UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

(MarkOne)  
(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended March 31, 1999

                                        OR

( )  TRANSITION  REPORT  PURSUANT  TO SECTION  13  OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from               to             

     Commission        Registrant, State of Incorporation,     I.R.S. Employer
     File Number          Address, and Telephone Number       Identification No.

       1-11377                     CINERGY CORP.                  31-1385023
                             (A Delaware Corporation)
                              139 East Fourth Street
                              Cincinnati, Ohio 45202
                                  (513) 421-9500

       1-1232          THE CINCINNATI GAS & ELECTRIC COMPANY      31-0240030
                              (An Ohio Corporation)
                             139 East Fourth Street
                             Cincinnati, Ohio 45202
                                (513) 421-9500

       1-3543                   PSI ENERGY, INC.                  35-0594457
                            (An Indiana Corporation)
                             1000 East Main Street
                           Plainfield, Indiana 46168
                                (317) 839-9611

       2-7793       THE UNION LIGHT, HEAT AND POWER COMPANY       31-0473080
                           (A Kentucky Corporation)
                            139 East Fourth Street
                            Cincinnati, Ohio 45202
                                (513) 421-9500

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
registrants  were required to file such  reports),  and (2) have been subject to
such filing requirements for the past 90 days. Yes X No

This combined Form 10-Q is separately filed by Cinergy Corp., The Cincinnati Gas
& Electric  Company,  PSI  Energy,  Inc.,  and The Union  Light,  Heat and Power
Company.  Information  contained herein relating to any individual registrant is
filed  by  such  registrant  on  its  own  behalf.   Each  registrant  makes  no
representation as to information relating to the other registrants.

The Union  Light,  Heat and Power  Company  meets  the  conditions  set forth in
General  Instruction  H(1)(a) and (b) of Form 10-Q and is  therefore  filing its
company specific information with the reduced disclosure format.

As of April 30, 1999,  shares of Common Stock  outstanding  for each  registrant
were as listed:

                              Company                                 Shares 
----------------------------------------------------------------   ------------
Cinergy Corp., par value $.01 per share                             158,870,194
The Cincinnati Gas & Electric Company, par value $8.50 per share     89,663,086
PSI Energy, Inc., without par value, stated value $.01 per share     53,913,701
  The Union Light, Heat and Power Company, par value $15.00 per share 585,333




<PAGE>



                                TABLE OF CONTENTS


 Item                                                               Page
Number                                                             Number

       Glossary of Terms . . . . . . . . . . . . . . . . . . .        3

                         PART I.  FINANCIAL INFORMATION

  1    Financial Statements
       Cinergy Corp.
         Consolidated Balance Sheets . . . . . . . . . . . . .        6
         Consolidated Statements of Income . . . . . . . . . .        8
         Consolidated Statements of Changes in Common
           Stock Equity. . . . . . . . . . . . . . . . . . . .        9
         Consolidated Statements of Cash Flows . . . . . . . .       10
         Results of Operations . . . . . . . . . . . . . . . .       11
       The Cincinnati Gas & Electric Company
         Consolidated Balance Sheets . . . . . . . . . . . . .       15
         Consolidated Statements of Income and Comprehensive
           Income. . . . . . . . . . . . . . . . . . . . . . .       17
         Consolidated Statements of Cash Flows . . . . . . . .       18
         Results of Operations . . . . . . . . . . . . . . . .       19
       PSI Energy, Inc.
          Consolidated Balance Sheets. . .  . . . . . . . . .        23
          Consolidated Statements of Income and
            Comprehensive Income . . . . . . . . . . . . . . .       25
          Consolidated Statements of Cash Flows. . . . . . . .       26
         Results of Operations . . . . . . . . . . . . . . . .       27
       The Union Light, Heat and Power Company
         Balance Sheets. . . . . . . . . . . . . . . . . . . .       31
         Statements of Income. . . . . . . . . . . . . . . . .       33
         Statements of Cash Flows. . . . . . . . . . . . . . .       34
         Results of Operations . . . . . . . . . . . . . . . .       35
       Notes to Financial Statements . . . . . . . . . . . . .       37
  2    Management's Discussion and Analysis of Financial
         Condition and Results of Operations . . . . . . . . .       45
  3    Quantitative and Qualitative Disclosures About
         Market Risk . . . . . . . . . . . . . . . . . . . . .       51

                           PART II. OTHER INFORMATION

  1    Legal Proceedings . . . . . . . . . . . . . . . . . . .       52
  4    Submission of Matters to a Vote of Security Holders . .       52
  5    Other Information . . . . . . . . . . . . . . . . . . .       53
  6    Exhibits and Reports on Form 8-K. . . . . . . . . . . .       53
       Signatures. . . . . . . . . . . . . . . . . . . . . . .       56



<PAGE>



                                GLOSSARY OF TERMS

The following  abbreviations  or acronyms used in the text of this combined Form
10-Q are defined below:

    TERM                                   DEFINITION

1998 Form         Combined 1998 Annual Report on Form 10-K filed separately by
  10-K              Cinergy, CG&E, PSI, and ULH&P

Avon Energy       Avon Energy Partners Holdings, an Unlimited Liability
                    Company and its wholly-owned subsidiary Avon Energy
                    Partners PLC, a Limited Liability Company

CAAA              Clean Air Act Amendments of 1990

CC&T              Cinergy Capital and Trading, Inc. (a subsidiary of
                    Investments)

CERCLA            Comprehensive Environmental Response, Compensation and
                    Liability Act

CG&E              The Cincinnati Gas & Electric Company (a subsidiary of
                    Cinergy)

CIBU              Cinergy Investments Business Unit

Cinergy or        Cinergy Corp.
  Company

Committed Lines   A line of credit providing short-term loans on a
                    committed basis

Destec            Destec Energy, Inc.

DOE               United States Department of Energy

Dynegy            Dynegy Inc.

ECBU              Energy Commodities Business Unit

EDBU              Energy Delivery Business Unit

EPA               United States Environmental Protection Agency

EPS               Earnings per share

FASB              Financial Accounting Standards Board

Gibson            PSI's Gibson Generating Station (steam electric generating
                    plant)

IBU               International Business Unit

ICR               Information Collection Request

IDEM              Indiana Department of Environmental Management

IGC               Indiana Gas Company, Inc., formerly Indiana Gas and Water
                    Company, Inc.

Investments       Cinergy Investments, Inc. (a subsidiary of Cinergy)

IT                Information Technology



<PAGE>



GLOSSARY OF TERMS (Continued)

    TERM                                   DEFINITION

IURC              Indiana Utility Regulatory Commission

kwh               Kilowatt-hour

mcf               Thousand cubic feet

MGP               Manufactured gas plant

Midlands          Midlands Electricity plc, a United Kingdom regional electric
                    company (a wholly-owned subsidiary of Avon Energy)

MW                Megawatts

N/A               Not applicable

NERC              North American Electric Reliability Council

NIPSCO            Northern Indiana Public Service Company

NOx               Nitrogen oxide

ProEnergy         Producers Energy Marketing, LLC (a subsidiary of CC&T),
                    which is engaged in the marketing of natural gas

PSI               PSI Energy, Inc. (a subsidiary of Cinergy)

RUS               Rural Utilities Service

SEC               United States Securities and Exchange Commission

September 1996    An IURC order issued in September 1996 on PSI's retail
  Order             rate proceeding

SIP               State Implementation Plan

SO2               Sulfur dioxide

Statement 131     Statement of Financial Accounting Standards No. 131,
                    Disclosures About Segments of an Enterprise and Related
                    Information

Statement 133     Statement of Financial Accounting Standards No. 133,
                    Accounting for Derivative Instruments and Hedging
                    Activities

ULH&P             The Union Light, Heat and Power Company (a wholly-owned
                    subsidiary of CG&E)

Uncommitted       A line of credit providing short-term loans on an
  Lines             uncommitted basis

US                United States

WVPA              Wabash Valley Power Association, Inc.






<PAGE>




                                  CINERGY CORP.
                            AND SUBSIDIARY COMPANIES


<PAGE>

<TABLE>
<CAPTION>


                                  CINERGY CORP.
                           CONSOLIDATED BALANCE SHEETS


ASSETS
<S>                                                  <C>          <C>     
                                                      March 31    December 31
                                                        1999          1998
                                                     (unaudited)
                                                      (dollars in thousands)

Current Assets

  Cash and temporary cash investments                $    92,652  $   100,154
  Restricted deposits                                      3,641        3,587
  Notes receivable                                            59           64
  Accounts receivable less accumulated provision
    for doubtful accounts of $31,355 at March
    31, 1999, and $25,622 at December 31, 1998           397,686      580,305
  Materials, supplies, and fuel - at average cost        180,969      202,747
  Prepayments and other                                   73,692       74,849
  Energy risk management assets                          703,278      969,000 
                                                     -----------  ------------
                                                       1,451,977    1,930,706

Utility Plant - Original Cost
  In service
    Electric                                           9,248,374    9,222,261
    Gas                                                  794,785      786,188
    Common                                               197,299      186,364
                                                     -----------  -----------
                                                      10,240,458   10,194,813
  Accumulated depreciation                             4,100,406    4,040,247
                                                     -----------  -----------
                                                       6,140,052    6,154,566
  Construction work in progress                          209,461      189,883
                                                     -----------  -----------
      Total utility plant                              6,349,513    6,344,449

Other Assets
  Regulatory assets                                      940,386      970,767
  Investments in unconsolidated subsidiaries             645,250      574,401
  Other                                                  459,022      478,472
                                                     -----------  -----------
                                                       2,044,658    2,023,640

                                                     $ 9,846,148  $10,298,795



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

       

<PAGE>


<TABLE>
<CAPTION>

                                  CINERGY CORP.


LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                                   <C>          <C>
                                                       March 31    December 31
                                                         1999         1998
                                                     (unaudited)
                                                      (dollars in thousands)

Current Liabilities
  Accounts payable                                    $  433,732   $   668,860
  Accrued taxes                                          240,179       228,347
  Accrued interest                                        40,878        51,679
  Notes payable and other short-term obligations       1,052,811       903,700
  Long-term debt due within one year                      25,959       136,000
  Energy risk management liabilities                     828,424     1,117,146
  Other                                                   86,814        93,376
                                                      ----------   -----------
                                                       2,708,797     3,199,108

Non-Current Liabilities
  Long-term debt                                       2,605,657     2,604,467
  Deferred income taxes                                1,100,473     1,091,075
  Unamortized investment tax credits                     154,381       156,757
  Accrued pension and other postretirement
    benefit costs                                        323,949       315,147
  Other                                                  268,042       298,370
                                                      ----------   -----------
                                                       4,452,502     4,465,816

    Total liabilities                                  7,161,299     7,664,924

Cumulative Preferred Stock of Subsidiaries
  Not subject to mandatory redemption                     92,616        92,640

Common Stock Equity
  Common stock - $.01 par value;  authorized
    shares - 600,000,000;  outstanding shares - 
    158,779,900 at March 31, 1999, and
    158,664,532 at December 31, 1998                       1,588         1,587
  Paid-in capital                                      1,598,884     1,595,237
  Retained earnings                                    1,001,034       945,214
  Accumulated other comprehensive loss                    (9,273)         (807)
                                                      ----------   -----------
    Total common stock equity                          2,592,233     2,541,231

                                                      $9,846,148   $10,298,795


</TABLE>


<PAGE>



<TABLE>
<CAPTION>


                                  CINERGY CORP.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)

<S>                                                  <C>            <C>       
                                                           Quarter Ended
                                                             March 31
                                                        1999           1998
                                             (in thousands, except per share amounts)

Operating Revenues
  Electric                                           $  968,532     $1,158,724
  Gas                                                   421,308        184,846
  Other                                                  12,439          4,891
                                                     ----------     ----------
                                                      1,402,279      1,348,461

