**UNITED
STATES**
 **SECURITIES
AND EXCHANGE COMMISSION**
 Washington,
D.C. 20549
 
 **FORM
10-Q**
 
 (X)  Quarterly
report pursuant to Section 13 or 15(d)
 of the
Securities Exchange Act of 1934
 **for
the Quarterly Period Ended March 31, 2005**
 OR
 (  
)  Transition
report pursuant to Section 13 or 15(d)
 of the
Securities Exchange Act of 1934
 for the
transition period from ___  to
____ .
 
 
 Commission
      File
      Number
    Exact
      Name of Registrant as specified in its charter;
      State
      of Incorporation;
      Address
      and Telephone Number
    IRS
      Employer
      Identification
      No.1-14756
    **Ameren
      Corporation**
    43-1723446(Missouri
      Corporation)1901
      Chouteau AvenueSt.
      Louis, Missouri 63103(314)
      621-32221-2967
    **Union
      Electric Company**
    43-0559760(Missouri
      Corporation)1901
      Chouteau AvenueSt.
      Louis, Missouri 63103(314)
      621-32221-3672
    **Central
      Illinois Public Service Company**
    37-0211380(Illinois
      Corporation)607
      East Adams StreetSpringfield,
      Illinois 62739(217)
      523-3600333-56594
    **Ameren
      Energy Generating Company**
    37-1395586(Illinois
      Corporation)1901
      Chouteau AvenueSt.
      Louis, Missouri 63103(314)
      621-32222-95569
    **CILCORP
      Inc.**
    37-1169387(Illinois
      Corporation)300
      Liberty StreetPeoria,
      Illinois 61602(309)
      677-52711-2732
    **Central
      Illinois Light Company**
    37-0211050(Illinois
      Corporation)300
      Liberty StreetPeoria,
      Illinois 61602(309)
      677-52711-3004
    **Illinois
      Power Company**
    37-0344645(Illinois
      Corporation)500
      S. 27th StreetDecatur,
      Illinois 62521(217)
      424-6600
 
   
   Indicate
by check mark whether the Registrants: (1) have filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) have been subject to such filing require-ments
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)Illinois
      Power Company
    Yes
    (
        )
    No
    (X)
 
  The
number of shares outstanding of each Registrant’s classes of common stock as of
May 2, 2005, was as follows:
 
 Ameren
      Corporation
    Common
      stock, $.01 par value per share - 195,908,104Union
      Electric Company
    Common
      stock, $5 par value per share, held by Ameren
      Corporation
      (parent company of the Registrant) - 102,123,834Central
      Illinois Public Service Company
    Common
      stock, no par value, held by Ameren
      Corporation
      (parent company of the Registrant) - 25,452,373Ameren
      Energy Generating Company
    Common
      stock, no par value, held by Ameren Energy
      Development
      Company (parent company of the
      Registrant
      and indirect subsidiary of Ameren
      Corporation)
      - 2,000CILCORP
      Inc.
    Common
      stock, no par value, held by Ameren
      Corporation
      (parent company of the Registrant) - 1,000Central
      Illinois Light Company
    Common
      stock, no par value, held by CILCORP Inc.
      (parent
      company of the Registrant and subsidiary of
      Ameren
      Corporation) - 13,563,871Illinois
      Power Company
    Common
      stock, no par value, held by Ameren
      Corporation
      (parent company of the Registrant) -
23,000,000
 
 **OMISSION
OF CERTAIN INFORMATION**
 
 Ameren
Energy Generating Company and CILCORP Inc. meet the conditions set forth in
General Instruction H(1)(a) and (b) of Form 10-Q and are therefore filing this
form with the reduced disclosure format allowed under that General
Instruction.
 
 
  This
combined Form 10-Q is separately filed by Ameren Corporation, Union Electric
Company, Central Illinois Public Service Company, Ameren Energy Generating
Company, CILCORP Inc., Central Illinois Light Company, and Illinois Power
Company. Each Registrant hereto is filing on its own behalf all of the
information contained in this quarterly report that relates to such Registrant.
Each Registrant hereto is not filing any information that does not relate to
such Registrant, and therefore makes no representation as to any such
information.
 
 On
September 30, 2004, Ameren Corporation completed its acquisition of Illinois
Power Company (see Note 2 - Acquisitions to our financial statements under Part
I, Item 1, of this report for further information). Commencing with the Annual
Report on Form 10-K for the fiscal year ended December 31, 2004, Illinois Power
Company is included in the combined filing of Ameren Corporation and its other
Registrant subsidiaries.
 
   
   **TABLE
OF CONTENTS**
 **Page**Glossary
      of Terms and Abbreviations
    4Forward-looking
      Statements
    6**PART
      I****Financial
      Information**Item
      1.Financial
      Statements (Unaudited)**Ameren
      Corporation**Consolidated
      Statement of Income
    7Consolidated
      Balance Sheet
    8Consolidated
      Statement of Cash Flows
    9**Union
      Electric Company**Consolidated
      Statement of Income
    10Consolidated
      Balance Sheet
    11Consolidated
      Statement of Cash Flows
    12**Central
      Illinois Public Service Company**Statement
      of Income
    13Balance
      Sheet
    14Statement
      of Cash Flows
    15**Ameren
      Energy Generating Company**Consolidated
      Statement of Income
    16Consolidated
      Balance Sheet
    17Consolidated
      Statement of Cash Flows
    18**CILCORP
      Inc.**Consolidated
      Statement of Income
    19Consolidated
      Balance Sheet
    20Consolidated
      Statement of Cash Flows
    21**Central
      Illinois Light Company**Consolidated
      Statement of Income
    22Consolidated
      Balance Sheet
    23Consolidated
      Statement of Cash Flows
    24**Illinois
      Power Company**Consolidated
      Statement of Income
    25Consolidated
      Balance Sheet
    26Consolidated
      Statement of Cash Flows
    27Combined
      Notes to Financial Statements
    28Item
      2.Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
    50Item
      3.Quantitative
      and Qualitative Disclosures About Market Risk
    68Item
      4.Controls
      and Procedures
    71**PART
      II****Other
      Information**Item
      1.Legal
      Proceedings
    72Item
      2.     Unregistered
      Sales of Equity Securities and Use of Proceeds
    72Item
      6Exhibits
    72Signatures
    74
 
 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 on
page 6 of 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.
 
 
 3
 ****
 **GLOSSARY
OF TERMS AND ABBREVIATIONS**
 
 We use
the words “our,” “we” or “us” with respect to certain information that relates
to all Ameren Companies, as defined below. When appropriate, subsidiaries of
Ameren are named specifically as we discuss their various business
activities.
 ***AERG*** -
AmerenEnergy Resources Generating Company, a CILCO subsidiary that operates a
non-rate-regulated electric generation business in Illinois.
 ***AFS*** - Ameren
Energy Fuels and Services Company, a Resources Company subsidiary that procures
fuel and natural gas and manages the related risks for the Ameren
Companies.
 ***Ameren*** - Ameren
Corporation and its subsidiaries on a consolidated basis. In references to
financing activities, acquisition activities, or liquidity arrangements, Ameren
is defined as Ameren Corporation, the parent.
 ***Ameren
Companies*** - The
individual Registrants within the Ameren consolidated group.
 ***Ameren
Energy*** - Ameren
Energy, Inc., an Ameren Corporation subsidiary that 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, an Ameren Corporation subsidiary that provides support
services to Ameren and its subsidiaries.
 ***Capacity
factor*** - A
percentage measure that indicates how much of an electric power generating
unit’s capacity was used during a specific period.
 ***CILCO*** - Central
Illinois Light Company, a CILCORP subsidiary that operates a rate-regulated
electric transmission and distribution business, a primarily non-rate-regulated
electric generation business through AERG, and a rate-regulated natural gas
transmission and distribution business, all in Illinois, as AmerenCILCO. CILCO
owns all of the common stock of AERG.
 ***CILCORP*** - CILCORP
Inc., an Ameren Corporation subsidiary that operates as a holding company for
CILCO.
 ***CIPS*** - Central
Illinois Public Service Company, an Ameren Corporation subsidiary that operates
a rate-regulated electric and natural gas transmission and distribution business
in Illinois as AmerenCIPS.
 ***CT*** -
Combustion turbine electric generation equipment used primarily for peaking
capacity.
 ***Development
Company*** - Ameren
Energy Development Company, a Resources Company subsidiary and Genco parent,
which primarily develops and constructs generating facilities for
Genco.
 ***DMG*** - Dynegy
Midwest Generation, Inc., a Dynegy subsidiary.
 ***DOE*** -
Department of Energy, a U.S. government agency.
 ***DRPlus*** - Ameren
Corporation’s dividend reinvestment and direct stock purchase plan.
 ***Dynegy*** - Dynegy
Inc.
 ***DYPM*** - Dynegy
Power Marketing, Inc., a Dynegy subsidiary.
 ***EEI*** -
Electric Energy, Inc., an 80%-owned Ameren Corporation subsidiary (40% owned by
UE and 40% owned by Resources Company) that operates electric generation and
transmission facilities in Illinois. The remaining 20% is owned by Kentucky
Utilities Company.
 ***EPA*** -
Environmental Protection Agency, a U.S. government agency.
 ***Equivalent
availability factor*** - A
measure that indicates the percentage of time an electric power generating unit
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.
 ***FERC*** - Federal
Energy Regulatory Commission, a U.S. government agency.
 ***FIN*** -
A ****** FASB
Interpretation intended to clarify accounting pronouncements previously issued
by the FASB.
 ***Fitch*** - Fitch
Ratings, a credit rating agency.
 ***FSP*** - FASB
Staff Position, which provides application guidance on FASB
literature.
 **FTRs** -
Financial Transmission Rights, financial instruments that entitle the holder to
pay or receive compensation for certain congestion-related transmission charges
between two designated points.
 ***GAAP*** -
Generally accepted accounting principles in the United States of
America.
 ***Genco*** - Ameren
Energy Generating Company, a Development Company subsidiary that operates a
non-rate-regulated electric generation business in Illinois and
Missouri.
 ***Gigawatthour*** - One
thousand megawatthours.
 ***GridAmerica
Companies*** - UE,
CIPS, American Transmission Systems, Inc. (a subsidiary of FirstEnergy Corp.),
and Northern Indiana Public Service Company (a subsidiary of NiSource, Inc.).
Effective November 1, 2005, UE and CIPS will withdraw from GridAmerica and
become direct members of MISO.
 ***Heating
degree-days*** - The
summation of negative differences between the mean daily temperature and a 65-
degree Fahrenheit base. This statistic is useful as an indicator of demand for
electricity and natural gas for winter space heating for residential and
commercial customers.
 ***ICC*** -
Illinois Commerce Commission, a state agency that regulates the Illinois utility
businesses and operations of CIPS, CILCO, IP and prior to May 2, 2005,
UE.
  4
 
 ***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.
 ***Illinova*** - ****** Illinova
Corporation, the former parent company of IP.
 ***IP*** - ****** Illinois
Power Company, which was acquired from Dynegy by, and became a subsidiary of,
Ameren Corporation on September 30, 2004. IP operates a rate-regulated electric
and natural gas transmission and distribution business in Illinois as
AmerenIP.
 ***IP
LLC*** -
Illinois Power Securitization Limited Liability Company, which is a
special-purpose Delaware limited liability company. Under FIN No. 46R,
“Consolidation of Variable-interest Entities,” IP LLC was no longer consolidated
within IP’s financial statements as of December 31, 2003.
 ***IP
SPT*** -
Illinois Power Special Purpose Trust, which was created as a subsidiary of IP
LLC to issue TFNs as allowed under Illinois’ deregulation legislation. Pursuant
to FIN No. 46R, IP SPT is a variable-interest entity, as the equity investment
is not sufficient to permit IP SPT to finance its activities without additional
subordinated debt. As of December 31, 2003, under FIN No. 46R, IP SPT was no
longer consolidated within IP’s financial statements.
 ***Jobs
Creation Act*** - ****** The
American Jobs Creation Act of 2004.
 ***Kilowatthour*** - ****** A measure
of electricity consumption equivalent to the use of 1,000 watts of power over a
period of one hour.
 ***Marketing
Company*** - ****** Ameren
Energy Marketing Company, a Resources Company subsidiary that markets power,
primarily for periods over one year.
 ***Medina
Valley*** -
AmerenEnergy ****** Medina
Valley Cogen (No. 4) LLC and its subsidiaries, which are all Resources Company
subsidiaries, which indirectly own a 40-megawatt gas-fired electric generation
plant.
 ***Megawatthour*** - One
thousand kilowatthours.
 ***MGP*** - ****** Manufactured
gas plant.
 ***MISO*** - ****** Midwest
Independent Transmission System Operator, Inc.
 ***MISO
Day Two Market*** - ****** A market
that began operating on April 1, 2005, and uses market-based pricing to
compensate market participants for power, incorporating transmission congestion
and line losses. The previous system required generators to make advance
reservations for transmission service.
 ***Money
pool*** - ****** Borrowing
agreements among Ameren and its subsidiaries to coordinate and provide for
certain short-term cash and working capital requirements. Separate money pools
are maintained between rate-regulated and non-rate-regulated businesses. These
are referred to as the utility money pool and the non-state-regulated subsidiary
money pool, respectively.
 ***Moody’s*** - ****** Moody’s
Investors Service Inc., a credit rating agency.
 ***MoPSC*** -
Missouri Public Service Commission, a state agency that regulates the Missouri
utility business and operations of UE.
 ***Native
Load Customers*** - The
wholesale and retail customers on whose behalf UE, CIPS, CILCO and IP have
undertaken an obligation to construct and operate an electric transmission and
distribution system.
 ***NOPR*** - ****** Notice of
Proposed Rulemaking issued by the FERC.
 ***NO*** ***x*** ****** - ****** Nitrogen
oxide.
 ***NRC*** - Nuclear
Regulatory Commission, a U.S. government agency.
 ***NYMEX*** - New
York Mercantile Exchange.
 ***OCI*** - ****** Other
Comprehensive Income (Loss) as defined by GAAP.
 ***PGA*** -
Purchased Gas Adjustment tariffs, which allow the passing through of the actual
cost of natural gas to utility customers.
 ***PUHCA*** - Public
Utility Holding Company Act of 1935, as amended.
 ***Resources
Company*** - Ameren
Energy Resources Company, an Ameren Corporation subsidiary that consists of
non-rate-regulated operations, including Development Company, Genco, Marketing
Company, AFS, and Medina Valley.
 ***RTO*** -
Regional Transmission Organization.
 ***S&P*** -
Standard and Poor’s, a division of The McGraw Hill Companies, Inc., a credit
rating agency.
 ***SEC*** -
Securities and Exchange Commission, a U.S. government agency.
 ***SFAS*** - ****** Statement
of Financial Accounting Standards, the accounting and financial reporting rules
issued by the FASB.
 ***SO*** ***2*** - ****** Sulfur
dioxide.
 ***TFN*** -
Transitional Funding Trust Notes issued by IP SPT as allowed under Illinois’
deregulation legislation. IP must designate a portion of cash received from
customer billings to fund payment of the TFNs. The proceeds received by IP are
remitted to IP SPT and are restricted for the sole purpose of making payments of
principal and interest on, and paying other fees and expenses related to, the
TFNs. Since the application of FIN No. 46R, IP does not consolidate IP SPT; the
obligation to IP SPT appears on IP’s balance sheet.
 ***UE*** - ****** Union
Electric Company, an Ameren Corporation subsidiary that operates a
rate-regulated electric generation, transmission and distribution business, and
a rate-regulated natural gas transmission and distribution business in Missouri
and prior to May 2, 2005, in Illinois, as AmerenUE.
 
 5
 **FORWARD-LOOKING
STATEMENTS**
 
 Statements
in this report not based on historical facts are considered “forward-looking”
and, accordingly, involve risks and uncertainties that could cause actual
results to differ materially from those discussed. Although such forward-looking
statements have been made in good faith and are 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” provi-sions 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 our other filings with the SEC,
could cause actual results to differ materially from management expectations as
suggested by such forward-looking statements:
 
 ·
    regulatory
      actions, including changes in regulatory policies and ratemaking
      determinations;
 ·
    changes
      in laws and other governmental actions, including monetary and fiscal
      policies;
 ·
    the
      effects of increased competition in the future due to, among other things,
      deregulation of certain aspects of our business at both the state and
      federal levels, and the implementation of deregulation, such as when the
      current electric rate freeze and current power supply contracts expire in
      Illinois in 2006;
 ·
    the
      effects of participation in the MISO;
 ·
    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;
 ·
    the
      effectiveness of our risk management strategies and the use of financial
      and derivative instruments;
 ·
    prices
      for power in the Midwest;
 ·
    business
      and economic conditions, including their impact on interest rates;
 ·
    disruptions
      of the capital markets or other events that make the Ameren Companies’
      access to necessary capital more difficult or
costly;
 ·
    the
      impact of the adoption of new accounting standards and the application of
      appropriate technical accounting rules and guidance;
 ·
    actions
      of credit ratings agencies and the effects of such actions;
 ·
    weather
      conditions and other natural phenomena;
 ·
    generation
      plant construction, installation and performance;
 ·
    operation
      of UE’s nuclear power facility, including planned and unplanned outages,
      and decommissioning costs;
 ·
    the
      effects of strategic initiatives, including acquisitions and divestitures;
 ·
    the
      impact of current environmental regulations on utilities and power
      generating companies and the expectation that more stringent requirements
      will be introduced over time, which could have a negative financial
      effect;
 ·
    labor
      disputes, future wages and employee benefits costs, including changes in
      returns on benefit plan assets;
 ·
    difficulties
      in integrating IP with Ameren’s other
businesses;
 ·
    changes
      in the energy markets, environmental laws or regulations, interest rates,
      or other factors that could adversely affect assumptions in connection
      with the CILCORP and IP acquisitions;
 ·
    the
      impact of conditions imposed by regulators in connection with their
      approval of Ameren’s acquisition of IP;
 ·
    the
      inability of our counterparties to meet their obligations with respect to
      our contracts and financial instruments;
 ·
    the
      cost and availability of transmission capacity;
 ·
    legal
      and administrative proceedings; and
 ·
    acts
      of sabotage, war or terrorist activities.
 
 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 to reflect new information, future events, or
otherwise.
 6
 **PART
      I. FINANCIAL INFORMATION****ITEM
      1. FINANCIAL STATEMENTS.****AMEREN
      CORPORATION****CONSOLIDATED
      STATEMENT OF INCOME****(Unaudited)
      (In millions, except per share amounts)****Three
      Months Ended****March
      31,****2005**
    
    **2004****Operating
      Revenues:**Electric
    **$**
    **1,129**
    
    $
    915Gas
    
    **496**
    
    
    301Other
    
    **1**
    
    
    2Total
      operating revenues
    
    **1,626**
    
    
    1,218**Operating
      Expenses:**Fuel
      and purchased power
    
    **416**
    
    
    273Gas
      purchased for resale
    
    **354**
    
    
    213Other
      operations and maintenance
    
    **345**
    
    
    306Depreciation
      and amortization
    
    **157**
    
    
    130Taxes
      other than income taxes
    
    **91**
    
    
    80Total
      operating expenses
    
    **1,363**
    
    
    1,002**Operating
      Income**
    
    **263**
    
    
    216**Other
      Income and (Deductions):**Miscellaneous
      income
    
    **7**
    
    
    8Miscellaneous
      expense
    
    **(1**
    **)**
    
    (1
    )Total
      other income and (deductions)
    
    **6**
    
    
    7**Interest
      Charges and Preferred Dividends:**Interest
    
    **74**
    
    
    64Preferred
      dividends of subsidiaries
    
    **3**
    
    
    3Net
      interest charges and preferred dividends
    
    **77**
    
    
    67**Income
      Before Income Taxes**
    
    **192**
    
    
    156**Income
      Taxes**
    
    **71**
    
    
    59**Net
      Income**
    **$**
    **121**
    
    $
    97**Earnings
      per Common Share – Basic and Diluted**
    **$**
    **0.62**
    
    $
    0.55**Dividends
      per Common Share**
    **$**
    **0.635**
    
    $
    0.635**Average
      Common Shares Outstanding**
    
    **195.3**
    
    
    174.3**The
      accompanying notes are an integral part of these consolidated financial
      statements.**
    7
  **AMEREN
      CORPORATION****CONSOLIDATED
      BALANCE SHEET****(Unaudited)
      (In millions, except per share amounts)****March
      31,**
    
    **December
      31,****2005**
    
    **2004****ASSETS****Current
      Assets:**Cash
      and cash equivalents
    **$**
    **30**
    
    $
    69Accounts
      receivables – trade (less allowance for doubtfulaccounts
      of $16 and $14, respectively)
    
    **501**
    
    
    442Unbilled
      revenue
    
    **246**
    
    
    336Miscellaneous
      accounts and notes receivable
    
    **44**
    
    
    38Materials
      and supplies
    
    **563**
    
    
    623Other
      current assets
    
    **54**
    
    
    74Total
      current assets
    
    **1,438**
    
    
    1,582**Property
      and Plant, Net**
    
    **13,332**
    
    
    13,297**Investments
      and Other Noncurrent Assets:**Investments
      in leveraged leases
    
    **136**
    
    
    140Nuclear
      decommissioning trust fund
    
    **235**
    
    
    235Goodwill
      and other intangibles, net
    
    **927**
    
    
    940Other
      assets
    
    **449**
    
    
    411Total
      investments and other noncurrent assets
    
    **1,747**
    
    
    1,726**Regulatory
      Assets**
    
    **816**
    
    
    829**TOTAL
      ASSETS**
    **$**
    **17,333**
    
    $
    17,434**LIABILITIES
      AND STOCKHOLDERS' EQUITY****Current
      Liabilities:**Current
      maturities of long-term debt
    **$**
    **351**
    
    $
    423Short-term
      debt
    
    **421**
    
    
    417Accounts
      and wages payable
    
    **365**
    
    
    567Taxes
      accrued
    
    **113**
    
    
    26Other
      current liabilities
    
    **425**
    
    
    374Total
      current liabilities
    
    **1,675**
    
    
    1,807**Long-term
      Debt, Net**
    
    **4,982**
    
    
    5,021**Preferred
      Stock of Subsidiary Subject to Mandatory
    Redemption**
    
    **20**
    
    
    20**Deferred
      Credits and Other Noncurrent Liabilities:**Accumulated
      deferred income taxes, net
    
    **1,870**
    
    
    1,886Accumulated
      deferred investment tax credits
    
    **137**
    
    
    139Regulatory
      liabilities
    
    **1,056**
    
    
    1,042Asset
      retirement obligations
    
    **445**
    
    
    439Accrued
      pension and other postretirement benefits
    
    **806**
    
    
    756Other
      deferred credits and liabilities
    
    **295**
    
    
    315Total
      deferred credits and other noncurrent liabilities
    
    **4,609**
    
    
    4,577**Preferred
      Stock of Subsidiaries Not Subject to Mandatory
      Redemption**
    
    **195**
    
    
    195**Minority
      Interest in Consolidated Subsidiaries**
    
    **14**
    
    
    14**Commitments
      and Contingencies (Notes 3, 9 and 10)****Stockholders'
      Equity:**Common
      stock, $.01 par value, 400.0 shares authorized –shares
      outstanding of 195.8 and 195.2, respectively
    
    **2**
    
    
    2Other
      paid-in capital, principally premium on common stock
    
    **3,976**
    
    
    3,949Retained
      earnings
    
    **1,903**
    
    
    1,904Accumulated
      other comprehensive loss
    
    **(28**
    **)**
    
    (45
    )Other
    
    **(15**
    **)**
    
    (10
    )Total
      stockholders’ equity
    
    **5,838**
    
    
    5,800**TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY**
    **$**
    **17,333**
    
    $
    17,434The
      accompanying notes are an integral part of these consolidated financial
      statements.
  8
 
 ****
 
 **AMEREN
      CORPORATION****CONSOLIDATED
      STATEMENT OF CASH FLOWS****(Unaudited)
      (In millions)****Three
      Months Ended****March
      31,****2005**
    
    
    **2004****Cash
      Flows From Operating Activities:**Net
      income
    **$**
    **121**
    
    $
    97Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
    
    **157**
    
    
    130Amortization
      of nuclear fuel
    
    **8**
    
    
    8Amortization
      of debt issuance costs and premium/discounts
    
    **3**
    
    
    3Deferred
      income taxes, net
    
    **3**
    
    
    (24
    )Deferred
      investment tax credits, net
    
    **(2**
    **)**
    
    (3
    )Coal
      contract settlement
    
    **-**
    
    
    9Other
    
    **23**
    
    
    30Changes
      in assets and liabilities, excluding the effects of the
      acquisitions:Receivables,
      net
    
    **20**
    
    
    37Materials
      and supplies
    
    **60**
    
    
    75Accounts
      and wages payable
    
    **(168**
    **)**
    
    (181
    )Taxes
      accrued
    
    **87**
    
    
    79Assets,
      other
    
    **(1**
    **)**
    
    (15
    )Liabilities,
      other
    
    **46**
    
    
    (1
    )Net
      cash provided by operating activities
    
    **357**
    
    
    244**Cash
      Flows From Investing Activities:**Capital
      expenditures
    
    **(210**
    **)**
    
    (165
    )Nuclear
      fuel expenditures
    
    **(3**
    **)**
    
    (3
    )Other
    
    **11**
    
    
    7Net
      cash used in investing activities
    
    **(202**
    **)**
    
    (161
    )**Cash
      Flows From Financing Activities:**Dividends
      on common stock
    
    **(124**
    **)**
    
    (116
    )Capital
      issuance costs
    
    **-**
    
    
    (22
    )Redemptions,
      repurchases, and maturities:Nuclear
      fuel lease
    
    **-**
    
    
    (67
    )Short-term
      debt
    
    **-**
    
    
    (159
    )Long-term
      debt
    
    **(189**
    **)**
    
    (100
    )Issuances:Common
      stock
    
    **30**
    
    
    903Short-term
      debt
    
    **4**
    
    
    -Long-term
      debt
    
    **85**
    
    
    -Net
      cash provided by (used in) financing activities
    
    **(194**
    **)**
    
    439Net
      change in cash and cash equivalents
    
    **(39**
    **)**
    
    522Cash
      and cash equivalents at beginning of year
    
    **69**
    
    
    111Cash
      and cash equivalents at end of period
    **$**
    **30**
    
    $
    633**Cash
      Paid During the Periods:**Interest
    **$**
    **41**
    
    $
    45Income
      taxes, net
    
    **4**
    
    
    34**The
      accompanying notes are an integral part of these consolidated
      financial statements.**
   9
 **UNION
      ELECTRIC COMPANY****CONSOLIDATED
      STATEMENT OF INCOME****(Unaudited)
      (In millions)****Three
      Months Ended,****March
      31,****2005**
    
    **2004****Operating
      Revenues:**Electric
    **$**
    **533**
    
    $
    548Gas
    
    **75**
    
    
    72Total
      operating revenues
    
    **608**
    
    
    620**Operating
      Expenses:**Fuel
      and purchased power
    
    **144**
    
    
    146Gas
      purchased for resale
    
    **45**
    
    
    44Other
      operations and maintenance
    
    **181**
    
    
    190Depreciation
      and amortization
    
    **76**
    
    
    72Taxes
      other than income taxes
    
    **55**
    
    
    55Total
      operating expenses
    
    **501**
    
    
    507**Operating
      Income**
    
    **107**
    
    
    113**Other
      Income and (Deductions):**Miscellaneous
      income
    
    **8**
    
    
    5Miscellaneous
      expense
    
    **(2**
    **)**
    
    (1
    )Total
      other income and (deductions)
    
    **6**
    
    
    4**Interest
      Charges**
    
    **25**
    
    
    25**Income
      Before Income Taxes**
    
    **88**
    
    
    92**Income
      Taxes**
    
    **31**
    
    
    34**Net
      Income**
    
    **57**
    
    
    58**Preferred
      Stock Dividends**
    
    **1**
    
    
    1**Net
      Income Available to Common Stockholder**
    **$**
    **56**
    
    $
    57**The accompanying notes as they relate
      to UE are an integral part of these consolidated financial
      statements.**
 10
 **UNION
      ELECTRIC COMPANY****CONSOLIDATED
      BALANCE SHEET****(Unaudited)
      (In millions, except per share amounts)****March
      31,**
    
    **December
      31,****2005**
    
    **2004****ASSETS****Current
      Assets:**Cash
      and cash equivalents
    **$**
    **2**
    
    $
    48Accounts
      receivable – trade (less allowance for doubtfulaccounts
      of $6 and $3, respectively)
    
    **182**
    
    
    188Unbilled
      revenue
    
    **94**
    
    
    118Miscellaneous
      accounts and notes receivable
    
    **15**
    
    
    20Advances
      to money pool, net
    
    **64**
    
    
    -Materials
      and supplies
    
    **182**
    
    
    199Other
      current assets
    
    **12**
    
    
    18Total
      current assets
    
    **551**
    
    
    591**Property
      and Plant, Net**
    
    **7,106**
    
    
    7,075**Investments
      and Other Noncurrent Assets:**Nuclear
      decommissioning trust fund
    
    **235**
    
    
    235Other
      assets
    
    **271**
    
    
    263Total
      investments and other noncurrent assets
    
    **506**
    
    
    498**Regulatory
      Assets**
    
    **585**
    
    
    585**TOTAL
      ASSETS**
    **$**
    **8,748**
    
    $
    8,749**LIABILITIES
      AND STOCKHOLDERS' EQUITY****Current
      Liabilities:**Current
      maturities of long-term debt
    **$**
    **3**
    
    $
    3Short-term
      debt
    
    **384**
    
    
    375Accounts
      and wages payable
    
    **154**
    
    
    326Taxes
      accrued
    
    **108**
    
    
    51Other
      current liabilities
    
    **103**
    
    
    108Total
      current liabilities
    
    **752**
    
    
    863**Long-term
      Debt, Net**
    
    **2,143**
    
    
    2,059**Deferred
      Credits and Other Noncurrent Liabilities:**Accumulated
      deferred income taxes, net
    
    **1,217**
    
    
    1,217Accumulated
      deferred investment tax credits
    
    **106**
    
    
    108Regulatory
      liabilities
    
    **780**
    
    
    776Asset
      retirement obligations
    
    **437**
    
    
    431Accrued
      pension and other postretirement benefits
    
    **239**
    
    
    219Other
      deferred credits and liabilities
    
    **78**
    
    
    80Total
      deferred credits and other noncurrent liabilities
    
    **2,857**
    
    
    2,831**Commitments
      and Contingencies (Notes 3, 9 and 10)****Stockholders'
      Equity:**Common
      stock, $5 par value, 150.0 shares authorized – 102.1 shares
      outstanding
    
