discussion.

     Our risk management objective is to optimize our physical generating assets
within prudent risk parameters.  Our risk management  policies are set by a Risk
Management  Steering  Committee,  which  is  comprised  of  senior-level  Ameren
officers.

Interest Rate Risk

     We are exposed to market risk through changes in interest rates  associated
with:

o    long-term and short-term variable-rate debt;
o    fixed-rate debt;
o    commercial paper;
o    auction-rate long-term debt; and
o    auction-rate preferred stock.

     We manage our interest  rate  exposure by  controlling  the amount of these
instruments we hold within our total capitalization  portfolio and by monitoring
the effects of market changes in interest rates.

     The  following  table  presents the  estimated  increase  (decrease) in our
annual interest expense and net income if interest rates were to change by 1% on
variable rate debt outstanding at June 30, 2004:

<TABLE>
<CAPTION>

   ===================================================================================================================
                                                                            Interest Expense        Net Income(a)
   -------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                   <C>
   Ameren(b)...........................................................        $      5              $      (3)
   UE..................................................................               8                     (5)
   CIPS................................................................               -                      -
   Genco...............................................................               2                     (1)
   CILCORP(c)..........................................................               3                     (2)
   CILCO...............................................................               2                     (1)
   ===================================================================================================================
</TABLE>

(a)  Calculations are based on an effective tax rate of 36%.
(b)  Includes  amounts  for  non-registrant   Ameren  subsidiaries  as  well  as
     intercompany eliminations.
(c)  CILCORP  consolidates  CILCO and  therefore  includes  CILCO amounts in its
     balances.

     The model does not consider  the effects of the reduced  level of potential
overall economic activity that would exist in such an environment.  In the event
of a significant change in interest rates,  management would likely take actions
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, the sensitivity analysis assumes no change in our financial structure.

                                       77

<PAGE>

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. On 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  receivables,  executory contracts with market risk
exposures  and  leveraged  lease  investments.  The risk  associated  with trade
receivables  is  mitigated  by the large number of customers in a broad range of
industry  groups  comprising  our  customer  base.  No  non-affiliated  customer
represents  greater  than 10%, in the  aggregate,  of our  accounts  receivable.
Ameren's  revenues are primarily  derived from sales of electricity  and natural
gas to  customers in Missouri and  Illinois.  UE and Genco have credit  exposure
associated  with  accounts   receivables   from   nonaffiliated   companies  for
interchange  sales.  At June 30, 2004,  UE's,  Genco's and  Marketing  Company's
combined  credit  exposure to  non-investment  grade  counterparties  related to
interchange sales was $2 million, net of collateral.  We establish credit limits
for these  counterparties and monitor the  appropriateness of these limits on an
ongoing basis through a credit risk  management  program,  which  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 prior to entering into sales,
forwards,  swaps, futures or option contracts and monitor counterparty  exposure
associated with our leveraged leases.

Equity Price Risk

     Our costs of providing  non-contributory  defined  benefit  retirement  and
postretirement benefit plans are dependent upon a number of factors, such as the
rate of return on plan assets, discount rate, the rate of increase in healthcare
costs and  contributions  made to the plans. The market value of our plan assets
was  affected  by declines in the equity  market for 2000  through  2002 for the
pension and  postretirement  plans. As a result, a minimum pension liability was
recorded at December 31, 2002, which resulted in a charge to OCI and a reduction
in stockholders' equity. At December 31, 2003, the minimum pension liability was
reduced resulting in OCI of $46 million and an increase in stockholders' equity.
The minimum pension liability has not changed as of June 30, 2004.

     The amount of the pension  liability as of June 30, 2004, was the result of
asset returns, interest rates and our contributions to the plans during 2003. In
future years, the liability recorded,  the costs reflected in net income or OCI,
or cash contributions to the plans could increase  materially without a recovery
in equity markets in excess of our assumed return on plan assets of 8.5%. If the
fair value of the plan  assets were to grow and exceed the  accumulated  benefit
obligations in the future,  the recorded  liability  would then be reduced and a
corresponding amount of equity would be restored, net of taxes.