Operating Expenses
  Fuel and purchased and exchanged power                433,169        652,404
  Gas purchased                                         334,402        107,586
  Other operation and maintenance                       244,548        212,693
  Depreciation and amortization                          86,477         79,935
  Taxes other than income taxes                          69,534         70,135
                                                     ----------     ----------
                                                      1,168,130      1,122,753

Operating Income                                        234,149        225,708

Equity in Earnings of Unconsolidated
  Subsidiaries                                           44,682         11,854

Other Income and (Expenses) - Net                       (11,886)       (11,815)

Interest                                                 60,772         59,805
                                                     ----------     ----------

Income Before Taxes                                     206,173        165,942

Income Taxes                                             77,564         57,449

Preferred Dividend Requirements
  of Subsidiaries                                         1,364          2,422
                                                     ----------     ----------

Net Income                                           $  127,245     $  106,071

Average Common Shares Outstanding                       158,746        157,764

Earnings Per Common Share
  Net income                                              $0.80          $0.67

Earnings Per Common Share - Assuming Dilution
  Net income                                              $0.80          $0.67

Dividends Declared Per Common Share                       $0.45         $ 0.45


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




<PAGE>



<TABLE>
<CAPTION>



                                  CINERGY CORP.
            CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
                             (dollars in thousands)
                                   (unaudited)
<S>                                <C>          <C>             <C>             <C>                <C>                <C>       
                                                                                 Accumulated
                                                                                    Other             Total              Total
                                   Common         Paid-in        Retained       Comprehensive      Comprehensive      Common Stock
                                   Stock          Capital        Earnings           Loss           Income (Loss)         Equity    

Quarter Ended March 31, 1999

Balance at January 1, 1999         $1,587       $1,595,237      $  945,214        $  (807)                             $2,541,231
Comprehensive income
  Net income                                                       127,245                           $127,245             127,245
  Other comprehensive income,
      net of tax
    Foreign currency translation
      adjustment                                                                                       (8,451)             (8,451)
    Unrealized gains/losses -
      grantor trusts                                                                                      (15)                (15)
                                                                                                     --------                     
    Other comprehensive loss
      total                                                                        (8,466)             (8,466)
                                                                                                     -------- 
Comprehensive income total                                                                           $118,779
Issuance of 115,368 shares of
  common stock - net                    1            1,978                                                                  1,979
Treasury shares purchased                             (233)                                                                  (233)
Treasury shares reissued                             1,902                                                                  1,902
Dividends on common stock (see
  page 8 for per share amounts)                                    (71,422)                                               (71,422)
Other                                                                   (3)                                                    (3)
                                   ------       ----------      ----------        -------                              ---------- 

Balance at March 31, 1999          $1,588       $1,598,884      $1,001,034        $(9,273)                             $2,592,233

Quarter Ended March 31, 1998

Balance at January 1, 1998         $1,577       $1,573,064      $  967,420        $(2,861)                             $2,539,200
Comprehensive income
  Net income                                                       106,071                           $106,071             106,071
  Other comprehensive income,
      net of tax
    Foreign currency translation
      adjustment                                                                                         (367)               (367)
    Minimum pension liability
      adjustment                                                                                          (51)                (51)
                                                                                                     --------
    Other comprehensive loss
      total                                                                          (418)               (418)
                                                                                                     --------
Comprehensive income total                                                                           $105,653
                                                                                                     ========
Issuance of 19,362 shares of
  common stock - net                    1              289                                                                    290
Treasury shares purchased              (1)          (1,430)                                                                (1,431)
Treasury shares reissued                1            2,149                                                                  2,150
Dividends on common stock (see
  page 8 for per share amounts)                                    (70,994)                                               (70,994)
Other                                                    8              (2)                                                     6
                                   ------       ----------      ----------        -------                              ----------

Balance at March 31, 1998          $1,578       $1,574,080      $1,002,495        $(3,279)                             $2,574,874

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




<PAGE>



<TABLE>
<CAPTION>


                                  CINERGY CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<S>                                                          <C>          <C>      
                                                                  Year to Date
                                                                    March 31
                                                                1999         1998
                                                                 (in thousands)

Operating Activities
  Net income                                                 $ 127,245    $ 106,071
  Items providing (using) cash currently:
    Depreciation and amortization                               86,477       79,935
    Deferred income taxes and investment tax
      credits - net                                             12,877      (12,955)
    Equity in earnings of unconsolidated subsidiaries          (44,682)     (11,854)
    Allowance for equity funds used during
      construction                                                (775)         (21)
    Regulatory assets - net                                      5,140       10,670
    Changes in current assets and current liabilities
      Restricted deposits                                          (54)         (29)
      Accounts and notes receivable, net of reserves
        on receivables sold                                    182,265     (106,525)
      Materials, supplies, and fuel                             21,778        4,660
      Accounts payable                                        (235,128)      69,305
      Accrued taxes and interest                                 1,031       24,938
      Energy risk management - net                             (23,000)        -
    Other items - net                                            9,478       25,788
                                                             ---------    ---------
          Net cash provided by operating
            activities                                         142,652      189,983

Financing Activities
  Issuance of common stock                                       1,979          290
  Issuance of long-term debt                                     6,623       98,901
  Retirement of preferred stock of subsidiaries                    (20)     (85,229)
  Redemption of long-term debt                                (116,000)    (160,291)
  Change in short-term debt                                    149,111      108,767
  Dividends on common stock                                    (71,422)     (70,994)
                                                             ---------    ---------
          Net cash used in financing activities                (29,729)    (108,556)

Investing Activities
  Construction expenditures (less allowance
    for equity funds used during construction)                 (79,143)     (66,348)
  Investments in unconsolidated subsidiaries                   (41,282)      (9,658)
                                                             ---------    ---------
          Net cash used in investing activities               (120,425)     (76,006)

Net increase (decrease) in cash and temporary
  cash investments                                              (7,502)       5,421

Cash and temporary cash investments at beginning
  of period                                                    100,154       53,310
                                                             ---------    ---------

Cash and temporary cash investments at end of period         $  92,652    $  58,731

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




<PAGE>









                                  CINERGY CORP.

Below is  information  concerning  the  consolidated  results of operations  for
Cinergy for the quarter ended March 31, 1999.  For  information  concerning  the
results of operations  for each of the other  registrants  for the quarter ended
March 31, 1999,  see the  discussion  under the heading  "Results of Operations"
following the financial statements of each registrant.


           RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1999

Operating Revenues

Electric Operating Revenues

The  components  of electric  operating  revenues  and the related kwh sales are
shown below:

                                                 Quarter Ended
                                                    March 31                
                                       Revenue               Kwh Sales      
                                  1999       1998        1999        1998  
                                            ($ and kwh in millions)

Retail                            $676      $  633      12,276      11,678
Sales for resale                   266         515      10,694      21,733
Other                               27          11         172        -    
                                  ----      ------      ------      -------
Total                             $969      $1,159      23,142      33,411

Electric  operating  revenues decreased $190 million (16%) for the quarter ended
March 31, 1999,  when  compared to the same period for 1998.  This  decrease was
primarily  due  to  decreased   volumes  on  non-firm  power  sales  for  resale
transactions  related to energy  marketing  and  trading  operations.  Partially
offsetting  the decline was an increase in the average  price per kwh for retail
customers,  higher retail and firm power kwh sales  resulting from growth in the
average  number of  residential  and  commercial  customers and a return to more
normal  weather in the first quarter of 1999, as compared to 1998, and increased
international operations.

Gas Operating Revenues

The  components  of gas  operating  revenues and the related mcf sales are shown
below:

                                                Quarter Ended
                                                   March 31                 
                                       Revenue                Mcf Sales     
                                 -------------------     -------------------
                                 1999           1998     1999          1998 
                                 ----           ----     ----          -----
                                           ($ and mcf in millions)

Sales for resale                 $243           $  -      143           N/A
Retail                            158            174       26            26
Transportation                     20             11       13            16
                                 ----           ----      ---           ---
Total                            $421           $185      182            42

Gas operating revenues increased $236 million in the first quarter of 1999, when
compared  to the same  period  last  year,  primarily  due to the gas  operating
revenues of ProEnergy, which was acquired in June 1998. A lower average cost per
mcf of gas  purchased,  which was  passed on to end  users,  contributed  to the
decrease in retail sales.  Transportation revenues increased as more residential
and commercial  customers began to purchase gas directly from  suppliers,  using
transportation  services  provided  by CG&E.  This  increase  in  transportation
revenues  was  partially  offset by a  decrease  in mcf  transportation  volumes
resulting from the loss of a large  industrial  transportation  customer  during
late 1998.

Other Revenues

Other revenues  increased $8 million for the quarter ended March 31, 1999,  over
the same period of 1998.  This  increase was  primarily  the result of increased
revenues of new  non-regulated  initiatives  operated  by the  various  business
units.

Operating Expenses

Fuel and Purchased and Exchanged Power

The components of fuel and purchased and exchanged power are shown below:

                                              Quarter Ended
                                                 March 31    
                                            1999        1998 
                                              (in millions)

Fuel                                        $198        $181
Purchased and exchanged power                235         471
                                            ----        ----
Total                                       $433        $652

Electric  fuel costs  increased $17 million (9%) for the quarter ended March 31,
1999, as compared to the same period last year.

An analysis of these fuel costs is shown below:

                                              Quarter Ended
                                                 March 31   
                                              (in millions)

Fuel expense - March 31, 1998                     $181 
Increase (Decrease) due to change in:
  Price of fuel                                     (2)
  Deferred fuel cost                                 5
  Kwh generation                                     9
  Other                                              5
                                                  ----

Fuel expense - March 31, 1999                     $198

Purchased  and  exchanged  power  expense  decreased  $236 million (50%) for the
quarter  ended  March 31,  1999,  as  compared  to the same  period  last  year,
primarily  reflecting decreased purchases of non-firm power for resale to others
as a result of a decline in sales for resale volumes in the energy marketing and
trading operations.

Gas Purchased

Gas purchased for the quarter ended March 31, 1999, increased $227 million, when
compared  to the same  period  last  year,  primarily  due to the gas  purchased
expenses of  ProEnergy,  which was acquired in June 1998.  Partially  offsetting
this increase was a lower average cost per mcf of gas purchased.




<PAGE>





Other Operation and Maintenance

The components of other operation and maintenance expenses are shown below:

                                         Quarter Ended
                                            March 31   
                                         1999     1998
                                         (in millions)

Other operation                          $195     $174
Maintenance                                50       39
                                         ----     ----
Total                                    $245     $213


Other operation expenses increased $21 million (12%) for the quarter ended March
31, 1999, as compared to the same period last year, primarily due to an increase
in operating  expenses  related to various  non-regulated  subsidiaries  and the
estimated loss on a specific customer account.

Maintenance expenses increased $11 million (28%) for the quarter ended March 31,
1999,  as compared to the same period of 1998,  primarily  due to an increase in
maintenance  activities  associated with planned  outages at certain  production
facilities.

Depreciation and Amortization

The components of depreciation and amortization expenses are shown below:

                                        Quarter Ended
                                           March 31   
                                        1999     1998
                                        (in millions)

Depreciation                            $79      $73
Amortization of phase-in deferrals        6        6
Amortization of post-in-service
  deferred operating expenses             1        1
                                        ---      ---
Total                                   $86      $80

Depreciation  expense  increased $6 million (8%) for the quarter ended March 31,
1999,  as compared to the same period last year,  primarily  due to additions to
depreciable plant.

Equity in Earnings of Unconsolidated Subsidiaries

The $33 million  increase in equity in earnings of  unconsolidated  subsidiaries
for the quarter ended March 31, 1999, as compared to the same period of 1998, is
primarily  attributable to an increase in the earnings of Avon Energy  resulting
from increased  profits related to Midlands'  supply business and lower costs of
purchased electricity.

Preferred Dividend Requirements of Subsidiaries

The decrease in preferred  dividend  requirements  of subsidiaries of $1 million
(44%) for the quarter  ended March 31,  1999,  as compared to the same period of
1998, is primarily attributable to PSI's redemption of all outstanding shares of
its 7.44% Series Cumulative Preferred Stock on March 1, 1998.