    **511**
    
    
    511Preferred
      stock not subject to mandatory redemption
    
    **113**
    
    
    113Other
      paid-in capital, principally premium on common stock
    
    **718**
    
    
    718Retained
      earnings
    
    **1,685**
    
    
    1,688Accumulated
      other comprehensive loss
    
    **(31**
    **)**
    
    (34
    )Total
      stockholders' equity
    
    **2,996**
    
    
    2,996**TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY**
    **$**
    **8,748**
    
    $
    8,749**The accompanying notes as they relate
      to UE are an integral part of these consolidated financial
      statements.**
  11
  
 **UNION
      ELECTRIC COMPANY****CONSOLIDATED
      STATEMENT OF CASH FLOWS****(Unaudited)
      (In millions)****Three
      Months Ended****March
      31,****2005**
    
    **2004****Cash
      Flows From Operating Activities:**Net
      income
    **$**
    **57**
    
    $
    58Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
    
    **76**
    
    
    72Amortization
      of nuclear fuel
    
    **8**
    
    
    8Amortization
      of debt issuance costs and premium/discounts
    
    **2**
    
    
    1Deferred
      income taxes, net
    
    **(11**
    **)**
    
    (22
    )Deferred
      investment tax credits, net
    
    **(2**
    **)**
    
    (1
    )Coal
      contract settlement
    
    **-**
    
    
    9Pension
      accrual
    
    **20**
    
    
    23Other
    
    **2**
    
    
    2Changes
      in assets and liabilities:Receivables,
      net
    
    **26**
    
    
    11Materials
      and supplies
    
    **17**
    
    
    14Accounts
      and wages payable
    
    **(153**
    **)**
    
    (142
    )Taxes
      accrued
    
    **57**
    
    
    63Assets,
      other
    
    **9**
    
    
    15Liabilities,
      other
    
    **(1**
    **)**
    
    (19
    )Net
      cash provided by operating activities
    
    **107**
    
    
    92**Cash
      Flows From Investing Activities:**Capital
      expenditures
    
    **(117**
    **)**
    
    (105
    )Nuclear
      fuel expenditures
    
    **(3**
    **)**
    
    (3
    )Changes
      in money pool advances
    
    **(64**
    **)**
    
    13Other
    
    **(1**
    **)**
    
    -Net
      cash used in investing activities
    
    **(185**
    **)**
    
    (95
    )**Cash
      Flows From Financing Activities:**Dividends
      on common stock
    
    **(60**
    **)**
    
    (79
    )Dividends
      on preferred stock
    
    **(1**
    **)**
    
    (1
    )Capital
      issuance costs
    
    **(1**
    **)**
    
    -Changes
      in money pool borrowings
    
    **-**
    
    
    292Redemptions,
      repurchases, and maturities:Nuclear
      fuel lease
    
    **-**
    
    
    (67
    )Short-term
      debt
    
    **-**
    
    
    (150
    )Issuances:Short-term
      debt
    
    **9**
    
    
    -Long-term
      debt
    
    **85**
    
    
    -Net
      cash provided by (used) in financing activities
    
    **32**
    
    
    (5
    )Net
      change in cash and cash equivalents
    
    **(46**
    **)**
    
    (8
    )Cash
      and cash equivalents at beginning of year
    
    **48**
    
    
    15Cash
      and cash equivalents at end of period
    **$**
    **2**
    
    $
    7**Cash
      Paid During the Periods:**Interest
    **$**
    **17**
    
    $
    27Income
      taxes, net
    
    **-**
    
    
    17**The accompanying notes as they relate to UE are an integral part of
      these consolidated financial statements.**
   12
   **CENTRAL
      ILLINOIS PUBLIC SERVICE COMPANY****STATEMENT
      OF INCOME****(Unaudited)
      (In millions)****Three
      Months Ended****March
      31,****2005**
    
    **2004****Operating
      Revenues:**Electric
    **$**
    **128**
    
    $
    127Gas
    
    **84**
    
    
    85Total
      operating revenues
    
    **212**
    
    
    212**Operating
      Expenses:**Purchased
      power
    
    **86**
    
    
    80Gas
      purchased for resale
    
    **59**
    
    
    56Other
      operations and maintenance
    
    **33**
    
    
    37Depreciation
      and amortization
    
    **13**
    
    
    13Taxes
      other than income taxes
    
    **8**
    
    
    9Total
      operating expenses
    
    **199**
    
    
    195**Operating
      Income**
    
    **13**
    
    
    17**Other
      Income and (Deductions):**Miscellaneous
      income
    
    **5**
    
    
    7Total
      other income and (deductions)
    
    **5**
    
    
    7**Interest
      Charges**
    
    **7**
    
    
    8**Income
      Before Income Taxes**
    
    **11**
    
    
    16**Income
      Taxes**
    
    **3**
    
    
    6**Net
      Income**
    
    **8**
    
    
    10**Preferred
      Stock Dividends**
    
    **1**
    
    
    1**Net
      Income Available to Common Stockholder**
    **$**
    **7**
    
    $
    9**The accompanying notes as they relate
      to CIPS are an integral part of these consolidated financial
      statements.******************
   13
   **CENTRAL
      ILLINOIS PUBLIC SERVICE COMPANY****BALANCE
      SHEET****(Unaudited)
      (In millions)****March
      31,**
    
    **December
      31,****2005**
    
    **2004****ASSETS****Current
      Assets:**Cash
      and cash equivalents
    **$**
    **2**
    
    $
    2Accounts
      receivable – trade (less allowance for doubtfulaccounts
      of $1 and $1, respectively)
    
    **66**
    
    
    48Unbilled
      revenue
    
    **52**
    
    
    71Miscellaneous
      accounts and notes receivable
    
    **12**
    
    
    13Current
      portion of intercompany note receivable – Genco
    
    **249**
    
    
    249Current
      portion of intercompany tax receivable – Genco
    
    **11**
    
    
    11Materials
      and supplies
    
    **25**
    
    
    56Other
      current assets
    
    **10**
    
    
    18Total
      current assets
    
    **427**
    
    
    468**Property
      and Plant, Net**
    
    **950**
    
    
    953**Investments
      and Other Noncurrent Assets:**Intercompany
      tax receivable – Genco
    
    **135**
    
    
    138Other
      assets
    
    **35**
    
    
    23Total
      investments and other noncurrent assets
    
    **170**
    
    
    161**Regulatory
      Assets**
    
    **31**
    
    
    33**TOTAL
      ASSETS**
    **$**
    **1,578**
    
    $
    1,615**LIABILITIES
      AND STOCKHOLDERS' EQUITY****Current
      Liabilities:**Current
      maturities of long-term debt
    **$**
    **20**
    
    $
    20Accounts
      and wages payable
    
    **67**
    
    
    76Borrowings
      from money pool
    
    **13**
    
    
    68Taxes
      accrued
    
    **7**
    
    
    -Other
      current liabilities
    
    **38**
    
    
    32Total
      current liabilities
    
    **145**
    
    
    196**Long-term
      Debt, Net**
    
    **430**
    
    
    430**Deferred
      Credits and Other Noncurrent Liabilities:**Accumulated
      deferred income taxes, net
    
    **293**
    
    
    298Accumulated
      deferred investment tax credits
    
    **10**
    
    
    10Regulatory
      liabilities
    
    **155**
    
    
    151Other
      deferred credits and liabilities
    
    **42**
    
    
    40Total
      deferred credits and other noncurrent liabilities
    
    **500**
    
    
    499**Commitments
      and Contingencies (Notes 3 and  9)****Stockholders'
      Equity:**Common
      stock, no par value, 45.0 shares authorized – 25.5 shares
      outstanding
    
    -
    
    
    -Other
      paid-in capital
    
    **121**
    
    
    121Preferred
      stock not subject to mandatory redemption
    
    **50**
    
    
    50Retained
      earnings
    
    **330**
    
    
    323Accumulated
      other comprehensive income (loss)
    
    **2**
    
    
    (4
    )Total
      stockholders' equity
    
    **503**
    
    
    490**TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY**
    **$**
    **1,578**
    
    $
    1,615**The accompanying notes as they relate
      to CIPS are an integral part of these consolidated financial
      statements.**
  14
  **CENTRAL
      ILLINOIS PUBLIC SERVICE COMPANY****STATEMENT
      OF CASH FLOWS****(Unaudited)
      (In millions)****Three
      Months Ended****March
      31,****2005**
    
    **2004****Cash
      Flows From Operating Activities:**Net
      income
    
    **$**
    **8**
    
    $
    10Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
    
    
    **13**
    
    
    13Deferred
      income taxes, net
    
    
    **(2**
    **)**
    
    (9
    )Other
    
    
    **4**
    
    
    2Changes
      in assets and liabilities:Receivables,
      net
    
    
    **5**
    
    
    7Materials
      and supplies
    
    
    **31**
    
    
    26Accounts
      and wages payable
    
    
    **(9**
    **)**
    
    (9
    )Taxes
      accrued
    
    
    **7**
    
    
    11Assets,
      other
    
    
    **9**
    
    
    (7
    )Liabilities,
      other
    
    
    **-**
    
    
    7Net
      cash provided by operating activities
    
    
    **66**
    
    
    51**Cash
      Flows From Investing Activities:**Capital
      expenditures
    
    
    **(10**
    **)**
    
    (9
    )Net
      cash used in investing activities
    
    
    **(10**
    **)**
    
    (9
    )**Cash
      Flows From Financing Activities:**Dividends
      on common stock
    
    
    **-**
    
    
    (19
    )Dividends
      on preferred stock
    
    
    **(1**
    **)**
    
    (1
    )Changes
      in money pool borrowings
    
    
    **(55**
    **)**
    
    (24
    )Net
      cash used in financing activities
    
    
    **(56**
    **)**
    
    (44
    )Net
      change in cash and cash equivalents
    
    
    **-**
    
    
    (2
    )Cash
      and cash equivalents at beginning of year
    
    
    **2**
    
    
    16Cash
      and cash equivalents at end of period
    
    **$**
    **2**
    
    $
    14**Cash
      Paid During the Periods:**Interest
    
    **$**
    **2**
    
    $
    3Income
      taxes paid (refunded), net
    
    
    **(5**
    **)**
    
    6**The accompanying notes as they relate
      to CIPS are an integral part of these consolidated financial
      statements.**
   15
  **AMEREN
      ENERGY GENERATING COMPANY****CONSOLIDATED
      STATEMENT OF INCOME****(Unaudited)
      (In millions)****Three
      Months Ended****March
      31,****2005**
    
    **2004****Operating
      Revenues:**Electric
    **$**
    **225**
    
    $
    216Total
      operating revenues
    
    **225**
    
    
    216**Operating
      Expenses:**Fuel
      and purchased power
    
    **99**
    
    
    94Other
      operations and maintenance
    
    **38**
    
    
    28Depreciation
      and amortization
    
    **19**
    
    
    19Taxes
      other than income taxes
    
    **(2**
    **)**
    
    5Total
      operating expenses
    
    **154**
    
    
    146**Operating
      Income**
    
    **71**
    
    
    70**Other
      Income and (Deductions):**Miscellaneous
      expense
    
    **-**
    
    
    (1
    )Total
      other income and (deductions)
    
    **-**
    
    
    (1
    )**Interest
      Charges**
    
    **21**
    
    
    23**Income
      Before Income Taxes**
    
    **50**
    
    
    46**Income
      Taxes**
    
    **19**
    
    
    17**Net
      Income**
    **$**
    **31**
    
    $
    29**The accompanying notes as they relate to
      Genco are an integral part of these consolidated financial
      statements.**
  16
  **AMEREN
      ENERGY GENERATING COMPANY****CONSOLIDATED
      BALANCE SHEET****(Unaudited)
      (In millions, except shares)****March
      31,**
    
    **December
      31,****2005**
    
    **2004****ASSETS****Current
      Assets:**Cash
      and cash equivalents
    **$**
    **-**
    
    $
    1Accounts
      receivable
    
    **102**
    
    
    96Miscellaneous
      accounts and notes receivable
    
    **7**
    
    
    -Materials
      and supplies
    
    **140**
    
    
    89Other
      current assets
    
    **1**
    
    
    2Total
      current assets
    
    **250**
    
    
    188**Property
      and Plant, Net**
    
    **1,744**
    
    
    1,749**Other
      Noncurrent Assets**
    
    **13**
    
    
    18**TOTAL
      ASSETS**
    **$**
    **2,007**
    
    $
    1,955**LIABILITIES
      AND STOCKHOLDER'S EQUITY****Current
      Liabilities:**Current
      maturities of long-term debt
    **$**
    **225**
    
    $
    225Current
      portion of intercompany notes payable – CIPS and Ameren
    
    **283**
    
    
    283Borrowings
      from money pool
    
    **115**
    
    
    116Accounts
      and wages payable
    
    **72**
    
    
    54Current
      portion of intercompany tax payable – CIPS
    
    **11**
    
    
    11Taxes
      accrued
    
    **34**
    
    
    35Other
      current liabilities
    
    **37**
    
    
    22Total
      current liabilities
    
    **777**
    
    
    746**Long-term
      Debt, Net**
    
    **473**
    
    
    473**Deferred
      Credits and Other Noncurrent Liabilities:**Accumulated
      deferred income taxes, net
    
    **151**
    
    
    144Accumulated
      deferred investment tax credits
    
    **11**
    
    
    12Intercompany
      tax payable – CIPS
    
    **135**
    
    
    138Accrued
      pension and other postretirement benefits
    
    **7**
    
    
    5Other
      deferred credits and liabilities
    
    **2**
    
    
    2Total
      deferred credits and other noncurrent liabilities
    
    **306**
    
    
    301**Commitments
      and Contingencies (Notes 3 and 9)****Stockholder's
      Equity:**Common
      stock, no par value, 10,000 shares authorized – 2,000 shares
      outstanding
    
    **-**
    
    
    -Other
      paid-in capital
    
    **225**
    
    
    225Retained
      earnings
    
    **228**
    
    
    211Accumulated
      other comprehensive loss
    
    **(2**
    **)**
    
    (1
    )Total
      stockholder's equity
    
    **451**
    
    
    435**TOTAL
      LIABILITIES AND STOCKHOLDER'S EQUITY**
    **$**
    **2,007**
    
    $
    1,955**The accompanying notes as they relate
      to Genco are an integral part of these consolidated financial
      statements.**
   17
  **AMEREN
      ENERGY GENERATING COMPANY****CONSOLIDATED
      STATEMENT OF CASH FLOWS****(Unaudited)
      (In millions)****Three
      Months Ended****March
      31,****2005**
    
    
    **2004****Cash
      Flows From Operating Activities:**Net
      income
    **$**
    **31**
    
    $
    29Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
    
    **19**
    
    
    19Deferred
      income taxes, net
    
    **7**
    
    
    9Deferred
      investment tax credits, net
    
    **(1**
    **)**
    
    -Other
    
    **1**
    
    
    -Changes
      in assets and liabilities:Accounts
      receivable
    
    **(13**
    **)**
    
    (5
    )Materials
      and supplies
    
    **(51**
    **)**
    
    2Accounts
      and wages payable
    
    **28**
    
    
    (14
    )Taxes
      accrued, net
    
    **(1**
    **)**
    
    16Assets,
      other
    
    **6**
    
    
    4Liabilities,
      other
    
    **12**
    
    
    7Net
      cash provided by operating activities
    
    **38**
    
    
    67**Cash
      Flows From Investing Activities:**Capital
      expenditures
    
    **(24**
    **)**
    
    (16
    )Net
      cash used in investing activities
    
    **(24**
    **)**
    
    (16
    )**Cash
      Flows From Financing Activities:**Dividends
      on common stock
    
    **(14**
    **)**
    
    (18
    )Changes
      in money pool borrowings
    
    **(1**
    **)**
    
    (33
    )Net
      cash used in financing activities
    
    **(15**
    **)**
    
    (51
    )Net
      change in cash and cash equivalents
    
    **(1**
    **)**
    
    -Cash
      and cash equivalents at beginning of year
    
    **1**
    
    
    2Cash
      and cash equivalents at end of period
    **$**
    **-**
    
    $
    2**Cash
      Paid During the Periods:**Interest
    **$**
    **8**
    
    $
    10Income
      taxes paid (refunded)
    
    **10**
    
    
    (3
    )**The accompanying notes as they relate
      to Genco are an integral part of these consolidated financial
      statements.**
  18
  **CILCORP
      INC.****CONSOLIDATED
      STATEMENT OF INCOME****(Unaudited)
      (In millions)****Three
      Months Ended****March
      31,****2005**
    
    **2004****Operating
      Revenues:**Electric
    **$**
    **93**
    
    $
    98Gas
    
    **128**
    
    
    141Other
    
    **1**
    
    
    1Total
      operating revenues
    
    **222**
    
    
    240**Operating
      Expenses:**Fuel
      and purchased power
    
    **33**
    
    
    45Gas
      purchased for resale
    
    **94**
    
    
    107Other
      operations and maintenance
    
    **42**
    
    
    43Depreciation
      and amortization
    
    **18**
    
    
    16Taxes
      other than income taxes
    
    **7**
    
    
    9Total
      operating expenses
    
    **194**
    
    
    220**Operating
      Income**
    
    **28**
    
    
    20**Other
      Income and (Deductions):**Miscellaneous
      expense
    
    **(2**
    **)**
    
    (1
    )Total
      other income and (deductions)
    
    **(2**
    **)**
    
    (1
    )**Interest
      Charges and Preferred Dividends:**Interest
    
    **12**
    
    
    12Preferred
      dividends of subsidiaries
    
    **1**
    
    
    -Net
      interest charges and preferred dividends
    
    **13**
    
    
    12**Income
      Before Income Taxes**
    
    **13**
    
    
    7**Income
      Taxes**
    
    **4**
    
    
    3**Net
      Income**
    **$**
    **9**
    
    $
    4**The accompanying notes as they
      relate to CILCORP are an integral part of these consolidated financial
      statements.**
  19
  **CILCORP
      INC.****CONSOLIDATED
      BALANCE SHEET****(Unaudited)
      (In millions, except shares)****March
      31,**
    
    **December
      31,****2005**
    
    
    **2004****ASSETS****Current
      Assets:**Cash
      and cash equivalents
    **$**
    **4**
    
    $
    7Accounts
      receivables – trade (less allowance for doubtfulaccounts
      of $3 and $3, respectively)
    
    **58**
    
    
    46Unbilled
      revenue
    
    **32**
    
    
    46Miscellaneous
      accounts and notes receivable
    
    **7**
    
    
    9Materials
      and supplies
    
    **120**
    
    
    134Other
      current assets
    
    **6**
    
    
    19Total
      current assets
    
    **227**
    
    
    261**Property
      and Plant, Net**
    
    **1,178**
    
    
    1,179**Investments
      and Other Noncurrent Assets:**Investments
      in leveraged leases
    
    **111**
    
    
    113Goodwill
      and other intangibles, net
    
    **559**
    
    
    559Other
      assets
    
    **54**
    
    
    33Total
      investments and other noncurrent assets
    
    **724**
    
    
    705**Regulatory
      Assets**
    
    **11**
    
    
    11**TOTAL
      ASSETS**
    **$**
    **2,140**
    
    $
    2,156**LIABILITIES
      AND STOCKHOLDER'S EQUITY****Current
      Liabilities:**Current
      maturities of long-term debt
    **$**
    **16**
    
    $
    16Borrowings
      from money pool, net
    
    **165**
    
    
    166Intercompany
      note payable – Ameren
    
    **76**
    
    
    72Accounts
      and wages payable
    
    **75**
    
    
    99Other
      current liabilities
    
    **72**
    
    
    58Total
      current liabilities
    
    **404**
    
    
    411**Long-term
      Debt, Net**
    
    **621**
    
    
    623**Preferred
      Stock of Subsidiary Subject to Mandatory
    Redemption**
    
    **20**
    
    
    20**Deferred
      Credits and Other Noncurrent Liabilities:**Accumulated
      deferred income taxes, net
    
    **208**
    
    
    214Accumulated
      deferred investment tax credits
    
    **9**
    
    
    10Regulatory
      liabilities
    
    **41**
    
    
    38Accrued
      pension and other postretirement benefits
    
    **247**
    
    
    242Other
      deferred credits and liabilities
    
    **29**
    
    
    31Total
      deferred credits and other noncurrent liabilities
    
    **534**
    
    
    535**Preferred
      Stock of Subsidiary Not Subject to Mandatory
      Redemption**
    
    **19**
    
    
    19**Commitments
      and Contingencies (Notes 3 and 9)****Stockholder's
      Equity:**Common
      stock, no par value, 10,000 shares authorized – 1,000 shares
      outstanding
    
    **-**
    
    
    -Other
      paid-in capital
    
    **565**
    
    
    565Retained
      earnings (deficit)
    
    **(42**
    **)**
    
    (21
    )Accumulated
      other comprehensive income
    
    **19**
    
    
    4Total
      stockholder's equity
    
    **542**
    
    
    548**TOTAL
      LIABILITIES AND STOCKHOLDER'S EQUITY**
    **$**
    **2,140**
    
    $
    2,156**The accompanying notes as they
      relate to CILCORP are an integral part of these consolidated financial
      statements.**
  20
  **CILCORP
      INC.****CONSOLIDATED
      STATEMENT OF CASH FLOWS****(Unaudited)
      (In millions)****Three
      Months Ended****March
      31**,**2005**
    
    
    **2004****Cash
      Flows From Operating Activities:**Net
      income
    **$**
    **9**
    
    $
    4Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
    
    **18**
    
    
    16Deferred
      income taxes, net
    
    **(8**
    **)**
    
    2Other
    
    **8**
    
    
    3Changes
      in assets and liabilities:Receivables,
      net
    
    **4**
    
    
    19Materials
      and supplies
    
    **14**
    
    
    33Accounts
      and wages payable
    
    **(24**
    **)**
    
    7Taxes
      accrued
    
    **(9**
    **)**
    
    1Assets,
      other
    
    **13**
    
    
    (4
    )Liabilities,
      other
    
    **16**
    
    
    14Net
      cash provided by operating activities
    
    **41**
    
    
    95**Cash
      Flows From Investing Activities:**Capital
      expenditures
    
    **(19**
    **)**
    
    (35
    )Changes
      in money pool advances
    
    **4**
    
    
    -Other
    
    **2**
    
    
    2Net
      cash used in investing activities
    
    **(13**
    **)**
    
    (33
    )**Cash
      Flows From Financing Activities:**Dividends
      on common stock
    
    **(30**
    **)**
    
    -Changes
      in money pool borrowings
    
    **(5**
    **)**
    
    47Proceeds
      from intercompany note payable – Ameren
    
    4
    
    
    -Redemptions,
      repurchases, and maturities:Intercompany
      note payable – Ameren
    
    **-**
    
    
    (8
    )Long-term
      debt
    
    **-**
    
    
    (100
    )Net
      cash used in financing activities
    
    **(31**
    **)**
    
    (61
    )Net
      change in cash and cash equivalents
    
    **(3**
    **)**
    
    1Cash
      and cash equivalents at beginning of period
    
    **7**
    
    
    11Cash
      and cash equivalents at end of period
    **$**
    **4**
    
    $
    12**Cash
      Paid During the Periods:**Interest
    **$**
    **3**
    
    $
    4Income
      taxes
    
    **1**
    
    
    3The
      accompanying notes as they relate to CILCORP are an integral part of these
      consolidated financial statements.
   21
  **CENTRAL
      ILLINOIS LIGHT COMPANY****CONSOLIDATED
      STATEMENT OF INCOME****(Unaudited)
      (In millions)****Three
      Months Ended****March
      31,****2005**
    
    
    **2004****Operating
      Revenues:**Electric
    **$**
    **93**
    
    $
    98Gas
    
    **125**
    
    
    127Total
      operating revenues
    
    **218**
    
    
    225**Operating
      Expenses:**Fuel
      and purchased power
    
    **31**
    
    
    45Gas
      purchased for resale
    
    **91**
    
    
    94Other
      operations and maintenance
    
    **44**
    
    
    47Depreciation
      and amortization
    
    **17**
    
    
    16Taxes
      other than income taxes
    
    **6**
    
    
    8Total
      operating expenses
    
    **189**
    
    
    210**Operating
      Income**
    
    **29**
    
    
    15**Other
      Income and (Deductions):**Miscellaneous
      expense
    
    **(1**
    **)**
    
    (1
    )Total
      other income and (deductions)
    
    **(1**
    **)**
    
    (1
    )**Interest
      Charges**
    
    **4**
    
    
    3**Income
      Before Income Taxes**
    
    **24**
    
    
    11**Income
      Taxes**
    
    **8**
    
    
    5**Net
      Income**
    
    **16**
    
    
    6**Preferred
      Stock Dividends**
    
    **1**
    
    
    -**Net
      Income Available to Common Stockholder**
    **$**
    **15**
    
    $
    6**The accompanying notes as they relate
      to CILCO are an integral part of these consolidated financial
      statements.**
   22
  **CENTRAL
      ILLINOIS LIGHT COMPANY****CONSOLIDATED
      BALANCE SHEET****(Unaudited)
      (In millions)****March
      31,**
    
    **December
      31,****2005**
    
    **2004****ASSETS****Current
      Assets:**Cash
      and cash equivalents
    **$**
    **1**
    
    $
    2Accounts
      receivable - trade (less allowance for doubtfulaccounts
      of $3 and $3, respectively)
    
    **58**
    
    
    46Unbilled
      revenue
    
    **32**
    
    
    43Miscellaneous
      accounts and notes receivable
    
    **7**
    
    
    11Materials
      and supplies
    
    **55**
    
    
    68Other
      current assets
    
    **4**
    
    
    6Total
      current assets
    
    **157**
    
    
    176**Property
      and Plant, Net**
    
    **1,165**
    
    
    1,165**Other
      Noncurrent Assets**
    
    **51**
    
    
    29**Regulatory
      Assets**
    
    **11**
    
    
    11**TOTAL
      ASSETS**
    **$**
    **1,384**
    
    $
    1,381**LIABILITIES
      AND STOCKHOLDERS' EQUITY****Current
      Liabilities:**Current
      maturities of long-term debt
    **$**
    **16**
    
    $
    16Borrowings
      from money pool
    
    **163**
    
    
    169Accounts
      and wages payable
    
    **74**
    
    
    95Taxes
      accrued
    
    **9**
    
    
    -Other
      current liabilities
    
    **53**
    
    
    49Total
      current liabilities
    
    **315**
    
    
    329**Long-term
      Debt, Net**
    
    **122**
    
    
    122**Preferred
      Stock Subject to Mandatory Redemption**
    
    **20**
    
    
    20**Deferred
      Credits and Other Noncurrent Liabilities:**Accumulated
      deferred income taxes, net
    
    **127**
    
    
    130Accumulated
      deferred investment tax credits
    
    **10**
    
    
    10Regulatory
      liabilities
    
    **178**
    
    
    176Accrued
      pension and other postretirement benefits
    
    **140**
    
    
    131Other
      deferred credits and liabilities
    
    **26**
    
    
    26Total
      deferred credits and other noncurrent liabilities
    
    **481**
    
    
    473**Commitments
      and Contingencies (Notes 3 and 9)****Stockholders'
      Equity:**Common
      stock, no par value, 20.0 shares authorized – 13.6 shares
      outstanding
    
    **-**
    
    
    -Preferred
      stock not subject to mandatory redemption
    
    **19**
    
    
    19Other
      paid-in capital
    
    **313**
    
    
    313Retained
      earnings
    
    **111**
    
    
    115Accumulated
      other comprehensive income (loss)
    
    **3**
    
    
    (10
    )Total
      stockholders' equity
    
    **446**
    
    
    437**TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY**
    **$**
    **1,384**
    
    $
    1,381**The
      accompanying notes as they relate to CILCO are an integral part of these
      consolidated financial statements.**
   23
  **CENTRAL
      ILLINOIS LIGHT COMPANY****CONSOLIDATED
      STATEMENT OF CASH FLOWS****(Unaudited)
      (In millions)****Three
      Months Ended****March
      31,****2005**
    
    **2004****Cash
      Flows From Operating Activities:**Net
      income
    **$**
    **16**
    
    $
    6Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
    
    **17**
    
    
    16Deferred
      income taxes, net
    
    **(4**
    **)**
    
    2Other
    
    **11**
    
    
    3Changes
      in assets and liabilities:Receivables,
      net
    
    **3**
    
    
    14Materials
      and supplies
    
    **13**
    
    
    29Accounts
      and wages payable
    
    **(21**
    **)**
    
    11Taxes
      accrued
    
    **9**
    
    
    -Assets,
      other
    
    **1**
    
    
    (5
    )Liabilities,
      other
    
    **-**
    
    
    3Net
      cash provided by operating activities
    
    **45**
    
    
    79**Cash
      Flows From Investing Activities:**Capital
      expenditures
    
    **(19**
    **)**
    
    (35
    )Net
      cash used in investing activities
    
    **(19**
    **)**
    
    (35
    )**Cash
      Flows From Financing Activities:**Dividends
      on common stock
    
    **(20**
    **)**
    
    -Dividends
      on preferred stock
    
    **(1**
    **)**
    
    -Changes
      in money pool borrowings
    
    **(6**
    **)**
    
    51Redemptions,
      repurchases, and maturities:Long-term
      debt
    
    **-**
    
    
    (100
    )Net
      cash used in financing activities
    
    **(27**
    **)**
    
    (49
    )Net
      change in cash and cash equivalents
    
    **(1**
    **)**
    
    (5
    )Cash
      and cash equivalents at beginning of year
    
    **2**
    
    
    8Cash
      and cash equivalents at end of period
    **$**
    **1**
    
    $
    3**Cash
      Paid During the Periods:**Interest
    **$**
    **3**
    
    $
    4Income
      taxes
    
    **1**
    
    
    3**The accompanying notes as they
      relate to CILCO are an integral part of these consolidated financial
      statements.**
 24
 **ILLINOIS
      POWER COMPANY****CONSOLIDATED
      STATEMENT OF INCOME****(Unaudited)
      (In millions)****-------Successor--------**
    
    **------Predecessor------****Three**
    
    **Three****Months**
    
    **Months****Ended**
    
    **Ended****March
      31,**
    
    **March
      31,****2005**
    
    **2004****Operating
      Revenues:**Electric
    **$**
    **235**
    
    $
    247Gas
    
    **197**
    
    
    210Total
      operating revenues
    
    **432**
    
    
    457**Operating
      Expenses:**Purchased
      power
    
    **157**
    
    
    151Gas
      purchased for resale
    
    **146**
    
    
    154Other
      operations and maintenance
    
    **42**
    
    
    47Depreciation
      and amortization
    
    **21**
    
    
    20Amortization
      of regulatory assets
    
    **-**
    
    
    11Taxes
      other than income taxes
    
    **22**
    
    
    21Total
      operating expenses
    
    **388**
    
    
    404**Operating
      Income**
    
    **44**
    
    
    53**Other
      Income and (Deductions):**Interest
      income from former affiliate
    