Commodity Price Risk

     The Ameren  Companies  are exposed to changes in market  prices for natural
gas, fuel and electricity to the extent they cannot be recovered  through rates.
For a more detailed  discussion of our commodity price risk, see Commodity Price
Risk under Part II, Item 7A of the Ameren Companies'  combined Form 10-K for the
fiscal year ended December 31, 2003. Below are tables  presenting the percentage
of fuel that is  price-hedged  and the  effects a material  change in price will
have on our coal costs not currently covered under  fixed-price  contracts as of
June 30, 2004.

     The following table presents the percentages of the required supply of coal
for our  coal-fired  power plants,  nuclear fuel and natural gas for our CTs and
distribution,  as appropriate,  which are price-hedged for the remainder of 2004
through 2008:

<TABLE>
<CAPTION>

   ===================================================================================================================
                                                                     2004               2005           2006 - 2008
   -------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>                <C>
   Ameren:
     Coal.....................................................        100%                92%               60%
     Nuclear fuel.............................................        100                100                32
     Natural gas for generation...............................         27                 16                 4
     Natural gas for distribution.............................         43                 17                 5
   -------------------------------------------------------------------------------------------------------------------
</TABLE>
                                       78

<PAGE>
<TABLE>
<CAPTION>

   -------------------------------------------------------------------------------------------------------------------
                                                                     2004               2005           2006 - 2008
   -------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>                <C>
   UE:
     Coal.....................................................        100%                88%               53%
     Nuclear fuel.............................................        100                100                32
     Natural gas for generation...............................         36                 12                 4
     Natural gas for distribution.............................         41                 14                 4
   ===================================================================================================================
   CIPS:
     Natural gas for distribution.............................         39%                17%                4%
   ===================================================================================================================
   Genco:
     Coal.....................................................        100%               100%               82%
     Natural gas for generation...............................         14                 18                 5
   ===================================================================================================================
   CILCORP:(a)
     Coal.....................................................        100%                83%               54%
     Natural gas for distribution.............................         46                 19                 6
   ===================================================================================================================
   CILCO:
     Coal.....................................................        100%                83%               54%
     Natural gas for distribution.............................         46                 19                 6
   ===================================================================================================================
</TABLE>

(a)  CILCORP  consolidates  CILCO and  therefore  includes  CILCO amounts in its
     balances.

     The following table presents the estimated increase (decrease) in our total
fuel  expense  and  net  income  if  coal  costs  were  to  change  by 1% on any
requirements currently not covered by fixed-price contracts for the remainder of
2004 through 2008:

<TABLE>
<CAPTION>
   ===================================================================================================================
                                                                                    Fuel Expense       Net Income(a)
   -------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>                <C>
   Ameren(b)..................................................................         $    6             $   3
   UE.........................................................................              3                 2
   CIPS.......................................................................              -                 -
   Genco......................................................................              1                 1
   CILCORP(c).................................................................              1                 -
   CILCO......................................................................              1                 -
   ===================================================================================================================
</TABLE>
(a)  Calculations are based on an effective tax rate of 36%.
(b)  Includes amounts for non-registrant Ameren subsidiaries.
(c)  CILCORP  consolidates  CILCO and  therefore  includes  CILCO amounts in its
     balances.

Fair Value of Contracts

     Most of our commodity  contracts  qualify for treatment as normal purchases
and normal sales. However, we utilize derivatives principally to manage the risk
of changes in market  prices for natural  gas,  fuel,  electricity  and emission
credits. Price fluctuations in natural gas, fuel and electricity cause:

o    an unrealized  appreciation  or  depreciation  of our firm  commitments  to
     purchase or sell when  purchase or sales prices  under the firm  commitment
     are compared with current commodity prices;
o    market  values of fuel and natural gas  inventories  or purchased  power to
     differ  from  the  cost  of  those  commodities  in  inventory  under  firm
     commitment; and
o    actual cash  outlays for the purchase of these  commodities  to differ from
     anticipated cash outlays.

     The  derivatives  that we use to hedge  these  risks are  dictated  by risk
management  policies and include forward contracts,  futures contracts,  options
and swaps. We continually  assess our supply and delivery  commitment  positions
against  forward  market  prices and  internally-forecasted  forward  prices and
modify our  exposure to market,  credit and  operational  risk by entering  into
various offsetting transactions. In general, we believe these transactions serve
to reduce our price risk. See Note 7 - Derivative  Financial  Instruments to our
financial   statements  under  Part  I,  Item  1  of  this  report  for  further
information.