<PAGE>




                              THE CINCINNATI GAS &
                                ELECTRIC COMPANY
                            AND SUBSIDIARY COMPANIES



<PAGE>



<TABLE>
<CAPTION>


                      THE CINCINNATI GAS & ELECTRIC COMPANY
                           CONSOLIDATED BALANCE SHEETS


ASSETS
<S>                                                   <C>          <C> 
                                                       March 31    December 31
                                                         1999         1998
                                                      (unaudited)
                                                       (dollars in thousands)

Current Assets
  Cash and temporary cash investments                 $   17,856   $   26,989
  Restricted deposits                                      1,173        1,173
  Notes receivable from affiliated companies             109,725       84,358
  Accounts receivable less accumulated provision
    for doubtful accounts of $19,295 at March
    31, 1999, and $17,607 at December 31, 1998           119,288      205,060
  Accounts receivable from affiliated companies              431       22,635
  Materials, supplies, and fuel - at average cost         94,163      115,294
  Prepayments and other                                   41,369       40,158
  Energy risk management assets                          351,639      484,500
                                                      ----------    ---------
                                                         735,644      980,167

Utility Plant - Original Cost
  In service
    Electric                                           4,817,108    4,806,958
    Gas                                                  794,786      786,188
    Common                                               197,299      186,364
                                                      ----------   ----------
                                                       5,809,193    5,779,510
  Accumulated depreciation                             2,184,770    2,147,298
                                                      ----------   ----------
                                                       3,624,423    3,632,212
  Construction work in progress                          121,476      119,993
                                                      ----------   ----------
      Total utility plant                              3,745,899    3,752,205

Other Assets
  Regulatory assets                                      616,784      627,035
  Other                                                  101,817      100,061
                                                      ----------   ----------
                                                         718,601      727,096

                                                      $5,200,144   $5,459,468

<FN>
The  accompanying  notes as they relate to The Cincinnati Gas & Electric Company
are an integral part of these consolidated financial statements.
</FN>
</TABLE>



<PAGE>



<TABLE>
<CAPTION>


                      THE CINCINNATI GAS & ELECTRIC COMPANY


LIABILITIES AND SHAREHOLDER'S EQUITY
<S>                                                   <C>          <C>       
                                                       March 31    December 31
                                                         1999         1998
                                                      (unaudited)
                                                       (dollars in thousands)

Current Liabilities
  Accounts payable                                    $  171,792   $  282,743
  Accounts payable to affiliated companies                34,376       13,166
  Accrued taxes                                          138,096      151,455
  Accrued interest                                        13,920       20,571
  Long-term debt due within one year                      20,000      130,000
  Notes payable and other short-term obligations         288,991      189,283
  Notes payable to affiliated companies                    4,289       17,020
  Energy risk management liabilities                     414,212      558,573
  Other                                                   25,961       26,422
                                                      ----------   ----------
                                                       1,111,637    1,389,233

Non-Current Liabilities
  Long-term debt                                       1,219,901    1,219,778
  Deferred income taxes                                  779,201      771,145
  Unamortized investment tax credits                     109,260      110,801
  Accrued pension and other postretirement
    benefit costs                                        149,830      146,361
  Other                                                  134,550      134,990
                                                      ----------   ----------
                                                       2,392,742    2,383,075

    Total liabilities                                  3,504,379    3,772,308

Cumulative Preferred Stock
  Not subject to mandatory redemption                     20,697       20,717

Common Stock Equity
  Common stock - $8.50 par value;  authorized
    shares - 120,000,000;  outstanding shares - 
    89,663,086 at March 31, 1999, and
    December 31, 1998                                    762,136      762,136
  Paid-in capital                                        553,929      553,926
  Retained earnings                                      360,127      351,505
  Accumulated other comprehensive loss                    (1,124)      (1,124)
                                                      ----------   ----------
    Total common stock equity                          1,675,068    1,666,443

                                                      $5,200,144   $5,459,468

</TABLE>



<PAGE>



<TABLE>
<CAPTION>


                      THE CINCINNATI GAS & ELECTRIC COMPANY
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                   (unaudited)
<S>                                                     <C>         <C>     
                                                           Quarter Ended
                                                              March 31
                                                          1999        1998
                                                           (in thousands)

Operating Revenues
  Electric                                              $481,586    $593,305
  Gas                                                    163,797     173,462
                                                        --------    --------
                                                         645,383     766,767

Operating Expenses
  Fuel and purchased and exchanged power                 198,871     325,171
  Gas purchased                                           78,878      96,588
  Other operation and maintenance                        108,156     101,405
  Depreciation and amortization                           50,570      47,660
  Taxes other than income taxes                           54,114      54,683
                                                        --------    --------
                                                         490,589     625,507

Operating Income                                         154,794     141,260

Other Income and (Expenses) - Net                         (1,261)     (2,494)

Interest                                                  24,407      26,789
                                                        --------    --------

Income Before Taxes                                      129,126     111,977

Income Taxes                                              48,889      40,785
                                                        --------    --------

Net Income                                              $ 80,237    $ 71,192

Preferred Dividend Requirement                               214         215
                                                        --------    --------

Net Income Applicable to Common Stock                   $ 80,023    $ 70,977
Other Comprehensive Income (Loss), Net of Tax               -           (155)
                                                        --------    --------
Comprehensive Income                                    $ 80,023    $ 70,822

<FN>
The  accompanying  notes as they relate to The Cincinnati Gas & Electric Company
are an integral part of these consolidated financial statements.
</FN>
</TABLE>




<PAGE>



<TABLE>
<CAPTION>


                      THE CINCINNATI GAS & ELECTRIC COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<S>                                              <C>          <C>      
                                                       Year to Date
                                                         March 31
                                                    1999        1998
                                                     (in thousands)

Operating Activities
  Net income                                     $  80,237    $  71,192
  Items providing (using) cash currently:
    Depreciation and amortization                   50,570       47,660
    Deferred income taxes and investment tax
      credits - net                                  8,795          (27)
    Allowance for equity funds used during
      construction                                    (775)         (10)
    Regulatory assets - net                          4,496        2,912
    Changes in current assets and current
      liabilities
        Accounts and notes receivable, net of
          reserves on receivables sold              80,619          391
        Materials, supplies, and fuel               21,131       14,073
        Accounts payable                           (89,741)      51,971
        Accrued taxes and interest                 (20,010)      (4,439)
        Energy risk management - net               (11,500)        -
    Other items - net                               (1,938)       9,753
                                                 ---------     --------
          Net cash provided by operating
            activities                             121,884      193,476

Financing Activities
  Retirement of preferred stock                        (17)          (9)
  Redemption of long-term debt                    (110,000)    (160,291)
  Change in short-term debt                         86,977       49,157
  Dividends on preferred stock                        (214)        (215)
  Dividends on common stock                        (71,400)     (42,600)
                                                 ---------    ---------
          Net cash used in financing
            activities                             (94,654)    (153,958)

Investing Activities
  Construction expenditures (less allowance
    for equity funds used during construction)     (36,363)     (36,483)
          Net cash used in investing
            activities                             (36,363)     (36,483)

Net increase (decrease) in cash and temporary
  cash investments                                  (9,133)       3,035

Cash and temporary cash investments at
  beginning of period                               26,989        2,349
                                                 ---------    ---------

Cash and temporary cash investments at
  end of period                                  $  17,856    $   5,384

<FN>
The  accompanying  notes as they relate to The Cincinnati Gas & Electric Company
are an integral part of these consolidated financial statements.
</FN>
</TABLE>



<PAGE>





                      THE CINCINNATI GAS & ELECTRIC COMPANY
           RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1999

Operating Revenues

Electric Operating Revenues

The  components  of electric  operating  revenues  and the related kwh sales are
shown below:

                                                 Quarter Ended
                                                    March 31                 
                                        Revenue                Kwh Sales     
                                    1999       1998        1999        1998  
                                            ($ and kwh in millions)

Retail                              $358       $336        5,882       5,438
Sales for resale                     121        254        4,918      10,793
Other                                  3          3          N/A         N/A
                                    ----       ----       ------      ------
Total                               $482       $593       10,800      16,231

Electric  operating  revenues decreased $111 million (19%) for the quarter ended
March 31, 1999,  when  compared to the same period for 1998.  This  decrease was
primarily  due  to  decreased   volumes  on  non-firm  power  sales  for  resale
transactions  related to  Cinergy's  energy  marketing  and trading  operations.
Partially  offsetting  the decline was higher  retail kwh sales  resulting  from
growth in the average  number of  residential  and  commercial  customers  and a
return to more normal weather in the first quarter of 1999, as compared to 1998.

Gas Operating Revenues

The  components  of gas  operating  revenues and the related mcf sales are shown
below:

                                           Quarter Ended
                                              March 31             
                                    Revenue             Mcf Sales  
                                  1999    1998        1999    1998
                                        ($ and mcf in millions)

Retail                            $144    $162         26      26
Transportation                      20      11         13      16
                                  ----    ----         --      --
Total                             $164    $173         39      42

Gas operating  revenues  decreased $9 million (5%) in the first quarter of 1999,
when  compared to the same period last year. A lower average cost per mcf of gas
purchased,  which was passed on to end users,  contributed  to the  decrease  in
retail  sales.   Transportation  revenues  increased  as  more  residential  and
commercial  customers  began to purchase  gas  directly  from  suppliers,  using
transportation  services  provided  by CG&E.  This  increase  in  transportation
revenues  was  partially  offset by a  decrease  in mcf  transportation  volumes
resulting from the loss of a large  industrial  transportation  customer  during
late 1998.




<PAGE>





Operating Expenses

Fuel and Purchased and Exchanged Power

The components of fuel and purchased and exchanged power are shown below:

                                             Quarter Ended
                                                March 31    
                                           1999        1998
                                             (in millions)

Fuel                                       $ 86        $ 88
Purchased and exchanged power               113         237
                                           ----        ----
Total                                      $199        $325

Electric  fuel costs  decreased $2 million (2%) for the quarter  ended March 31,
1999, as compared to the same period last year.

An analysis of these fuel costs is shown below:

                                                  Quarter Ended
                                                     March 31   
                                                  (in millions)

Fuel expense - March 31, 1998                          $88
Increase (Decrease) due to change in:
  Price of fuel                                          1
  Deferred fuel cost                                    (7)
  Kwh generation                                         4
                                                       ---

Fuel expense - March 31, 1999                          $86

Purchased  and  exchanged  power  expense  decreased  $124 million (52%) for the
quarter  ended March 31,  1999,  as compared to the same period last year.  This
decline primarily reflects  decreased  purchases of non-firm power for resale to
others as a result of a decline in sales for resale volumes in Cinergy's  energy
marketing and trading operations.

Gas Purchased

Gas purchased for the quarter ended March 31, 1999, decreased $18 million (18%),
when compared to the same period last year,  primarily due to an decrease in the
average cost per mcf of gas purchased.

Other Operation and Maintenance

The components of other operation and maintenance expenses are shown below:

                                         Quarter Ended
                                            March 31    
                                         1999      1998
                                         (in millions)

Other operation                          $ 84      $ 82
Maintenance                                24        19
                                          ---       ---
Total                                    $108      $101




<PAGE>





Maintenance  expenses increased $5 million (26%) for the quarter ended March 31,
1999,  as compared to the same period of 1998,  primarily  due to an increase in
maintenance  activities  associated with planned  outages at certain  production
facilities.

Depreciation and Amortization

The components of depreciation and amortization expenses are shown below:

                                        Quarter Ended
                                           March 31  
                                        1999     1998
                                        (in millions)

Depreciation                            $43      $41
Amortization of phase-in deferrals        7        6
Amortization of post-in-service
  deferred operating expenses             1        1
                                        ---      ---
Total                                   $51      $48

Depreciation  expense  increased $2 million (5%) for the quarter ended March 31,
1999,  as compared to the same period of 1998,  primarily  due to  additions  to
depreciable plant.