    **-**
    
    
    43Miscellaneous
      income
    
    **2**
    
    
    5Total
      other income and (deductions)
    
    **2**
    
    
    48**Interest
      Charges**
    
    **10**
    
    
    39**Income
      Before Income Taxes**
    
    **36**
    
    
    62**Income
      Taxes**
    
    **14**
    
    
    25**Net
      Income**
    
    **22**
    
    
    37**Preferred
      Stock Dividends**
    
    **1**
    
    
    1**Net
      Income Applicable to Common Stockholder**
    **$**
    **21**
    
    $
    36The
      accompanying notes as they relate to IP are an integral part of
      these consolidated financial statements.
   25
 
 **ILLINOIS
      POWER COMPANY****CONSOLIDATED
      BALANCE SHEET****(Unaudited)
      (In millions)****------------------------Successor-------------------------****March
      31,**
    
    **December
      31,****2005**
    
    **2004****ASSETS****Current
      Assets:**Cash
      and cash equivalents
    **$**
    **5**
    
    $
    5Account
      receivables (less allowance for doubtfulaccounts
      of $6 and $6, respectively)
    
    **134**
    
    
    101Unbilled
      revenue
    
    **66**
    
    
    98Miscellaneous
      accounts and notes receivable
    
    **17**
    
    
    8Advances
      to money pool
    
    **105**
    
    
    140Materials
      and supplies
    
    **33**
    
    
    85Other
      current assets
    
    **44**
    
    
    69Total
      current assets
    
    **404**
    
    
    506**Property
      and Plant, Net**
    
    **1,999**
    
    
    1,984**Investments
      and Other Noncurrent Assets:**Investment
      in IP SPT
    
    **7**
    
    
    7Goodwill
    
    **307**
    
    
    320Other
      assets
    
    **41**
    
    
    37Accumulated
      deferred income taxes
    
    **76**
    
    
    65Total
      investments and other noncurrent assets
    
    **431**
    
    
    429**Regulatory
      Assets**
    
    **187**
    
    
    198**TOTAL
      ASSETS**
    **$**
    **3,021**
    
    $
    3,117**LIABILITIES
      AND STOCKHOLDERS’ EQUITY****Current
      Liabilities**:Current
      maturities of long-term debt
    **$**
    **-**
    
    $
    70Current
      maturities of long-term debt to IP SPT
    
    **72**
    
    
    74Accounts
      and wages payable
    
    **113**
    
    
    122Taxes
      accrued
    
    **7**
    
    
    5Other
      current liabilities
    
    **114**
    
    
    102Total
      current liabilities
    
    **306**
    
    
    373**Long-term
      Debt, Net**
    
    **710**
    
    
    713**Long-term
      Debt to IP SPT**
    
    **254**
    
    
    278**Deferred
      Credits and Other Noncurrent Liabilities:**Regulatory
      liabilities
    
    **82**
    
    
    76Accrued
      pension and other postretirement liabilities
    
    **251**
    
    
    248Other
      deferred credits and other noncurrent liabilities
    
    **140**
    
    
    149Total
      deferred credits and other noncurrent liabilities
    
    **473**
    
    
    473**Commitments
      and Contingencies (Notes 3 and 9)****Stockholders’
      Equity:**Common
      stock, no par value, 100.0 shares authorized –23.0
      shares outstanding
    
    **-**
    
    
    -Other
      paid-in-capital
    
    **1,204**
    
    
    1,207Preferred
      stock not subject to mandatory redemption
    
    **46**
    
    
    46Retained
      earnings
    
    **28**
    
    
    27Total
      stockholders’ equity
    
    **1,278**
    
    
    1,280**TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY**
    **$**
    **3,021**
    
    $
    3,117**The accompanying notes as they relate
      to IP are an integral part of these consolidated financial
      statements**.
   26
 **ILLINOIS
      POWER COMPANY****CONSOLIDATED
      STATEMENT OF CASH FLOWS****(Unaudited)
      (In millions)****-------Successor-------**
    
    **------Predecessor------****Three**
    
    **Three****Months**
    
    **Months****Ended**
    
    **Ended****March
      31,**
    
    **March
      31,****2005**
    
    **2004****Cash
      Flows From Operating Activities:**Net
      income
    **$**
    **22**
    
    $
    37Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
    
    **21**
    
    
    31Amortization
      of debt issuance costs and premium/discounts
    
    **2**
    
    
    2Deferred
      income taxes
    
    **7**
    
    
    (6
    )Other
    
    **(21**
    **)**
    
    -Changes
      in assets and liabilities:Receivables,
      net
    
    **(10**
    **)**
    
    3Materials
      and supplies
    
    **52**
    
    
    32Accounts
      and wages payable
    
    **(9**
    **)**
    
    (12
    )Assets,
      other
    
    **4**
    
    
    27Liabilities,
      other
    
    **45**
    
    
    19Net
      cash provided by operating activities
    
    **113**
    
    
    133**Cash
      Flows From Investing Activities:**Capital
      expenditures
    
    **(31**
    **)**
    
    (30
    )Changes
      in money pool advances
    
    **35**
    
    
    -Other
    
    **(3**
    **)**
    
    2Net
      cash (used in) provided by investing activities
    
    **1**
    
    
    (28
    )**Cash
      Flows From Financing Activities:**Dividends
      on common stock
    
    **(20**
    **)**
    
    -Dividends
      preferred stock
    
    **(1**
    **)**
    
    (1
    )Redemptions,
      repurchases, and maturities:Long-term
      debt
    
    **(92**
    **)**
    
    (22
    )TFN
      overfunding
    
    **(1**
    **)**
    
    (2
    )Net
      cash used in financing activities
    
    **(114**
    **)**
    
    (25
    )Net
      change in cash and cash equivalents
    
    **-**
    
    
    80Cash
      and cash equivalents at beginning of period
    
    **5**
    
    
    17Cash
      and cash equivalents at end of year
    **$**
    **5**
    
    $
    97**Cash
      Paid During the Periods:**Interest
    **$**
    **8**
    
    $
    14Income
      taxes paid (refunded), net
    
    **(10**
    **)**
    
    34**The accompanying notes as
      they relate to IP are an integral part of these consolidated
      financial statements**.
  27
 **AMEREN
CORPORATION** **(Consolidated)**
 **UNION
ELECTRIC COMPANY** **(Consolidated)**
 **CENTRAL
ILLINOIS PUBLIC SERVICE COMPANY**
 **AMEREN
ENERGY GENERATING COMPANY** **(Consolidated)**
 **CILCORP
INC.** **(Consolidated)**
 **CENTRAL
ILLINOIS LIGHT COMPANY** **(Consolidated)**
 **ILLINOIS
POWER COMPANY** **(Consolidated)**
 
 **COMBINED
NOTES TO FINANCIAL STATEMENTS**
 **(Unaudited)**
 **March
31, 2005**
 
 **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
transmission and 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 subsidiaries are listed below. Also see Glossary of Terms and
Abbreviations.
 
 ·
    UE,
      or Union Electric Company, also known as AmerenUE, operates a
      rate-regulated electric generation, transmission and distribution
      business, and a rate-regulated natural gas transmission and distribution
      business in Missouri and prior to May 2, 2005, in 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 prior to May 2, 2005, in west central Illinois. This area has
      an estimated population of 3 million and includes the greater St. Louis
      area. UE supplies electric service to 1.2 million customers and natural
      gas service to 140,000 customers. See Note 3 - Rate and Regulatory Matters
      for information regarding the May 2005 transfer of UE’s Illinois electric
      and natural gas transmission and distribution businesses to CIPS and the
      planned addition of a large new electric customer in June 2005.
 ·
    CIPS,
      or Central Illinois Public Service Company, also known as AmerenCIPS,
      operates a rate-regulated electric and natural gas transmission and
      distribution business in Illinois. 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 20,000 square miles. CIPS supplies electric service to 325,000
      customers and natural gas service to 170,000 customers.
 ·
    Genco,
      or 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 representing in the aggregate
      approximately 2,860 megawatts of capacity and related liabilities to Genco
      at historical net book value. The transfer was made in exchange for a
      subordinated promissory note from Genco in the amount of $552 million and
      shares of Genco’s common stock. Since Genco commenced operations, it has
      acquired 25 CTs, which gave it a total installed generating capacity of
      approximately 4,751 megawatts as of March 31, 2005. Genco is a subsidiary
      of Development Company, a subsidiary of Resources Company, which is a
      subsidiary of Ameren. See Note 3 - Rate and Regulatory Matters for
      information regarding the May 2005 transfer of Genco’s 10 CTs located in
      Pinckneyville and Kinmundy, Illinois to UE.
 ·
    CILCO,
      or Central Illinois Light Company, also known as AmerenCILCO, 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 transmission and distribution business in Illinois. CILCO was
      incorporated in Illinois in 1913. CILCORP was incorporated in Illinois in
      1985. CILCO supplies electric and gas utility service to portions of
      central and east central Illinois in areas of 3,700 and 4,500 square
      miles, respectively, with an estimated population of 1 million. CILCO
      supplies electric service to 205,000 customers and natural gas service to
      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 respect of all the
      outstanding stock of AERG and AERG’s assumption of certain liabilities.
      The net book value of the transferred assets was $378 million. No gain or
      loss was recognized, as the transaction was accounted for as a transfer
      between entities under common control. The transfer was made in
      conjunction with the Illinois Customer Choice Law.
 ·
    IP,
      or Illinois Power Company, also known as AmerenIP, operates a
      rate-regulated electric and natural gas transmission and distribution
      business in Illinois. Ameren acquired IP on September 30, 2004, from
      Dynegy, which had acquired it as part of Illinova in early 2000. IP was
      incorporated in Illinois in 1923. It supplies electric and gas utility
      service to portions of central, east central, and southern Illinois,
      serving an estimated population of 1.4 million in an area of 15,000 square
      miles, contiguous to our other service territories. IP supplies electric
      service
   28
 to 600,000 customers and natural gas service to 415,000
customers, including most of the Illinois portion of the greater St. Louis area.
See Note 2 -
 Acquisitions and Note 8 - Related Party Transactions for
further information.
  Ameren
has various other subsidiaries responsible for the short- and long-term
marketing of power, procurement of fuel, management of commodity risks and
provision of other shared services. Ameren has an 80% ownership interest in EEI
through UE and Resources Company, which each own 40% of EEI. This 80% ownership
in EEI includes a 20% interest indirectly acquired by Resources Company from a
Dynegy subsidiary on September 30, 2004. Ameren consolidates EEI for financial
reporting purposes, while UE reports 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. As the
acquisition of IP occurred on September 30, 2004, Ameren’s Consolidated
Statements of Income and Cash Flows for the period ended March 31, 2004, do not
reflect IP’s results of operations or financial position. See Note 2 -
Acquisitions for further information on the accounting for the IP acquisition.
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 information in this report is 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 better enables readers to understand
the impact of these factors on Ameren’s earnings. All references in this report
to earnings per share are based on diluted shares.
 
 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 2005 reporting.  These statements should be read in conjunction with the
financial statements and the notes thereto included in the Ameren Companies’
combined 2004 Annual Report on Form 10-K.
 
 As part
of the acquisition of IP on September 30, 2004, Ameren “pushed down” the effects
of purchase accounting to the financial statements of IP. Accordingly, IP’s
postacquistion financial statements reflect a new basis of accounting, and
separate financial statement amounts are presented for preacquisition
(predecessor) and postacquisition (successor) periods, separated by a bold black
line. As a result of the acquisition of IP, certain reclassifications have been
made to make IP prior-year financial statements conform to our current
presentation.
 
 **Earnings
Per Share**
 
 There
were no differences between Ameren’s basic and diluted earnings per share for
the three month periods ended March 31, 2005 and 2004, due to an immaterial
number of stock options outstanding.
 
 **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. Decommissioning
costs associated with UE’s Callaway nuclear plant comprise substantially all of
Ameren’s asset retirement obligations. UE has recorded asset retirement
obligations related to its Callaway nuclear plant decommissioning costs and for
a UE river structure. Additionally, Genco has recorded an asset retirement
obligation for the retirement costs for a Genco power plant ash pond. CILCORP
and CILCO have recorded asset retirement obligations related to CILCO’s power
plant ash ponds (now owned by AERG).
 
 Asset
retirement obligations at Ameren and UE increased by $6 million for the quarter
ended March 31, 2005, to reflect the accretion of obligations to their present
value. Increases to Genco’s, CILCORP’s and CILCO’s asset retirement obligations
due to accretion were immaterial during this period. Substantially all of this
accretion was recorded as an increase to regulatory assets.
 
 In
February 2005, the FASB issued FIN No. 47, “Accounting for Conditional Asset
Retirement Obligations,” which clarifies that a legal obligation
to perform an asset retirement activity that is conditional on a future event is
within the scope o f SFAS
No. 143 *.* Accordingly, an 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. An exhibit to the
interpretation provides examples of when to recognize conditional asset
retirement obligations, including asbestos removal and chemically treated
utility poles. We are in the process of evaluating the impact of this new
interpretation. It will likely require accrual of additional liabilities by the
Ameren Companies and their subsidiaries and could result in increased expense,
which, while not yet quantified, could be material. This interpretation is
effective for us no later than December 31, 2005.
 
 29
 **
 *FASB
Staff Position SFAS No. 106-2 - “Accounting and Disclosure Requirements Related
to the Medicare Prescription Drug, Improvement and Modernization Act of
2003”*
  In May
2004, the FASB issued FSP SFAS 106-2, which provides guidance on accounting for
the effects of the Medicare Prescription Drug, Improvement and Modernization Act
of 2003 for employers whose prescription drug benefits are actuarially
equivalent to the drug benefit under Medicare Part D. Ameren, UE, CIPS, Genco,
CILCORP and CILCO elected to adopt FSP SFAS 106-2 during the second quarter
ended June 30, 2004, retroactive to January 1, 2004. The effect of the federal
subsidy provided by this Medicare Prescription Drug Act was a reduction of
various components of Ameren’s and principally UE’s net periodic postretirement
benefit costs.
 
 Predecessor
IP’s adoption of FSP SFAS 106-2 on July 1, 2004, had no impact on IP’s results
of operations, financial position or liquidity because its drug benefit was not
actuarially equivalent to the drug benefit under Medicare Part D.
 
 **Revenue**
 
 *Interchange
Revenues*
 
 The
following table presents the interchange revenues included in Operating Revenues
- Electric for the three months ended March 31, 2005 and 2004:
 
 **Three
      Months****2005**
    
    **2004**Ameren(a)
    **$******
    ******113**
    
    $
    100UE
    
    **97**
    
    
    84CIPS
    
    **9**
    
    
    10Genco
    
    **42**
    
    
    39CILCORP
    
    **15**
    
    
    11CILCO
    
    **15**
    
    
    11IP(b)
    
    **(c**
    **)**
    
    (c
    )
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations, but excludes 2004 amounts for IP. Includes
      interchange revenues for EEI of $7 million for the three months ended
      March 31, 2005 (2004 - $15 million).
 (b)
    2004
      amount represents predecessor information.
 (c)
    Less
      than $1 million.
 **Purchased
Power**
 
 The
following table presents the purchased power expenses included in Operating
Expenses - Fuel and Purchased Power for the three months ended March 31, 2005
and 2004. See Note 8 - Related Party Transactions for further information on
affiliate purchased power transactions.
 
 **Three
      Months****2005**
    
    **2004**Ameren(a)
    **$******
    ******205**
    
    $
    75UE
    
    **38**
    
    
    53CIPS
    
    **86**
    
    
    80Genco
    
    **49**
    
    
    40CILCORP
    
    **9**
    
    
    21CILCO
    
    **9**
    
    
    21IP(b)
    
    **157**
    
    
    151
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations, but excludes 2004 amounts for
    IP.
 (b)
    2004
      amount represents predecessor information.
 
 **Excise
Taxes**
 
 Excise
taxes reflected on Missouri electric, Missouri gas, and Illinois gas customer
bills are imposed on us. They 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. They
are recorded as tax collections payable and included in Taxes Accrued. The
following table presents excise taxes recorded in Operating Revenues and Taxes
Other than Income Taxes for the three months ended March 31, 2005 and
2004:
 
 **Three
      Months****2005**
    
    **2004**Ameren(a)
    **$******
    ******40**
    
    $
    34UE
    
    **22**
    
    
    24CIPS
    
    **4**
    
    
    5CILCORP
    
    **3**
    
    
    5CILCO
    
    **3**
    
    
    5IP(b)
    
    **11**
    
    
    12
  (a)
    Excludes
      2004 amounts for IP.
 (b)
    2004
      amount represents predecessor information.
 
 **NOTE
2 -** **ACQUISITIONS**
 
 **IP
and EEI**
 
 On
September 30, 2004, Ameren completed the acquisition of all the common stock and
662,924 shares of preferred stock of IP and an additional 20% ownership interest
in EEI from subsidiaries of Dynegy. Ameren acquired IP to complement its
existing Illinois gas and electric operations. The purchase included IP’s
rate-regulated electric and natural gas transmission and distribution business
serving 600,000 electric and 415,000 gas customers in areas contiguous to our
existing Illinois utility service territories. With the acquisition, IP became
an Ameren subsidiary operating as AmerenIP.
  
 30
  The total
transaction value was $2.3 billion, including the assumption of $1.8 billion of
IP debt and preferred stock and consideration, including transaction costs, of
$440 million in cash, net of $51 million cash acquired and a working capital
adjustment of $5 million received from Dynegy in February 2005 pursuant to the
terms of the stock purchase agreement. Ameren placed $100 million of the cash
portion of the purchase price in a six-year escrow account pending resolution of
certain contingent environmental obligations of IP and other Dynegy affiliates
for which Ameren has been provided indemnification by Dynegy. See Note 9 -
Commitments and Contingencies for information on the IP environmental matter to
which the indemnification and escrow applies. In addition, this transaction
included a fixed-price capacity power supply agreement for IP’s annual purchase
in 2005 and 2006 of 2,800 megawatts of electricity from DYPM. This agreement is
expected to supply about 70% of IP’s electric customer requirements during those
two years. The remaining 30% of IP’s power needs in 2005 and 2006 will be
supplied by other companies through contracts and open market purchases. 
In the event that suppliers are unable to supply the electricity required
by existing agreements, IP would be forced to find alternative suppliers to
meet its load requirements, thus exposing itself to market price risk, which
could have a material impact on Ameren’s and IP’s results of operations,
financial position or liquidity.
 
 Ameren
funded this acquisition with the issuance of new Ameren common stock. Ameren
issued an aggregate of 30 million common shares in February 2004 and July 2004,
which generated net proceeds of $1.3 billion. Proceeds from these issuances were
used to finance the cash portion of the purchase price and to reduce IP debt
assumed as part of this transaction and to pay related premiums.
 
 In March
2005, the FERC denied appeals of its approvals of the IP and EEI acquisitions
made by the Missouri Office of Public Counsel and a group of electric industrial
customers of UE.
 
 The
following table presents the estimated fair values of the assets acquired and
liabilities assumed at the date of Ameren’s acquisition of IP. Ameren is
completing its valuations of the net assets and liabilities of IP and EEI
acquired, including third-party valuations of property and plant, intangible
assets, pension and other postretirement benefit obligations, and contingent
obligations. As a result, the allocation of the purchase price is preliminary
and subject to further adjustment. The fair
value of IP’s power supply agreements, including the fixed-price capacity power
supply agreement with DYPM, recorded at the acquisition date resulted in a net
liability of $109 million (March 31, 2005 - $77 million). This amount will be
amortized over 27 months following the acquisition date. In addition, IP
recorded a fair value adjustment, resulting in a net asset of $20 million (March
31, 2005 - $18 million), for IP’s power supply agreement with EEI that expires
at the end of 2005. T he excess
of the purchase price for IP’s common stock and preferred stock over tangible
net assets acquired has been allocated preliminarily to goodwill in the amount
of $307 million, net of future tax benefits. No specifically identifiable
intangible assets have been identified. For income tax purposes, we expect that
a portion of the purchase price will be allocated to goodwill and that such
portion will be deducted ratably over a 15-year period.
 
 Current
      assets
    $
    370Property
      and plant
    
    1,967Investments
      and other noncurrent assets
    
    397Goodwill
    
    307Total
      assets acquired
    
    3,041Current
      liabilities
    
    228Long-term
      debt, including current maturities
    
    1,982Accrued
      pension and other postretirement liabilities
    
    244Other
      noncurrent liabilities
    
    208Total
      liabilities assumed
    
    2,662Preferred
      stock assumed
    
    13Net
      assets acquired
    $
    366
 
 
 The
following unaudited pro forma financial information presents a summary of
Ameren’s consolidated results of operations for the quarter ended March 31,
2004, as if the acquisition of IP had been completed at the beginning of 2004,
including pro forma adjustments, which are based upon preliminary estimates, to
reflect the allocation of the purchase price to the acquired net assets. The pro
forma financial information does not include cost savings that may result from
the combination of Ameren with IP.
 
 For
      the quarter ended March 31,
    
    **2004**Operating
      revenues
    $
    1,675Net
      income
    
    141Earnings
      per share - basic
    
    0.73-
      diluted
    
    0.73
 
 This pro
forma information is not necessarily indicative of the results of operations as
they would have been had the transaction been effected on the assumed date, nor
is it an indication of trends for future results.
 
 IP’s Note
Receivable from Former Affiliate of $2.3 billion was eliminated as of September
30, 2004, and prior to Ameren’s acquisition of IP to meet the conditions of the
closing.
 
 The
portion of the total transaction value attributable to Ameren’s acquisition of
Dynegy’s 20% ownership interest in EEI now held by Resources Company was $125
million. This transaction was accounted for as a step acquisition. T he excess
of the purchase price for this ownership interest over 20% of the fair value of
EEI’s net assets acquired has been preliminarily allocated to property and plant
($80 million) and emission allowances ($41 million), partially offset by a net
liability for power supply agreements ($25 million) and a reduction to net
deferred tax assets ($38 million). The remaining excess was allocated to
goodwill in the amount of $54 million, subject to change based on our final
valuation.
 
 
 31
 ****
 **NOTE
3 -** **RATE
AND REGULATORY MATTERS** ****
 
 Below is
a summary of significant regulatory proceedings. With respect to pending
matters, we are unable to predict the ultimate outcome of these regulatory
proceedings, the timing of the final decisions of the various agencies or the
impact on our results of operations, financial position or
liquidity.
 
 **Intercompany
Transfer of Illinois Service Territory and Electric Generating
Facilities**
 
 *Illinois
Service Territory Transfer*
 
 
 On May 2,
2005, following the receipt of all required regulatory approvals, UE completed
the transfer of its Illinois-based electric and natural gas utility businesses,
including its Illinois-based distribution assets, certain of its transmission
assets and approximately 100 employees, at an estimated net book value of $138
million to CIPS. Under the terms of the asset transfer agreement among UE, CIPS
and Ameren, the net book value will be adjusted within 60 days after the closing
to reflect the actual net book value of the transferred assets as of the closing
date. UE’s electric generating facilities and a certain insignificant amount of
its electric transmission and communication facilities in Illinois were not part
of the transfer. Pursuant to the asset transfer agreement, UE transferred 50
percent of the assets directly to CIPS in consideration for a CIPS subordinated
promissory note in the principal amount of approximately $69 million and 50
percent of the assets by means of a dividend in kind to Ameren, followed by a
capital contribution by Ameren to CIPS. With the completion of this transfer, UE
no longer operates as a public utility subject to ICC regulation.
 
 In
February 2005, the MoPSC issued an order approving the transfer and clarified
its order in March 2005. The MoPSC’s order, as clarified, included the following
principal conditions:
 
 ·
    The
      order allows UE to recover in rates up to 6% of unknown UE
      generation-related liabilities associated with the generation that was
      formerly allocated to UE’s Illinois service territory if UE can show that
      the benefits of the transfer of the Illinois service territory outweigh
      these costs in future rate cases.
 ·
    The
      order requires an amendment to the joint dispatch agreement among UE,
      Genco and CIPS, to declare that margins on short-term power sales will be
      divided based on generation output as opposed to load. This amendment is
      expected to provide UE with additional annual margins and Genco with
      reduced annual margins of $7 million to $24 million. However, this
      reduction to Genco’s margins is expected to be mitigated by margins
      received from additional power sales by Genco (through Marketing Company)
      to CIPS to serve the transferred UE Illinois-based
      electric utility business through the end of 2006 under the current power
      supply contracts. The increased allocation of short-term power sales
      margins to UE would have the effect of lowering the revenue required to be
      collected through rates the next time electric rates are adjusted. 
      The MoPSC also ordered that UE may complete the transfer prior to receipt
      of all regulatory approvals necessary to effectuate the required amendment
      to the joint dispatch agreement based on UE’s commitment that for
      ratemaking purposes the joint dispatch agreement amendment should be
      deemed to be made by UE as of the date the transfer is closed.  In
      the event that the regulatory approvals for the amendment are not
      obtained, this commitment would result in just the allocation of these
      additional margins to UE for determining the revenue requirements in the
      ratemaking process, with no impact on Genco’s
    margins.
 ·
    The
      order requires that, in a future rate case, revenues UE could have
      received for incremental energy transfers under the joint dispatch
      agreement resulting from the service territory transfer be imputed based
      on market prices unless UE can show the benefits of the transfer of the
      Illinois service territory outweigh the difference between the market
      prices and the actual cost-based charges for such incremental energy
      transfers.
 
 See Note
8 - Related Party Transactions for a more detailed discussion of the joint
dispatch agreement.
 
 *Electric
Generating Facilities Transfer*
 
 On May 2,
2005, following the receipt of all required regulatory approvals, Genco
completed the transfer to UE of its 550 megawatts of CTs at Pinckneyville and
Kinmundy, Illinois, for a total estimated net book value of $240 million. Under
the terms of each asset transfer agreement between Genco and UE, the net book
value will be adjusted within 90 days after the closing to reflect the actual
net book value of the transferred assets as of the closing date. These transfers
complete the remainder of UE’s commitment under the 2002 Missouri electric rate
case settlement to add 700 megawatts of generation capacity by June 30,
2006.
 
 The
Illinois service territory transfer and the electric generating facilities
transfer, discussed above, were accounted for at book value with no gain or loss
recognition. Genco plans to use the proceeds from the transfer to reduce
borrowings.
 
 
 32
  **Missouri**
 
 *Authority
to Serve Noranda*
 
 UE filed
in December 2004 with the MoPSC for authority to extend its Missouri electric
service territory to include the area where Noranda Aluminum, Inc. (Noranda) is
located. Earlier in December, Noranda and UE signed an agreement whereby,
subject to MoPSC approval, UE would serve Noranda under a proposed tariff that
had a 15-year term of service. UE would supply up to approximately 470 megawatts
(peak load) electric service (or approximately 5% of UE’s generating capability,
including currently committed purchases) pursuant to the proposed tariff to
Noranda’s primary aluminum smelter in southeast Missouri subject to the
satisfaction of certain conditions.
 
 With the
completion, on May 2, 2005, of UE’s Illinois service territory transfer to CIPS
and the transfer of Genco’s 550 megawatts of CTs to UE, as discussed above in
this Note, and authorizations granted by the MoPSC and the FERC, all conditions
of the supply agreement between UE and Noranda were satisfied and therefore the
tariff by which UE will serve Noranda will become effective June 1,
2005.
 
 **Illinois**
 
 *Electric*
 
 By 2002,
all of the Illinois residential, commercial and industrial customers of UE,
CIPS, CILCO and IP had a choice in electric suppliers under the provisions of
the Illinois Customer Choice Law. Under the
Illinois Customer Choice Law, UE, CIPS, CILCO and IP rates initially were frozen
through January 1, 2005. Due to an
amendment to the Illinois Customer Choice Law, the rate freeze was extended
through January 1, 2007. As a result of this extension, and pursuant to orders
of the ICC, CIPS and Marketing Company, and CILCO and AERG extended their
respective power supply agreements through December 31, 2006. See Note
8 - Related Party Transactions for a discussion of these affiliate power supply
agreements.
 
 On
January 1, 2007, the current Illinois electric rate freeze expires, and the
supply contracts for generation to serve the power requirements of CIPS, CILCO
and IP expire on December 31, 2006. Prior to December 31, 2006, determinations
must be made as to how all Illinois distribution companies will procure their
generation needs and how they will set future rates for the generation and
delivery service components of customer rates.
 
 During
2004, the ICC conducted workshops to seek input from interested parties on the
framework for retail electric rate determination and generation procurement
after the current Illinois electric rate freeze expires on January 1, 2007, and
supply contracts expire on December 31, 2006. A report issued by the ICC in late
2004 which outlines a process, among others, that would have CIPS, CILCO and IP
procure power through an auction monitored by the ICC, received strong support
in the ICC workshops. The form of power supply would meet the full requirements
of the utility and the risk of fluctuations in power requirements would be borne
by the supplier. In addition, the report noted that many stakeholders, including
Ameren, supported a process whereby the price of power resulting from the
auction would be the price used to determine the generation component of
customer rates. This purchased power would be charged to customers through a
direct pass-through mechanism. With regard to the delivery service component of
customer rates, it is expected that all Illinois delivery service companies will
file rate cases, at which time the delivery service component of customer rates
will be updated. Genco and AERG would probably participate in the auction
through Marketing Company, but there may be a limit imposed by the ICC on the
maximum amount of power they could supply CIPS, CILCO and IP. In February 2005,
CIPS, CILCO and IP filed with the ICC a proposed process for the generation
procurement auction and a rate mechanism to pass generation costs through to
customers, among other things. These proposals are subject to review and
approval by the ICC within eleven months of the filings. In addition, the
Illinois legislature held hearings regarding the framework for retail rate
determination and generation procurement in early 2005. We cannot predict what
actions, if any, the Illinois legislature will take, or whether the ICC will
approve our proposals for generation procurement or electric rate
determination.
 
 **
 *Gas*
 
 IP is
seeking authority from the ICC to raise its natural gas delivery rates. In March
2005, an administrative law judge issued a proposed order authorizing an annual
rate increase of approximately $14 million. The ICC staff has proposed an
approximate $11 million annual rate increase. By law, the ICC is required to
issue its decision by May 2005. In the order approving Ameren’s acquisition of
IP, the ICC prohibits IP from filing for any proposed increase in gas delivery
rates to be effective prior to January 1, 2007, beyond IP’s now-pending request
for a gas delivery rate increase.
 
 **Federal**
 
 *New
Market Power Analysis Screen Order*
 
 UE,
Genco, CIPS, CILCO, AERG, Development Company, Marketing Company, and Medina
Valley currently have authorization from the FERC to sell wholesale power at
market-based rates. As required, these Ameren companies filed an updated market
power analysis with the FERC in December 2004. In March 2005, the FERC issued an
order accepting the updated market power analysis of the Ameren companies and
allowing them to continue selling power at market-based rates. The FERC also
granted the application of IP to sell power at market-based rates in this March
2005 order.
   33
 
 
  **NOTE
4 - SHORT-TERM BORROWINGS AND LIQUIDITY**
 
 Short-term
borrowings typically consist of commercial paper issuances and drawings under
committed bank credit facilities with maturities generally within 1 to 45 days.
 