                                       79

<PAGE>

     The following  table  presents the favorable  (unfavorable)  changes in the
fair value of all  contracts  marked-to-market  during the three  months and six
months ended June 30, 2004:

<TABLE>
<CAPTION>
   ===================================================================================================================
                                                               Ameren(a)    UE     CIPS       CILCORP(b)      CILCO
   -------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>         <C>      <C>         <C>           <C>
                         Three Months
   Fair value of contracts at beginning of period, net.....   $   18      $  (2)   $  4        $  11         $  11
     Contracts realized or otherwise settled during the
         period............................................        -          -       -            -             -
     Changes in fair values attributable to changes in
         valuation technique and assumptions                       -          -       -            -             -
     Fair value of new contracts entered into during the
         period............................................        -          -       -            -             -
     Other changes in fair value...........................        6          -       2            1             1
   -------------------------------------------------------------------------------------------------------------------
   Fair value of contracts outstanding at end
         of period, net....................................   $   24      $  (2)   $  6        $  12         $  12
   ===================================================================================================================
                          Six Months
   Fair value of contracts at beginning of period, net.....   $   12      $  (1)   $  1        $   6         $   6
     Contracts realized or otherwise settled during the
         period............................................       (4)         1      (1)          (3)           (3)
     Changes in fair values attributable to changes in
         valuation technique and assumptions                       -          -       -            -             -
     Fair value of new contracts entered into during the
         period............................................        -          -       -            -             -
     Other changes in fair value...........................       16         (2)      6            9             9
   -------------------------------------------------------------------------------------------------------------------
   Fair value of contracts outstanding at end
         of period, net....................................   $   24      $  (2)   $  6        $  12         $  12
   ===================================================================================================================
</TABLE>
(a)  Includes  amounts  for  non-registrant   Ameren  subsidiaries  as  well  as
     intercompany eliminations.
(b)  CILCORP  consolidates  CILCO and  therefore  includes  CILCO amounts in its
     balances.

<TABLE>
<CAPTION>

     The following table presents maturities of contracts as of June 30, 2004:

   ===================================================================================================================
                  Sources                   Maturity       Maturity       Maturity      Maturity in        Total
                    of                      Less than         1-3            4-5         Excess of          Fair
                Fair Value                   1 Year          Years          Years         5 Years        Value(a)
   -------------------------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>            <C>             <C>
   Ameren:
   Prices actively quoted...............     $  14          $    9         $    -         $    -          $   23
   Prices provided by other external
      sources(b)........................         1               -              -              -               1
   Prices based on models and other
      valuation methods(c)..............         2               -             (2)             -               -
   -------------------------------------------------------------------------------------------------------------------
   Total................................     $  17          $    9         $   (2)        $    -          $   24
   ===================================================================================================================
   UE:
   Prices actively quoted...............     $   2          $    2         $    -         $    -          $    4
   Prices provided by other external
      sources(b)........................         1               -              -              -               1
   Prices based on models and other
      valuation methods(c)..............        (6)              1             (2)             -              (7)
   -------------------------------------------------------------------------------------------------------------------
   Total................................     $  (3)         $    3         $   (2)        $    -          $   (2)
   ===================================================================================================================
   CIPS:
   Prices actively quoted...............     $   3          $    3         $    -         $    -          $    6
   Prices provided by other external
      sources(b)........................         -               -              -              -               -
   Prices based on models and other
      valuation methods(c)..............         -               -              -              -               -
   -------------------------------------------------------------------------------------------------------------------
   Total................................     $   3          $    3         $    -         $    -          $    6
   -------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       80

<PAGE>
<TABLE>
<CAPTION>

   -------------------------------------------------------------------------------------------------------------------
                  Sources                   Maturity       Maturity       Maturity      Maturity in        Total
                    of                      Less than         1-3            4-5         Excess of          Fair
                Fair Value                   1 Year          Years          Years         5 Years        Value(a)
   -------------------------------------------------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>            <C>             <C>
   CILCORP:(d)
   Prices actively quoted ..............     $   8          $    4         $    -         $    -          $   12
   Prices provided by other external
      sources(b)........................         -               -              -              -               -
   Prices based on models and other
      valuation methods(c)..............         -               -              -              -               -
   -------------------------------------------------------------------------------------------------------------------
   Total ...............................     $   8          $    4         $    -         $    -          $   12
   ===================================================================================================================
   CILCO:
   Prices actively quoted ..............     $   8          $    4         $    -         $    -          $   12
   Prices provided by other external
      sources(b)........................         -               -              -              -               -
   Prices based on models and other
      valuation methods(c)..............         -               -              -              -               -
   -------------------------------------------------------------------------------------------------------------------
   Total ...............................     $   8          $    4         $    -         $    -          $   12
   ===================================================================================================================
</TABLE>