Other Income and (Expenses) - Net

The change in other  income and  (expenses)  - net of $1 million for the quarter
ended March 31, 1999,  as compared to the same period of 1998,  is primarily due
to an increase in interest  income and an increase in allowance for equity funds
used during  construction  resulting from an increase in the equity rate applied
and an increase in construction expenditures subject to allowance.

Interest

The decrease in interest  expense of $2 million (9%) for the quarter ended March
31, 1999, as compared to the same period last year, was due to decreases in both
interest on long-term debt and other interest expense.  The decrease in interest
expense on long-term debt is primarily due to a net redemption of  approximately
$90 million of long-term  debt during the period of March 1998 through  February
1999. The decrease in other  interest  expense was due to a reduction in average
short-term borrowings and lower short-term interest rates.



<PAGE>




                                PSI ENERGY, INC.
                             AND SUBSIDIARY COMPANY



<PAGE>


<TABLE>
<CAPTION>



                                PSI ENERGY, INC.
                           CONSOLIDATED BALANCE SHEETS


ASSETS
<S>                                                   <C>          <C>       
                                                       March 31    December 31
                                                         1999         1998
                                                      (unaudited)
                                                       (dollars in thousands)

Current Assets
  Cash and temporary cash investments                 $   31,187   $   18,788
  Restricted deposits                                      2,468        2,414
  Notes receivable                                         8,298       17,024
  Notes receivable from affiliated companies                  70           73
  Accounts receivable less accumulated provision
    for doubtful accounts of $11,968 at March
    31, 1999, and $7,893 at December 31, 1998            139,685      225,449
  Accounts receivable from affiliated companies           10,674          384
  Materials, supplies, and fuel - at average cost         83,789       80,445
  Prepayments and other                                   27,485       31,461
  Energy risk management assets                          351,639      484,500
                                                      ----------   ----------
    Total current assets                                 655,295      860,538

Electric Utility Plant - Original Cost
  In service                                           4,431,266    4,415,303
  Accumulated depreciation                             1,915,636    1,892,949
                                                      ----------   ----------
                                                       2,515,630    2,522,354
  Construction work in progress                           87,984       69,891
                                                      ----------   ----------
    Total electric utility plant                       2,603,614    2,592,245

Other Assets
  Regulatory assets                                      323,603      343,731
  Other                                                   92,496       93,012
                                                      ----------   ----------
    Total other assets                                   416,099      436,743

                                                      $3,675,008   $3,889,526

<FN>
The accompanying  notes as they relate to PSI Energy,  Inc. are an integral part
of these consolidated financial statements.
</FN>
</TABLE>




<PAGE>



<TABLE>
<CAPTION>


                                PSI ENERGY, INC.


LIABILITIES AND SHAREHOLDER'S EQUITY
<S>                                                   <C>          <C>       
                                                       March 31    December 31
                                                         1999         1998
                                                      (unaudited)
                                                       (dollars in thousands)

Current Liabilities
  Accounts payable                                    $  141,076   $  217,959
  Accounts payable to affiliated companies                12,954       30,145
  Accrued taxes                                           90,558       58,901
  Accrued interest                                        17,628       28,335
  Notes payable and other short-term obligations         157,597      173,162
  Notes payable to affiliated companies                  103,092      102,946
  Long-term debt due within one year                       5,959        6,000
  Energy risk management liabilities                     414,212      558,573
  Other                                                    2,161        2,227
                                                      ----------   ----------
                                                         945,237    1,178,248

Non-Current Liabilities
  Long-term debt                                       1,020,093    1,025,659
  Deferred income taxes                                  360,007      364,049
  Unamortized investment tax credits                      45,121       45,956
  Accrued pension and other postretirement
    benefit costs                                        116,664      112,387
  Other                                                  101,641      115,656
                                                      ----------   ----------
                                                       1,643,526    1,663,707

    Total liabilities                                  2,588,763    2,841,955

Cumulative Preferred Stock
  Not subject to mandatory redemption                     71,919       71,923

Common Stock Equity
  Common stock - without par value;  $0.01  
    stated  value;  authorized  shares - 60,000,000;
    outstanding shares - 53,913,701 at March
    31, 1999, and December 31, 1998                          539          539
  Paid-in capital                                        410,740      410,739
  Retained earnings                                      603,557      564,865
  Accumulated other comprehensive loss                      (510)        (495) 
                                                      ----------   ---------- 
    Total common stock equity                          1,014,326      975,648

                                                      $3,675,008   $3,889,526


</TABLE>






<PAGE>



<TABLE>
<CAPTION>


                                PSI ENERGY, INC.
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                   (unaudited)
<S>                                                   <C>          <C>     
                                                         Quarter Ended
                                                            March 31
                                                        1999         1998
                                                         (in thousands)

Operating Revenues
  Electric                                            $482,465     $592,125

Operating Expenses
  Fuel and purchased and exchanged power               234,927      352,746
  Other operation and maintenance                      113,240      101,685
  Depreciation and amortization                         33,743       32,275
  Taxes other than income taxes                         14,488       14,967
                                                      --------     --------
                                                       396,398      501,673

Operating Income                                        86,067       90,452

Other Income and (Expenses) - Net                          323        1,718

Interest                                                21,364       22,898
                                                      --------     --------

Income Before Taxes                                     65,026       69,272

Income Taxes                                            25,185       25,944
                                                      --------     --------

Net Income                                            $ 39,841     $ 43,328

Preferred Dividend Requirement                           1,150        2,208
                                                      --------     --------

Net Income Applicable to Common Stock                 $ 38,691     $ 41,120
Other Comprehensive Income (Loss), Net of Tax              (15)         944 
                                                      --------     ---------
Comprehensive Income                                  $ 38,676     $ 42,064

<FN>
The accompanying  notes as they relate to PSI Energy,  Inc. are an integral part
of these consolidated financial statements.
</FN>
</TABLE>





<PAGE>

<TABLE>
<CAPTION>




                                PSI ENERGY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<S>                                                  <C>          <C>      
                                                          Year to Date
                                                            March 31
                                                        1999         1998
                                                         (in thousands)

Operating Activities
  Net income                                         $  39,841    $  43,328
  Items providing (using) cash currently:
    Depreciation and amortization                       33,743       32,275
    Deferred income taxes and investment tax
      credits - net                                     (3,476)        (473)
    Allowance for equity funds used during
      construction                                        -             (11)
    Regulatory assets - net                                644        7,758
    Changes in current assets and current
      liabilities
        Restricted deposits                                (54)         (29)
        Accounts and notes receivable, net of
          reserves on receivables sold                  85,834      (75,348)
        Materials, supplies, and fuel                   (3,344)      (9,413)
        Accounts payable                               (94,074)      33,541
        Accrued taxes and interest                      20,950       26,088
        Energy risk management - net                   (11,500)        -
    Other items - net                                    7,593      (14,292)
                                                     ---------    ---------
          Net cash provided by operating
            activities                                  76,157       43,424

Financing Activities
  Issuance of long-term debt                              -          98,901
  Retirement of preferred stock                             (3)     (85,220)
  Redemption of long-term debt                          (6,000)        -
  Change in short-term debt                            (15,419)       8,481
  Dividends on preferred stock                          (1,150)      (2,736)
  Dividends on common stock                               -         (28,400)
                                                     ---------    ---------
          Net cash used in financing activities        (22,572)      (8,974)

Investing Activities
  Construction expenditures (less allowance
    for equity funds used during construction)         (41,186)     (26,803)
          Net cash used in investing activities        (41,186)     (26,803)

Net increase in cash and temporary cash
  investments                                           12,399        7,647

Cash and temporary cash investments at
  beginning of period                                   18,788       18,169
                                                     ---------    ---------

Cash and temporary cash investments at
  end of period                                      $  31,187    $  25,816

<FN>
The accompanying  notes as they relate to PSI Energy,  Inc. are an integral part
of these consolidated financial statements.
</FN>
</TABLE>




<PAGE>





                                PSI ENERGY, INC.
           RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1999

Operating Revenues

The components of operating revenues and the related kwh sales are shown below:

                                                Quarter Ended
                                                   March 31                  
                                         Revenue              Kwh Sales     
                                     1999       1998      1999         1998  
                                           ($ and kwh in millions)

Retail                               $318       $297      6,393        6,239
Sales for resale                      157        287      6,282       12,185
Other                                   7          8        N/A          N/A
                                     ----       ----     ------       ------
Total                                $482       $592     12,675       18,424

Operating  revenues decreased $110 million (19%) for the quarter ended March 31,
1999, when compared to the same period for 1998. This decrease was primarily due
to decreased volumes on non-firm power sales for resale transactions  related to
Cinergy's  energy  marketing and trading  operations.  Partially  offsetting the
decline was an increase in the average  price per kwh for retail  customers  and
higher  retail and firm power kwh sales  resulting  from  growth in the  average
number of  residential  and  commercial  customers  and a return to more  normal
weather in the first quarter of 1999, as compared to 1998.

Operating Expenses

Fuel and Purchased and Exchanged Power

The components of fuel and purchased and exchanged power are shown below:

                                            Quarter Ended
                                               March 31   
                                           1999       1998
                                            (in millions)

Fuel                                       $107       $ 92
Purchased and exchanged power               128        261
                                           ----       ----
Total                                      $235       $353

Fuel  costs  increased  $15  million  (16%) for the first  quarter  of 1999,  as
compared to the same period last year.




<PAGE>





An analysis of fuel costs is shown below:

                                              Quarter Ended
                                                 March 31   
                                              (in millions)

Fuel expense - March 31, 1998                     $ 92
Increase (Decrease) due to change in:
  Price of fuel                                     (3)
  Deferred fuel cost                                12
  Kwh generation                                     6
                                                  ----

Fuel expense - March 31, 1999                     $107

Purchased  and  exchanged  power  expense  decreased  $133 million (51%) for the
quarter  ended March 31,  1999,  as compared to the same period last year.  This
decline primarily reflects  decreased  purchases of non-firm power for resale to
others as a result of a decline in sales for resale volumes in Cinergy's  energy
marketing and trading operations.

Other Operation and Maintenance

The components of other operation and maintenance expenses are shown below:

                                         Quarter Ended
                                            March 31   
                                         1999     1998
                                         (in millions)

Other operation                          $ 88     $ 82
Maintenance                                25       20
                                         ----     ----
Total                                    $113     $102

Other  operation  expense  increased $6 million (7%) for the quarter ended March
31, 1999, as compared to the same period of 1998, primarily due to the estimated
loss on a specific customer account.

Maintenance  expense  increased $5 million (25%) for the quarter ended March 31,
1999,  as compared to the same period of 1998,  primarily  due to an increase in
maintenance  activities  associated with planned  outages at certain  production
facilities.

Other Income and (Expenses) - Net

The change in other  income and  (expenses)  - net of $1 million for the quarter
ended March 31,  1999,  as compared  to the same  period of 1998,  is  primarily
attributable to a decrease in interest income.

Interest

The $2 million (7%) decrease in interest expense for the quarter ended March 31,
1999,  as compared to the same period of 1998, is primarily due to a decrease in
other  interest  expense  resulting  from  a  reduction  in  average  short-term
borrowings  and  lower  short-term  interest  rates.  Partially  offsetting  the
decrease was an increase in interest  expense on long-term  debt  resulting from
the net issuance of  approximately  $144  million of  long-term  debt during the
period from March 1998 through December 1998.



<PAGE>






Preferred Dividend Requirement

The  decrease in  preferred  dividend  requirement  of $1 million  (48%) for the
quarter  ended  March 31,  1999,  as  compared  to the same  period of 1998,  is
primarily  attributable  to PSI's  redemption of all  outstanding  shares of its
7.44% Series Cumulative Preferred Stock on March 1, 1998.