 The
following table summarizes the short-term borrowing activity and relevant
interest rates as of March 31, 2005 and December 31, 2004,
respectively:
 **Ameren**(a)
    
    **UE****March
      31, 2005:**Short-term
      borrowings at March 31, 2005
    **$******
    ******421**
    
    **$******
    ******384**Average
      daily borrowings outstanding during 2005
    
    **329**
    
    
    **291**Weighted
      average interest rate during 2005
    
    ******2.71**
    ******%**
    
    ******2.50**
    ******%**Peak
      short-term borrowings during 2005
    
    **447**
    
    
    **403**Peak
      interest rate during 2005
    
    ******3.01**
    ******%**
    
    ******2.95**
    ******%**
 **December
      31, 2004:**Short-term
      borrowings at December 31, 2004
    $
    417
    
    $
    375Average
      daily borrowings outstanding during 2004
    
    47
    
    
    33Weighted
      average interest rate during 2004
    
    2.19
    %
    
    1.56
    %Peak
      short-term borrowings during 2004
    
    419
    
    
    375Peak
      interest rate during 2004
    
    2.97
    %
    
    2.40
    %
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations, but excludes amounts for IP prior to September
      30, 2004.
   At March
31, 2005, certain of the Ameren Companies had committed bank credit facilities
totaling $1,164 million, $779 million of which was available for use, subject to
applicable regulatory short-term borrowing authorizations, by UE, CIPS, CILCO,
IP, and Ameren Services through a utility money pool arrangement. All of the
$779 million was available for use, subject to applicable regulatory short-term
borrowing authorizations, by Ameren directly, by CILCORP through direct
short-term borrowings from Ameren, and by most of the non-rate-regulated
subsidiaries including, but not limited to, Resources Company, Genco, Marketing
Company, AFS, AERG, and Ameren Energy, through a non-state-regulated subsidiary
money pool agreement. The committed bank credit facilities are used to support
our commercial paper programs under which $385 million was outstanding for
Ameren and UE at March 31, 2005 (December 31, 2004 - $375 million). Access to
credit facilities for the Ameren Companies is subject to reduction based on use
by affiliates. In the first quarter of 2005, UE increased the size of its
commercial paper program from $430 million to $500 million.
 
 Ameren
has money pool agreements with and among its subsidiaries to coordinate and
provide for certain short-term cash and working capital requirements. Separate
money pools are maintained between rate-regulated and non-rate-regulated
entities. In addition, a unilateral borrowing agreement exists between Ameren,
IP and Ameren Services, which enables IP to make short-term borrowings directly
from Ameren. The aggregate amount of borrowings outstanding at any time by IP
under the unilateral borrowing agreement and the utility money pool agreement,
together with any outstanding external short-term borrowings by IP, may not
exceed $500 million pursuant to authorizations from the ICC and the SEC under
the PUHCA. Ameren Services is responsible for operation and administration of
the agreements. See Note 8 - Related Party Transactions for a detailed
explanation of the money pool arrangements and the unilateral borrowing
agreement.
 
 EEI has
two bank credit facilities which will mature in the second quarter of 2005. EEI
intends to renew both facilities for a one-year term.
 
 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 SEC’s 50% aggregate investment
limitation under the PUHCA. Based on Ameren’s aggregate investment in these
exempt wholesale generators as of March 31, 2005, the maximum permissible
borrowings under Ameren’s non-state-regulated subsidiary money pool pursuant to
this limitation for these entities totaled $473 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’, CILCO’s and IP’s total indebtedness
to 60% of total capitalization pursuant to a calculation defined in the
agreement. Exceeding these debt levels would result in a default under the
credit arrangements. As of March 31, 2005, the ratio of total indebtedness to
total capitalization (calculated in accordance with this provision) for Ameren,
UE, CIPS, CILCO and IP was 50%, 45%, 50%, 42%, and 45% respectively (2004 - 50%,
44%, 53%, 43%, not applicable for IP). In addition, certain of these credit
agreements contain indebtedness cross-default provisions and material adverse
 
 
 
 34
 
 change
clauses that could trigger a default under these facilities in the event that
any of Ameren’s 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 arrangements contains
credit rating triggers. One of EEI’s credit agreements contains a credit rating
trigger under which a default can occur in the event any of the credit ratings
of EEI’s sponsors (UE, CIPS, IP and Kentucky Utilities Company) fall below Baa3
or BBB- by Moody’s and S&P and the sponsors do not cover a payment default.
At March 31, 2005, the Ameren Companies and EEI were in compliance with their
credit agreement provisions and covenants *.*
 
 **NOTE
5 -** **LONG-TERM
DEBT AND EQUITY FINANCINGS**
 
 **Ameren**
 
 Under
DRPlus, pursuant to an effective SEC Form S-3 registration statement, and under
our 401(k) plans, pursuant to effective SEC Form S-8 registration statements,
Ameren issued a total of 0.6 million new shares of common stock in the first
quarter of 2005 valued at $30 million.
 
 In March
2002, Ameren issued $345 million of adjustable conversion-rate equity security
units consisting of $345 million of senior unsecured notes due 2007 and stock
purchase contracts. In February 2005, the annual interest rate on these senior
unsecured notes was reset to 4.263% through a remarketing process in accordance
with and as required by the original terms of the related financing agreements.
The proceeds from remarketing the senior unsecured notes were used by the
holders of the equity security units to purchase treasury securities to secure
their obligations to purchase Ameren common stock on May 15, 2005, pursuant to
the stock purchase contracts. Ameren did not receive any proceeds as part of the
remarketing. In the remarketing, Ameren purchased $95 million in principal
amount of the senior unsecured notes which were subsequently retired.
 
 **UE**
 
 In
January 2005, UE issued, pursuant to its effective September 2003 SEC Form S-3
shelf registration statement, $85 million of 5.00% senior secured notes due
February 1, 2020, with interest payable semi-annually on February 1 and August 1
of each year beginning in August 2005. UE received net proceeds of $83 million,
which were used to repay short-term debt incurred to fund the December 2004
maturity of UE’s $85 million 7.375% first mortgage bonds.
 
 
 **CILCORP**
 
 In
conjunction with Ameren’s acquisition of CILCORP in January 2003, CILCORP’s
long-term debt was recorded at fair value. Amortization related to these fair
value adjustments was $2 million for the three months ended March 31, 2005 (2004
- $2 million), and was included in interest expense in the Consolidated
Statements of Income of Ameren and CILCORP.
 
 **IP**
 
 In
conjunction with Ameren’s acquisition of IP in September 2004, IP’s long-term
debt was recorded at fair value. Amortization related to fair value adjustments
was $5 million for the three months ended March 31, 2005 (2004 - less than $1
million), and was included in interest expense in the Consolidated Statements of
Income of Ameren and IP.
 
 **Indenture
Provisions and Other Covenants**
 
 *UE*
 
 UE’s
indenture agreements and articles of incorporation include covenants and
provisions related to the issuances 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 March 31, 2005, UE had a coverage ratio of
7.6 times the annual interest charges on the first mortgage bonds outstanding,
which would permit UE to issue an additional $3.6 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 March 31, 2005, UE had a coverage ratio
of 62.4 times the annual dividend requirement on preferred stock outstanding,
which would permit UE to issue an additional $2 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 that 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 payment
of common dividends, except those dividends payable in common stock, which left
$1.65 billion of free and unrestricted retained earnings at March 31, 2005.
 
 
 35
 
 *CIPS*
 
 CIPS’
indenture agreements and articles of incorporation include covenants that must
be complied with before first mortgage bonds and preferred stock are issued. 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, except in certain cases when additional first mortgage bonds are
issued on the basis of retired bonds. For the 12 months ended March 31, 2005,
CIPS had a coverage ratio of 3.1 times the annual interest charges for one year
on the aggregate amount of first mortgage bonds outstanding. Consequently, the
most restrictive test under the indenture agreements would allow CIPS to issue
an additional $138 million of first mortgage bonds, assuming an interest rate of
7%. For the issuance of additional preferred stock, earnings coverage of 1.5
times annual interest charges on all long-term debt and the annual preferred
stock dividends is required under CIPS’ articles of incorporation. For the 12
months ended March 31, 2005, CIPS had a coverage ratio of 2 times the sum of the
annual interest charges and dividend requirements on all long-term debt and
preferred stock outstanding as of March 31, 2005, and consequently had the
ability to issue an additional $148 million of preferred stock, assuming a
dividend rate of 7%. The ability to issue such securities in the future will
depend on such coverage ratios at that time.
 
 *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 for the succeeding four six-month periods) in order to pay
dividends or to make payments of principal or interest under certain
subordinated indebtedness, excluding amounts payable under its intercompany note
payable to CIPS. For the 12 months ended March 31, 2005, this ratio was 5.1 to
1. In addition, the indenture also restricts Genco from incurring any additional
indebtedness, with the exception of certain permitted indebtedness 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 does not exceed 60% - both after giving effect to the
additional indebtedness on a pro forma basis. This debt incurrence restriction
is to be disregarded if both Moody’s and S&P reaffirm the ratings of Genco
in place at the time of debt incurrence after considering the additional
indebtedness. As of March 31, 2005, Genco’s senior debt to total capital ratio
was 53%. The ability to issue such securities in the future will depend on such
coverage ratios at that time.
 
 *CILCORP*
 
 Covenants
in CILCORP's indenture governing its senior
notes and bonds require CILCORP to maintain a debt-to-capital ratio 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 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
March 31, 2005, CILCORP's debt-to-capital ratio was 0.58 to 1 and its interest
coverage ratio was 2.4 to 1, calculated in accordance with applicable provisions
of this indenture. At March 31, 2005, CILCORP’s senior long-term debt ratings
from S&P, Moody’s, and Fitch were BBB+, Baa2, and BBB+, respectively. The
common stock of CILCO is pledged as security to the holders of these senior
notes.
 
 *CILCO*
 
 CILCO’s
indenture agreement and articles of incorporation include covenants that must be
complied with before CILCO may issue first mortgage bonds and preferred stock.
For the issuance of additional first mortgage bonds, an earnings coverage of
twice the annual interest requirements on first mortgage bonds outstanding and
to be issued, or earnings of at least 12% of the principal amount of all bonds outstanding
and to be issued is required, except in certain cases when additional first
mortgage bonds are issued on the basis of retired bonds. For the 12 months ended
March 31, 2005, CILCO had an earnings coverage ratio of 8.1 times the annual
interest charges for one year on the aggregate amount of bonds outstanding or at
least 55% of the principal amount of all mortgage bonds outstanding under the
mortgage. Accordingly, the most restrictive test under the indenture agreement
would allow CILCO to issue an additional $496 million of first mortgage bonds.
For the issuance of additional shares of preferred stock, the articles of
incorporation provide that no class of shares with rights superior to the
currently issued preferred stock as to payment of dividends or as to assets
shall be issued, unless the net income available for the payment of the
dividends for a period of 12 consecutive calendar months within the 15 months
immediately preceding the issuance shall be at least 2 1⁄2 times the annual
dividend requirements of all then-outstanding shares of preferred stock.
Consequently, the most restrictive test under which CILCO could issue additional
shares of preferred stock would allow CILCO to issue additional preferred stock
in the amount of $155 million. The ability to issue such securities in the
future will depend on such coverage ratios at that time.
 
 
 36
  *IP*
 
 IP’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 based on property additions,
earnings coverage of twice the annual interest charges on first mortgage bonds
outstanding and to be issued is required. For the 12 months ended March 31,
2005, IP had a coverage ratio of 3.37 times the annual interest charges on the
first mortgage bonds outstanding, which would permit IP to issue an additional
$850 million of first mortgage bonds, assuming an interest rate of 7%. For the
issuance of additional preferred stock, earnings coverage of at least 1.5 times
the annual dividend on preferred stock outstanding and to be issued is required
under IP’s articles of incorporation. For the 12 months ended March 31, 2005, IP
had a coverage ratio of 1.62 times the annual dividend requirement on preferred
stock outstanding, which would permit IP to issue an additional $114
million of preferred stock assuming a dividend rate of 7%. The ability
to issue such securities in the future will depend on such tests at that time.
 
 The IP
SPT TFNs contain restrictions that prohibit IP LLC from making any loan or
advance to, or certain investments in, any other person. Also, as long as the
TFNs are outstanding, the IP SPT shall not, directly or indirectly, pay any
dividend or make any distribution (by reduction of capital or otherwise) to any
owner of a beneficial interest in the IP SPT.
 
 ****
 **Off-Balance
Sheet Arrangements**
 
 At March
31, 2005, none of the Ameren Companies had any off-balance sheet financing
arrangements, other than operating leases entered into in the ordinary course of
business. None of the Ameren Companies expect to engage in any significant
off-balance sheet financing arrangements in the near future.
   **NOTE
6** **-
OTHER INCOME AND DEDUCTIONS**
 
 The
following table presents Other Income and Deductions for each of the Ameren
Companies for the three months ended March 31, 2005 and 2004:
 
 **Three
      Months****2005**
    
    **2004****Ameren:**(a)Miscellaneous
      income:Interest
      and dividend income
    **$******
    ******1**
    
    $
    2Allowance
      for equity funds used during construction
    
    **4**
    
    
    3Other
    
    **2**
    
    
    3Total
      miscellaneous income
    **$******
    ******7**
    
    $
    8Miscellaneous
      expense:Minority
      interest in subsidiary
    **$******
    ******(1**
    ******)**
    $
    (1
    )Total
      miscellaneous expense
    **$******
    ******(1**
    ******)**
    $
    (1
    )**UE:**Miscellaneous
      income:Interest
      and dividend income
    **$******
    ******-**
    
    $
    1Equity
      in earnings of subsidiary
    
    **1**
    
    
    1Allowance
      for equity funds used during construction
    
    **5**
    
    
    3Other
    
    **2**
    
    
    -Total
      miscellaneous income
    **$******
    ******8**
    
    $
    5Miscellaneous
      expense:Other
    **$******
    ******(2**
    ******)**
    
    (1
    )Total
      miscellaneous expense
    **$******
    ******(2**
    ******)**
    $
    (1
    )**CIPS:**Miscellaneous
      income:Interest
      and dividend income
    **$******
    ******5**
    
    $
    7Total
      miscellaneous income
    **$******
    ******5**
    
    $
    7**Genco:**Miscellaneous
      expense:Loss
      on disposition of property
    **$******
    ******-**
    
    $
    (1
    )Total
      miscellaneous expense
    **$******
    ******-**
    
    $
    (1
    )**CILCORP:**Miscellaneous
      expense:Other
    **$******
    ******(2**
    ******)**
    $
    (1
    )Total
      miscellaneous expense
    **$******
    ******(2**
    ******)**
    $
    (1
    )**CILCO:**Miscellaneous
      expense:Other
    **$******
    ******(1**
    ******)**
    $
    (1
    )Total
      miscellaneous expense
    **$******
    ******(1**
    ******)**
    $
    (1
    )
   37
  
 **Three
      Months****2005**
    
    
    **2004****IP:**(b)Miscellaneous
      income:Interest
      and dividend income
    **$******
    ******1**
    
    $
    -Tilton
      Lease
    
    **-**
    
    
    4Other
    
    **1**
    
    
    1Total
      miscellaneous income
    **$******
    ******2**
    
    $
    5
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations, but excludes 2004 amounts for
    IP.
 (b)
    2004
      amounts represent predecessor information.
 
 **NOTE
7 - DERIVATIVE FINANCIAL INSTRUMENTS**
 
 The
following table presents balances in certain accounts for cash flow hedges as of
March 31, 2005:
 
 **Ameren**(a)
    
    **UE**
    
    **CIPS**
    
    **Genco**
    
    **CILCORP**
    
    **CILCO****2005:**Balance
      Sheet:Other
      assets
    **$******
    ******70**
    
    **$******
    ******10**
    
    **$******
    ******17**
    
    **$******
    ******1**
    
    **$******
    ******34**
    
    **$******
    ******34**Other
      deferred credits and liabilities
    
    **23**
    
    
    **15**
    
    
    **2**
    
    
    **1**
    
    
    **-**
    
    
    **-**Accumulated
      OCI:Power
      forwards(b)
    
    **(1**
    **)**
    
    **-**
    
    
    **-**
    
    
    **(1**
    **)**
    
    **-**
    
    
    **-**Interest
      rate swaps(c)
    
    **4**
    
    
    **-**
    
    
    **-**
    
    
    **4**
    
    
    **-**
    
    
    **-**Gas
      swaps and future contracts(d)
    
    **56**
    
    
    **9**
    
    
    **15**
    
    
    **-**
    
    
    **32**
    
    
    **32**
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations.
 (b)
    Represents
      the mark-to-market value 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 three
      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 March 2008.
   The
pretax net gain or loss on power forward derivative instruments is included
in Operating Revenues - Electric or Operating Expenses - Fuel and Purchased
Power at Ameren, UE and Genco. This represents the impact of
discontinued cash flow hedges, the ineffective portion of cash flow hedges, and
the reversal of amounts previously recorded in OCI due to transactions going to
delivery or settlement, resulting in a less than $1 million gain
for Ameren, UE and Genco for the quarter ended March 31, 2005 (2004 - less than
$1 million gain for Ameren and Genco and less than $1 million loss for
UE).
 
 **Other
Derivatives**
 
 The
following table represents the net change in market value of option
transactions, which are used to manage our positions in SO 2 emission
allowances and coal. Certain of these transactions are treated as nonhedge
transactions under SFAS No. 133, “Accounting for Derivative Instruments and
Hedging Activities,” as amended. The net change in the market value of
SO 2 options
is recorded in Operating Revenues - Electric, while the net change in the market
value of coal
options is recorded as Operating Expenses - Fuel and Purchased
Power.
 
 **Three
      Months****Gains
      (Losses)**(a)
    **2005**
    
    **2004****SO****2****options:**Ameren(b)
    **$******
    ******(6**
    ******)**
    $
    (1
    )UE
    
    **(1**
    **)**
    
    (3
    )Genco
    
    **(5**
    **)**
    
    2
 
 (a)
    Coal
      option gains and losses were less than $1 million for all periods shown
      above.
 (b)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations, but excludes 2004 amounts for
    IP.
 
 **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, and
borrowings and lendings. Transactions between affiliates are reported as
intercompany transactions on their financial statements, but are eliminated in
consolidation for Ameren’s financial statements. For a discussion of our material related party agreements,
see Note 14 - Related Party Transactions under Part II, Item 8 of the Ameren
Companies’ combined Form 10-K for the fiscal year ended December 31, 2004. Below
are updates to several of these related party transactions as well as additional
related party transactions.
  
 38
 **Electric
Power Supply Agreements**
 
 The
following table presents the amount of gigawatthour sales under related party
electric power supply agreements.
 
 
 **Three
      Months****2005**
    **2004****Electric
      Power Supply Agreements**Genco
      sales to Marketing Company
    
    **4,900**
    
    4,921Marketing
      Company sales to CIPS
    
    **2,055**
    
    1,942AERG
      sales to CILCO
    
    **1,270**
    
    1,330EEI
      sales to UE
    
    **697**
    
    816EEI
      sales to CIPS
    
    **572**
    
    407EEI
      sales to IP
    
    **413**
    
    -
 
 **Joint
Dispatch Agreement**
 
 UE and
Genco jointly dispatch electric generation under a joint dispatch agreement
among UE, Genco and CIPS. Each affiliate has the option to serve its load
requirements from its own generation first and then to allow access to any
available generation to its affiliate. Any excess generation not used by UE or
Genco through the joint dispatch agreement is sold to third parties through
Ameren Energy, serving as each affiliate’s agent. Ameren Energy also acts as
agent on behalf of UE and Genco to purchase power when they require it. The
termination of the joint dispatch agreement, or modifications to it, could have
a material effect on Ameren, UE or Genco. The joint dispatch agreement can be
terminated by either party upon one year’s notice.
 
 The
following table presents the amount of gigawatthour sales under the joint
dispatch agreement.
 
 
 **Three
      Months****2005**
    **2004****Joint
      Dispatch Agreement**UE
      sales to Genco
    
    **2,948**
    
    2,185Genco
      sales to UE
    
    **597**
    
    667
 
 See Note
3 - Rate and Regulatory Matters for a discussion of a MoPSC order to amend the
joint dispatch agreement.
 
 **Money
Pools**
 
 *Utility*
 
 Through
the utility money pool, the pool participants can access committed credit
facilities at Ameren that totaled $935 million at March 31, 2005. 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. Based on outstanding UE commercial paper
borrowings at March 31, 2005, $779 million was available for borrowing under
Ameren credit facilities through the utility money pool agreement. 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 quarter ended
March 31, 2005 was 2.5% (2004 - 1.0%).
 
 *Non-state-regulated
subsidiaries*
 
 At March
31, 2005, $779 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 quarter ended March 31, 2005 was 8.2% (2004 -
8.8%).
 
 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. At March 31, 2005, CILCORP had notes payable under this agreement of $76
million at an average interest rate of 8.2%.
 
 **Intercompany
Promissory Notes**
 
 As of
March 31, 2005, Genco had subordinated affiliate notes payable of $249 million
and $34 million to CIPS and Ameren, respectively. These notes had a 7% interest
rate, a 10-year amortization schedule and a maturity date of May 1, 2005. The
note payable to CIPS was issued on May 1, 2000, in conjunction with
the transfer of its electric generating assets and related liabilities
to Genco. As of May 1, 2005, Genco amended certain terms of the CIPS note by the
issuance to CIPS of an amended and restated subordinated promissory note in the
principal amount of approximately $249 million with an interest rate of 7.125%
per annum, a 5-year amortization schedule and a maturity date of May 1, 2010. On
May 1, 2005, the remaining principal balance under Genco’s note payable to
Ameren was repaid.
 
 On May 2,
2005, CIPS issued to UE a subordinated promissory note in the principal amount
of approximately $69 million as consideration for approximately 50% of UE’s
Illinois-based utility assets transferred to CIPS on that date. The note bears
interest at 4.70% per annum and has a 10-year amortization schedule and a
maturity date of May 2, 2010. See Note 3 - Rate and Regulatory Matters for a
discussion of this intercompany transfer.
 
 **Intercompany
Transfer of Illinois Service Territory and Electric Generating
Facilities**
 
 See Note
3 - Rate and Regulatory Matters for a discussion of the related party
transactions engaged in with respect to the intercompany transfer of Illinois
service territory and electric generating facilities.
   39
 **Summary
of Related Party Transactions**
 
 The following tables present the impact of related party transactions on the
Ameren Companies’ statements of income and balance sheets, based primarily on
the transactions discussed above and in 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, 2004.
 
 **UE**
 **Three
      Months****Consolidated
      Statement of Income**
    
    **2005**
    
    **2004**Operating
      revenues from affiliates:Power
      supply agreement with EEI
    
    ******$******
    **********(a**
    **********)**
    $
    (a
    )Joint
      dispatch agreement with Genco
    
    
    **41**
    
    
    30Agency
      agreement with Ameren Energy
    
    
    **55**
    
    
    53Gas
      transportation agreement with Genco
    
    
    **(a**
    **)**
    
    (a
    )Total
      operating revenues
    
    ******$**********
    **************96**
    
    $
    83Fuel
      and purchased power expenses from affiliates:Power
      supply agreements:EEI
    
    ******$******
    **********14**
    
    $
    16Marketing
      Company
    
    
    **2**
    
    
    2Joint
      dispatch agreement with Genco
    
    
    **11**
    
    
    12Agency
      agreement with Ameren Energy
    
    
    **9**
    
    
    19Total
      fuel and purchased power expenses
    
    ******$**********
    **************36**
    
    $
    49Other
      operating expenses:Support
      service agreements:Ameren
      Services
    
    **$******
    ******41**
    
    $
    38Ameren
      Energy
    
    
    **1**
    
    
    3AFS
    
    
    **1**
    
    
    1Total
      other operating expenses
    
    ******$**********
    **************43**
    
    $
    42Interest
      expense:Borrowings
      (advances) related to money pool
    
    ******$**********
    **************(a**
    **************)**
    $
    (a
    )
 
 (a)
    Less
      than $1 million.
  **Consolidated
      Balance Sheet**
    
    **March
      31, 2005**
    
    **December
      31, 2004**Assets:Miscellaneous
      accounts and notes receivable
    
    **$******
    ******13**
    
    $
    8Advances
      to money pool, net
    
    
    ******64**
    
    
    -Liabilities:Accounts
      payable and wages payable
    
    **$******
    ******35**
    
    $
    53
 
 **CIPS**
 **Three
      Months****Statement
      of Income**
    
    **2005**
    
    **2004**Operating
      revenues from affiliates:Power
      supply agreements:Marketing
      Company
    
    ******$******
    **********9**
    
    $
    8Total
      operating revenues
    
    ******$******
    **********9**
    
    $
    8Fuel
      and purchased power expenses from affiliates:Power
      supply agreements:Marketing
      Company
    
    ******$******
    **********76**
    
    $
    72EEI
    
    
    **9**
    
    
    8Total
      fuel and purchased power expenses
    
    **********$******
    **************85**
    
    $
    80Other
      operating expenses:Support
      service agreements:Ameren
      Services
    
    ******$******
    **********11**
    
    $
    12AFS
    
    
    **(a**
    **)**
    
    (a
    )Total
      other operating expenses
    
    ******$******
    **********11**
    
    $
    12Interest
      income:Note
      receivable from Genco
    
    ******$**********
    **************4**
    
    $
    7Borrowings
      (advances) related to money pool
    
    
    **(a**
    **)**
    
    (a
    )
 
 (a)
    Less
      than $1 million.
 
 
 40
 
 
 **Balance
      Sheet**
    
    **March
      31, 2005**
    
    **December
      31, 2004**Assets:Miscellaneous
      accounts and notes receivable
    
    **$******
    ******11**
    
    $
    12Promissory
      note receivable from Genco
    
    
    ******249**
    
    
    249Tax
      receivable from Genco(a)
    
    
    **146**
    
    
    149Liabilities:
    
    
    ****Accounts
      payable and wages payable
    
    **$******
    ******47**
    
    $
    49Borrowings
      from money pool
    
    
    ******13**
    
    
    68
 
 (a)
    Amount
      includes current portion of $11 million as of March 31, 2005, and December
      31, 2004.
 
 
 **Genco**
 **Three
      Months****Consolidated
      Statement of Income**
    
    **2005**
    
    **2004**Operating
      revenues from affiliates:Power
      supply agreements:Marketing
      Company
    
    ******$******
    **********179**
    
    $
    173EEI
    
    
    **(a**
    **)**
    
    (a
    )Joint
      dispatch agreement with UE
    
    
    **11**
    
    
    12Agency
      agreement with Ameren Energy
    
    
    **32**
    
    
    27Operating
      lease with Development Company
    
    
    **3**
    
    
    3Total
      operating revenues
    
    **$******
    ******225**
    
    $
    215Fuel
      and purchased power expenses from affiliates:Joint
      dispatch agreement with UE
    
    **$******
    ******41**
    
    $
    30Agency
      agreement with Ameren Energy
    
    
    **6**
    
    
    7Power
      purchase agreement with Marketing Company
    
    
    **2**
    
    
    (a
    )Gas
      transportation agreement with UE
    
    
    **(a**
    **)**
    
    (a
    )Total
      fuel and purchased power expenses
    
    **$******
    ******49**
    
    $
    38Other
      operating expenses:Support
      service agreements:Ameren
      Services
    
    **$******
    ******5**
    
    $
    4Ameren
      Energy
    
    
    **1**
    
    
    1AFS
    
    
    **1**
    
    
    (a
    )Total
      other operating expenses
    
    **$******
    ******7**
    
    $
    5Interest
      expense:Borrowings
      from money pool
    
    **$******
    ******2**
    
    $
    3Note
      payable to CIPS
    
    
    **4**
    
    
    7Note
      payable to Ameren
    
    
    **1**
    
    
    1
  (a)
    Less
      than $1 million.
  **Consolidated
      Balance Sheet**
    
    **March
      31, 2005**
    
    **December
      31, 2004**Assets:Miscellaneous
      accounts and notes receivable
    
    **$******
    ******91**
    
    $
    86Liabilities:Accounts
      payable and wages payable
    
    **$******
    ******25**
    
    $
    13Interest
      payable
    
    
    **4**
    
    
    5Promissory
      note payable to CIPS
    
    
    **249**
    
    
    249Promissory
      note payable to Ameren
    
    
    **34**
    
    
    34Tax
      payable to CIPS(a)
    
    
    **146**
    
    
    149Borrowings
      from money pool
    
    
    **115**
    
    
    116
 
 (a)
    Amount
      includes current portion of $11 million as of March 31, 2005, and December
      31, 2004.
 