(a)  Contracts  of less than $8  million  were with  non-investment-grade  rated
     counterparties.
(b)  Principally  power forwards based on a published  survey of settled forward
     pricing  and  natural  gas  swap  valuations  based  on  NYMEX  prices  for
     over-the-counter contracts.
(c)  Principally coal and SO2 option values based on a Black-Scholes  model that
     includes information from external sources and our estimates. Also includes
     power forward contract values based on our estimates.
(d)  CILCORP  consolidates  CILCO and  therefore  includes  CILCO amounts in its
     balances.


ITEM 4.  Controls and Procedures.

     (a)  Evaluation of Disclosure Controls and Procedures

     As of  June  30,  2004,  the  principal  executive  officer  and  principal
financial  officer of each  registrant have evaluated 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
that evaluation, the principal executive officer and principal financial officer
of each such  registrant  have  concluded  that  such  disclosure  controls  and
procedures  are effective in timely  alerting  them to any material  information
relating  to  such  registrant,  which  is  required  to  be  included  in  such
registrant's reports filed or submitted with the SEC under the Exchange Act.

     (b)  Change in Internal Controls

     There  has  been  no  change  in the  registrants'  internal  control  over
financial  reporting that occurred  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.

     Note 2 -  Acquisitions,  Note 3 - Rate  and  Regulatory  Matters,  Note 8 -
Related Party  Transactions  and Note 9 - Commitments and  Contingencies  to our
financial  statements under Part I, Item 1 of this report contain information on
legal and  administrative  proceedings which are incorporated by reference under
this item.

                                       81

<PAGE>


ITEM 2. CHANGES IN  SECURITIES,  USE OF PROCEEDS AND ISSUER  PURCHASES OF EQUITY
        SECURITIES.

     Ameren Corporation's  purchases of equity securities  reportable under Item
703 of Regulation S-K:

<TABLE>
<CAPTION>

   ======================================================================================================================
                          (a)Total         (b)Average          (c)Total Number of           (d)Maximum Number (or
                          Number of           Price             Shares (or Units)         Approximate Dollar Value) of
                           Shares           Paid per           Purchased as Part of        Shares (or Units) that May
                         (or Units)           Share         Publicly Announced Plans       Yet Be Purchased Under the
         Period         Purchased(a)        (or Unit)              or Programs                  Plans or Programs
   ----------------------------------------------------------------------------------------------------------------------
<S>                        <C>           <C>                       <C>                              <C>
   April 1 -
   April 30, 2004........    1,000        $    44.21                   -                               -
   May 1 -
   May 31, 2004..........   61,382             43.43                   -                               -
   June 1 -
   June 30, 2004.........      950             44.14                   -                               -
   ----------------------------------------------------------------------------------------------------------------------
   Total                    63,332        $    43.45                   -                               -
   ----------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)  These shares of Ameren common stock were purchased by Ameren in open-market
     transactions in satisfaction of Ameren's  obligations  upon the exercise by
     employees of options  issued under  Ameren's  Long-term  Incentive  Plan of
     1998.  Ameren  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 April 1 to June 30, 2004, period.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Ameren

     At Ameren's  annual  meeting of  shareholders  held on April 27, 2004,  the
following  matters  were  presented to the meeting for a vote and the results of
such voting are as follows:

     Item (1) Election of 12 directors (comprising Ameren's full Board of
              Directors) to serve until the next annual meeting of shareholders
              in 2005.