<PAGE>





                     THE UNION LIGHT, HEAT AND POWER COMPANY



<PAGE>


<TABLE>
<CAPTION>



                     THE UNION LIGHT, HEAT AND POWER COMPANY
                                 BALANCE SHEETS


ASSETS
<S>                                                  <C>         <C>     
                                                      March 31   December 31
                                                        1999         1998
                                                     (unaudited)
                                                      (dollars in thousands)

Current Assets
  Cash and temporary cash investments                 $  4,993     $  3,244
  Accounts receivable less accumulated provision
    for doubtful accounts of $1,826 at
    March 31, 1999, and $1,248 at December
    31, 1998                                             9,076       14,125
  Accounts receivable from affiliated companies           -             666
  Materials, supplies, and fuel - at average cost        3,668        8,269
  Prepayments and other                                    154          308
                                                      --------     --------
    Total current assets                                17,891       26,612

Utility Plant - Original Cost
  In service
    Electric                                           234,791      232,222
    Gas                                                165,629      164,040
    Common                                              20,358       18,908
                                                      --------     --------
                                                       420,778      415,170
  Accumulated depreciation                             146,128      143,386
                                                      --------     --------
                                                       274,650      271,784
  Construction work in progress                          9,971       11,444
                                                      --------     --------
      Total utility plant                              284,621      283,228

Other Assets
  Regulatory assets                                     10,893       10,978
  Other                                                  5,470        3,767
                                                      --------     --------
                                                        16,363       14,745

                                                      $318,875     $324,585

<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company
are an integral part of these financial statements.
</FN>
</TABLE>



<PAGE>



<TABLE>
<CAPTION>


                     THE UNION LIGHT, HEAT AND POWER COMPANY


LIABILITIES AND SHAREHOLDER'S EQUITY
<S>                                                   <C>          <C>     
                                                       March 31    December 31
                                                         1999         1998
                                                      (unaudited)
                                                       (dollars in thousands)

Current Liabilities
  Accounts payable                                    $  6,729     $  5,903
  Accounts payable to affiliated companies              15,582       14,986
  Accrued taxes                                          6,616        3,216
  Accrued interest                                       1,432        1,959
  Long-term debt due within one year                    20,000       20,000
  Notes payable to affiliated companies                 11,386       31,817
  Other                                                  4,179        4,247
                                                      --------     --------
                                                        65,924       82,128

Non-Current Liabilities
  Long-term debt                                        54,571       54,553
  Deferred income taxes                                 25,711       26,134
  Unamortized investment tax credits                     4,168        4,238
  Accrued pension and other postretirement
    benefit costs                                       11,920       11,678
  Amounts due to customers - income taxes                9,253        8,959
  Other                                                 11,968        8,077
                                                      --------     --------
                                                       117,591      113,639

    Total liabilities                                  183,515      195,767

Common Stock Equity
  Common stock - $15.00 par value;  authorize
    shares - 1,000,000;  outstanding shares - 
    585,333 at March 31, 1999, and
    December 31, 1998                                    8,780        8,780
  Paid-in capital                                       19,525       19,525
  Retained earnings                                    107,055      100,513
                                                      --------     --------
    Total common stock equity                          135,360      128,818

                                                      $318,875     $324,585

</TABLE>




<PAGE>

<TABLE>
<CAPTION>




                     THE UNION LIGHT, HEAT AND POWER COMPANY
                              STATEMENTS OF INCOME
                                   (unaudited)
<S>                                                 <C>            <C>    
                                                        Quarter Ended
                                                           March 31
                                                     1999           1998
                                                        (in thousands)

Operating Revenues
  Electric                                          $49,159        $46,999
  Gas                                                33,000         28,480
                                                    -------        -------
                                                     82,159         75,479

Operating Expenses
  Electricity purchased from parent company
    for resale                                       36,748         34,090
  Gas purchased                                      17,322         16,353
  Operation and maintenance                          10,190          9,430
  Depreciation                                        3,571          3,232
  Taxes other than income taxes                       1,083          1,005
                                                    -------        -------
                                                     68,914         64,110

Operating Income                                     13,245         11,369

Other Income and (Expenses) - Net                      (390)          (496)

Interest                                              1,563          1,115
                                                    -------        -------

Income Before Taxes                                  11,292          9,758

Income Taxes                                          4,749          3,989
                                                    -------        -------

Net Income                                          $ 6,543        $ 5,769

<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company
are an integral part of these financial statements.
</FN>
</TABLE>






<PAGE>



<TABLE>
<CAPTION>


                     THE UNION LIGHT, HEAT AND POWER COMPANY
                            STATEMENTS OF CASH FLOWS
                                   (unaudited)

<S>                                              <C>         <C>     
                                                     Year to Date
                                                       March 31
                                                   1999        1998
                                                    (in thousands)

Operating Activities
  Net income                                     $  6,543    $  5,769
  Items providing (using) cash currently:
    Depreciation                                    3,571       3,232
    Deferred income taxes and investment tax
      credits - net                                  (200)        462
    Allowance for equity funds used during
      construction                                     16          14
    Regulatory assets                                  35         (41)
    Changes in current assets and current
      liabilities
        Accounts and notes receivable, net of
          reserves on receivables sold              4,006         240
        Materials, supplies, and fuel               4,601       3,111
        Accounts payable                            1,422      (5,751)
        Accrued taxes and interest                  2,873      (1,000)
        Other current assets and liabilities           86        -
    Other items - net                               4,200       1,627
                                                 --------    --------
          Net cash provided by operating
            activities                             27,153       7,663

Financing Activities
  Change in short-term debt                       (20,431)     (2,030)
                                                 --------    --------
          Net cash used in financing
            activities                            (20,431)     (2,030)

Investing Activities
  Construction expenditures (less allowance
    for equity funds used during construction)     (4,973)     (6,175)
          Net cash used in investing
            activities                             (4,973)     (6,175)

Net increase (decrease) in cash and temporary
  cash investments                                  1,749        (542)

Cash and temporary cash investments at
  beginning of period                               3,244         546
                                                 --------    --------

Cash and temporary cash investments at
  end of period                                  $  4,993    $      4

<FN>
The accompanying notes as they relate to The Union Light, Heat and Power Company
are an integral part of these financial statements.
</FN>
</TABLE>


                                                 

<PAGE>





                     THE UNION LIGHT, HEAT AND POWER COMPANY
           RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31, 1999


Operating Revenues

Electric Operating Revenues

Electric  operating  revenues  increased $2 million  (5%) for the quarter  ended
March 31,  1999,  as  compared  to the same  period  last  year.  This  increase
primarily  reflects a return to more normal weather  conditions,  as compared to
the same period in 1998,  and higher retail kwh sales  resulting  from growth in
the average number of residential and commercial customers.

Gas Operating Revenues

The  components  of gas  operating  revenues and the related mcf sales are shown
below:

                                                Quarter Ended
                                                   March 31                   
                                        Revenue                Mcf Sales      
                                  1999         1998        1999         1998
                                          ($ and mcf in thousands)

Retail                          $31,555      $27,266      5,219        4,491
Transportation                    1,445        1,214      1,078        1,106
                                -------      -------      -----        -----
Total                           $33,000      $28,480      6,297        5,597

Gas operating  revenues increased $5 million (16%) in the first quarter of 1999,
when  compared to the same period last year,  primarily due to a increase in mcf
volumes sold, a return to more normal weather conditions, and an increase in the
number of customers.

Operating Expenses

Electricity Purchased from Parent Company for Resale

Electricity  purchased increased $3 million (8%) for the quarter ended March 31,
1999, as compared to the same period last year.  This increase  reflects  higher
volumes purchased from CG&E.

Gas Purchased

Gas purchased  for the quarter ended March 31, 1999,  increased $1 million (6%),
when compared to the same period last year,  primarily due to an increase in the
volumes of gas purchased,  due to higher demand and an increase in the number of
customers.




<PAGE>





Other Operation and Maintenance

The components of other operation and maintenance expenses are shown below:

                                        Quarter Ended
                                           March 31     
                                        1999      1998  
                                        (in thousands)

Other operation                       $ 8,948    $8,135
Maintenance                             1,242     1,295 
                                      -------    -------
Total                                 $10,190    $9,430

Other operation expenses increased $.8 million (10%) for the quarter ended March
31, 1999, as compared to the same period last year, primarily due to an increase
in administrative and general activities.

Depreciation

Depreciation  increased  $.3 million (10%) for the quarter ended March 31, 1999,
as compared to the same period last year, due to additions to depreciable plant.

Other Income and (Expenses) - Net

The change in other  income and  (expenses) - net of $.1 million for the quarter
ended March 31,  1999,  as compared  to the same  period of 1998,  is  primarily
attributable to an increase in miscellaneous non-utility revenues.

Interest

The  increase in interest  expense of $.4  million  (40%) for the quarter  ended
March 31, 1999,  as compared to the same period last year,  was primarily due to
the net  issuance  of  approximately  $30 million of  long-term  debt during the
period of April 1998 through December 1998.


<PAGE>





                          NOTES TO FINANCIAL STATEMENTS

Cinergy,  CG&E,  PSI,  and  ULH&P

1.   These Financial  Statements  reflect all adjustments (which include normal,
     recurring  adjustments)  necessary in the opinion of the  registrants for a
     fair  presentation of the interim results.  These statements should be read
     in conjunction with the Financial Statements and the notes thereto included
     in the combined 1998 Form 10-K of the registrants.

     Certain amounts in the 1998 Financial  Statements have been reclassified to
     conform to the 1999 presentation.

Cinergy

2.   On April 16, 1999, Cinergy issued and sold $200 million principal amount of
     its 6.125% Debentures due 2004. Proceeds from the sale were used to repay a
     portion of short-term indebtedness and for general corporate purposes.

Cinergy and PSI

3.   On April 30, 1999, PSI issued: $124.7 million principal amount of its First
     Mortgage  Bonds,  Series BBB, 8%, due July 15, 2009, in exchange for $125.7
     million principal amount of certain  outstanding Secured Medium-term Notes,
     Series A;  $60.1  million  principal  amount of its First  Mortgage  Bonds,
     Series CCC,  8.85%,  due January 15, 2022,  in exchange  for $60.5  million
     principal amount of certain  outstanding  Secured Medium-term Notes, Series
     A; and $38 million  principal  amount of its First Mortgage  Bonds,  Series
     DDD,  8.31%,  due September 1, 2032, in exchange for $38 million  principal
     amount of certain outstanding Secured Medium-term Notes, Series B.

     Also on April 30,  1999,  PSI issued $97  million  principal  amount of its
     6.52%  Senior  Notes due 2009 in exchange  for a like  principal  amount of
     outstanding   7.25%  Junior   Maturing   Principal   Securities   due  2028
     ("JUMPS(sm)").

     The Secured Medium-term Notes and JUMPS(sm) received by PSI in the exchange
     transactions described above have been cancelled.

Cinergy, CG&E, and PSI

4.   Cinergy'senergy  marketing  and  trading  operations,  conducted  primarily
     through its ECBU,  markets and trades  electricity,  natural gas, and other
     energy-related products. The power marketing and trading operation has both
     physical  and trading  activities.  Generation  not required to meet native
     load  requirements  is available to be sold to third parties,  either under
     long-term contracts, such as full requirements transactions or firm forward
     sales  contracts,  or in  short-term  and spot  market  transactions.  When
     transactions  are entered into, each  transaction is designated as either a
     physical  or  trading  transaction.  In  order  for  a  transaction  to  be
     designated  as  physical,  there must be intent and  ability to  physically
     deliver the power from company-owned generation.  Physical transactions are
     accounted for on a settlement basis. All other  transactions are considered
     trading transactions and are accounted for using the mark-to-market  method
     of accounting. Under the mark-to-market method of accounting, these trading
     transactions are reflected at fair value as "Energy risk management assets"
     and "Energy risk management  liabilities." Changes in fair value, resulting
     in  unrealized  gains and losses,  are reflected in "Fuel and purchased and
     exchanged  power."  Revenues  and costs for all  transactions  are recorded
     gross in

<PAGE>





     the  Consolidated  Statements of Income as contracts are settled.  Revenues
     are recognized in "Operating Revenues - Electric" and costs are recorded in
     "Fuel and purchased and exchanged power."