 **CILCORP**
 **Three
      Months****Consolidated
      Statement of Income**
    
    **2005**
    
    **2004**Operating
      revenues from affiliates:Power
      supply agreements:Bilateral
      supply agreement with Marketing Company
    
    ******$******
    **********15**
    
    $
    10Total
      operating revenues
    
    ******$******
    **********15**
    
    $
    10Fuel
      and purchased power expenses from affiliates:Executory
      tolling agreement with Medina Valley
    
    ******$******
    **********10**
    
    $
    10Bilateral
      supply agreement with Marketing Company
    
    
    **3**
    
    
    4Total
      fuel and purchased power expenses
    
    ******$**********
    **************13**
    
    $
    14
    41
   **Three
      Months****Consolidated
      Statement of Income**
    
    
    **2005**
    
    
    **2004**Other
      operating expenses:Support
      services agreements:Ameren
      Services
    
    ******$******
    **********12**
    
    $
    13AFS
    
    
    ******1**
    
    
    (a
    )Total
      other operating expenses
    
    ******$**********
    **************13**
    
    $
    13Interest
      expense:Note
      payable to Ameren
    
    ******$******
    **********2**
    
    $
    1Borrowings
      from money pool
    
    
    ******1**
    
    
    1
 
 (a)
    Less
      than $1 million.
  **Consolidated
      Balance Sheet**
    
    **March
      31, 2005**
    
    **December
      31, 2004**Assets:Miscellaneous
      accounts and notes receivable
    
    **$**********
    **********7**
    
    $
    9Liabilities:Accounts
      and wages payable
    
    **$******
    ******19**
    
    $
    42Note
      payable to Ameren
    
    
    **76**
    
    
    72Borrowings
      from money pool, net
    
    
    **165**
    
    
    166
 
 **CILCO**
 **Three
      Months****Consolidated
      Statement of Income**
    
    **2005**
    
    **2004**Operating
      revenues from affiliates:Power
      supply agreements:Bilateral
      supply agreement with Marketing Company
    
    ******$******
    **********15**
    
    $
    10Total
      operating revenues
    
    ******$******
    **********15**
    
    $
    10Fuel
      and purchased power expenses from affiliates:Executory
      tolling agreement with Medina Valley
    
    ******$******
    **********10**
    
    $
    10Bilateral
      supply agreement with Marketing Company
    
    
    **3**
    
    
    4Total
      fuel and purchased power expenses
    
    ******$**********
    **************13**
    
    $
    14Other
      operating expenses:Support
      services agreements:Ameren
      Services
    
    ******$******
    **********12**
    
    $
    12AFS
    
    
    ******1**
    
    
    (a
    )Total
      other operating expenses
    
    ******$**********
    **************13**
    
    $
    12Interest
      expense:Borrowings
      from money pool
    
    **$******
    ******1**
    
    $
    1
 
 (a)
    Less
      than $1 million.
  **Consolidated
      Balance Sheet**
    
    **March
      31, 2005**
    
    **December
      31, 2004**Assets:Miscellaneous
      accounts and notes receivable
    
    **$******
    ******7**
    
    $
    11Liabilities:Accounts
      and wages payable
    
    **$**********
    **********18**
    
    $
    42Borrowings
      from money pool
    
    
    **********163**
    
    
    169
 
 **IP**
 **Three
      Months****Consolidated
      Statement of Income**
    
    **2005**
    
    **2004(a)**Operating
      revenues from affiliates and former affiliates:Retail
      natural gas sales DMG
    
    **$**
    -
    
    **$**
    2Transmission
      sales to DYPM
    
    ************
    **************-**
    
    $
    4Interest
      income from former affiliates
    
    
    -
    
    
    43Total
      operating revenues
    
    ******$**********
    **************-**
    
    $
    49Fuel
      and purchased power expenses from affiliates and former
      affiliates:Power
      supply agreements:
    
    ****DMG
    
    **$**
    **-**
    
    
    124EEI
    
    
    **7**
    
    
    -Gas
      purchased from Dynegy
    
    
    -
    
    
    6Total
      fuel and purchased power expenses
    
    ******$**************************
    **7**
    
    $
    130
   42
   **Three
      Months****2005**
    
    **2004(a)**Other
      operating expenses:Services
      and facilities agreement - Dynegy
    
    ******$**
    -
    
    $
    3Total
      other operating expenses
    
    ******$**********
    **************-**
    
    $
    3Interest
      expense (income):Interest
      expense for IP SPT
    
    ******$**
    **(b)**
    
    $
    6Interest
      expense on Tilton lease
    
    
    -
    
    
    4Interest
      income on Tilton lease
    
    
    -
    
    
    (4
    )Advances
      to money pool
    
    **$******
    ******** **(1)**
    
    
    -
 
 (a)
    Represents
      predecessor information.
 (b)
    Less
      than $1 million.
  **Consolidated
      Balance Sheet**
    
    **March
      31, 2005**
    
    **December
      31, 2004**Assets:Miscellaneous
      accounts and notes receivable
    
    **$******
    ******5**
    
    $
    4Advances
      related to money pool
    
    
    **105**
    
    
    140Investment
      in IP SPT
    
    
    **7**
    
    
    7Liabilities:Accounts
      and wages payable
    
    **$******
    ******24**
    
    $
    4Long-term
      debt to IP SPT(a)
    
    
    **326**
    
    
    352
 
 (a)
    Amount
      includes current portion of $72 million as of March 31, 2005, and $74
      million as of December 31, 2004, and includes a purchase accounting
      fair value adjustment of $16 million as of March 31, 2005, and $18
      million as of December 31, 2004.
 
 **NOTE
9 -** **COMMITMENTS
AND CONTINGENCIES**
  ****Reference
is made to Note 1 - Summary of Significant Accounting Policies, Note 3 - Rate
and Regulatory Matters, Note 14 - Related Party Transactions and 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, 2004.
 
 **Callaway
Nuclear Plant**
 
 The
following table presents insurance coverage at UE’s Callaway nuclear plant at
March 31, 2005:
 **Type
      and Source of Coverage**
    
    **Maximum
      Coverages**
    
    **Maximum
      Assessments for Single Incidents**Public
      liability:American
      Nuclear Insurers
    
    $
    300
    
    $
    -Pool
      participation
    
    
    10,461
    
    
    101(a)$
    10,761(b)
    
    $
    101Nuclear
      worker liability:American
      Nuclear Insurers
    
    $
    300(c)
    
    $
    4Property
      damage:Nuclear
      Electric Insurance Ltd.
    
    $
    2,750(d)
    
    $
    21Replacement
      power:Nuclear
      Electric Insurance Ltd.
    
    $
    490(e)
    
    $
    7
 
 (a)
    Retrospective
      premium under the Price-Anderson liability provisions of the Atomic Energy
      Act of 1954, as amended (Price-Anderson). Thisis
      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. While the renewal of Price-Anderson is pending, 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 $4.5 million for 52 weeks, which commences after the first
      eight weeks of an outage, plus $3.6 million per week for 71.1 weeks
      thereafter.
 
 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 to reflect changes in
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.
 
 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, UE self-insures
the risk. If a serious nuclear incident occurred, it could have a material but
indeterminable adverse effect on our results of operations, financial position,
or liquidity.
 
 
 
 43
  
 **Other
Obligations**
 
 To supply a portion of the fuel requirements of our generating plants, we have
entered into various long-term commitments for the procurement of coal, natural
gas and nuclear fuel. In addition, we have entered into various long-term
commitments for the purchase of electricity. For a complete listing of our
obligations and commitments, see Contractual Obligations under Part II, Item 7
and 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,
2004.
  As of
March 31, 2005, the commitments for the procurement of coal have increased from
amounts previously disclosed as of December 31, 2004. The following table
presents the total estimated coal purchase commitments at March 31, 2005:
 **2005**
    
    **2006**
    
    **2007**
    
    **2008**
    
    **2009**
    
    **Thereafter**(a)Ameren(b)
    
    $
    740
    
    $
    694
    
    $
    646
    
    $
    489
    
    $
    239
    
    $
    40UE
    
    
    377
    
    
    342
    
    
    325
    
    
    233
    
    
    92
    
    
    20Genco
    
    
    204
    
    
    207
    
    
    186
    
    
    158
    
    
    108
    
    
    11CILCORP
    
    
    77
    
    
    65
    
    
    58
    
    
    42
    
    
    16
    
    
    4CILCO
    
    
    77
    
    
    65
    
    
    58
    
    
    42
    
    
    16
    
    
    4
 
 (a)
    Commitments
      for coal are until 2010.
 (b)
    Includes
      amounts for Registrant and non-Registrant Ameren subsidiaries and
      intercompany eliminations.
 
  **Environmental
Matters**
  ****We are
subject to various environmental regulations by federal, state and local
authorities. From the beginning phases of siting and development to the ongoing
operation of existing or new electric generating, transmission and distribution
facilities, and natural gas storage plant, transmission and distribution
facilities, our activities involve compliance with diverse laws and regulations.
These address noise, emissions, and impacts to air and water, protected and
cultural resources (such as wetlands, endangered species, and
archeological/historical resources), chemical and waste handling. Our activities
often require complex and often lengthy processes as we obtain approvals,
permits or licenses for new, existing or modified facilities. Additionally, the
use and handling of various chemicals or hazardous materials (including wastes)
requires preparation of release prevention plans and emergency response
procedures. As new laws or regulations are promulgated, we assess their
applicability and implement the necessary modifications to our facilities or
their operations, as required. The more significant matters are discussed
below.
 
 *Clean
Air Act*
 
 In March 2005, the EPA issued its final regulations with respect to
SO 2 and
NO x emissions (the Clean Air Interstate Rule) and mercury emissions from coal-fired
power plants. The new regulations will require significant additional reductions
in these emissions from UE, Genco and CILCO power plants in phases, beginning in
2010. The following table presents
 preliminary
estimated capital costs based on current available
technology to comply with the  Clean Air
Interstate Rule and mercury  rules:
 **2005**
    
    **2006
      - 2009**
    
    **2010
      - 2015**
    
    **Total**Ameren
    
    $
    50
    
    $
    510
      - $1,360
    
    $
    355
      - $1,130
    
    $
    1,400
      - $1,900UE
    
    
    20
    
    
    160 -880
    
    
    175
      -      880
    
    
    840 -1,140Genco
    
    
    10
    
    
    250 -340
    
    
    140
      -200
    
    
    400
      -550CILCO
    
    
    20
    
    
    100 -140
    
    
    40 -50
    
    
    160 -210
 
 
 Each state has 18 months, or until the fall of 2006, to develop a state
regulation implementing the Clean Air Interstate Rule and mercury rules. While
the federal rules mandate a specific emissions cap for SO 2 ,
NO x and
mercury emissions by state from utility boilers, the states have considerable
flexibility in allocating emission allowances to individual utility boilers. In
addition, a state may choose to hold back certain emission allowances for growth
or other reasons, and may implement a more stringent program than required by
the federal rule. The costs reflected in the above table assume each Ameren
generating unit will be allocated allowances based on the model “cap and trade”
rule guidelines issued by the EPA. Should either Missouri or Illinois decide to
develop alternative allowance allocations for utility units, the cost impact
could be material. At this time, we are unable to determine the impact of such a
state decision on our results of operations, financial position or
liquidity.
 
 *Emission
Credits*
 
 As of
March 31, 2005, UE, Genco, CILCO, and EEI held 1.56 million, 0.48 million, 0.27
million, and 0.32 million tons, respectively, of SO 2 emission
allowances with vintages from 2005 to 2012. Each company possesses additional
allowances for use in periods beyond 2012. As of March 31, 2005, UE, Genco,
CILCO and EEI Illinois facilities held 213, 17,522, 4,266 and 5,490 tons,
respectively, of NO X emission
allowances with vintages from 2004 to 2007. The Illinois Environmental
Protection Agency (the Illinois EPA) is still determining some NO x emission
allowance allocations for this period and 2008. UE, Genco, CILCO and EEI expect
to use a substantial portion of the SO 2 and
NO x allowances for ongoing operations. Allocations of NO x emission
allowances for Missouri facilities are pending the finalization of rules by
Missouri regulators. New environmental regulations, including the Clean Air
Interstate Rule, the timing of the installation of
 
 
 44
 
 
 
 pollution
control equipment, and level of operations will have a significant impact on the
amount of allowances actually required for ongoing operations.
 
 *New
Source Review*
 
 The EPA has been conducting an enforcement initiative in an effort to determine
whether modifications at a number of coal-fired power plants owned by other
electric utilities in the U.S. are subject to New Source Review requirements or
New Source Performance Standards under the Clean Air Act. The EPA’s inquiries
focus on whether the best available emission control technology was or should
have been used at such power plants when major maintenance or capital
improvements were made.
 
 IP and DMG had been the subject of a Notice of Violation from the EPA and a
complaint filed in 1999 by the United States in the U.S. District Court for the
Southern District of Illinois alleging violations of the Clean Air Act and
certain related federal and Illinois regulations in connection with certain
equipment repairs, replacements, and maintenance activities at the three Baldwin
Power Station generating units, currently owned by DMG and formerly owned by IP.
 
 Pursuant to the terms of the stock purchase agreement covering Ameren’s
acquisition of IP from Dynegy, Dynegy agreed to fully indemnify Ameren and IP in
the event of an adverse ruling and in any settlement arising from or out of this
litigation. To secure payment of the indemnification obligations of Dynegy,
Ameren, pursuant to the terms of the stock purchase agreement, deposited $100
million of the cash portion of the purchase price into an escrow account with
the funds to be released to Dynegy on the sooner of (1) December 31, 2010; (2)
the date on which the senior unsecured debt of Dynegy Holdings Inc., a Dynegy
subsidiary, achieves an investment grade rating from S&P or Moody’s; or (3) the
occurrence of specified events relating to contingent environmental liabilities
associated with IP’s former generating facilities, including the Baldwin Power
Station.
  DMG has
entered into a comprehensive settlement with the EPA, the U.S. and other
intervening parties that resolves this litigation. The settlement agreement is
set forth in a consent decree and resolves all claims in the litigation as well
as similar claims that may have been brought with respect to other generation
facilities owned by DMG and formerly owned by IP. If approved by the Court, this
consent decree will relieve IP of any civil liability under the Clean Air Act
and related federal and Illinois regulations with respect to IP’s former
ownership of the Baldwin Power Station and other generation assets now owned by
DMG. The consent decree, upon its approval by the Court, is also expected to
satisfy the conditions for the release to Dynegy of the $100 million of the IP
purchase price that is held in an escrow account as discussed
above.
 
 In April 2005, Genco received a request from the EPA for information pursuant to
Section 114(a) of the Clean Air Act seeking detailed operating and maintenance
history data with respect to its Meredosia, Hutsonville, Coffeen and Newton
facilities, EEI’s Joppa facility and AERG’s E.D. Edwards and Duck Creek
facilities. All of these facilities are coal-fired power plants. The information
request requires Genco to provide responses to specific EPA questions regarding
certain projects and maintenance activities in order to determine compliance
with certain Illinois air pollution and emissions rules and with the New Source
Performance Standard requirements of the Clean Air Act. Genco intends to comply
with this information request, but cannot predict the outcome of this matter at
this time.
 
 *Remediation*
 
 We are
involved in a number of remediation actions to clean up hazardous waste sites as
required by federal and state law. Such statutes require that responsible
parties fund remediation actions regardless of fault, legality of original
disposal, or ownership of a disposal site. UE, CIPS, CILCO and IP have each been
identified by the federal or state governments as a potentially responsible
party at several contaminated sites. Several of these sites involve facilities
that were transferred by CIPS to Genco in May 2000 and were transferred by CILCO
to AERG in October 2003. As part of each transfer, CIPS or CILCO has
contractually agreed to indemnify Genco or AERG for remediation costs associated
with pre-existing environmental contamination at the transferred sites.
 
 As of
March 31, 2005, UE, CIPS, CILCO, and IP owned or were otherwise responsible for
one, 13, four, and 25 former MGP sites, respectively, in Illinois. All of these
sites are in various stages of investigation, evaluation and remediation. Under
its current schedule, Ameren anticipates that remediation at these sites should
be completed by 2015. The ICC permits each company to recover remediation and
litigation costs associated with their former MGP sites located in Illinois from
their Illinois electric and natural gas utility customers through environmental
adjustment rate riders. To be recoverable, such costs must be prudently and
properly incurred; costs are subject to annual reconciliation review by the ICC.
The total costs deferred, net of recoveries from insurers and through
environmental adjustment rate riders, at March 31, 2005, were $1 million, $23
million, $4 million, and $64 million for UE, CIPS, CILCO, and IP, respectively.
On May 2, 2005, as a part of its Illinois utility service territory transfer, UE
transferred its one Illinois-based former MGP site to CIPS. In connection with
the transfer, CIPS succeeded to UE’s ICC-approved environmental adjustment rate
rider which permits CIPS to recover remediation and litigation costs associated
with UE’s former MGP site from UE’s transferred Illinois electric and natural
gas utility customers. For a
 
 
 45
 
 
 
 discussion
of the Illinois service territory transfer, see Note 3 - Rate and Regulatory
Matters in this report.
 
 In
addition, UE owns or is otherwise responsible for 10 MGP sites in Missouri and
one in Iowa. Unlike Illinois, UE does not have in effect in Missouri a rate
rider mechanism which permits remediation costs associated with MGP sites to be
recovered from utility customers. UE does not have any retail utility operations
in Iowa. Because of the unknown and unique characteristics of each site (such as
amount and type of residues present, physical characteristics of the site and
the environmental risk), and uncertain regulatory requirements, we are not able
to determine the maximum liability for the remediation of these sites. UE has
recorded a $16 million liability as of March 31, 2005, to represent its
estimated minimum obligation. At this time, we are unable to determine what
portion of these costs, if any, will be eligible for recovery from insurance
carriers.
 
 In June
2000, the EPA notified UE and numerous other companies that former landfills and
lagoons in Sauget, Illinois, may contain soil and groundwater contamination.
These sites are known as Sauget Area 2. From approximately 1926 until 1976, UE
operated a power generating facility adjacent to Sauget Area 2 and currently
owns a parcel of property that is used as a landfill. Under the terms of an
Administrative Order and Consent, UE has joined with other potentially
responsible parties to evaluate the extent of potential contamination with
respect to Sauget Area 2.
 
 In
October 2002, UE was included in a Unilateral Administrative Order list of
potentially liable parties for groundwater contamination for a portion of the
Sauget Area 2 site. The Unilateral Administrative Order encompasses the
groundwater contamination releasing to the Mississippi River adjacent to
Monsanto Chemical Company’s (now known as Solutia) former chemical waste
landfill and the resulting impact area in the Mississippi River. UE was asked to
participate in response activities that involve the installation of a barrier
wall around a chemical waste site with three recovery wells to divert
groundwater flow. The projected cost for this remedy method is $26 million. In
November 2002, UE sent a letter to the EPA asserting its defenses to the
Unilateral Administrative Order and requested its removal from the list of
potentially responsible parties under the Unilateral Administrative Order.
Solutia agreed to comply with the Unilateral Administrative Order. However, in
December 2003, Solutia filed for bankruptcy protection; it is now seeking to
discharge its environmental liabilities. In March 2004, Pharmacia Corporation,
the former parent company of Solutia, confirmed its intent to comply with the
EPA’s Unilateral Administrative Order.
 
 As the
status of future remediation at Sauget Area 2 or compliance with the Unilateral
Administrative Order is uncertain, we are unable to predict the ultimate impact
of the Sauget Area 2 site on our results of operations, financial position or
liquidity. In December 2004, the U.S. Supreme Court, in Cooper Industries, Inc.
vs. Aviall Services, Inc., limited the circumstances under which potentially
responsible parties could assert cost-recovery claims against other potentially
responsible parties. As a result of this ruling, UE may not be able to recover
from other potentially responsible parties the costs it incurs in complying with
EPA orders. Any liability or responsibility which may be imposed on UE as a
result of this Sauget, Illinois environmental matter was not transferred to CIPS
as a part of UE’s May 2005 utility service territory transfer discussed above
and in Note 3 - Rate and Regulatory Matters.
 
 In
December of 2004, AERG submitted a comprehensive package to the Illinois EPA to
address groundwater and surface water issues associated with the recycle pond,
ash ponds and reservoir at the Duck Creek power plant facility. Information
submitted by AERG is currently under review by the Illinois EPA. CILCORP and
CILCO both have a liability of $4 million at March 31, 2005, included on their
Consolidated Balance Sheets for the estimated cost of the remediation effort to
treat and discharge the recycle system water in order to address these
groundwater and surface water issues. Future AERG capital expenditures at Duck
Creek under the AERG proposal will include construction of a dry fly ash
collection system, a landfill, and a new pond. AERG estimates that future
capital expenditures for the indicated activities could be approximately $19
million by 2008.
 
 In
addition, our operations or those of our predecessor companies, involve the use,
disposal and, in appropriate circumstances, the cleanup of substances regulated
under environmental protection laws. We are unable to determine the impact these
actions may have on our results of operations, financial position, or
liquidity.
 
 **Asbestos-Related
Litigation**
 
 Ameren,
UE, CIPS, Genco, CILCO and IP have been named, along with numerous other
parties, in a number of lawsuits that 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; as many as 166 parties are named in some
pending cases and as few as five in others. However, the average number of
parties is 58 in the cases that were pending as of March 31, 2005.
 
 
 The claims filed against Ameren, UE, CIPS, Genco, CILCO and IP allege injury
from asbestos exposure during the plaintiffs’ activities at our present or
former electric generating plants. Former CIPS plants are now owned by Genco,
and most former CILCO plants are now owned by AERG. Most of IP’s plants were
transferred to a Dynegy subsidiary prior to
 
 
 46
 
 Ameren’s
acquisition of IP. As a part of the transfer of ownership of the CIPS and CILCO
generating plants, CIPS or CILCO has contractually agreed to indemnify 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
January 1, 2005 through March 31, 2005, 10 additional asbestos-related lawsuits
were filed against UE, CIPS, CILCO and IP, mostly in the Circuit Court of
Madison County, Illinois; 16 lawsuits were dismissed and one was settled. The
following table presents the status as of March 31, 2005, of the
asbestos-related lawsuits that have been filed against the Ameren
Companies:
 **Specifically
      Named as Defendant****Total**(a)
    **Ameren**
    **UE**
    **CIPS**
    **Genco**
    **CILCO**
    **IP**Filed
    276
    24
    149
    104
    2
    20
    122Settled
    58
    -
    35
    21
    -
    2
    26Dismissed
    116
    11
    72
    31
    1
    4
    50Pending
    102
    13
    42
    52
    1
    14
    46
 
 (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.
  As of
March 31, 2005, four asbestos-related lawsuits were pending against EEI. The
general liability insurance maintained by EEI provides coverage with respect to
liabilities arising from asbestos-related claims.
 
 The Ameren Companies believe that the final disposition of these proceedings
will not have a material adverse effect on their results of operations,
financial position, or liquidity. See Note 3 - Rate and Regulatory Matters - IP
and EEI Acquisition under Part II, Item 8 of the Ameren Companies’ combined Form
10-K for the year ended December 31, 2004, for information on the ICC’s approval
of a tariff rider through which asbestos-related litigation claims will be
allowed to be recovered from IP’s electric customers, subject to certain terms,
commencing in 2007.
 
 **Other
Matters**
 
 *Leveraged
Leases*
 
 Ameren owns interests in assets that have been financed as leveraged leases. One
of these leveraged leases is a $10 million investment at March 31, 2005, in an
aircraft leased to Delta Air Lines. Delta Air Lines reported significant
operating losses and disclosed in its Form 10-K filing for the year ended
December 31, 2004, that its results are unsustainable and underscore the urgent
need to reduce its cost structure. Ameren could lose all or a portion of its
investment 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 March 31,
2005, Delta Air Lines was current on its payments on 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 and sells from its Callaway
nuclear plant. Electric utility rates charged to customers provide for recovery
of such costs. The DOE is not expected to have its permanent storage facility
for spent fuel available until at least 2012. UE has sufficient storage capacity
at its Callaway nuclear plant until 2020. It has the capability for additional
storage capacity through the licensed life of the plant. The delayed
availability of the DOE’s disposal facility is not expected to adversely affect
the continued operation of the Callaway nuclear plant through its currently
licensed life.
 
 Electric
utility rates charged to customers provide for the recovery of the Callaway
nuclear plant’s decommissioning costs, which include decontamination,
dismantling, and site restoration costs, over an assumed 40-year life of the
plant, ending with the expiration of the plant’s operating license in 2024. The
Callaway nuclear plant site is assumed to be decommissioned based on immediate
dismantlement method and removal from service. Ameren and UE have recorded an
asset retirement obligation for the Callaway nuclear plant decommissioning costs
at fair value, which represents the present value of estimated future cash
outflows. See the discussion of SFAS No.143 in Note 1 - Summary of Significant
Accounting Policies. Decommissioning costs are charged to cost of services used
to establish electric rates for UE’s customers. These costs amounted to $7
million in each of the years 2004, 2003 and 2002. Every three years, the MoPSC
requires UE to file an updated cost study for decommissioning its Callaway
nuclear plant. Electric rates may be adjusted at such times to reflect changed
estimates. The
latest study was filed in 2002; an updated cost study is expected to be filed in
September 2005. Costs
collected from customers are deposited in an external trust fund to provide for
the Callaway nuclear plant’s decommissioning. If the assumed return on trust
assets is not earned, we believe that it is probable that any such earnings
deficiency will be recovered in rates. The fair value of the nuclear
decommissioning trust fund for UE’s Callaway nuclear plant is reported in
Nuclear Decommissioning Trust Fund in Ameren’s and UE’s Consolidated Balance
Sheets. This amount is legally
 47
 
 
 restricted.
It may be used only to fund the costs of nuclear decommissioning. Changes in the
fair value of the trust fund are recorded as an increase or decrease to the
nuclear decommissioning trust fund and to the regulatory asset recorded in
connection with the adoption of SFAS No. 143. In connection with UE’s transfer
of its Illinois electric and gas utility businesses to CIPS on May 2, 2005, the
assets and liabilities related to the Illinois portion of the decommissioning
trust fund are being transferred to the Missouri and the FERC jurisdictions. See
Note 3 - Rate and Regulatory Matters for further information about this
intercompany transfer.
 
  **NOTE
11** **-** **** **STOCKHOLDERS’
EQUITY**
 
 **Outstanding
Shares of Common Stock**
 
 The following table reconciles the outstanding shares of Ameren common stock for
the three months ended March 31, 2005 and 2004:
 **Three
      Months****2005**
    **2004**Shares
      outstanding at beginning of period
    **195.2**
    162.9Shares
      issued
    **0.6**
    19.6Shares
      outstanding at end of period
    **195.8**
    182.5
 
 **Paid-In
Capital**
 
 Ameren’s paid-in capital increased $27 million as of March 31, 2005 compared to
December 31, 2004 due to the issuance of 0.6 million new shares of common stock
valued at $30 million under DRPlus and Ameren’s 401(k) plans offset by $3
million related to Ameren’s open market purchases for employee stock options and
restricted stock awards. 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 shareholders. A reconciliation of net income to comprehensive
income for the three months ended March 31, 2005 and 2004, is shown below for
the Ameren Companies:
 **Three
      Months****2005**
    
    **2004****Ameren:**(a)Net
      income
    
    **$******
    ******121**
    
    $
    97Unrealized
      gain on derivative hedging instruments, net of taxes of $15 and $-,
      respectively
    
    
    **17**
    
    
    -Total
      comprehensive income, net of taxes
    
    **$******
    ******138**
    
    $
    97**UE:**Net
      income
    
    **$******
    ******57**
    
    $
    58Unrealized
      gain on derivative hedging instruments, net of taxes of $2 and $1,
      respectively
    
    
    **3**
    
    
    2Total
      comprehensive income, net of taxes
    
    **$******
    ******60**
    
    $
    60**CIPS:**Net
      income
    
    **$******
    ******8**
    
    $
    10Unrealized
      gain on derivative hedging instruments, net of taxes of $3 and $1,
      respectively
    
    
    **6**
    
    
    3Reclassification
      adjustments for (gains) included in net income, net of taxes of $- and $-,
      respectively
    
    
    **-**
    
    
    (1
    )Total
      comprehensive income, net of taxes
    
    **$******
    ******14**
    
    $
    12**Genco:**Net
      income
    
    **$******
    ******31**
    
    $
    29Unrealized
      (loss) on derivative hedging instruments, net of (benefit) of $- and $(1),
      respectively
    
    
    **(1**
    **)**
    
    (1
    )Total
      comprehensive income, net of taxes
    
    **$******
    ******30**
    
    $
    28**CILCORP:**Net
      income
    
    **$******
    ******9**
    
    $
    4Unrealized
      gain on derivative hedging instruments, net of taxes of $8 and $1,
      respectively
    
    
    **15**
    
    
    3Total
      comprehensive income, net of taxes
    
    **$******
    ******24**
    
    $
    7**CILCO:**Net
      income
    
    **$******
    ******16**
    
    $
    6Unrealized
      gain on derivative hedging instruments, net of taxes of $8 and $1,
      respectively
    
    
    **13**
    
    
    3Total
      comprehensive income, net of taxes
    
    **$******
    ******29**
    
    $
    9**IP:**(b)Net
      income
    
    **$******
    ******22**
    
    $
    37Minimum
      pension liability adjustment, net of taxes of $- and $-,
      respectively
    
    
    **-**
    
    
    1Total
      comprehensive income, net of taxes
    
    **$******
    ******22**
    
    $
    38
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations, but excludes 2004 amounts for
    IP.
 (b)
    Includes
      predecessor information for the first quarter of
2004.
 
  48
 **NOTE
12 - RETIREMENT BENEFITS**


Ameren’s pension plans are funded in compliance with income tax regulations and
federal funding requirements. Based on our assumptions at December 31, 2004, in
order to maintain minimum funding levels for Ameren’s pension plans, we expect
future required contributions to aggregate $400 million for the period of 2005
to 2009, with no minimum contribution required until 2008 assuming continuation
of the current federal interest rate relief beyond 2005. These amounts are
estimates and may change based on actual stock market performance, changes in
interest rates and any changes in government regulations.
  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 ended March 31, 2005 and 2004:
 **Pension
      Benefits****2005**
    
    **2004**(a)Service
      cost
    
    **$******
    ******15**
    
    $
    11Interest
      cost
    
    
    **42**
    
    
    33Expected
      return on plan assets
    
    
    **(46**
    **)**
    
    (30
    )Amortization
      cost:Prior
      service cost
    
    
    **2**
    
    
    2Losses
    
    
    **10**
    
    
    7Net
      periodic benefit cost
    
    **$******
    ******23**
    
    $
    23
  **Postretirement
      Benefits****2005**
    
    **2004**(a)Service
      cost
    
    **$******
    ******6**
    
    $
    4Interest
      cost
    
    
    **19**
    
    
    17Expected
      return on plan assets
    
    
    **(12**
    **)**
    
    (9
    )Amortization
      cost:Prior
      service cost
    
    
    **(1**
    **)**
    
    (1
    )Losses
    
    
    **10**
    
    
    10Net
      periodic benefit cost
    
    **$******
    ******22**
    
    $
    21
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations, but excludes 2004 amounts for
    IP.
 
 UE, CIPS, Genco, CILCORP, CILCO and IP are participants in Ameren’s plans and
are responsible for their proportional share of the pension and other
postretirement costs. The following table presents the pension and other
postretirement costs incurred for the three months ended March 31, 2005 and
2004:
 **Pension
      Benefits****2005**
    
    **2004**Ameren(a)
    
    **$******
    ******23**
    
    $
    23UE
    
    
    **13**
    
    
    14CIPS
    
    
    **3**
    
    
    3Genco
    
    
    **2**
    
    
    2CILCORP
    
    
    **3**
    
    
    4CILCO
    
    
    **4**
    
    
    6IP(b)
    
    
    **2**
    
    
    -
  **Postretirement
      Benefits****2005**
    
    **2004**Ameren(a)
    
    **$******
    ******22**
    
    $
    21UE
    
    
    **11**
    
    
    13CIPS
    
    
    **3**
    
    
    3Genco
    
    
    **1**
    
    
    1CILCORP
    
    
    **4**
    
    
    4CILCO
    
    
    **6**
    
    
    6IP(b)
    
    
    ******3**
    
    
    -
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations, but excludes 2004 amounts for
    IP.
 (b)
    Includes
      predecessor information for first quarter of
2004.
 
 **NOTE
13 -** **SEGMENT
INFORMATION** ****
 
 As discussed in the Ameren Companies combined Form 10-K for the fiscal year
ended December 31, 2004, 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.
 