<TABLE>
<CAPTION>

   ===================================================================================================================
               Name                         For                        Withheld               Non-Voted Brokers(a)
   -------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                            <C>                             <C>
   Susan S. Elliott                     151,719,167                     3,971,806                      0
   Clifford L. Greenwalt                151,468,735                     4,222,238                      0
   Thomas A. Hays                       151,678,396                     4,012,577                      0
   Richard A. Liddy                     150,385,122                     5,305,851                      0
   Gordon R. Lohman                     151,764,063                     3,926,910                      0
   Richard A. Lumpkin                   150,526,942                     5,164,031                      0
   John Peters MacCarthy                147,760,462                     7,930,511                      0
   Paul L. Miller, Jr.                  150,616,064                     5,074,909                      0
   Charles W. Mueller                   151,794,798                     3,896,175                      0
   Douglas R. Oberhelman                141,796,966                    13,894,007                      0
   Gary L. Rainwater                    151,353,286                     4,337,686                      0
   Harvey Saligman                      150,480,134                     5,210,839                      0
   ===================================================================================================================
</TABLE>

(a)  Broker shares included in the quorum but not voting on the item.

     Item (2) Ratification of PricewaterhouseCoopers LLP as Ameren's independent
              registered public accounting firm for the fiscal year ending
              December 31, 2004.

<TABLE>
<S>                                     <C>                         <C>                    <C>
   ===================================================================================================================
               For                         Against                     Abstain               Non-Voted Brokers(a)
   -------------------------------------------------------------------------------------------------------------------
           151,263,408                    2,667,991                   1,758,182                   18,926,816
   ===================================================================================================================
</TABLE>

(a)  Broker shares included in the quorum but not voting on the item.

                                       82

<PAGE>

     Item (3) Shareholder proposal relating to the storage of irradiated fuel
     rods at UE's Callaway nuclear plant.

<TABLE>
<S>                                     <C>                          <C>                    <C>
   ===================================================================================================================
               For                         Against                     Abstain               Non-Voted Brokers(a)
   -------------------------------------------------------------------------------------------------------------------
            10,155,207                   101,417,459                  9,541,877                   53,501,853
   ===================================================================================================================
</TABLE>

(a)  Broker shares included in the quorum but not voting on the item.

UE

     At UE's  annual  meeting  of  shareholders  held on  April  27,  2004,  the
following matter was presented to the meeting for a vote and the results of such
voting are as follows:

     Item (1) Election of six directors (comprising UE's full Board of
              Directors) to serve until the next annual meeting ofshareholders
              in 2005.

<TABLE>
<CAPTION>
   ===================================================================================================================
               Name                         For                         Withheld              Non-Voted Brokers(a)
   -------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                              <C>                           <C>
   Warner L. Baxter                     102,557,609                      10,061                        0
   Gary L. Rainwater                    102,557,609                      10,061                        0
   Gary L. Randolph                     102,557,009                      10,061                        0
   Steven R. Sullivan                   102,557,609                      10,061                        0
   Thomas R. Voss                       102,557,509                      10,161                        0
   David A. Whiteley                    102,557,009                      10,061                        0
   ===================================================================================================================
</TABLE>

(a)  Broker shares included in the quorum but not voting on the item.

CIPS

     At CIPS'  annual  meeting  of  shareholders  held on April  27,  2004,  the
following matter was presented to the meeting for a vote and the results of such
voting are as follows:

     Item (1) Election of six directors (comprising CIPS' full Board of
              Directors) to serve until the next annual meeting of shareholders
              in 2005.

<TABLE>
<CAPTION>

   ===================================================================================================================
               Name                         For                        Withheld               Non-Voted Brokers(a)
   -------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                             <C>                           <C>
   Warner L. Baxter                      25,813,624                      31,963                        0
   Daniel F. Cole                        25,813,619                      31,968                        0
   Gary L. Rainwater                     25,813,614                      31,973                        0
   Steven R. Sullivan                    25,813,619                      31,968                        0
   Thomas R. Voss                        25,813,616                      31,971                        0
   David A. Whiteley                     25,813,624                      31,963                        0
   ===================================================================================================================
</TABLE>

(a)  Broker shares included in the quorum but not voting on the item.

CILCO

     At CILCO's  annual  meeting of  shareholders  held on April 27,  2004,  the
following matter was presented to the meeting for a vote and the results of such
voting are as follows:

     Item (1) Election of six directors (comprising CILCO's full Board of
              Directors) to serve until the next annual meeting of shareholders
              in 2005.

<TABLE>
<CAPTION>

   ===================================================================================================================
               Name                         For                        Withheld               Non-Voted Brokers(a)
   -------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                              <C>                          <C>
   Warner L. Baxter                      13,794,566                       1,243                        0
   Scott A. Cisel                        13,794,566                       1,243                        0
   Daniel F. Cole                        13,794,566                       1,243                        0
   Gary L. Rainwater                     13,794,566                       1,243                        0
   Steven R. Sullivan                    13,794,566                       1,243                        0
   Thomas R. Voss                        13,794,566                       1,243                        0
   ===================================================================================================================
</TABLE>

(a)  Broker shares included in the quorum but not voting on the item.