     Although  physical  transactions are entered with the intent and ability to
     settle the contract with company-owned  generation, it is likely, that from
     time to time, due to numerous  factors such as generating  station outages,
     native load  requirements,  and weather,  power used to settle the physical
     transactions will be required to be purchased on the open market. Depending
     on the factors giving rise to these open market purchases, the cost of such
     purchases  could be in excess of the  associated  revenues.  Losses such as
     this will be recognized as the power is  delivered.  In addition,  physical
     contracts  are subject to permanent  impairment  tests.  At March 31, 1999,
     management has concluded that no physical contracts are impaired.

     Prior to December 31, 1998,  the  transactions  now included in the trading
     portfolio were  accounted for and valued at the aggregate  lower of cost or
     market.  Under this method,  only the net value of the entire portfolio was
     recorded as a liability in the Consolidated Balance Sheets.

     Contracts  in the  trading  portfolio  are valued at  end-of-period  market
     prices,  utilizing  factors  such as closing  exchange  prices,  broker and
     over-the-counter  quotations,  and model pricing.  Model pricing  considers
     time value and volatility  factors  underlying any options and  contractual
     commitments. Management expects that some of these obligations, even though
     considered as trading  contracts,  will  ultimately be settled from time to
     time by using  company-owned  generation.  The cost of this  generation  is
     typically  below the market prices at which the trading  portfolio has been
     valued.

     Because of the volatility  currently  experienced in the power markets, and
     the factors  discussed  above  pertaining  to both the physical and trading
     activities, volatility in future earnings (losses) from period to period in
     the ECBU is likely.

     Cinergy's ECBU also  physically  markets natural gas and trades natural gas
     and other  energy-related  products.  All of these operations are accounted
     for on the  mark-to-market  method of  accounting.  Revenues and costs from
     physical  marketing are recorded  gross in the  Consolidated  Statements of
     Income as  contracts  are  settled  due to the  exchanging  of title to the
     natural gas throughout the earnings process. All non-physical  transactions
     are  recorded net in the  Consolidated  Statements  of Income.  Energy risk
     management  assets and  liabilities  and gross  margins from these  trading
     activities currently are not significant.

Cinergy, CG&E, and PSI

5.   Cinergy and its subsidiaries use derivative financial  instruments to hedge
     exposures to foreign  currency  exchange  rates,  lower funding costs,  and
     manage  exposures to fluctuations in interest  rates.  Instruments  used as
     hedges must be  designated  as a hedge at the inception of the contract and
     must be effective at reducing the risk  associated  with the exposure being
     hedged.   Accordingly,   changes  in  market  values  of  designated  hedge
     instruments must be highly  correlated with changes in market values of the
     underlying  hedged items at inception of the hedge and over the life of the
     hedge contract.

     Cinergy and its subsidiaries utilize foreign exchange forward contracts and
     currency  swaps  to  hedge  certain  of  its  net  investments  in  foreign
     operations.  Accordingly,  any  translation  gains or losses related to the
     foreign  exchange  forward  contracts  or  the  principal  exchange  on the
     currency swap are recorded in "Accumulated other comprehensive loss," which
     is a separate  component  of common  stock  equity.  Aggregate  translation
     losses related to these instruments are reflected in "Current  Liabilities"
     in the Consolidated Balance Sheets.

     Interest  rate  swaps  are   accounted   for  under  the  accrual   method.
     Accordingly,  gains and losses based on any interest  differential  between
     fixed-rate and floating-rate  interest  amounts,  calculated on agreed upon
     notional principal amounts,  are recognized in the Consolidated  Statements
     of Income as a component of interest  expense as realized  over the life of
     the agreement.

Cinergy, CG&E, PSI, and ULH&P

6.   As discussed in the 1998 Form 10-K, prior to the 1950s, gas was produced at
     MGP sites  through a process that  involved the heating of coal and/or oil.
     The gas produced  from this process was sold for  residential,  commercial,
     and industrial uses.

Cinergy and PSI

     Coal tar residues, related hydrocarbons, and various metals associated with
     MGP sites  have been  found at former MGP sites in  Indiana,  including  at
     least 21 MGP sites  which PSI or its  predecessors  previously  owned.  PSI
     acquired four of the sites from NIPSCO in 1931 and at the same time it sold
     NIPSCO the sites located in Goshen and Warsaw,  Indiana.  In 1945, PSI sold
     19 of these sites  (including  the four it acquired from NIPSCO) to Indiana
     Gas and Water  Company,  Inc.  (now IGC).  One of the 19 sites,  located in
     Rochester, Indiana, was later sold by IGC to NIPSCO.

     IGC and NIPSCO  both made  claims  against  PSI,  contending  that PSI is a
     Potentially  Responsible  Party under the CERCLA with respect to the 21 MGP
     sites, and therefore legally responsible for the costs of investigating and
     remediating  these  sites.  Moreover,  in August  1997,  NIPSCO  filed suit
     against PSI in federal court, claiming,  pursuant to CERCLA,  recovery from
     PSI of NIPSCO's past and future costs of investigating  and remediating MGP
     related contamination at the Goshen MGP site.

     In November 1998,  NIPSCO,  IGC, and PSI entered into a Site  Participation
     and Cost  Sharing  Agreement  by which they  settled  allocation  of CERCLA
     liability for past and future costs,  among the three  companies,  at seven
     MGP sites in Indiana. Pursuant to this agreement,  NIPSCO's lawsuit against
     PSI was  dismissed.  The parties  have  assigned  one of the  parties  lead
     responsibility   for  managing   further   investigation   and  remediation
     activities at each of the sites.  Similar  agreements  were reached between
     IGC and PSI which  allocate  CERCLA  liability  at 14 MGP sites  with which
     NIPSCO had no involvement. These agreements conclude all CERCLA and similar
     claims between the three companies  relative to MGP sites.  Pursuant to the
     agreements and  applicable  laws, the parties are continuing to investigate
     and remediate the sites as appropriate.  Investigation  and cleanup of some
     of the sites is subject to oversight by the IDEM.

     PSI has placed its insurance carriers on notice of IGC's, NIPSCO's, and the
     IDEM's  claims  related  to MGP  sites.  In April  1998,  PSI filed suit in
     Hendricks  County  Circuit  Court against its general  liability  insurance
     carriers  seeking,  among other  matters,  a declaratory  judgment that its
     insurance  carriers are  obligated to defend MGP claims  against PSI or pay
     PSI's costs of defense and to indemnify PSI for its costs of investigating,
     preventing, mitigating, and remediating damage to

<PAGE>





     property and paying claims  associated  with MGP sites.  PSI cannot predict
     the outcome of this litigation.

     Based upon the work  performed to date, PSI has accrued costs for the sites
     related  to  investigation,   remediation,   and  groundwater   monitoring.
     Estimated costs of certain remedial  activities are accrued when such costs
     are reasonably  estimable.  PSI does not believe it can provide an estimate
     of the reasonably  possible total  remediation  costs for any site prior to
     completion   of  a   remedial   investigation/feasibility   study  and  the
     development  of some  sense of the  timing  for the  implementation  of the
     potential  remedial  alternatives,  to the extent such  remediation  may be
     required.  Accordingly,  the total costs that may be incurred in connection
     with the remediation of all sites, to the extent  remediation is necessary,
     cannot be determined at this time. These future costs at the 21 Indiana MGP
     sites,  based on  information  currently  available,  are not  material  to
     Cinergy's financial condition or results of operations. However, as further
     investigation and remediation activities are undertaken at these sites, the
     potential liability for the 21 MGP sites could be material to Cinergy's and
     PSI's financial condition or results of operations.

Cinergy, CG&E, and ULH&P

     CG&E and its utility  subsidiaries  are aware of potential  sites where MGP
     activities  have occurred at some time in the past.  None of these sites is
     known  to  present  a  risk  to  the  environment.  CG&E  and  its  utility
     subsidiaries  have undertaken  preliminary  site assessments to obtain more
     information about some of these MGP sites.

Cinergy, CG&E, PSI, and ULH&P

7.   During the second quarter of 1998,  the FASB issued  Statement 133. The new
     standard requires companies to record derivative instruments, as defined in
     Statement  133,  as assets or  liabilities,  measured  at fair  value.  The
     Statement   requires  that  changes  in  the  derivative's  fair  value  be
     recognized  currently in earnings unless specific hedge accounting criteria
     are met.  Special  accounting for  qualifying  hedges allows a derivative's
     gains and losses to offset related results on the hedged item in the income
     statement,  and requires that a company must formally document,  designate,
     and assess the  effectiveness of transactions that receive hedge accounting
     treatment.  The standard is effective for fiscal years beginning after June
     15, 1999,  and Cinergy  expects to adopt the provisions of Statement 133 in
     the first quarter of 2000.

The  Company has not yet quantified the impacts of adopting Statement 133 on its
     consolidated  financial statements.  However,  Statement 133 could increase
     volatility in earnings and other comprehensive income.

                                                   
<PAGE>




<TABLE>
<CAPTION>


Cinergy

Presented below is a reconciliation of earnings per common share (basic EPS) and
earnings per common share assuming dilution (diluted EPS).
<S>                                         <C>          <C>             <C>
                                              Income        Shares       Earnings
                                            (Numerator)  (Denominator)   Per Share
                                           (In thousands, except per share amounts)
   Quarter ended March 31, 1999 
   Earnings per common share:
        Net income                           $127,245        158,746       $ .80

     Effect of dilutive securities:
        Common stock options                                     412
        Contingently issuable common stock                        13

     EPS--assuming dilution:
        Net income plus assumed conversions  $127,245        159,171       $ .80

     Quarter ended March 31, 1998 
     Earnings per common share:
        Net income                           $106,071        157,764       $ .67

     Effect of dilutive securities:
        Common stock options                                     787
        Contingently issuable common stock                       123

     EPS--assuming dilution:
        Net income plus assumed conversions  $106,071        158,674       $ .67
</TABLE>

Options  to  purchase  shares  of  common  stock  that  were  excluded  from the
calculation  of  EPS--assuming  dilution  because the  exercise  prices of these
options were greater than the average  market price of the common  shares during
the period are summarized below:

                           Quarter                      Average
                            Ended                       Exercise
                           March 31      Shares          Price   

                             1999       1,744,800        $35.70
                             1998         914,800         37.61

Cinergy

9.   Midlands (of which the Company owns 50%) has a 40% ownership  interest in a
     586 MW  power  project  in  Pakistan  ("Uch  project"  or  "Uch")  which as
     originally  scheduled to begin  commercial  operation in late 1998. In July
     1998, the Pakistani  government-owned  utility issued a notice of intent to
     terminate certain key project agreements  relative to the Uch project.  The
     notice  asserted  that various  forms of  corruption  were  involved in the
     original  granting of the  agreements to the Uch investors by a predecessor
     government.  The  Company  believes  that this notice is similar to notices
     received by a number of other independent power projects in Pakistan.

     The Uch  investors,  including a subsidiary of Midlands,  strongly deny the
     allegations  and have pursued all available  legal options to enforce their
     contractual rights under the project agreements.  Physical  construction of
     the project is complete;  however,  commercial operations have been delayed
     pending  resolution  of  the  dispute.  In  December  1998,  the  Pakistani
     government offered to withdraw its notice.

Through its 50% ownership of Midlands,  the Company's current  investment in the
Uch project is  approximately  $36 million.  In addition,  project lenders could
require investors to make additional capital  contributions to the project under
certain  conditions.  The Company's share of these  additional  contributions is
approximately  $8 million.  At the present time,  the Company cannot predict the
ultimate outcome of this matter.