 Ameren’s
reportable segment Utility Operations includes the operations of UE,
CIPS, Genco, CILCORP and CILCO. The operations of IP are included in
Ameren’s Utility Operations segment from September 30, 2004.
  The
accounting policies for segment data are the same as those described in Note 1 -
Summary of Significant Accounting Policies. Segment data include intersegment
revenues, as well as a charge for allocating costs of administrative support
services to each of the operating companies, which, in each case, is eliminated
upon consolidation. Ameren Services allocates administrative support services
based on various factors, such as headcount, number of customers, and total
assets. The following table presents information about the reported revenues and
net income of Ameren for the three months ended March 31, 2005 and
2004:
 
 **Utility
      Operations**
    
    **Other**
    
    **Reconciling
      Items**(b)
    
    **Total****2005:**Operating
      revenues
    
    **$******
    ******1,944**
    
    **$******
    ******-**
    
    **$******
    ******(318**
    ******)**
    **$******
    ******1,626**Net
      income
    
    
    **125**
    
    
    **(4**
    **)**
    
    **-**
    
    
    **121****2004:**(**a**)Operating
      revenues
    
    $
    1,515
    
    $
    -
    
    $
    (297
    )
    $
    1,218Net
      income
    
    
    97
    
    
    -
    
    
    -
    
    
    97
  (a)
    Excludes
      2004 amounts for IP.
 (b)
    Elimination
      of intercompany revenues.
  49
  
 ****
 **ITEM
2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.**
   **OVERVIEW** **
 
 **Ameren
Executive Summary**
 
 Ameren’s net earnings in the first quarter of 2005 benefited from higher prices
for interchange power sales, the addition of IP and improved availability and
capacity factors at Ameren’s power plants. Milder winter weather, reduced
emission credit sales and higher fuel costs offset some of the positive factors
this year.
 
 Increased plant availability allowed Ameren to take advantage of higher power
prices in the interchange markets. The power markets continue to be driven by
high prices for natural gas and higher coal and transportation costs. However,
Ameren also experienced higher fuel costs this year and expects this trend to
continue.
  In late
February, CIPS, CILCO and IP made initial filings with the ICC to outline a
proposed method for procuring power in 2007 and beyond. Later this year, or
early next year, CIPS, CILCO and IP will make filings with the ICC that will
serve as a basis for adjusting electric distribution rates. By January 1, 2006,
UE will provide an updated cost of service study to the MoPSC staff and others.
These are milestone events for Ameren.
 
 **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 as discussed below. Dividends on Ameren’s common stock are
dependent on distributions made to it by its subsidiaries. Ameren’s principal
subsidiaries are listed below. 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 Ameren's principal subsidiaries.
 
 ·
    UE
      operates a rate-regulated electric generation, transmission and
      distribution business, and a rate-regulated natural gas transmission and
      distribution business in Missouri and prior to May 2, 2005, in
      Illinois.
 ·
    CIPS
      operates a rate-regulated electric and natural gas transmission and
      distribution business in Illinois.
 ·
    Genco
      operates a non-rate-regulated electric generation business in Illinois and
      Missouri.
 ·
    CILCO
      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, through its
      subsidiary, AERG, and a rate-regulated natural gas transmission and
      distribution business in Illinois.
 ·
    IP
      operates a rate-regulated electric and natural gas transmission and
      distrubution business in Illinois.  See Note 2 - Acquisitions to our
      financial statements under Part I, Item 1, of this report for further
      information.
 
 The
financial statements of Ameren are prepared on a consolidated basis and
therefore include the accounts of its majority-owned subsidiaries. As the
acquisition of IP occurred on September 30, 2004, Ameren’s Consolidated
Statements of Income and Cash Flows for the three months ended March 31, 2004,
do not reflect IP’s results of operations or financial position. See Note 2 -
Acquisitions for further information on the accounting for the IP acquisition.
See also Note 2 - Acquisitions under Part II, Item 8 of the Ameren Companies’
combined Form 10-K for the year ended December 31, 2004, for information on the
accounting for the CILCORP acquisition. 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 information in this report is expressed in cents per share. These
amounts reflect factors that directly affect Ameren’s earnings. We believe this
per share information is useful because it enables readers to understand the
impact of these factors on Ameren’s earnings per share. All references in this
report to earnings per share are based on weighted-average diluted common shares
outstanding during the applicable period.
 
 **IP
Acquisition**
 
 On September 30, 2004, Ameren completed the acquisition from Dynegy of all the
common stock and 662,924 shares of preferred stock of IP (based in Decatur,
Illinois) and an additional 20% ownership interest in EEI. Ameren acquired IP to
complement its existing Illinois electric and gas operations. The purchase
included IP’s rate-regulated electric and natural gas transmission and
distribution business serving 600,000 electric and 415,000 gas customers in
areas contiguous to our existing Illinois utility service territories. With the
acquisition, IP became an Ameren subsidiary operating as AmerenIP.
 
 The total
transaction value was $2.3 billion, including the assumption of $1.8 billion of
IP debt and preferred stock and consideration, including transaction costs, of
$440 million in cash, net of $51 million cash acquired and a final working
capital adjustment of $5 million received from Dynegy in February 2005 pursuant
to the terms of the stock purchase agreement. Ameren placed $100 million of the
cash portion of the purchase price in a six-year escrow account pending
resolution of certain contingent environmental obligations of IP
 
 
 50
 
 
 
 and other
Dynegy affiliates for which Ameren has been provided indemnification by Dynegy.
See Note 9 - Commitments and Contingencies to our financial statements under
Part I, Item 1, of this report for information on the IP environmental matter to
which the indemnification and escrow applies. In addition, this transaction
included a fixed-price power supply agreement for IP’s annual purchase in 2005
and 2006 of 2,800 megawatts of electricity from DYPM. The contract was marked to
fair value at closing of the IP acquisition. This agreement is expected to
supply about 70% of IP’s electric customer requirements during those two years.
The remaining 30% of its power needs in 2005 and 2006 will be supplied under
other arrangements. In the event that any of IP’s suppliers are unable to supply
the electricity required by existing agreements, IP would be forced to find
alternative suppliers to meet its load requirements, thus exposing IP to market
price risk, which could have a material impact on Ameren’s and IP’s results of
operations, financial condition, or liquidity.
 
 Ameren funded this acquisition with the issuance of new Ameren common stock.
Ameren issued an aggregate of approximately 30 million common shares in February
2004 and July 2004, which generated net proceeds of about $1.3 billion. Proceeds
from these issuances were used to finance the cash portion of the purchase price
and to reduce high-cost IP debt assumed as part of this transaction and to pay
related premiums.
  Ameren
expects the acquisition of IP to be accretive to earnings in the first two years
of ownership. That belief is based on a variety of assumptions related to power
prices, interest rates, and synergies, among other things. In December 2004, 230
IP employees accepted a voluntary separation opportunity, whichprovides
an enhanced separation benefit and extended medical and dental benefits.
Employees who accepted the voluntary separation opportunity will leave IP
throughout 2005 as business needs warrant. These voluntary separations are
consistent with Ameren’s plan for the integration of IP and conditions in the
ICC order approving the acquisition, which relate to the realization of
administrative synergies from the acquisition. As of March 31, 2005, estimated
separation costs of $26 million have been deferred as a regulatory asset for
future recovery from customers, which is also consistent with the ICC
order.
  For
income tax purposes, Ameren and Dynegy have elected to treat Ameren’s
acquisition of IP stock as an asset acquisition under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended.
  **RESULTS
OF OPERATIONS**
 
 **Earnings
Summary**
 
 Our results of operations and financial position are affected by many factors.
Weather, economic conditions, and the actions of key customers or competitors
can significantly affect the demand for our services. Our results are also
affected by seasonal fluctuations caused by winter heating and summer cooling
demand. With approximately 85% of Ameren’s revenues directly subject to
regulation by various state and federal agencies, decisions by regulators can
have a material impact on the prices we charge for our services. Our
non-rate-regulated sales are subject to market conditions for power. We
principally use coal, nuclear fuel, natural gas, and oil in our operations. The
prices for these commodities can fluctuate significantly due to the world
economic and political environment, weather, supply and demand levels and many
other factors. We do not currently 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 (PGAs) in each state for our gas delivery
businesses. The electric and gas rates for UE in Missouri are set through June
2006, and are set for CIPS, CILCO and IP in Illinois through the end of 2006, so
that cost decreases or increases will not be immediately reflected in rates.
Fluctuations in interest rates affect 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 costs, operating and administrative
costs, and capital investment are key factors that we seek to control in order
to optimize our results of operations ,
financial position and
liquidity.
 
 Ameren’s net income increased $24 million to $121 million, or 62 cents per
share, in the first quarter of 2005 from $97 million, or 55 cents per share, in
the first quarter of 2004. The change in net income was primarily due to the
inclusion of IP results for three months in 2005, increased margins on
interchange power sales as a result of higher power prices, and improved power
plant availability and capacity factors. Partially offsetting these increases to
net income were the effect of mild winter weather, decreased emission allowance
sales, higher fuel costs and electric rate reductions in the first quarter of
the current year.
 
 
 51
 
 As a
holding company, Ameren’s net income and cash flows are primarily generated by
its principal subsidiaries: UE, CIPS, Genco, CILCORP and IP. The following table
presents the contribution by Ameren’s principal subsidiaries to Ameren’s
consolidated net income for the three months ended March 31, 2005 and
2004:
 **Three
      Months****2005**
    
    **2004**Net
      income:UE(a)
    
    **$**
    **56**
    
    $
    57CIPS
    
    
    **7**
    
    
    9Genco(a)
    
    
    **31**
    
    
    29CILCORP(a)
    
    
    **9**
    
    
    4IP(b)
    
    
    **21**
    
    
    -Other(c)
    
    
    **(3**
    **)**
    
    (2
    )Ameren
      net income
    
    **$**
    **121**
    
    $
    97
 
 (a)
    Includes
      earnings from unregulated interchange power sales that provided $22
      million (2004 - $17 million) of UE’s net income, $12 million (2004 - $10
      million) of Genco’s net income and $5 million of CILCORP’s net income in
      the current year.
 (b)
    Ameren
      acquired IP on September 30, 2004.
 (c)
    Includes
      corporate general and administrative expenses, transition costs associated
      with the IP acquisition and other non-rate-regulated
      operations.
 
 **Acquisition
Accounting**
 
 The amortization of noncash purchase accounting fair value adjustments at IP
increased Ameren’s and IP’s net income by $14 million and $10 million,
respectively, for the three months ended March 31, 2005, as compared with the
prior-year period. The amortization of the fair value adjustments at IP that
increased net income were related to pension and postretirement liabilities,
long-term debt, and a power supply contract with Dynegy to supply IP 2,800
megawatts for 2005 and 2006. Partially offsetting these items at IP was the
amortization of the fair value adjustment related to a power supply contract
with EEI that expires in 2005. The following table presents the favorable
(unfavorable) impact on Ameren’s and IP’s net income related to the amortization
of purchase accounting fair value adjustments
associated with the IP acquisition during the three months ended March 31,
2005:
 **Three
      Months****2005****Ameren**
    
    **IP**Statement
      of Income line item:Other
      operations and maintenance(a)
    
    **$******
    ******7**
    
    **$******
    ******7**Interest(b)
    
    
    **6**
    
    
    **6**Purchased
      power(c)
    
    
    **10**
    
    
    **4**Income
      taxes(d)
    
    
    **(9**
    **)**
    
    **(7**
    **)**Impact
      on net income
    
    **$******
    ******14**
    
    **$******
    ******10**
 
 (a)
    Related
      to the adjustment to fair value of the pension plan and postretirement
      plans.
 (b)
    Related
      to the adjustment to fair value of all the IP debt assumed at acquisition
      on September 30, 2004 and the unamortized gain or loss on reacquired debt.
      The net write-up to fair value of all the IP debt assumed, excluding early
      redemption premiums, is being amortized over the anticipated remaining
      life of the debt.
 (c)
    Related
      to the amortization of fair value adjustments to power supply contracts.
 (d)
    Tax
      effect of the above amortization adjustments.
 
 The amortization of fair value adjustments at EEI as a result of the
additional 20% interest acquired by Ameren on September 30, 2004, were related
to plant in service, emission credits and a power supply agreement with IP
that expires in 2005. The following table presents the favorable (unfavorable)
impact on Ameren’s net income related to the amortization of purchase accounting
fair value adjustments associated with the EEI acquisition during the three
months ended March 31, 2005:
 **Three
      Months****2005**Statement
      of Income line item:Interchange
      revenues(a)
    
    **$******
    ******1**Fuel
      and purchased power(b)
    
    
    **(1**
    **)**Depreciation
      and amortization(c)
    
    
    **(1**
    **)**Income
      taxes(d)
    
    
    **-**Impact
      on net income
    
    **$******
    ******(1**
    ******)**
 
 (a)
    Related
      to the amortization of a power supply
contract.
 (b)
    Related
      to the amortization of emission credits.
 (c)
    Includes
      the amortization of the fair value adjustment related to plant assets.
 (d)
    Tax
      effect of the above amortization adjustments.
 
   **Electric
Operations**
  ****The
following table presents the favorable (unfavorable) variations in electric
margins, defined as electric revenues less fuel and purchased power costs, for
the three months ended March 31, 2005, from the comparable period in 2004. We
consider electric and interchange margins useful measures to analyze the change
in profitability of our electric operations between periods. We have included
the analysis below as a complement to our financial information provided in
accordance with GAAP. However, electric and interchange margins may not be a
presentation defined under GAAP and may not be comparable to other companies’
presentations or more useful than the GAAP information we are providing
elsewhere in this report.
 
 The
variation for Ameren shows the contribution from IP for the three months ended
March 31, 2005, as a separate line item, which facilitates comparison with other
margin components. IP’s electric margins in 2005 include purchase accounting
  
 52
 
 adjustments
and are compared with the same period in 2004 when Ameren did not own IP and it
did not contribute to Ameren’s electric margins.
 **Three
      Months**
    
    **Ameren**(a)
    
    **UE**
    
    **CIPS**
    
    **Genco**
    
    **CILCORP**
    
    **CILCO**
    
    **IP**(b)Electric
      revenue change:IP
      - January to March, 2005
    
    $
    235
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -Effect
      of weather (estimate)
    
    
    (6
    )
    
    (2
    )
    
    (1
    )
    
    -
    
    
    (2
    )
    
    (2
    )
    
    (1
    )Growth
      and other (estimate)
    
    
    (6
    )
    
    (4
    )
    
    3
    
    
    6
    
    
    (7
    )
    
    (7
    )
    
    (11
    )Emission
      credits
    
    
    (15
    )
    
    (15
    )
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Rate
      reductions
    
    
    (7
    )
    
    (7
    )
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Interchange
      revenues
    
    
    13
    
    
    13
    
    
    (1
    )
    
    3
    
    
    4
    
    
    4
    
    
    -Total
    
    $
    214
    
    $
    (15
    )
    $
    1
    
    $
    9
    
    $
    (5
    )
    $
    (5
    )
    $
    (12
    )Fuel
      and purchased power change:IP
      - January to March, 2005
    
    $
    (157
    )
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    -Fuel:Generation
      and other
    
    
    6
    
    
    (4
    )
    
    -
    
    
    14
    
    
    (3
    )
    
    (1
    )
    
    -Price
    
    
    (19
    )
    
    (9
    )
    
    -
    
    
    (10
    )
    
    3
    
    
    3
    
    
    -Purchased
      power
    
    
    27
    
    
    15
    
    
    (6
    )
    
    (9
    )
    
    12
    
    
    12
    
    
    (6
    )Total
    
    $
    (143
    )
    $
    2
    
    $
    (6
    )
    $
    (5
    )
    $
    12
    
    $
    14
    
    $
    (6
    )Net
      change in electric margins
    
    $
    71
    
    $
    (13
    )
    $
    (5
    )
    $
    4
    
    $
    7
    
    $
    9
    
    $
    (18
    )
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations.
 (b)
    Compared
      to predecessor information for the three months ended March 31,
      2004.
 *Ameren*
 
 Ameren’s electric margin increased $71 million for the three months ended March
31, 2005, compared with the same period in 2004. The acquisition of IP added
electric margins of $78 million in the first quarter of 2005. Otherwise,
electric margin decreased in the first quarter of 2005 primarily due to lower
emission allowance sales, unfavorable weather conditions, rate reductions, and
reduced low margin sales into the deregulated Illinois marketplace. Revenues
from emission credit sales at UE decreased $15 million in the first quarter of
2005 as compared with the same period in 2004. Partially offsetting these
reductions were increased interchange margins as discussed below.
 
 We
experienced mild winter weather conditions during the first quarter of 2005
compared with the same period in 2004. Heating degree-days during that period in
our service territory were down 4% from the prior year and down 8% from normal
conditions. Excluding the three months of IP sales in the current year,
weather-sensitive residential and commercial sales were down 2% and 1%,
respectively, compared with the prior year period.
 
 Industrial
sales, excluding IP sales in the current year, declined almost 6%, primarily as
a result of the expiration and non-renewal of low margin power sales contracts
outside of Ameren’s core service territory. Excluding the expired contracts,
industrial sales rose approximately 1% over the same period in the prior
year.
 
 Rate
reductions resulting from the 2002 UE electric rate case settlement in Missouri
negatively affected electric revenues by $7 million during the first quarter of
2005. These were the final rate reductions under the rate case settlement.
 
 Margins
on interchange sales increased $17 million for the first three months of 2005
compared with the same period in 2004.
Interchange margins increased principally because of higher power prices. In
addition, there was increased availability
of low-cost generation resulting from reduced demand from native load customers
due to the mild weather as well as improved power plant availability. High
natural gas, emission allowance and coal prices in 2005 have been contributing
to the high power prices. Average realized power prices on interchange sales
increased to approximately $38 per megawatthour in the first three months of
2005 from approximately $31 per megawatthour in the comparable period of 2004.
Ameren’s baseload electric generating plants’ average capacity factor was
approximately 76% in the first quarter of 2005 compared with 75% in the same
period of 2004 and the equivalent availability factor was approximately 84%, as
compared with 82% in the prior-year period.
 
 Ameren’s
fuel and purchased power costs, excluding the three months of IP results,
decreased $14 million in the first quarter of 2005 compared with the same period
of 2004 because of reduced demand, lower industrial sales and increased plant
availability, partially offset by higher fuel costs.
 
 *UE*
 
 UE’s
electric margin decreased $13 million for the first three months of 2005
compared with the same period in 2004 primarily because of decreased emission
credit sales and rate reductions from the 2002 Missouri rate case settlement. In
addition, unfavorable weather conditions resulted in a decrease in residential
and commercial sales of 2%. Partially offsetting these decreases to electric
revenues were increased interchange margins. Margins on interchange sales with
non-affiliates increased $8 million in the first three months of 2005, as
compared with the same period of 2004, primarily
 
 
 53
 
 because
of higher power prices. Margins on sales to affiliates also increased over the
same period in 2004 because of increased sales to Genco resulting from a major
plant maintenance outage at Genco. Fuel and purchased power was flat in the
first quarter of 2005 as compared to the year-ago period as decreased power
purchases due to the mild weather and improved plant availability were offset by
higher fuel costs.
  *CIPS*
 
 CIPS’ electric margin decreased $5 million in the first quarter of 2005 compared
with the same period of 2004 primarily because of unfavorable weather conditions
and increased purchased power costs.
 
 *Genco*
 
 Genco’s
electric margin increased $4 million in the first quarter of 2005 compared with
the same period of 2004. The increase in electric margin was primarily
attributable to an increase in wholesale margins on sales to new customers
and increased interchange margins. Interchange margins increased $4 million in
the three months ended March 31 2005, as compared with the same period in
2004, primarily because of the higher power prices. Partially
offsetting these increases was a loss of $6 million due to the settlement of
SO 2 emission
allowance options in the first quarter of 2005.  Increased purchased
power, principally from UE, was the result of a major power plant
maintenance outage in the first quarter of 2005.
 
 *CILCORP
and CILCO*
 
 Electric
margin at CILCORP and CILCO increased $7 million and $9 million, respectively,
during the first quarter of 2005 compared with the same period of 2004.
Increases in electric margin were due to increased interchange margins and the
use of lower cost coal at one of AERG’s power plants, partially offset by the
mild weather and reduced margin due to transfers of non-rate-regulated customers
to Marketing Company.
 
 *IP*
 
 IP’s
electric margin decreased $18 million in the first quarter of 2005 compared with
the same period of 2004 primarily because of unfavorable weather conditions and
reduced industrial revenues ($8 million) because of customers choosing
alternative suppliers. In addition, purchased power costs increased due to
higher power prices as a result of the mix of purchases under various contracts.
While power costs decreased under contracts with DYPM, costs on remaining power
purchase contracts were higher than in the first quarter of the prior
year.
 
 **Gas
Operations**
 
 The
following table presents the favorable (unfavorable) variations in gas margins,
defined as gas revenues less gas purchased for resale, for the three months
ended March 31, 2005, from the comparable period in 2004. We consider gas margin
to be a useful measure to analyze the change in profitability of our gas utility
operations between periods. We 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’ presentations or more useful than the GAAP information we are
providing elsewhere in this report.
 **Three
      Months**Ameren(a)
    
    **$******
    ******54**UE
    
    
    **2**CIPS
    
    
    **(4**
    **)**CILCORP
    
    
    **(c**
    **)**CILCO
    
    
    **1**IP(b)
    
    
    **(5**
    **)**
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations.
 (b)
    Compared
      to predecessor information for the three months ended March 31, 2004.
 (c)
    Less
      than $1 million.
 
 Ameren’s
gas margin increased due to the inclusion of three months of IP results in the
current year ($51 million). Excluding the IP results, gas margin increased $3
million as rate increases of $3 million at UE and increased transportation
revenues offset the effect of mild winter weather in 2005. Gas sales in the
first quarter of 2005 increased almost 70%, due to the IP acquisition, while gas
sales in Ameren’s preacquisition service territory were down 5% in the same
period, as a result of the mild weather. CIPS’ and IP’s gas margins decreased
primarily due to unfavorable weather conditions. CILCORP’s and CILCO’s gas
margins were comparable to the first quarter of 2004.
 
 **Operating
Expenses and Other Statement of Income Items**
 
 *Other
Operations and Maintenance*
 
 Ameren’s
other operations and maintenance expenses increased $39 million for the three
months ended March 31, 2005, compared with the same period in 2004. The three
months of IP results in the current year accounted for $42 million of other
operations and maintenance expense. Excluding the three months of IP results in
the current year, other operations and maintenance expenses were relatively flat
compared to 2004 with several offsetting increases and decreases as discussed
below.
 
 
 54
 
 
 Other
operations and maintenance expenses decreased $9 million at UE in the first
quarter of 2005, as compared with the first three months of 2004, primarily as a
result of decreased power plant maintenance costs. In the first quarter of 2004,
there was an unscheduled outage at the Callaway nuclear plant and planned
outages at two coal-fired plants that were more extensive than in 2005. The
decrease at UE in 2005 was also attributable to decreased labor
costs.
 
 Other
operations and maintenance expenses decreased $4 million at CIPS in the first
three months of 2005 compared with the same period of 2004 primarily because of
a decrease in bad debt expense.
 
 Genco’s
other operations and maintenance expenses increased $10 million in the first
quarter of 2005 compared with the first quarter of 2004 primarily as a result of
increased power plant maintenance costs due to a major power plant maintenance
outage in the first quarter of 2005.
 
 CILCORP’s
other operations and maintenance expenses were comparable in the first quarter
of 2005 with the same period in 2004.
 
 CILCO’s
other operations and maintenance expenses decreased $3 million in the first
quarter of 2005, as compared with the first three months of 2004, primarily as a
result of  reduced power plant maintenance.
 
 Other
operations and maintenance expenses at IP decreased $5 million in the first
three months of 2005 compared with the same period of 2004. The decrease was
primarily due to reduced costs associated with injuries and damages and bad debt
expense.
 
 **
 *Depreciation
and Amortization*
 
 Ameren’s
depreciation and amortization expenses increased $27 million in the first three
months of 2005, as compared with the same period of 2004, because of the
acquisition of IP, which added $21 million, as well as capital additions.
 
 Depreciation
and amortization expenses at UE increased $4 million in the first three months
of 2005 compared with the first quarter of 2004 because of capital additions.
 
 IP’s
depreciation and amortization expenses, excluding the amortization of regulatory
assets, were comparable in the first quarter of 2005 with the first quarter of
2004. Amortization of regulatory assets at IP decreased $11 million in the first
three months of 2005, as compared with the same period of 2004. The transition
cost regulatory asset was eliminated in conjunction with Ameren’s acquisition of
IP.
 
 Depreciation
and amortization expenses at CIPS, Genco, CILCORP and CILCO were comparable for
the three months ended March 31, 2005, with the same period in
2004.
 
 *Taxes
Other Than Income Taxes*
 
 Taxes
other than income taxes increased $11 million at Ameren in the first three
months of 2005 compared with the same period of 2004 principally because of the
acquisition of IP, which added $22 million. Excluding the three months of IP
included in the current year, taxes other than income taxes at Ameren decreased
$11 million primarily because of decreased gross receipts taxes ($5 million) and
property taxes ($5 million) as discussed below.
 
 UE’s
taxes other than income taxes were comparable in the first quarter of 2005 with
the same period in 2004 as decreased gross receipt taxes of $2 million were
offset by increased property taxes of $2 million.
 
 Genco’s
taxes other than income taxes decreased $7 million in the first three months of
2005 compared with the same period of 2004 due to a favorable property tax court
decision.
 
 Both
CILCORP’s and CILCO’s taxes other than income taxes decreased $2 million in the
first three months of 2005, as compared with the same period of 2004, primarily
because of reduced gross receipts taxes.
 
 Taxes
other than income taxes at CIPS and IP were comparable in the first three months
of 2005 with the same period of 2004.
 
 *Other
Income and Deductions*
 
 Other income and deductions at Ameren, Genco, CILCORP and CILCO were comparable
in the first three months of 2005 with the same period of 2004.
  Other
income and deductions at UE increased $2 million in the first three months of
2005 compared with the same period of 2004 primarily because of an increase in
allowance for funds used during construction as a result of capital
additions.
  CIPS’
other income and deductions decreased $2 million in the first quarter of 2005
compared with the first quarter of 2004 primarily because of reduced interest
income on the intercompany note receivable from Genco.
 
 Other income and deductions at IP decreased $46 million in the first three
months of 2005, as compared with the same period of 2004, primarily because of
reduced interest income after the elimination of IP’s Note Receivable from
Former Affiliate in conjunction with Ameren’s acquisition of IP.
 
 See Note 6 -
Other Income and Deductions to our financial statements under Part I, Item 1, of
this report for further information .
   55
 *Interest*
 
 Interest expense increased at Ameren in the first three months of 2005 compared
with the same period of 2004 principally due to the acquisition of IP, which
added $10 million. Excluding the three months of IP results in the current year,
interest expense was comparable to the first quarter of 2004.
  Genco’s
interest expense was $2 million lower in the first three months of 2005, as
compared with the same period of 2004, primarily because of a reduction in
principal amounts outstanding on intercompany promissory notes to CIPS and
Ameren.
 
 Interest
expense decreased
$29 million at IP in the
first three months of 2005 compared with the first quarter of 2004 primarily because of redemptions and repurchases of indebtedness of $700 million
in the fourth quarter of 2004 and $70 million in the first quarter of 2005 and
reductions in notes payable to IP SPT.
 
 Interest expense at UE, CIPS, CILCORP and CILCO in the first three months of
2005 was comparable to the same period of 2004.
  *Income
Taxes*
 
 Income
tax expense increased at Ameren in the first three months of 2005 compared with
the same period of 2004 because of higher pretax income and the inclusion of
three months of IP results in 2005, partially offset by the recognition in the
2005 first quarter of the nontaxable federal Medicare Prescription Drug Subsidy
and the recognition of a deduction allowed under the Jobs Creation Act. Income
tax expense was higher at Genco, CILCORP and CILCO in the first quarter of 2005
compared with the first quarter of 2004 due to higher pretax income. Income tax
expense was lower at UE, CIPS and IP in the first quarter of 2005 compared with
the same period of 2004 due to lower pretax income and, in the case of CIPS, a
reduction in estimates for anticipated settlements of uncertain tax positions.
UE’s income tax expense was also reduced in the current year by the recognition
of the Medicare Prescription Drug Subsidy and the Jobs Creation Act
deduction.
 
 **LIQUIDITY
AND CAPITAL RESOURCES**
 
 The
tariff-based gross margins of Ameren’s rate-regulated utility operating
companies (UE, CIPS, CILCO and IP) continue to be the principal source of cash
from operating activities for Ameren and its rate-regulated subsidiaries. A
diversified retail customer mix of primarily rate-regulated residential,
commercial and industrial classes and a commodity mix of gas and electric
service provide a reasonably predictable source of cash flows. For cash flows
from operating activities, Genco principally relies on sales to an affiliate
under a contract expiring at the end of 2006 and sales to other wholesale and
industrial customers under long-term contracts. In addition, we plan to use
short-term borrowings to support normal operations and other temporary capital
requirements.
 
  The following table presents net cash
provided by (used in) operating, investing and financing activities for the
three months ended March 31, 2005 and 2004:
 **Net
      Cash Provided By**
      **Operating
      Activities**
    
    **Net
      Cash Provided By**
      **(Used
      In) Investing Activities**
    
    **Net
      Cash Provided By**
      **(Used
      In) Financing Activities****2005**
    
    **2004**
    
    **Variance**
    
    **2005**
    
    **2004**
    
    **Variance**
    
    **2005**
    
    **2004**
    
    **Variance**Ameren(a)
    
    **$******
    ******357**
    
    $
    244
    
    $
    113
    
    **$******
    ******(202**
    ******)**
    $
    (161
    )
    $
    (41
    )
    **$******
    ******(194**
    ******)**
    $
    439
    
    $
    (633
    )UE
    
    
    **107**
    
    
    92
    
    
    15
    
    
    **(185**
    **)**
    
    (95
    )
    
    (90
    )
    
    **32**
    
    
    (5
    )
    
    37CIPS
    
    
    **66**
    
    
    51
    
    
    15
    
    
    **(10**
    **)**
    
    (9
    )
    
    (1
    )
    
    **(56**
    **)**
    
    (44
    )
    
    (12
    )Genco
    
    
    **38**
    
    
    67
    
    
    (29
    )
    
    **(24**
    **)**
    
    (16
    )
    
    (8
    )
    
    **(15**
    **)**
    
    (51
    )
    
    36CILCORP
    
    
    **41**
    
    
    95
    
    
    (54
    )
    
    **(13**
    **)**
    
    (33
    )
    
    20
    
    
    **(31**
    **)**
    
    (61
    )
    
    30CILCO
    
    
    **45**
    
    
    79
    
    
    (34
    )
    
    **(19**
    **)**
    
    (35
    )
    
    16
    
    
    **(27**
    **)**
    
    (49
    )
    
    22IP(b)
    
    
    **113**
    
    
    133
    
    
    (20
    )
    
    **1**
    
    
    (28
    )
    
    29
    
    
    **(114**
    **)**
    
    (25
    )
    
    (89
    )
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations, but excludes 2004 amounts for
    IP.
 (b)
    2004
      amounts include predecessor information.
 