                                       83

<PAGE>

GENCO and CILCORP

     The  information  called for by this item is omitted in reliance on General
Instruction H(1)(a) and (b) of Form 10-Q.


ITEM 5. OTHER INFORMATION.

     Reference  is  made  to  Item  2.  Properties  under  Part I of the  Ameren
Companies'  combined Form 10-K for the fiscal year ended December 31, 2003 for a
discussion of UE's,  CIPS' and CILCO's written notice to MAIN of their intent to
withdraw from that  organization  effective  January 1, 2005. MAIN is a regional
electric  reliability  council  organized  for  coordinating  the  planning  and
operation of bulk power supply in the central United  States.  In July 2004, UE,
CIPS and CILCO further  notified MAIN that they agree to delay their  withdrawal
to January 1, 2006  provided the  configuration  of MAIN  remains the same.  The
right to  withdraw  effective  January 1, 2005,  was  reserved in the event that
certain utilities elect not to remain as regular MAIN members after December 31,
2004.  UE, CIPS and CILCO intend to join  another RRO prior to their  withdrawal
from MAIN.  UE, CIPS and CILCO may  withdraw  their notice of intent to withdraw
from MAIN at any time.


ITEM 6. Exhibits and Reports on Form 8-K.

     (a)  Exhibits.  The  documents  listed  below are being  filed on behalf of
Ameren,   UE,  CIPS,  Genco,   CILCORP  and  CILCO   (collectively  the  "Ameren
Companies").

<TABLE>
<CAPTION>

   ----------------------------------------------------------------------------------------------------------------------------
        Exhibit Designation         Registrant(s)                               Nature of Exhibit
   ----------------------------------------------------------------------------------------------------------------------------
<S>                               <C>              <C>
   Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
   ----------------------------------------------------------------------------------------------------------------------------
                2.1                Ameren           Amendment No. 2, dated as of April 30, 2004, to Stock Purchase Agreement,
                                   Companies        dated as of February 2, 2004, by and between Dynegy and certain of its
                                                    subsidiaries and Ameren
   ----------------------------------------------------------------------------------------------------------------------------
                                   Ameren           Amendment No. 3, dated as of May 31, 2004, to Stock Purchase Agreement,
                2.2                Companies        dated as of February 2, 2004, by and between Dynegy and certain of its
                                                    subsidiaries and Ameren
   ----------------------------------------------------------------------------------------------------------------------------
   Material Contracts
   ----------------------------------------------------------------------------------------------------------------------------
                10.1               Ameren           Three-Year Revolving Credit Agreement dated as of July 14, 2004
   ----------------------------------------------------------------------------------------------------------------------------
                10.2               Ameren           Five-Year Revolving Credit Agreement dated as of July 14, 2004
   ----------------------------------------------------------------------------------------------------------------------------
                                   Ameren           Extension of Power Supply between AERG and CILCO
                10.3               CILCORP
                                   CILCO
   ----------------------------------------------------------------------------------------------------------------------------
   Code of Ethics
   ----------------------------------------------------------------------------------------------------------------------------
                14.1               Ameren           *Code of Ethics amended as of June 11, 2004
                                   Companies
   ----------------------------------------------------------------------------------------------------------------------------
   Rule 13a-14(a) / 15d-14(a) Certifications
   ----------------------------------------------------------------------------------------------------------------------------
                31.1               Ameren           Rule13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
                                                    Ameren
   ----------------------------------------------------------------------------------------------------------------------------
                31.2               Ameren           Rule 13a-14(a)/15d-14(a) Certification of Principal  Financial Officer of
                                                    Ameren
   ----------------------------------------------------------------------------------------------------------------------------
                31.3               UE               Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
                                                    UE
   ----------------------------------------------------------------------------------------------------------------------------
                31.4               UE               Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of
                                                    UE
   ----------------------------------------------------------------------------------------------------------------------------
                31.5               CIPS             Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
                                                    CIPS
   ----------------------------------------------------------------------------------------------------------------------------
                31.6               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
                                                    Genco
   ----------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       84