Cinergy and PSI

10.  As  discussed  in the 1998 Form  10-K,  PSI and  Dynegy  (formerly  Destec)
     entered  into a 25-year  contractual  agreement  for the  provision of coal
     gasification  services in November 1995. The agreement  requires PSI to pay
     Dynegy a base monthly fee including certain monthly operating expenses. PSI
     received  authorization  in the  September  1996 Order for the inclusion of
     these costs in retail rates.  In addition,  PSI received  authorization  to
     defer,  for subsequent  recovery in retail rates, the base monthly fees and
     expenses  incurred prior to the effective date of the September 1996 Order.
     Over the next five years,  the base  monthly fees and expenses for the coal
     gasification service agreement are expected to total $201 million.

     During the third quarter of 1998,  PSI reached an agreement  with Dynegy to
     purchase  the  remainder  of its  25-year  contract  for coal  gasification
     services for $265.7  million.  The proposed  purchase,  which is contingent
     upon regulatory  approval  satisfactory to PSI, could be completed in 1999.
     PSI is investigating financing alternatives.  The transaction,  if approved
     as proposed, is not expected to have a material impact on PSI's earnings.

     Currently,  natural  gas prices  have  fallen to a level  which  causes the
     synthetic  gas  supply  taken  under  the  current  gasification   services
     agreement  to  be  substantially   above  market.  If  the  buyout  of  the
     gasification services agreement is approved, the combustion turbine will be
     fired with  natural gas, or with  synthetic  gas if it can be produced at a
     cost competitive with natural gas.

11.  As discussed  in the 1998 Form 10-K,  the  collective-bargaining  agreement
     with the  International  Brotherhood of Electrical  Workers Local No. 1393,
     covering approximately 1,470 employees, expired on May 1, 1999. A new labor
     agreement was ratified  April 22, 1999,  and is effective from May 1, 1999,
     through April 30, 2002.

Cinergy, CG&E, PSI, and ULH&P

12.  As  discussed  in  the  1998  Form  10-K,  during  1998,  Cinergy  and  its
     subsidiaries  adopted the  provisions  of Statement  131.  During the first
     quarter of 1999, Cinergy reorganized its reportable segments.  The business
     unit structure effective with that reorganization is described below.

     The ECBU operates and maintains,  exclusive of certain jointly-owned plant,
     all of the Company's domestic electric generation  facilities.  In addition
     to the production of electric power, all energy risk management, marketing,
     and proprietary  arbitrage trading,  with the exception of electric and gas
     retail  sales,  is  conducted  through  the ECBU.  Revenues  from  external
     customers  are  derived  from  the  ECBU's  marketing,  trading,  and  risk
     management  activities.  Intersegment revenues are derived from the sale of
     electric power to the EDBU.

     The  EDBU  plans,   constructs,   operates,  and  maintains  the  Company's
     transmission and distribution  systems and provides gas and electric energy
     to end users.  Revenues from  customers  other than end users are primarily
     derived  from the  transmission  of electric  power  through the  Company's
     transmission system.

     The CIBU  manages  the  development,  sales,  and  marketing  of  domestic,
     non-regulated  wholesale energy and  energy-related  products and services.
     Most of the CIBU's revenues are derived from the sales of such products and
     services to external,  end-use customers.  In addition,  some of the CIBU's
     activities are conducted through  joint-venture  affiliates,  including the
     construction and sale or lease of cogeneration and trigeneration facilities
     to large commercial/industrial  customers and energy management services to
     third parties.

     The IBU directs and manages  all of the  Company's  international  business
     holdings,  which include wholly-owned  subsidiaries and equity investments.
     Revenues and equity  earnings from  unconsolidated  companies are primarily
     derived from energy-related businesses.

     Transfer pricing for sales of electric energy and sales of electric and gas
     transmission  and  distribution  services  between  the  ECBU  and EDBU are
     derived from the operating utilities' retail and wholesale rate structures.



<PAGE>



<TABLE>
<CAPTION>


Financial  results by business unit for the quarters  ended March 31, 1999,  and
1998, and Total Segments Assets at March 31, 1999, and December 31, 1998, are as
follows:
<S>                   <C>           <C>           <C>        <C>         <C>                <C>        <C>             <C>       
                                                                       1999
                                                                                              All      Reconciling
                                               Cinergy Business Units                        Other     Eliminations
                          ECBU         EDBU        CIBU         IBU         Total             (1)          (2)         Consolidated
                      -------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Revenues -
  External Customers  $  503,638    $  868,367    $17,400    $ 12,874    $1,402,279         $  -        $    -          $1,402,279
Intersegment Revenues    456,536          -          -           -          456,536            -         (456,536)            -
Segment Profit (Loss) 
  Before Taxes            83,317       102,754     (2,729)     24,136       207,478          (1,305)         -             206,173

Total Segment Assets 
  at March 31, 1999   $5,081,083    $3,897,368    $46,876    $789,840    $9,815,167         $30,981     $    -          $9,846,148



                                                                            1998
                                                                                              All      Reconciling
                                               Cinergy Business Units                        Other     Eliminations
                          ECBU         EDBU        CIBU         IBU         Total             (1)          (2)         Consolidated
                      -------------------------------------------------------------------------------------------------------------
(in thousands)
Operating Revenues -
  External Customers  $  502,098    $  832,452    $13,765    $    146    $ 1,348,461       $   -        $    -          $ 1,348,461
Intersegment Revenues    434,931          -          -           -           434,931           -         (434,931)             -
Segment Profit (Loss)
  Before Taxes            91,153        90,572     (3,268)       (961)       177,496        (11,554)         -              165,942

Total Segment Assets
  at December 31, 
  1998                $5,474,428    $3,987,055    $42,107    $751,861    $10,255,451       $ 43,344     $    -          $10,298,795

<FN>
1.   The all other category represents  miscellaneous corporate items, which are
     not  allocated  to  business  units  for the  purposes  of  segment  profit
     measurement.

2.   The reconciling  eliminations category eliminates the intersegment revenues
     of the ECBU and the EDBU.
</FN>

</TABLE>





<PAGE>





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

Cinergy,  CG&E, PSI, and ULH&P 
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION Matters discussed in
this "Item 2.  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations" in "Part I. Financial  Information" reflect and elucidate
Cinergy's  corporate vision of the future and, as a part of that,  outline goals
and aspirations,  as well as specific  projections.  These goals and projections
are considered forward-looking statements and are based on management's beliefs,
as well as certain  assumptions made by management.  Forward-looking  statements
involve  risks  and  uncertainties  which  may cause  actual  results  to differ
materially from the forward-looking  statements.  In addition to any assumptions
and other factors that are referred to  specifically  in  connection  with these
statements,  other factors that could cause actual results to differ  materially
from those indicated in any forward-looking  statements  include,  among others:
factors  generally  affecting  operations,  such as unusual weather  conditions,
unscheduled  generation outages;  unusual maintenance or repairs,  unanticipated
changes  in  fuel  costs,   environmental   incidents,  or  system  constraints;
legislative and regulatory  initiatives regarding deregulation and restructuring
of  the  industry;  increased  competition  in  the  electric  and  gas  utility
environment;  challenges  related to Year 2000  readiness;  regulatory  factors;
changes in  accounting  principles or policies;  adverse  political,  legal,  or
economic conditions; changing market conditions; success of efforts to invest in
and develop new opportunities in non-traditional business;  availability or cost
of capital;  employee workforce  factors;  legal and regulatory delays and other
obstacles  associated  with  mergers,  acquisitions,  and  investments  in joint
ventures; costs and effects of legal and administrative proceedings;  changes in
legislative  requirements;  and  other  risks.  The SEC's  rules do not  require
forward-looking statements to be revised or updated, and Cinergy does not intend
to do so.

FINANCIAL CONDITION

Recent Developments

Cinergy
Acquisitions   During  the  first   quarter  of  1999,   Cinergy,   through  its
international subsidiaries,  invested an additional $41 million in international
unconsolidated subsidiaries.

Competitive Pressures

Cinergy, CG&E, PSI, and ULH&P
Ohio As discussed in the 1998 Form 10-K, electric restructuring  legislation was
reintroduced  in  1999  in both  houses  of the  Ohio  General  Assembly.  These
companion  bills  propose to give  choice to all retail  electric  customers  by
January 1, 2001. As written,  the legislation has not gained consensus among the
stakeholders.

The Ohio Senate Ways and Means  Committee has scheduled a vote on a deregulation
bill during the second  quarter of 1999 with a full senate vote  scheduled  if a
bill is reported  from  committee.  It is uncertain  whether  these efforts will
produce legislation in Ohio in 1999.



<PAGE>






Indiana As  discussed  in the 1998 Form 10-K,  legislation  by a large  group of
industrial  customers was  introduced  into the Indiana  legislature  in January
1999.  This  legislation did not pass in the 1999 session of the Indiana General
Assembly, which came to a close on April 29, 1999.

Regulatory Matters

Cinergy and PSI
Coal Contract Buyout Costs See Note 10 of the "Notes to Financial Statements" in
"Part I. Financial Information."

Environmental Issues

Cinergy, CG&E, and PSI
Ozone Transport  Rulemaking As discussed in the 1998 Form 10-K, in October 1998,
the EPA finalized its Ozone  Transport Rule (or NOx SIP Call).  It applies to 22
states in the eastern  half of the US,  including  the three states in which the
Cinergy  electric  utilities  operate,  and also  proposes  a model NOx  trading
program.  This rule  recommends  that states reduce NOx emissions from primarily
industrial and utility  sources to a certain limit by May 2003. The EPA gave the
affected states until September 30, 1999, to incorporate  utility NOx reductions
with a trading program into their SIPs. Ohio, Indiana, a number of other states,
and various industry groups,  including some of which Cinergy is a member, filed
legal  challenges  to the NOx SIP Call in late 1998.  Ohio and Indiana have also
provided  preliminary  indications that they will seek fewer NOx reductions from
the utility sector in their  implementing  regulations than the EPA has budgeted
in its rulemaking.

On April 30, 1999, the EPA made an affirmative  technical  determination  on the
February 1998 northeast state CAAA Section 126 petitions seeking to reduce ozone
in the eastern US. By  affirming  these  Section 126  petitions  the EPA makes a
finding that the named Midwest  stationary  sources  (including all of Cinergy's
facilities)  are  significantly  contributing to ozone problems in the northeast
for both the one- and  eight-hour  ozone  standard.  The EPA has stated that the
Section 126 petitions and the NOx SIP call  requirements  should be coordinated.
Therefore,  the EPA will defer fully  granting the relief sought by  petitioners
until the affected states file their proposed SIPs in September 1999.

Ambient Air  Standards  and Regional Haze As discussed in the 1998 Form 10-K, in
1997, the EPA revised the National  Ambient Air Quality  Standards for ozone and
fine particulate matter and was scheduled to finalize new regional haze rules by
the summer of 1999. It is currently anticipated that the new ozone standard will
not require  additional  utility NOx reductions  beyond those resulting from the
NOx SIP Call discussed above.

The EPA  finalized  the new regional  haze rules on April 22, 1999.  These rules
established  planning  and  emission  reduction  timelines  for states to use to
improve  visibility in national parks  throughout the US. The ultimate effect of
the new  regional  haze  rules  could be  requirements  for  newer  and  cleaner
technologies  and  additional  controls  on  conventional   particulates  and/or
reductions  in SO2 and NOx  emissions  from  utility  sources.  If more  utility
emissions reductions are required, the compliance cost could be significant. The
outcome or effects of the states' determination cannot currently be predicted.

Air  Toxics As  discussed  in the 1998 Form  10-K,  in  November  1998,  the EPA
finalized  its Mercury  ICR.  Pursuant  to the ICR,  all  generating  units must
provide detailed  information  about coal use and mercury  content.  The EPA has
since selected about 100 generating units for one-time stack sampling, including
Cinergy's Gibson Unit No. 3 and the Wabash River Repowering Project.  The EPA is
planning  to make  its  regulatory  determination  on the  need  for  additional
regulation  by the fourth  quarter of 2000. If more air toxics  regulations  are
issued, the compliance cost could be significant.  The outcome or effects of the
EPA's determination cannot currently be predicted.