 **Cash
Flows from Operating Activities**
 
 Cash flows provided by operating activities increased for Ameren, UE and CIPS in
the first three months of 2005 compared with the same period of 2004. Ameren’s
increase in cash flows from operating activities was due to the addition of cash
flows generated from IP, which was acquired on September 30, 2004. Excluding
IP’s cash flows from operations
of $113 million in the first three months of 2005, Ameren’s cash flows from
operating activities were flat compared to 2004. Otherwise, a $30 million
reduction in cash taxes in the first three months of 2005 compared to the same
period in 2004 was offset by the purchase of SO 2 emission
allowances of $42 million in 2005 and the absence in 2005 of
 
 
 56
 
 $9
million of cash flows in 2004 from a coal contract settlement and the timing of
other working capital items.
 
 UE’s cash flows from operating activities increased in the first three months of
2005 compared with the same period in 2004 principally due to a $17 million
reduction in taxes paid. A change in working capital at UE was principally due
to the timing and amount of accounts and wages payable related to the payment of
certain annual incentive payments and property taxes. In the first three months
of 2004, UE’s cash flows from operating activities benefited from the receipt of
$9 million related to a coal contract settlement.
 
 CIPS’ increase in cash flows from operating activities in the first three months
of 2005 was due to the receipt of a refund of $5 million from Ameren based on
its tax sharing agreement with Ameren compared with tax payments of $6 million
in the same period in 2004 and a greater quarter-over-quarter reduction in
natural gas inventories. These increases were partially offset by decreased
operating margins as discussed under Results of Operations.
 
 Cash flows provided by operating activities decreased for Genco in the first
three months of 2005 compared with the same period of 2004. Genco’s decrease was
attributed to purchases of SO 2 emission
allowances and increased coal inventories of $12 million. A $13 million variance
caused by the payment of taxes in the first three months of 2005 compared with a
refund received in the same period in 2004 also contributed to the decrease in
Genco’s cash flows from operating activities. These decreases in cash flows from
operating activities were partially offset by differences in the timing and
amount of accounts and wages payable along with incremental earnings as
discussed under Results of Operations.
 
 Cash flows from operating activities decreased for CILCORP and CILCO in the
first three months of 2005 compared with the same period in 2004 primarily
because of a smaller quarter-over-quarter reduction in gas inventories. Also
contributing to the reduction in cash flows from operating activities were
differences in the timing and amount of accounts and wages payable related to
certain annual incentive payments and property taxes. CILCORP’s and CILCO’s
decrease in cash flows from operating activities was partially offset by
increased operating margins as discussed under Results of
Operations.
 
 IP’s decrease in cash flows from operating activities in the first three months
of 2005 as compared to the year-ago period was principally due to lower
operating margins as described under Results of Operations. These decreases were
partially offset by a $10 million tax refund received in the first three months
of 2005 compared with a $34 million tax payment made in the same period in 2004.
IP received this refund because of lower estimated taxable income resulting from
the debt redemptions made in the fourth quarter of 2004.
 
 **Cash
Flows from Investing Activities**
  ****Cash
flows used in investing activities increased for Ameren, UE and
Gencoand
decreased for CILCORP and CILCO for the three months ended March 31, 2005
compared with the same period in 2004. IP’s cash flows from investing activities
increased for the first three months of 2005 as compared to the same period in
2004.
  Ameren’s
increase in cash used in investing activities was primarily attributed to $31
million of additional capital expenditures incurred with the addition of IP and
increased capital expenditures at Ameren’s other subsidiaries as described
below.
 
 UE’s cash flows used in investing activities increased because of contributions
made to the money pool arrangement in the first three months of 2005 compared
with receipt of cash in the same period in 2004. Incremental capital
expenditures also contributed to UE’s increase in cash flows used in investing
activities in the first three months of 2005 compared with the same period in
2004.
 
 CIPS’
cash flows used in investing activities were relatively flat in the
first three months of 2005 as compared with the same period of 2004.
 
 Genco’s cash flows used in investing activities increased in the first three
months of 2005 compared with the same period in 2004 because of an increase in
capital expenditures as discussed below.
 
 CILCORP’s
and CILCO’s cash flows used in investing activities decreased in the first three
months of 2005 compared with the same period in 2004 primarily because of
reduced capital expenditures at power plants as discussed below. An additional
$4 million received for payment on prior period money pool advances by CILCORP
decreased its cash flows used in investing activities in the first three months
of 2005 compared with the same period in 2004.
 
 IP’s cash
flows from investing activities increased in the first three months of 2005
primarily because of proceeds received from the return of advances made to the
money pool arrangement in the fourth quarter of 2004.
 
 *Capital
Expenditures*
 
 Ameren’s capital expenditures for the first quarter of 2005 included
expenditures at UE’s Callaway nuclear plant for steam generators and low
pressure rotor equipment replacement. UE’s capital expenditures also included
costs for transmission, distribution and other generation-related
 
 
 57
 
 activities
at certain of its coal-fired plants. Genco’s
capital expenditures were attributed to an extended planned outage at one of its
plants in the current year quarter. CILCORP’s and CILCO’s capital
expenditures in 2005 were primarily related to power plant upgrades to allow
more flexibility in future fuel supply for power generation. Capital
expenditures at IP consisted of projects
to upgrade and maintain the reliability of IP’s electric and gas transmission
and distribution systems and to add new customers to the system.
 
 *Intercompany
Transfer of Illinois Service Territory and Electric Generating
Facilities*
 
 On May 2, 2005, UE completed the transfer of its Illinois-based electric and
natural gas utility businesses to CIPS, at an estimated net book value of $138
million. UE transferred 50 percent of the assets directly to CIPS in
consideration for a CIPS subordinated promissory note in the principal amount of
approximately $69 million and 50 percent of the assets by means of a dividend in
kind to Ameren, followed by a capital contribution by Ameren to CIPS. See Note 3
- Rate and Regulatory Matters, under Part I, Item 1 of this report for a
discussion of the asset transfer.
 
 On May 2, 2005, Genco completed the transfer to UE of its 550 megawatts of CTs
at Pinckneyville and Kinmundy, Illinois, for a total estimated net book value of
$240 million. UE paid for the assets with borrowings from the money pool
arrangement. Genco will utilize these transfer proceeds to eliminate its $34
million affiliate note payable with Ameren, reduce its money pool borrowings and
also use a portion of the proceeds to fund the maturity of its $225 million
7.75% senior notes due 2005. See Note 3 - Rate and Regulatory Matters, under
Part I, Item 1, of this report for a discussion of the asset
transfers.
 
 We
continually review our generation portfolio and expected power needs. As a
result, we could modify our plan for generation capacity, which could include
changing the times when certain assets will be added to or removed from our
portfolio, the type of generation asset technology that will be employed, and
whether capacity may be purchased, among other things. Any changes that we may
plan to make for future generating needs could result in significant capital
expenditures or losses being incurred, which could be material.
 
 See Note
9 - Commitments and Contingencies to our financial statements under Part I, Item
1, of this report for a further discussion of environmental
matters.
 
 ****
 **Cash
Flows from Financing Activities**
 
 Cash flows from financing activities decreased for Ameren in the first three
months of 2005 as compared with the same period of 2004, primarily because of
the receipt of $903 million in proceeds in the first quarter of 2004 from the
issuance of common stock. These proceeds were used to fund the acquisition of IP
and Dynegy’s 20% interest in EEI on September 30, 2004. See Note 2 -
Acquisitions to our financial statements under Part I, Item 1, of this report
for further information. Reduced redemptions and repurchases of short-term debt
and long-term debt in the first three months of 2005 as compared to the year-ago
period partially offset the effect of the lower proceeds from issuance of common
stock.
 
 UE’s cash flows from financing activities increased in the first three months of
2005 compared with the same period of 2004. This increase was caused, in
part, by cash proceeds received from the issuance of long-term debt and
short-term debt in 2005, less redemptions of long-term and short-term debt in
2005, and a nuclear fuel lease payment that was made in the first three months
of 2004. A decrease in the payment of dividends to Ameren was another
contributing factor to UE’s increase in cash flows from investing activities.
The increases were offset by reduced proceeds received from money pool
borrowings in the first three months of 2005 compared with the same period in
2004.
 
 CIPS’ cash flows used in financing activities increased in the first three
months of 2005, as compared with the same period of 2004. This increase resulted
from the additional use of cash to repay money pool borrowings. This increase
was offset by an absence of dividend payments to Ameren in the first three
months of 2005 compared with $19 million paid in the same period in 2004.
 
 Genco’s cash flows used in financing activities decreased in the first three
months of 2005, as compared with the same period of 2004, primarily because of a
$32 million decrease in cash from money pool borrowings. A decrease in payments
of common dividends in the first quarter of 2005 compared to the same period in
2004 also contributed to the decrease in Genco’s cash used in financing
activities.
  As of
March 31, 2005, Genco had subordinated affiliate notes payables of $249 million
and $34 million to CIPS and Ameren, respectively, which by their terms had final
payments of principal and interest due on May 1, 2005. As of May 1, 2005, Genco
amended certain terms of the CIPS note by the issuance to CIPS of an amended and
restated subordinated promissory note in the principal amount of approximately
$249 million with an interest rate of 7.125% per annum, a 5-year amortization
schedule and a maturity of May 1, 2010. In May  2005, Genco paid the
outstanding $34 million note payable it had with Ameren with proceeds received
from the transfer of its CTs at Pinckneyville and Kinmundy, Illinois to
UE.
 
 CILCORP’s and CILCO’s cash flows used in financing activities decreased in the
first three months of 2005 compared with the same period of 2004. This decrease
was caused by less redemptions of long-term debt partially offset
 
 
 58
 
 by
dividend payments made in the first quarter of 2005 compared to none in the
2004 period. Borrowings from the money pool in the first three months of 2004
were used to partially fund the repayment of a bank term loan.
 
 IP’s cash flows used in financing activities increased in the first three months
of 2005 compared with the same period of 2004 primarily because of
incremental redemptions, repurchases and maturities of long-term debt and
dividend payments made to Ameren in 2005.
 ****
 **Short-term
Borrowings and Liquidity**
 
 For information on short-term borrowing activity, relevant interest rates, and
borrowings under Ameren’s utility money pool arrangement and non-state-regulated
subsidiary money pool arrangement, see Note 4 - Short-term Borrowings and
Liquidity to our financial statements under Part I, Item 1, of this report.
  
 The following table presents the various committed bank credit facilities of
certain of the Ameren Companies and EEI as of March 31, 2005:
 **Credit
      Facility**
    **Expiration**
    **Amount
      Committed**
    **Amount
      Available****Ameren:**(a)Multiyear
      revolving
    July
      2006
    $235
    $79Multiyear
      revolving
    July
      2007
    350
    350Multiyear
      revolving
    July
      2009
    350
    350**UE:**Various
      364-day revolving
    through
      July 2005
    154
    -**CIPS:**Two
      364-day revolving
    through
      July 2005
    15
    -**CILCO:**Three
      364-day revolving
    through
      August 2005
    60
    -**EEI:**Two
      bank credit facilities
    through
      June 2005
    45
    11Total
    
    $1,209
    $790
 
 (a)
    Ameren
      Companies may access these credit facilities through intercompany
      borrowing arrangements.
 
 In addition to committed credit facilities, a further source of liquidity for
Ameren from time to time is available cash and cash equivalents. At March 31,
2005, Ameren had $30 million of cash and cash equivalents.
 
 Ameren
and UE are authorized by the SEC under PUHCA to have an aggregate of up to of
$1.5 billion and $1 billion, respectively, of short-term unsecured debt
instruments outstanding at any time. In addition, CIPS, CILCORP and CILCO have
PUHCA authority to have an aggregate of up to $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 and preferred stock
for the three months ended March 31, 2005 and 2004, for certain of the Ameren
Companies. For additional information, see Note 5 - Long-term Debt and Equity
Financings to our financial statements under Part I, Item 1, of this
report.




**Month
      Issued, Redeemed, Repurchased or Matured**
    **Three
      Months****2005****2004****Issuances***Long-term
      debt***UE:**5.00%
      Senior secured notes due 2020
    January
    **$****85**$-Total
      Ameren long-term debt issuances
    
    **$****85                               
             $**    
      -*Common
      stock***Ameren:**19,063,181
      Shares at $45.90
    February
    **$****-**$875DRPlus
      and 401(k)(a)
    Various
    **30**28Total
      common stock issuances
    
    **$****30                                     
      $**903Total
      Ameren long-term debt and common stock issuances
    
    **$****115**$903
    59
   **Month
      Issued, Redeemed, Repurchased or Matured**
    **Three
      Months****2005                                       
      2****004****Redemptions,
      Repurchases and Maturities***Long-term
      debt***Ameren:**Senior
      notes due 2007(b)
    February
    **$****95**$-**CILCO:**Secured
      bank term loan
    February
    **-**100**IP:**6.75%
      mortgage bonds due 2005
    March
    **70                                            
      -**Note
      payable to IP SPT5.38%
      Series due 2005
    Various
    **22**22Less:
      IP activity prior to acquisition date
    
    **-**(22)Total
      Ameren long-term debt redemptions, repurchases and
      maturities(c)
    
    **$****187                                     
      $**100
 
 (a)
    Includes
      issuances of common stock of 0.6 million shares during the three months
      ended March 31, 2005 and 0.5 million shares during the three months ended
      March 31, 2004 under DRPlus and 401(k)
plans.
 (b)
    A
      component of the adjustable conversion-rate equity security units. See
      Note 5 - Long-term Debt and Equity Financings to our financial statements
      under Part I, Item 1, of this report.
 
 The following table presents the authorized amounts under SEC Form S-3 shelf
registration statements filed and declared effective for certain of the Ameren
Companies as of March 31, 2005:
 **Effective**
      **Date**
    **Authorized**
      **Amount**
    **Issued**
    **Available**Ameren
    June
      2004
    2,000
    459
    1,541UE(a)
    September
      2003
    1,000
    689
    311CIPS
    May
      2001
    250
    150
    100
 
 (a)
    UE
      issued securities totaling $85 million in January
2005.
 
 In March 2004, the SEC declared effective a Form S-3 registration statement
filed by Ameren in February 2004, authorizing the offering of 6 million
additional shares of its common stock under DRPlus. Shares of common stock sold
under DRPlus are, at Ameren’s option, newly issued shares or treasury shares, or
shares purchased in the open market or in privately negotiated transactions.
 
 Ameren,
UE and CIPS may sell all or a portion of the remaining securities registered
under the shelf registration statements if market conditions and capital
requirements warrant such a sale. Any such offer and sale will be made only by
means of a prospectus meeting the requirements of the Securities Act of 1933 and
the rules and regulations thereunder.
 
 **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 covenants and
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 covenants and provisions contained in certain of the
Ameren Companies’ indenture agreements and articles of incorporation.
 
 At March 31, 2005, Ameren and its subsidiaries were in compliance with their
credit agreement and articles of incorporation provisions and covenants.
 
 We rely
on access to 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 and grow our businesses. After assessing our current operating
performance, liquidity, and credit ratings (see Credit Ratings below), we
believe that we will continue to have access to the capital markets. However,
events beyond our control may create uncertainty in the capital markets. Such
events might cause our cost of capital to increase or our ability to access the
capital markets to be adversely affected.
 
 **Dividends**
  ****The
amount and timing of dividends payable on Ameren’s common stock are within the
sole discretion of Ameren’s board of directors. The board of directors has not
set specific targets or payout parameters when declaring common stock dividends.
However, the board considers various issues including Ameren’s 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 three months of 2005 totaled
$124 million, or 63.5 cents per share (2004 - $116 million or 63.5 cents per
share). On April 26, 2005, Ameren’s board of directors declared a quarterly
common stock dividend of 63.5 cents per share payable on June 30, 2005, to
shareholders of record on June 8, 2005.
 
 
 60
 
 
 
 UE’s preferred stock dividends are payable May 15, 2005, and August 15, 2005, to
shareholders of record on April 20, 2005, and July 20, 2005, respectively. CIPS’
preferred stock dividends are payable June 30, 2005 and September 30, 2005, to
shareholders of record on June 8, 2005, and September 8, 2005, respectively.
CILCO’s preferred stock dividend is payable July 1, 2005, to shareholders of
record on June 3, 2005. CILCO paid a preferred stock dividend of approximately
$1 million on April 1, 2005. IP’s preferred stock dividend is payable August 1,
2005, to shareholders of record on July 11, 2005. IP paid a preferred stock
dividend of approximately $1 million on May 2, 2005.
 
 Certain
of our financial agreements and corporate organizational documents contain
covenants and conditions that, among other things, restrict the Ameren
Companies’ payment of dividends. UE would experience restrictions on dividend
payments if it were to extend or defer interest payments on its subordinated
debentures. CIPS has provisions in its articles of incorporation restricting
dividend payments based on ratios of common stock to total capitalization and
other provisions related to certain operating expenses and accumulations of
earned surplus. Genco’s indenture includes restrictions that prohibit making any
dividend payments if debt service coverage ratios are below a defined threshold.
CILCORP has restrictions if 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. At
March 31, 2005, none of the conditions described above that would restrict the
payment of dividends existed. In its approval of the acquisition of IP by
Ameren, the ICC issued an order that provides for the ability of IP to pay
dividends on its common stock subject to certain conditions related to credit
ratings of IP and Ameren and the elimination of IP’s 11.50% mortgage bonds.
Given the current credit ratings of IP and the amount of IP’s 11.50% mortgage
bonds that remain outstanding, IP’s payment of dividends on its common stock is
restricted to $80 million in 2005 and $160 million cumulatively through 2006. In
addition, in accordance with the order issued by the ICC, IP will establish a
dividend policy comparable to the dividend policy of Ameren’s other Illinois
utilities and consistent with achieving and maintaining a common equity to total
capitalization ratio between 50% and 60%.
 
  The following table presents dividends paid by Ameren Corporation and by
Ameren’s subsidiaries to their respective parents for the three months ended
March 31, 2005 and 2004:
 **Three
      Months****2005**
    
    **2004**UE
    
    **$******
    ******60**
    
    $
    79CIPS
    
    
    **-**
    
    
    19Genco
    
    
    **14**
    
    
    18CILCORP
    
    
    **30**
    
    
    -IP(a)
    
    
    **20**
    
    
    -Dividends
      paid by Ameren
    
    **$******
    ******124**
    
    $
    116
 
 (a)
    Prior
      to October 2004, the ICC prohibited IP from paying dividends. If permitted
      to be paid, IP’s dividends would have been paid directly to Illinova or
      indirectly to Dynegy.
 
 **Contractual
Obligations**
 
 For a
complete listing of our obligations and commitments, see Contractual Obligations
under Part II, Item 7 and 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, 2004. See Note 12 - Pension and Other Postretirement Benefits to
our financial statements under Part I, Item 1 of this report for information
regarding expected minimum funding levels for our pension plan.
 
 Subsequent
to December 31, 2004, obligations related to the procurement of coal increased
at Ameren, UE, Genco, CILCORP and CILCO to $2,848 million, $1,389 million, $874
million, $262 million and $262 million, respectively, as of March 31, 2005.
Total other obligations at December 31, 2004, updated for material changes since
year-end through March 31, 2005, at Ameren, UE, Genco, CILCORP and CILCO are
$4,170 million, $1,685 million, $919 million, $620 million and $620 million,
respectively.
 
  61
 
 **Credit
Ratings**
 
 On March 31, 2005, Moody’s upgraded IP’s credit ratings. IP’s senior secured
debt rating was upgraded from Baa3 to Baa1, its issuer rating was upgraded from
Ba1 to Baa2, and its preferred stock rating was upgraded from Ba3 to Ba1. This
rating action concluded Moody’s review for possible upgrade that was initiated
for these ratings on March 18, 2005. The ratings outlook for IP is now
stable.
  Any
adverse change in the Ameren Companies’ credit ratings may reduce access to
capital and/or increase the cost of borrowings, resulting in a negative impact
on earnings. At March 31, 2005, if UE, CIPS, Genco, CILCORP, CILCO or IP were to
receive a sub-investment-grade rating (less than BBB- or Baa3), Ameren, UE,
CIPS, Genco, CILCORP, CILCO and IP could have been required to post collateral
for certain trade obligations amounting to $104 million, $25 million, $-
million, $1 million, $6 million, $6 million, and $31 million, respectively. In
addition, the cost of borrowing under our credit facilities can increase or
decrease based on credit ratings. A credit rating is not a recommendation to
buy, sell or hold securities and it 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 industrywide trends and Ameren-specific issues to affect
earnings in 2005 and beyond:
 
 ·
    Ameren,
      CILCORP, CILCO and IP expect to continue to focus on realizing integration
      synergies associated with these acquisitions, including lower fuel costs
      at CILCORP and CILCO and reduced administrative and operating expenses at
      IP.
 ·
    We
      expect continued economic growth in our service territory to benefit
      electric demand in 2005.
 ·
    In
      2005, we expect natural gas and coal prices to support power prices
      similar to 2004 levels. In the first quarter of 2005, power prices
      exceeded 2004 levels. Power prices in the Midwest affect the amount of
      revenues UE, Genco and CILCO (through AERG) can generate by marketing any
      excess power into the interchange markets and influence the cost of power
      we purchase in the interchange markets.
 ·
    Ameren’s
      coal and related transportation costs rose in 2004 and are expected to
      increase 3% to 5% in 2005 and again in 2006, and to increase, at a
      minimum, by 3% to 5% again in 2007.
 ·
    In
      April 2005, the Missouri House of Representatives passed Senate Bill
      179. This bill was previously passed by the Missouri Senate. If
      signed by the Governor of Missouri, this bill would enable the MoPSC to
      put in place an environmental cost recovery mechanism for Missouri’s
      utilities. In addition, it would enable the MoPSC to allow electric
      utilities to recover fuel and purchased power costs through a similar
      recovery mechanism.  The legislation also includes rate case filing
      requirements, a 2 1/2 percent annual rate increase cap for the
      environmental recovery mechanism and prudency reviews, among other
      things.
 ·
    On
      April 1, 2005, the MISO Day Two Markets began operating. The Day Two
      markets present an opportunity for increased power sales from UE, Genco
      and CILCO power plants. During the first month of Day Two operations, we
      have seen what we believe is suboptimal dispatching of power plants and
      some price volatility.
 ·
    Due
      to recent or future regulatory proceedings, there could be changes to the
      agreement between UE and Genco to dispatch electric generation jointly or
      changes to the effect of that agreement on revenues. Any change would
      likely result in a transfer of electric margins between Genco and UE and
      could ultimately affect the pricing of electric transfers between Genco
      and UE. Ameren’s earnings could be affected if and when electric rates for
      UE are adjusted by the MoPSC to reflect any such transfers, amendments to
      the joint dispatch agreement and other changes in costs of providing
      electric service. See Note 3 - Rate and Regulatory Matters and Note 8 -
      Related Party Transactions to our financial statements under Part I, Item
      1, of this report for a more detailed description of the joint dispatch
      agreement and potential impacts.
 ·
    UE’s
      Callaway nuclear plant will have a refueling and maintenance outage in the
      fall of 2005, which is expected to last 70 to 75 days. During this outage,
      major capital equipment will be replaced, which means that the outage will
      last longer than a typical refueling outage, which usually lasts 30 to 35
      days and occurs approximately every 18 months. The delivery of some major
      equipment for this outage is dependent on adequate water levels in the
      Missouri River. Any delays or damage during shipment could result in
      additional costs and deferral of the project. These potential low water
      levels, caused by a persistent drought in the Missouri River basin, could
      also cause reduced operations at the Callaway nuclear plant and UE’s
      Labadie plant. During a refueling outage, maintenance and purchased power
      costs increase, and the amount of excess power available for sale
      decreases versus non-outage years.
 · Over the
next few years, we expect increased expenses for rising employee benefit costs
as well as higher insurance and security costs associated with additional
measures we
 have
taken, or may have to take, at UE’s Callaway nuclear plant and our other
operating plants.
 ·
    We
      are currently undertaking cost reduction or control initiatives associated
      with the strategic sourcing of purchases and streamlining of
      administrative functions. UE, Genco and CILCO are also seeking to raise
      the
 
    62
 
 
 equivalent availability and capacity factors of power plants from 2004
levels.
 ·
    Electric
      rates for Ameren’s operating subsidiaries have been fixed or declining for
      periods ranging from 12 years to 22 years. In 2006, electric rate
      adjustment moratoriums and intercompany power supply contracts expire in
      Ameren’s regulatory jurisdictions. Approximately 8 million megawatthours
      supplied annually by Genco and 6 million megawatthours supplied annually
      by AERG have been subject to contracts to provide CIPS and CILCO,
      respectively, with power. The prices in these power supply contracts of
      $34.00 per megawatthour for AERG and $38.50 per megawatthour for Genco
      were below estimated market prices for similar contracts in April 2005.
      CIPS, CILCO and IP made a filing with the ICC, in February 2005,
      outlining, among other things, a proposed framework for generation
      procurement after 2006. In 2005, Ameren will also begin the process of
      preparing utility cost-of-service studies to be submitted in Illinois and
      Missouri in late 2005 or early 2006 to determine rates for UE, CIPS, CILCO
      and IP. In March 2005 legislative hearings, Ameren indicated it expected
      the average rates for its Illinois utilities, on a combined basis, may
      increase by 10% to 20% in 2007 over present bundled rate levels, with 50%
      to 70% of this increase resulting from higher power costs. This estimate
      was based on a number of assumptions about auction results, ratemaking
      outcomes and various other factors. The final results of the auction
      process and regulatory proceedings could be significantly different from
      these assumptions. See Note 3 - Rate and Regulatory Matters to our
      financial statements under Part I, Item 1, of this
  report.
 ·  The EPA
has issued more stringent emission limits on all coal-fired power plants.
Between 2005 and 2015, Ameren expects that certain of the Ameren Companies will
be required
 to invest between $1.4 and $1.9 billion to retrofit their power plants with
pollution control equipment. These investments will also result in higher
ongoing operating expenses.
 Approximately two-thirds of this investment will be in Ameren’s regulated
Missouri operations and therefore is expected to be recoverable over time from
ratepayers. The
 recoverability of amounts expended in non-rate-regulated operations will depend
on the adjustment of market prices for power as a result of this increased
investment.
  The outcome and developments related to the above items could have a material
impact on our results of operations, financial position, or liquidity.
Additionally, in the ordinary course of business, we evaluate strategies to
enhance our results of operations, financial position, and liquidity. These
strategies may include acquisitions, divestitures, opportunities to reduce costs
or increase revenues, and other strategic initiatives to increase Ameren’s
shareholder value. We are unable to predict which, if any, of these initiatives
will be executed. The execution of these initiatives may have a material impact
on our future results of operations, financial position or liquidity.
 
 **RISK
FACTORS**
 ****
 **Ameren may not be able to integrate IP successfully into its other businesses or
achieve the benefits it anticipates.**
 
 Ameren cannot ensure that it will be able to integrate IP successfully with its
other businesses. The integration of IP with its other businesses will present
significant challenges; 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
it may not be able to achieve those benefits at all. Ameren expects that this
acquisition will be accretive to earnings per share in the first two years. This
expectation is based on important assumptions, which may be incorrect, including
assumptions related to expected financing arrangements, regulatory treatment,
interest rates, market prices for power, and synergies. As a result, if Ameren
is unable to integrate its businesses effectively or to achieve the benefits
anticipated, its results of operations, financial position and liquidity may be
materially adversely affected.
 ****
 **The electric and gas rates that certain Ameren Companies are allowed to charge
in Missouri and Illinois are largely set through 2006. These “rate freezes,”
along with other actions of regulators that can significantly affect our
earnings, liquidity and business activities, are largely outside our
control.**
 
 The rates that certain Ameren Companies are allowed to charge for their services
are the single most important item influencing the results of operations,
financial position, and liquidity of the Ameren Companies. Our industry is
highly regulated. The regulation of the rates that we charge our customers is
determined, in large part, by governmental organizations outside of our control,
including the MoPSC, the ICC, and the FERC. We are also subject to regulation by
the SEC under the PUHCA. Decisions made by these regulators could have a
material impact on our results of operations, financial position and
liquidity.
  As
a part of the settlement of UE’s Missouri electric rate case in 2002, UE is
subject to a rate moratorium that prohibits changes in its electric rates in
Missouri before July 1, 2006, subject to limited statutory and other exceptions.
In addition, a provision of the Illinois legislation related to the
restructuring of the Illinois electric industry put a rate freeze into effect in
Illinois through January 1, 2007, for CIPS, CILCO and IP. This Illinois
legislation also requires that 50% of the earnings from each respective Illinois
jurisdiction in excess of certain levels be refunded to CIPS’, CILCO’s and IP’s
Illinois customers through 2006. 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. UE will
 
 
 63
 
 make no
changes in its gas delivery rates prior to July 1, 2006, subject to certain
exceptions. Also, in the order approving Ameren’s acquisition of IP, the ICC
prohibited IP from filing for any proposed increase in gas delivery rates to be
effective prior to January 1, 2007, beyond IP’s then-pending request for a gas
delivery rate increase. The ICC conducted workshops seeking input from
interested parties on the framework to be used for retail rate determination and
for generation procurement by customers after the current Illinois rate freeze
and supply contracts end in 2006. In February 2005, CIPS, CILCO and IP filed
with the ICC a proposed format for the generation procurement auction and a rate
mechanism to legislators to pass generation costs through to customers, among
other things.
 