<PAGE>
<TABLE>
<CAPTION>

   ----------------------------------------------------------------------------------------------------------------------------
        Exhibit Designation         Registrant(s)                               Nature of Exhibit
   ----------------------------------------------------------------------------------------------------------------------------
<S>                               <C>              <C>
                31.8               Genco            Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of
                                                    Genco
   ----------------------------------------------------------------------------------------------------------------------------
                31.9               CILCORP          Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
                                                    CILCORP
   ----------------------------------------------------------------------------------------------------------------------------
                31.10              CILCORP          Rule13a-14(a)/15d-14(a) Certification of Principal Financial Officer of
                                                    CILCORP
   ----------------------------------------------------------------------------------------------------------------------------
                31.11              CILCO            Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
                                                    CILCO
   ----------------------------------------------------------------------------------------------------------------------------
                31.12              CILCO            Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer of
                                                    CILCO
   ----------------------------------------------------------------------------------------------------------------------------
   Section 1350 Certifications
   ----------------------------------------------------------------------------------------------------------------------------
                32.1               Ameren           Section 1350 Certification of Principal Executive Officer of Ameren
   ----------------------------------------------------------------------------------------------------------------------------
                32.2               Ameren           Section 1350 Certification of Principal Financial Officer of Ameren
   ----------------------------------------------------------------------------------------------------------------------------
                32.3               UE               Section 1350 Certification of Principal Executive Officer of UE
   ----------------------------------------------------------------------------------------------------------------------------
                32.4               UE               Section 1350 Certification of Principal Financial Officer of UE
   ----------------------------------------------------------------------------------------------------------------------------
                32.5               CIPS             Section 1350 Certification of Principal Executive Officer of CIPS
   ----------------------------------------------------------------------------------------------------------------------------
                32.6               CIPS             Section1350 Certification of Principal Financial Officer of CIPS
   ----------------------------------------------------------------------------------------------------------------------------
                32.7               Genco            Section 1350 Certification of Principal Executive Officer of Genco
   ----------------------------------------------------------------------------------------------------------------------------
                32.8               Genco            Section 1350 Certification of Principal Financial Officer of Genco
   ----------------------------------------------------------------------------------------------------------------------------
                32.9               CILCORP          Section 1350 Certification of Principal Executive Officer of CILCORP
   ----------------------------------------------------------------------------------------------------------------------------
                32.10              CILCORP          Section 1350 Certification of Principal Financial Officer of CILCORP
   ----------------------------------------------------------------------------------------------------------------------------
                32.11              CILCO            Section 1350 Certification of Principal Executive Officer of CILCO
   ----------------------------------------------------------------------------------------------------------------------------
                32.12              CILCO            Section 1350 Certification of Principal Financial Officer of CILCO
   ----------------------------------------------------------------------------------------------------------------------------
</TABLE>


     *    Revisions  to the Code of Ethics  are also  being  posted on  Ameren's
          website  within five business days following the date of the revision,
          in accordance with SEC regulation.

     (b)  Reports on Form 8-K. The Ameren Companies filed the following  reports
          on Form 8-K during the quarterly period ended June 30, 2004:

<TABLE>
<CAPTION>


                              Date of Report                Items Reported              Financial Statements Filed
                              --------------                --------------              --------------------------
<S>                          <C>                                <C>                           <C>
                              Ameren:
                              April 29, 2004 (a)                 12                             (b)
                              May 18, 2004                       5, 7                           None
                              UE:
                              May 18, 2004                       5, 7                           None
                              CIPS:
                              None
                              Genco:
                              None
                              CILCORP:
                              None
                              CILCO:
                              None

</TABLE>

     (a)  This report was furnished  pursuant to Item 12 and not deemed  "filed"
          for  purposes  of Section 18 of the  Exchange  Act.
     (b)  Consolidated  operating  statistics  for three  months ended March 31,
          2004, and March 31, 2003,  unaudited  consolidated balance sheet as of
          March  31,  2004,  and  December  31,  2003,  unaudited   consolidated
          statement of income for three  months ended March 31, 2004,  and March
          31, 2003, and unaudited consolidated statement of cash flows for three
          months ended March 31, 2004 and March 31, 2003.

                                       85

<PAGE>



                                   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 Controller
                                   (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)


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<PAGE>


                                         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)


Date:  August 9, 2004



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