 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, for among other things, the
addition of more than 700 megawatts of new generation capacity. UE satisfied its
commitment with respect to the addition of new generation capacity by the
construction of 240 megawatts of CTs in 2002 and the acquisition of 550
megawatts of CTs from Genco in May 2005. Ameren also committed IP to make
between $275 million and $325 million in energy infrastructure investments over
its first two years of ownership, in conjunction with the ICC’s approval of
Ameren’s acquisition of IP. UE’s agreement to a rate moratorium in Missouri and
CIPS’, CILCO’s and IP’s rate freezes mean that capital expenditures will not
become recoverable in rates, and will not earn a return, before July 1, 2006,
for UE and January 1, 2007, for CIPS, CILCO and IP. Therefore, undertakings with
respect to energy infrastructure investments and funding new programs, coupled
with the rate reductions and rate moratoriums, could result in increased
financing requirements for UE, CIPS, CILCO and IP and thus have a material
impact on our results of operations, financial position and
liquidity.
  The
Ameren Companies do not have in either Missouri or Illinois a fuel adjustment
clause for their electric operations that would allow them to recover from
customers’ costs for purchased power or increased fuel used for generation.
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 that 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 for
transmission-owning public utilities such as UE, CIPS, CILCO and IP. In
Missouri, restructuring bills have been introduced in the past, but no
legislation has been passed. In Illinois, which since the acquisition of IP,
supplies over 50% of Ameren’s electric revenues, the Illinois Customer Choice
Law provides for electric utility restructuring and retail competition.
  Principally
because of rate reductions and rate moratoriums that affect certain Ameren
Companies, increased costs and investments have resulted in decreased returns in
our distribution utility businesses. In 2005, Ameren will begin the process for
preparing and submitting proposals for utility rate adjustments in Illinois and
Missouri to take effect after the expiration of the applicable rate
moratoriums.
  We are
not able to predict what rate treatment certain Ameren Companies will receive
after the rate moratoriums expire in Missouri and Illinois. There are currently
activities under way in Illinois to determine the framework for retail electric
rate determination and generation procurement after the current Illinois
electric rate freeze and supply contracts expire in 2006. See Note 3 - Rate and
Regulatory Matters to our financial statements under Part I, Item 1, of this
report. In response to competitive, economic, political, legislative and
regulatory pressures, we may be subject to further rate moratoriums, rate
refunds, limits on rate increases or rate reductions, any and all of which could
have a significant adverse affect on our results of operations, financial
position and liquidity. See Note 9 - Commitments and Contingencies to our
financial statements under Part I, Item 1, of this report.
  **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. In March 2005, the EPA issued final regulations
with respect to SO 2 ,
NO x, and
mercury emissions from coal-fired power plants. These new rules will require
significant additional reductions in these emissions from our power plants in
phases, beginning in 2010. Preliminary estimates of capital costs, based on
Ameren systems’ current technology, to comply with the EPA proposed
SO 2 ,
NO x, and
mercury emission regulations, range from $1.4 billion to $1.9 billion by 2015.
  Future
initiatives regarding greenhouse gas emissions and global warming continue to be
the subject of much debate. Coal-fired power plants are significant sources of
carbon dioxide emissions, a principal greenhouse gas. The related Kyoto Protocol
was signed by the United States, but it has since been rejected by the
president, who instead has asked for an 18% voluntary decrease in carbon
intensity. In response to the administration’s request, six electric power
sector trade associations, including the Edison Electric Institute, of which
Ameren is a member, and the Tennessee Valley Authority (TVA), signed a
Memorandum of Understanding (MOU) with the DOE in December 2004 calling for a 3%
- 5% decrease in carbon intensity from******the
utility sector between 2002 and 2012 on a voluntary basis. Currently, Ameren is
considering various initiatives to comply
 
 
 64
 
 with the
MOU. These include enhanced generation at our nuclear and hydro power plants,
increased efficiency measures at our coal-fired units, and investing in
renewable energy and carbon sequestration projects.
  The EPA
has been conducting an enforcement initiative in an effort to determine whether
modifications at a number of coal-fired power plants owned by other electric
utilities in the U.S. are subject to New Source Review requirements or New
Source Performance Standards under the Clean Air Act. The EPA’s inquiries focus
on whether the best available emission control technology was or should have
been used at such power plants when major maintenance or capital improvements
were made.
 
 In April 2005, Genco received a request from the EPA for information pursuant to
Section 114(a) of the Clean Air Act seeking detailed operating and maintenance
history data with respect to its Meredosia, Hutsonville, Coffeen and Newton
facilities, EEI’s Joppa facility and AERG’s E.D. Edwards and Duck Creek
facilities. All of these facilities are coal-fired plants. The information
request requires Genco to provide responses to specific EPA questions regarding
certain projects and maintenance activities in order to determine compliance
with certain Illinois air pollution and emissions rules and with the New Source
Performance Standard requirements of the Clean Air Act. Genco intends to comply
with this information request, but cannot predict the outcome of this matter at
this time.
 
 We are unable to predict the ultimate effect of any new environmental
regulations, voluntary compliance guidelines, enforcement initiatives, or
legislation on our results of operations, financial position or liquidity. Any
of these factors would add significant pollution control expenditures and
operating costs to UE’s, Genco’s and CILCO’s generating assets and, therefore,
could also increase financing requirements for some Ameren Companies. Although
costs incurred by UE would be eligible for recovery in rates over time, subject
to MoPSC approval in a rate proceeding, there is no similar mechanism for
recovery of costs by Genco or CILCO in Illinois.
  **UE’s,
CIPS’, CILCO’s and IP’s participation in the MISO could increase costs, reduce
revenues, and reduce UE’s, CIPS’, CILCO’s and IP’s control over their
transmission assets. Genco could also incur increased costs or reduced revenues
as a result of participation in the MISO Day Two
Markets.**
 
 On May 1, 2004, functional control of the UE and CIPS transmission systems was
transferred to the MISO. On September 30, 2004, IP transferred functional
control of its transmission system to the MISO. CILCO had transferred functional
control of its transmission system to the MISO before the acquisition. The
participation by UE, CIPS and IP in the MISO is expected to increase annual
costs by $10 million to $25 million in the aggregate because the companies will
be subject to the MISO’s administrative costs. Participation could also result
in a decrease in annual revenues of $5 million to $15 million in the aggregate,
because of the MISO’s method of allocating transmission revenues. UE, CIPS,
CILCO and IP may also be required to expand their  transmission
systems according to decisions made by MISO rather than according to their
internal planning process. See Note 3 - Rate and Regulatory Matters to our
financial statements under Part II, Item 8, of the Ameren Companies’ combined
Form 10-K for the year ended December 31, 2004.
  In July
2002, the FERC issued its standard market design NOPR. The NOPR proposed three
important changes to the way the current wholesale transmission service and
energy markets are operated: the placement of all jurisdictional transmission
facilities under the control of an independent transmission provider (similar to
the MISO); a new transmission service tariff that would provide a single form of
transmission service for all users of the transmission system, including bundled
retail load; and a new transmission management system. This new design would use
market-based pricing to compensate market participants for power, as well as for
transmission congestion and losses. The current system requires generators to
make advance reservations for transmission service.
  In
April 2003, the FERC issued a white paper reflecting comments received in
response to the NOPR. The white paper indicated that the FERC will not assert
jurisdiction over the transmission rate component of bundled retail service. The
FERC will ensure in its final rule that existing bundled retail customers retain
their existing transmission rights and their 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. We
believe that the proposed NOPR could have a negative impact on the cost and
reliability of service to retail customers. It could lead to trapped
transmission costs that might not be recoverable from ratepayers as a result of
inconsistent regulatory policies.
  Although
issuance of the final rule is uncertain and its implementation schedule unknown,
the MISO implemented a separate market design similar to the market design
proposed by the NOPR. This new market design is referred to as the MISO Day Two
Market. The MISO Day Two Market, which began operation on April 1, 2005, is
designed to result in improved transparency of power pricing and efficiency in
generation dispatch. Since this is a new and complex market, there could be
significant initial price volatility. During the first month of Day Two
operations, we have seen what we believe is suboptimal dispatching of power
plants and some price volatility. Ultimately, price transparency and dispatch
efficiency could result in lower prices on market-based power sales by UE,
Genco, AERG and CILCO to their customers. In
 
 
 65
 
 addition,
the movement of power could result in unanticipated transmission congestion
charges or credits. The MISO has allocated FTRs, which are financial instruments
intended to hedge the risk of day-ahead congestion, to UE, CIPS, Genco, CILCO
and IP. The MISO also has issued FTRs to IP for the portion of IP load not
served pursuant to the power supply agreement between DYPM and IP. DYPM has
assumed the risk of congestion for the IP load served pursuant to this power
supply agreement. UE, CIPS, Genco, CILCO and IP may not have been allocated the
appropriate number of these FTRs. In addition, these instruments could prove
ineffective in hedging the day-ahead congestion risk.
  Until we
achieve some degree of operational experience participating in the MISO,
including the MISO Day Two Market, we are unable to predict the impact that the
MISO participation or ongoing RTO developments at the FERC or other regulatory
authorities will have on our results of operations, financial position or
liquidity.
  **Increasing
costs associated with our defined benefit retirement plans, health care plans,
and other employee- related benefits may adversely affect our results of
operations, financial position, and liquidity.**
  ****We have
defined benefit and postretirement plans that cover substantially all of our
employees. Assumptions related to future costs, returns on investments, interest
rates, and other actuarial assumptions have a significant impact on our earnings
and funding requirements. Assuming that we continue to receive federal interest
rate relief beyond 2005, we do not expect contributions to our defined benefit
plans to be required until 2008 and 2009, when an aggregate $400 million is
expected to be paid. This amount is an estimate; it may change because of actual
stock market performance, changes in interest rates, or any pertinent changes in
government regulations, any of which could also result in a requirement to
record an additional minimum pension liability.
  In
addition to the costs of our retirement plans, the costs of providing health
care benefits to our employees and retirees have increased substantially in
recent years. We believe that our employee benefit costs, including costs
related to health care plans for our employees and former employees, will
continue to rise. The increasing costs and funding requirements associated with
our defined benefit retirement plans, health care plans and other employee
benefits may adversely affect our results of operations, financial position or
liquidity.
  **UE’s,
Genco’s, CILCO’s, AERG’s, Medina Valley’s and EEI’s electric generating
facilities are subject to operational risks that could result in unscheduled
plant outages, unanticipated operation and maintenance expenses, and increased
purchased power costs.**
  ****UE,
Genco, CILCO, AERG, Medina Valley, and EEI own and operate coal, nuclear,
gas-fired, hydro, and oil-fired generating facilities. Operation of electric
generating facilities involves certain risks that can adversely affect energy
output and
efficiency levels. Included among these risks are:
 
 ·
    increased
      prices for fuel and fuel transportation as existing contracts
      expire;
 ·
    facility
      shutdowns due to a failure of equipment or processes or operator
      error;
 ·
    longer-than-anticipated
      maintenance outages;
 ·
    disruptions
      in the delivery of fuel and lack of adequate
  inventories;
 ·
    labor
      disputes;
 ·
    inability
      to comply with regulatory or permit
requirements;
 ·
    disruptions
      in the delivery of electricity;
 ·
    increased
      capital expenditures requirements, including those due to environmental
      regulation; and
 ·
    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 CILCO’s generating capacity is committed
under affiliate contracts that expire at the end of 2006. Upon expiration of
these contracts, Genco’s and CILCO’s electric generating facilities must compete
for the sale of energy and capacity, which exposes them to price
risk.**
 
 As of
March 31, 2005, Genco and CILCO, through AERG, owned 4,199 megawatts and 1,165
megawatts, respectively, of non-rate-regulated electric generating facilities.
Of these non-rate-regulated electric generating facilities, approximately 3,300
megawatts are currently under full-requirements contracts with our affiliates.
The remainder of the generating capacity must compete for the sale of energy and
capacity.
 
 To the
extent electric capacity generated by these facilities is not under contract to
be sold, 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:
 
 ·
    the
      current and future market prices for natural gas, fuel oil and
      coal;
 ·
    current
      and forward prices for the sale of
electricity;
 ·
    the
      extent of additional supplies of electric energy from current competitors
      or new market entrants;
 ·
    the
      pace of deregulation in our market area and the expansion of deregulated
      markets;
 ·
    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;
 ·
    future
      pricing for, and availability of, transmission services on transmission
      systems, and the effect of
 66
  RTOs and export energy transmission constraints, which could limit the
ability to sell energy in markets adjacent to Illinois;
 ·
    the
      rate of growth in electricity usage as a result of population changes,
      regional economic conditions, and the implementation of conservation
      programs; and
 ·
    climate
      conditions prevailing in the Midwest
market.
 
 In a
report issued by the ICC in late 2004, a process was outlined that would have
CIPS, CILCO and IP procuring power through an auction monitored by the ICC after
the current Illinois rate freeze and supply contracts end in 2006. Genco and
AERG, through Marketing Company, would probably participate in this auction, but
there might be a limit on the maximum amount of power they could supply to
Ameren’s Illinois utilities. See Note 3 - Rate and Regulatory Matters to our
financial statements under Part I, Item 1, of this report.
 
 Genco and
UE have signed an agreement to dispatch their generating facilities jointly,
which produces benefits and efficiencies for both generating parties. Recently
completed or future federal and state regulatory proceedings and policies may
evolve in ways that could affect Genco’s ability to participate in these
affiliate transactions on current terms. For example, as a result of the MoPSC
order approving the transfer of UE’s Illinois-based utility business to CIPS,
certain terms of the joint dispatch agreement were ordered to be modified; this
could result in margins from interchange sales of $7 million to $24 million
being transferred from Genco to UE or just reduced at UE through the ratemaking
process. See Note 3 - Rate and Regulatory Matters to our financial statements
under Part I, Item 1, of this report for a more detailed description of these
modifications. The termination of the joint dispatch agreement, or modifications
to it, could have a material effect on UE or Genco.
 
 **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 capacity. Therefore, UE is subject to the risks of nuclear
generation, which include the following:
 
 ·
    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;
 ·
    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;
 ·
    uncertainties
      with respect to contingencies and assessment amounts if insurance coverage
      is inadequate;
 ·
    increased
      public and governmental concerns over the adequacy of security at nuclear
      power plants;
 ·
    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
 ·
    costly
      and extended outages for scheduled or unscheduled
    maintenance.
 
 The NRC
has broad authority under federal law to impose licensing and safety
requirements for the operation of nuclear generation facilities. In the event of
non-compliance, the NRC has the authority to impose fines, 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, if a serious nuclear incident occurred, it could have a material but
indeterminable adverse effect on UE’s results of operations, financial position
or liquidity. 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 resulted in unscheduled or
extended outages including the extension of Callaway’s scheduled refueling and
maintenance outage in 2004. In addition, Ameren and UE incurred significant
unanticipated replacement power and maintenance costs. As a result, the
operating performance at UE’s Callaway nuclear plant has declined in comparison
with both its past operating performance and the operating performance of other
nuclear plants in the U.S. Ameren and UE are actively working to address the
factors that led to the decline in Callaway’s operating performance. Management
and supervision of operating personnel, equipment reliability, maintenance
worker practices, engineering performance, and overall organizational
effectiveness have been reviewed with some actions taken and other actions
currently under consideration. However, Ameren and UE cannot predict whether
such efforts will result in an overall improvement of operations at Callaway.
Any actions taken are expected to result in incremental operating costs at
Callaway. Further, additional unscheduled or extended outages at Callaway could
have a material adverse effect on the results of operations, financial position
and liquidity 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 or
increased volatility in 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 use long-term purchase and sales contracts
in addition to derivatives such as forward contracts, futures contracts,
options, and swaps to manage
 
 
 67
 
 
 
 these
risks. We attempt to manage our risk associated with 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.
  Although we routinely enter into contracts 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 unhedged positions than we
would prefer at a given time. To the extent that unhedged positions exist,
fluctuating commodity prices can adversely affect our results of operations,
financial position and liquidity.
  **Our
counterparties may not meet their obligations to
us.**
  ****We are
exposed to risk that counterparties who owe us money, energy or other
commodities or services will not be able to perform their obligations. Should
the counterparties to these arrangements (which include agreements for a
subsidiary of Dynegy and others to supply electricity to IP during 2005 and
2006) fail to perform, IP might be forced to replace the underlying commitment
at then-current market prices. In such event, we might incur losses in addition
to the amounts, if any, already paid to the counterparties.
  **Our
facilities are considered critical infrastructure and may be targets for acts of
terrorism.**
  ****Like
other electric and gas utilities, our power generation plants, fuel storage
facilities, and transmission and distribution facilities may be targets of
terrorist activities that could result in disruption of our ability to produce
or distribute some portion of our energy products. Any such disruption could
result in a significant decrease in revenues or significant additional costs to
repair, which could have a material adverse effect on our results of operations,
financial position and liquidity.
  **Our
businesses are dependent on our ability to access the capital markets
successfully. We may not have access to sufficient capital in the amounts and at
the times needed.**
  ****We use
short-term and long-term capital markets as a significant source of liquidity
and funding for capital requirements, including those related to future
environmental compliance, 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 expand 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 that
could increase our cost of capital or impair our ability to access the capital
markets.
  
 **REGULATORY
MATTERS**
 
 See Note 3 - Rate and Regulatory Matters to our financial statements under Part
I, Item 1, of this report.
 
 **ITEM
3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.**
 
 Market risk represents the risk of changes in value of a physical asset 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 nonfinancial or nonquantifiable. Such risks, principally
business, legal and operational risks, 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 comprises senior-level Ameren officers.
 
 **Interest
Rate Risk**
 
 We are
exposed to market risk through changes in interest rates associated
with:
 
 ·
    long-term
      and short-term variable-rate debt;
 ·
    fixed-rate
      debt;
 ·
    commercial
      paper; and
 ·
    auction-rate
      long-term debt.
 
 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.
 
 
 68
 
 
 The following table presents the estimated increase (decrease) in our annual
interest expense and net income if interest rates were to increase by 1% on
variable rate debt outstanding at March 31, 2005:
 **Interest
      Expense**
    
    **Net
      Income**(a)Ameren
    
    $
    14
    
    $
    (9
    )UE
    
    
    8
    
    
    (5
    )CIPS
    
    
    1
    
    
    -Genco
    
    
    1
    
    
    (1
    )CILCORP
    
    
    3
    
    
    (2
    )CILCO
    
    
    2
    
    
    (1
    )IP
    
    
    3
    
    
    (2
    )
 
 (a)
    Calculations
      are based on an effective tax rate of 37%.
 
 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 probably 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.
 
 **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
who make up our customer base. At March 31, 2005, no nonaffiliated customer
represented greater than 10%, in the aggregate, of our accounts receivable. Our
revenues are primarily derived from sales of electricity and natural gas to
customers in Missouri and Illinois. UE, Genco and Marketing Company have credit
exposure associated with accounts receivable from nonaffiliated companies for
interchange sales. At March 31, 2005, UE’s, Genco’s and Marketing Company’s
combined credit exposure to non-investment-grade counterparties related to
interchange sales was $3 million, net of collateral (2004 - $4 million). We
establish credit limits for these counterparties and monitor the appropriateness
of these limits on an ongoing basis through a credit risk-management program
that involves daily exposure reporting to senior management, master trading and
netting agreements, and credit support, such as letters of credit and parental
guarantees. We also analyze each counterparty’s financial condition prior to
entering into sales, forwards, swaps, futures or option contracts, and we
monitor counterparty exposure associated with our leveraged leases. We are
currently evaluating our credit exposure associated with the implementation of
the MISO Day Two on April 1, 2005, but we are unable to predict at this time
what impact it will have, if any.
 
 **Equity
Price Risk**
 
 Our costs
of providing defined benefit retirement and postretirement benefit plans are
dependent upon a number of factors, such as the rate of return on plan assets,
the discount rate, the rate of increase in health care costs and contributions
made to the plans. The market value of our plan assets was negatively affected
by volatility in the equity markets in 2003 and 2004 for the pension and
postretirement plans. As a result, at December 31, 2004, we recognized an
additional minimum pension liability as prescribed by SFAS No. 87, “Employers’
Accounting for Pensions,” which resulted in an after-tax charge to OCI of $6
million, offsetting the $46 million of OCI in 2003 from a reduction in the
minimum pension liability and an increase in stockholders’ equity. The minimum
pension liability has not changed as of March 31, 2005.
 
 The
amount of the pension liability as of March 31, 2005, was the result of asset
returns, interest rates, and our contributions to the plans during 2004. 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, then the recorded liability would 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, 2004.
 
 
 69
 
  The
following table presents the percentages of the projected required supply of
coal and coal transportation for our coal-fired power plants, nuclear fuel for
UE’s Callaway nuclear plant and natural gas for our gas-fired generation (CTs)
and retail distribution, as appropriate, which are price-hedged over the
remainder of 2005 through 2009:
 **2005**
    **2006**
    **2007**-**2009****Ameren:**Coal
    97%
    91%
    53%Coal
      transportation
    100
    95
    83Nuclear
      fuel
    100
    100
    34Natural
      gas for generation
    39
    8
    2Natural
      gas for distribution(a)
    n/a
    17
    5**UE:**Coal
    96%
    89%
    50%Coal
      transportation
    100
    99
    85Nuclear
      fuel
    100
    100
    34Natural
      gas for generation
    10
    6
    3Natural
      gas for distribution(a)
    n/a
    17
    7**CIPS:**Natural
      gas for distribution(a)
    n/a
    29%
    13%**Genco:**Coal
    100%
    100%
    62%Coal
      transportation
    99
    95
    65Natural
      gas for generation
    50
    7
    3**CILCORP:**Coal
    100%
    77%
    51%Coal
      transportation
    100
    69
    64Natural
      gas for distribution(a)
    n/a
    24
    9**CILCO:**Coal
    100%
    77%
    51%Coal
      transportation
    100
    69
    64Natural
      gas for distribution(a)
    n/a
    24
    9**IP:**Natural
      gas for distribution(a)
    n/a
    7%
    0%
 
 (a)
    Represents
      the percentage of natural gas price hedged for the peak winter season
      which includes the months of November through March. The year 2005
      represents the period January 2005 through March 2005 and therefore is
      non-applicable (N/A) for this report. The year 2006 represents November
      2005 through March 2006. This continues each successive year through March
      2009.
 
 The
following table presents the estimated annual increase in our total fuel expense
and decrease in net income if coal and coal transportation costs were to
increase by 1% on any requirements currently not covered by fixed-price
contracts for the remainder of 2005 through 2009:
 **Coal**
    
    **Transportation****Fuel**
      **Expense**
    
    **Net**
      **Income**(a)
    
    **Fuel**
      **Expense**
    
    **Net**
      **Income**(a)Ameren
    
    $
    6
    
    $
    (4
    )
    $
    2
    
    $
    (1
    )UE
    
    
    4
    
    
    (2
    )
    
    -
    
    
    -Genco
    
    
    1
    
    
    (1
    )
    
    1
    
    
    -CILCORP
    
    
    1
    
    
    (b
    )
    
    1
    
    
    -CILCO
    
    
    1
    
    
    (b
    )
    
    1
    
    
    -
 
 (a)
    Calculations
      are based on an effective tax rate of 37%.
 (b)
    Less
      than $1 million.
 
 In the
event of a significant change in coal prices, UE, Genco and CILCO would probably
take actions to further mitigate their exposure to this market risk. However,
due to the uncertainty of the specific actions that would be taken and their
possible effects, the sensitivity analysis assumes no change in our financial
structure or fuel sources.
 
 See Note
9 - Commitments and Contingencies to our financial statements under Part I, Item
1, of this report for further information.
 
 
 
 70
 
 **Fair
Value of Contracts**
 
 Most of our commodity contracts qualify for treatment as normal purchases and
normal sales. We use 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:
 
 ·
    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;
 ·
    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
 ·
    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 governed by risk-management
policies that control the use of forward contracts, futures, options and swaps.
Our net positions are continually assessed within our structured hedging
programs to determine whether new or offsetting transactions are required. The
goal of the hedging program is generally to mitigate financial risks while
ensuring sufficient volumes are available to meet our requirements. See Note 7 -
Derivative Financial Instruments to our financial statements under Part I, Item
1, of this report for further information.
 
 The
following table presents the favorable (unfavorable) changes in the fair value
of all derivative contracts marked-to-market during the quarter ended March 31,
2005. The sources used to determine the fair value of these contracts were
primarily active quotes and other external sources. All of these contracts have
maturities of less than three years.
 **Ameren**(a)
    
    **UE**
    
    **CIPS**
    
    **CILCORP**
    
    **CILCO**Fair
      value of contracts at beginning of period, net
    
    $
    21
    
    $
    (10
    )
    $
    6
    
    $
    14
    
    $
    14Contracts
      realized or otherwise settled during the period
    
    
    (6
    )
    
    -
    
    
    -
    
    
    1
    
    
    1Changes
      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
    
    
    32
    
    
    5
    
    
    9
    
    
    19
    
    
    19Fair
      value of contracts outstanding at end of period, net
    
    $
    47
    
    $
    (5
    )
    $
    15
    
    $
    34
    
    $
    34
 
 (a)
    Includes
      amounts for Ameren Registrant and non-Registrant subsidiaries and
      intercompany eliminations.
 
 
 **ITEM
4.   CONTROLS AND PROCEDURES.**
  (a)
    Evaluation
      of Disclosure Controls and Procedures
 
 As of
March 31, 2005, the principal executive officer and principal financial officer
of each of the Ameren Companies 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 of the Ameren Companies have concluded that such disclosure controls and
procedures are effective in timely alerting them to any material information
relating to such Registrant that is required in such Registrant’s reports filed
or submitted to the SEC under the Exchange Act.
 
 (b)
    Change
      in Internal Controls
 
 There has
been no change in the Ameren Companies’ internal control over financial
reporting during their most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, their internal control over
financial reporting, except for the following. As a result of the acquisition of
IP on September 30, 2004, Ameren is integrating the accounting and financial
reporting processes of IP into certain Ameren shared service functions. In that
regard, certain aspects of IP's internal control over financial reporting were
modified to conform to the existing Ameren internal controls during the quarter
ended March 31, 2005. On April 1, 2005, Ameren converted IP from its legacy
financial information systems (excluding IP's billing system) to the financial
information systems of Ameren. As a result of these system conversions, certain
of Ameren's internal controls over financial reporting were modified to
accommodate the accounting processes of IP. Additionally, on April 1, 2005,
certain internal controls over financial reporting were implemented or modified
in conjunction with Ameren's participation in the MISO Day Two Market. These
internal controls primarily related to revenue and cost recognition associated
with power sales and purchases.
  
 71
 
 
 
 **PART
II.   OTHER INFORMATION**
 
 **ITEM
1.** **LEGAL
PROCEEDINGS** **.**
 
 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.
 
 **ITEM
2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.**
  ****Ameren’s
purchases of equity securities reportable under Item 703 of Regulation
S-K:
 ****
      **Period**
    **(a)
      Total Number**
      **of
      Shares**
      **(or
      Units) Purchased**(a)
    **(b)
      Average Price**
      **Paid
      per Share**
      **(or
      Unit)**
    **(c)
      Total Number of Shares (or Units) Purchased as Part of Publicly Announced
      Plans or Programs**
    **(d)
      Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May
      Yet Be Purchased Under the Plans or Programs**January
      1 -
      January
      31, 2005
    6,730
    $49.35
    -
    -February
      1 -
      February
      28, 2005
    330,676
    51.19
    -
    -March
      1 -
      March
      31, 2005
    5,350
    51.24
    -
    -Total
    342,756(a)
    $51.16
    -
    -
 
 (a)
    190,640
      of 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. Included in February’s figures were 152,116 shares of Ameren
      common stock purchased by Ameren in open-market transactions to satisfy
      the 2005******restricted******stock******awards
      granted to employees 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 January 1 to March 31, 2005,
period.
 
 ****
 **ITEM
6.** **EXHIBITS** **.**
 
 (a)  Exhibits.
The documents listed below are being filed on behalf of Ameren, UE, CIPS, Genco,
CILCORP, CILCO and IP as indicated.
 
 **Exhibit
      Designation**
    **Registrant(s)**
    **Nature
      of Exhibit****Rule
      13a-14(a) / 15d-14(a) Certifications**31.1
    Ameren
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
      Ameren31.2
    Ameren
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Financial Officer of
      Ameren31.3
    UE
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
      UE31.4
    UE
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Financial Officer of
      UE31.5
    CIPS
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
      CIPS31.6
    CIPS
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Financial Officer of
      CIPS31.7
    Genco
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
      Genco31.8
    Genco
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Financial Officer of
      Genco31.9
    CILCORP
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
      CILCORP31.10
    CILCORP
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Financial Officer of
      CILCORP31.11
    CILCO
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
      CILCO31.12
    CILCO
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Financial Officer of
      CILCO31.13
    IP
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Executive Officer of
      IP31.14
    IP
    Rule
      13a-14(a)/15d-14(a) Certification of Principal Financial Officer of
      IP
    72
  
 **Exhibit
      Designation**
    **Registrant(s)**
    **Nature
      of Exhibit****Section
      1350 Certifications**32.1
    Ameren
    Section
      1350 Certification of Principal Executive Officer of
  Ameren32.2
    Ameren
    Section
      1350 Certification of Principal Financial Officer of
  Ameren32.3
    UE
    Section
      1350 Certification of Principal Executive Officer of UE32.4
    UE
    Section
      1350 Certification of Principal Financial Officer of UE32.5
    CIPS
    Section
      1350 Certification of Principal Executive Officer of
  CIPS32.6
    CIPS
    Section
      1350 Certification of Principal Financial Officer of
  CIPS32.7
    Genco
    Section
      1350 Certification of Principal Executive Officer of
  Genco32.8
    Genco
    Section
      1350 Certification of Principal Financial Officer of
  Genco32.9
    CILCORP
    Section
      1350 Certification of Principal Executive Officer of
    CILCORP32.10
    CILCORP
    Section
      1350 Certification of Principal Financial Officer of
    CILCORP32.11
    CILCO
    Section
      1350 Certification of Principal Executive Officer of
  CILCO32.12
    CILCO
    Section
      1350 Certification of Principal Financial Officer of
  CILCO32.13
    IP
    Section
      1350 Certification of Principal Executive Officer of IP32.14
    IP
    Section
      1350 Certification of Principal Financial Officer of
IP
 
 
 
   
 73
 
 **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 signaature for each undersigned company shall be deemed to
relate only to matters having reference to such company or its
subsidiaries.
 
 
 **AMEREN
      CORPORATION**(Registrant)By:
    /s/ Martin J.
  LyonsMartin J. LyonsVice President and
      Controller(Principal Accounting
Officer)
 **UNION ELECTRIC
      COMPANY**(Registrant)By:
    /s/ Martin J.
  LyonsMartin J. LyonsVice President and
      Controller(Principal Accounting Officer)
  **CENTRAL ILLINOIS
      PUBLIC SERVICE COMPANY**(Registrant)By:
    /s/ Martin J.
  LyonsMartin J. LyonsVice President and
      Controller(Principal Accounting Officer)
  **AMEREN ENERGY GENERATING
      COMPANY**(Registrant)By:
    /s/ Martin J.
  LyonsMartin J. LyonsVice President and
      Controller(Principal Accounting Officer)
    74
  **CILCORP
      INC.**(Registrant)By:
    /s/ Martin J.
  LyonsMartin J. LyonsVice President and
      Controller(Principal Accounting
Officer)
 **CENTRAL ILLINOIS
      LIGHT COMPANY**(Registrant)By:
    /s/ Martin J.
  LyonsMartin J. LyonsVice President and
      Controller(Principal Accounting
Officer)
  **ILLINOIS POWER
      COMPANY**(Registrant)By:
    /s/ Martin J.
  LyonsMartin J. LyonsVice President and
      Controller(Principal Accounting Officer)
   Date: May
10, 2005


75