MGP  Sites  See  Note 6 of the  "Notes  to  Financial  Statements"  in  "Part I.
Financial Information."

Accounting Issues

Cinergy, CG&E, PSI, and ULH&P
New  Accounting  Standards See Note 7 of the "Notes to Financial  Statements" in
"Part I. Financial Information."

Market Risk Sensitive Instruments and Positions

Cinergy, CG&E, and PSI
Energy  Commodities  Sensitivity  The Company  markets  and trades  electricity,
natural  gas,  and  other   energy-related   products.   The  Company   utilizes
over-the-counter  forward  and option  contracts  for the  purchase  and sale of
electricity and also trades exchange-traded futures contracts. See Notes 4 and 5
of the "Notes to Financial  Statements" in "Part I. Financial  Information"  for
the  Company's  accounting  policies  for certain  derivative  instruments.  The
Company's  market  risks  have not  changed  materially  from the  market  risks
reported in the 1998 Form 10-K.

Cinergy
Exchange  Rate   Sensitivity  The  Company  utilizes  foreign  exchange  forward
contracts and currency swaps to hedge certain of its net  investments in foreign
operations. See Notes 4 and 5 of the "Notes to Financial Statements" in "Part I.
Financial  Information"  for  the  Company's  accounting  policies  for  certain
derivative  instruments.  The Company's market risks have not changed materially
from the market risks reported in the 1998 Form 10-K.

Cinergy, CG&E, PSI, and ULH&P
Interest  Rate  Sensitivity  The  Company's  net exposure to changes in interest
rates primarily  consists of debt instruments with floating  interest rates that
are benchmarked to various market indices.  To manage the Company's  exposure to
fluctuations  in  interest  rates  and  to  lower  funding  costs,  the  Company
constantly  evaluates the use of, and has entered into, interest rate swaps. See
Notes 4 and 5 of the  "Notes  to  Financial  Statements"  in "Part I.  Financial
Information"  for the  Company's  accounting  policies  for  certain  derivative
instruments.  The Company's  market risks have not changed  materially  from the
market risks reported in the 1998 Form 10-K.

CAPITAL RESOURCES AND REQUIREMENTS

Cinergy, CG&E, PSI, and ULH&P
Long-term Debt For  information  regarding  recent  issuances and redemptions of
long-term  debt  securities,  see  Notes  2 and 3 of  the  "Notes  to  Financial
Statements" in "Part I. Financial Information."

As of April 30, 1999, CG&E and PSI have remaining state regulatory authority for
long-term debt issuance of $200 million and $30 million, respectively.




<PAGE>





Cinergy, CG&E, PSI, and ULH&P
Short-term  Debt  Obligations  representing  notes payable and other  short-term
obligations (excluding notes payable to affiliated companies) at March 31, 1999,
were as follows:

Cinergy

                                  Established
                                     Lines         Outstanding
                                          (in millions)
Cinergy
  Committed lines
    Acquisition line                $  160          $  160
    Revolving line                     600              -
  Commercial paper                      -              336
  Uncommitted line                      45              83*
Utility subsidiaries
  Committed lines                      215              -
  Uncommitted lines                    410             180
  Pollution control notes              267             267
Non-utility subsidiary                 130              27
                                    ------          ------

Total                               $1,827          $1,053

* Excess  over  Established  Line  represents  amount  sold by  dealers to other
investors.

CG&E

                                  Established
                                     Lines         Outstanding
                                          (in millions)

Committed lines                      $ 85             $ -
Uncommitted lines                     215              105
Pollution control notes               184              184
                                     ----             ----

Total                                $484             $289

PSI
                                  Established
                                     Lines         Outstanding
                                          (in millions)

Committed lines                      $130             $ -
Uncommitted lines                     195               75
Pollution control notes                83               83
                                     ----             ----

Total                                $408             $158

Cinergy, CG&E, and PSI
Cinergy's  committed lines are comprised of an acquisition  line and a revolving
line. The established  revolving line also provides credit support for Cinergy's
commercial paper program, which is limited to a maximum principal amount of $400
million.  The  proceeds  from the  commercial  paper sales were used for general
corporate purposes.

The  established  committed  lines  for CG&E and PSI each  include  $75  million
designated  as backup for certain of the  uncommitted  lines at March 31,  1999.
CG&E and PSI also  have the  capacity  to issue  commercial  paper  that must be
supported by committed  lines of the  respective  company.  Neither CG&E nor PSI
issued commercial paper during the first quarter of 1999.

Both CG&E and PSI have issued variable rate pollution control notes.  Holders of
these pollution  control notes have the right to put their notes on any business
day.  Accordingly,  these  issuances are reflected in the  Consolidated  Balance
Sheets as "Notes payable and other short-term obligations."

Cinergy
Global Resources  established a $100 million revolving credit agreement in 1998,
which was due to expire in March 1999 and has been extended to June 29, 1999.

Cinergy, CG&E, PSI, and ULH&P
Year 2000 The Year 2000 issue generally exists because many computer systems and
applications,   including  those  embedded  in  equipment  and  facilities,  use
two-digit rather than four-digit date fields to designate an applicable year. As
a  result,  the  systems  and  applications  may not  properly  recognize  dates
including  and beyond  the year 2000 or  accurately  process  data in which such
dates are included, potentially causing data miscalculations and inaccuracies or
operational   malfunctions  and  failures,   which  could  materially  affect  a
business's financial condition, results of operations, and cash flows.

Cinergy has established a centrally-managed,  company-wide initiative,  known as
the Cinergy Year 2000 Readiness Program, to identify, evaluate, and address Year
2000 issues. The Cinergy Year 2000 Readiness Program,  which began in the fourth
quarter of 1996,  is generally  focused on three  elements  that are integral to
this  initiative:   (1)  business  continuity,  (2)  risk  management,  and  (3)
regulatory compliance.  Business continuity includes providing reliable electric
and gas supply and service in a safe and  cost-effective  manner.  This  element
encompasses mission-critical generation,  transmission, and distribution systems
and related infrastructure,  as well as operational and financial IT systems and
applications,  end-user  computing  resources,  and  building  systems  (such as
security, elevator, and heating and cooling systems). Risk management includes a
review of the Year 2000 readiness efforts of Cinergy's critical  suppliers,  key
customers  and other  principal  business  partners,  and, as  appropriate,  the
development of joint business support,  contingency  plans, and the inclusion of
Year 2000  concerns as a regular  part of the due  diligence  process in any new
business venture.  Regulatory compliance includes communications with regulatory
agencies, other utilities, and various industry groups. While this initiative is
broad in scope,  it has been  structured to identify and prioritize  efforts for
mission-critical  electric  and  gas  systems  and  services  and  key  business
partners.

Under the Cinergy Year 2000 Readiness Program,  Cinergy has established a target
date of June 30, 1999, for the remediation  and testing of its  mission-critical
generation,  transmission,  and  distribution  systems  (gas and  electric).  An
innovative  remediation and testing effort which Cinergy has initiated  involves
operating several electric-generating units with post Year 2000 dates. Cinergy's
experience  has been that those  units have  continued  to operate  without  any
material  adverse result  relating to a Year 2000 issue.  Cinergy's  progress to
date ranges from  approximately  95% regarding IT systems to  approximately  87%
regarding assessment of critical suppliers.

Cinergy has also reviewed its existing contingency and business continuity plans
and  modified  them in light of the Year 2000  issue.  Contingency  planning  to
maintain  and  restore  service  in the event of  natural  and  other  disasters
(including software- and  hardware-related  problems) has been part of Cinergy's
standard  operation  for many years,  and  Cinergy is working to  leverage  this
experience  in the  review  of  existing  plans  to  address  Year  2000-related
challenges. These reviews have assessed the potential for business disruption in
various scenarios, including the most reasonably likely worst-case scenario, and
to provide for key operational back up, recovery, and restoration alternatives.

Cinergy  cannot  guarantee  that third  parties on whom it depends for essential
goods and services (those where the interruption of the supply of such goods and
services could lead to issues involving the safety of employees,  customers,  or
the public; the continued reliable delivery of gas and/or  electricity;  and the
ability to comply  with  applicable  laws or  regulations)  will  convert  their
mission-critical  systems and processes in a timely manner.  Failure or delay by
any of these third parties could  significantly  disrupt business.  However,  to
address this issue,  Cinergy has established a supplier compliance program,  and
is working with its critical suppliers in an effort to minimize such risks.

In addition,  Cinergy is  coordinating  its findings and other issues with other
utilities and various industry groups via the Electric Power Research  Institute
Year  2000  Embedded  Systems  Project  and the Year 2000  Readiness  Assessment
Program of the NERC, acting at the request of the DOE. The DOE has asked NERC to
report on the  integrity  of the  transmission  system for North  America and to
coordinate and assess the  preparation of the electric  systems in North America
for the Year 2000.  NERC  submitted  its  initial  quarterly  status  report and
coordination  plan to the DOE in September 1998, and a second  quarterly  status
report for the fourth quarter of 1998 was submitted on January 11, 1999. A third
quarterly status report for the first quarter of 1999 was submitted on April 30,
1999.

Cinergy currently  estimates that the total cost for the inventory,  assessment,
remediation,  testing, and upgrading of its systems as a result of the Year 2000
effort is approximately $13 million.  Approximately $12 million in expenses have
been incurred  through March 31, 1999,  for such things as external  labor,  for
hardware and software  upgrades,  and for Cinergy  employees  who are  dedicated
full-time  to the  Cinergy  Year 2000  Readiness  Program.  The  timing of these
expenses may vary and is not  necessarily  indicative  of  readiness  efforts or
progress to date.  Cinergy  anticipates that a portion of its Year 2000 expenses
will not be incremental  costs,  but rather,  will represent the redeployment of
existing IT  resources.  Since its  formation,  Cinergy has  incurred,  and will
continue to incur,  significant  capital  improvement  costs  related to planned
system upgrades or replacements required in the normal course of business. These
costs have not been accelerated as a result of the Year 2000 issue.

The above information is based on Cinergy's  current best estimates,  which were
derived using numerous assumptions of future events,  including the availability
and  future  costs of certain  technological  and other  resources,  third-party
modification  actions,  and other factors.  Given the complexity of these issues
and possible  unidentified  risks, actual results may vary materially from those
anticipated  and  discussed  above.  Specific  factors  that  might  cause  such
differences  include,  among  others,  the  ability  to locate and  correct  all
affected   computer  code,  the  timing  and  success  of  remedial  efforts  of
third-party suppliers, and similar uncertainties.

The  above  information  is a Year 2000  Readiness  Disclosure  pursuant  to the
Federal Year 2000 Information and Readiness Disclosure Act.

Cinergy
Other  Commitments  At March 31,  1999,  Cinergy  had  issued  $297  million  in
guarantees  primarily related to the energy marketing and trading  activities of
its  subsidiaries  and  affiliates.  In addition,  Cinergy had  guaranteed  $258
million of the debt securities of its subsidiaries and affiliates.



<PAGE>





RESULTS OF OPERATIONS

Cinergy, CG&E, PSI, and ULH&P
Reference  is made to  "Item 1.  Financial  Statements"  in  "Part I.  Financial
Information."


       ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Cinergy, CG&E, PSI, and ULH&P
Reference  is made to the "Market  Risk  Sensitive  Instruments  and  Positions"
section in "Item 2. Management's  Discussion and Analysis of Financial Condition
and Results of Operations" in "Part I. Financial  Information" and Notes 4 and 5
of the "Notes to Financial Statements" in "Part I. Financial Information."




<PAGE>





                           PART II. OTHER INFORMATION

                            ITEM 1. LEGAL PROCEEDINGS

Cinergy, CG&E, and PSI
Manufactured Gas Plant Sites

See  Note  6 of the  "Notes  to  Financial  Statements"  in  Part  I.  Financial
Information.


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


Cinergy
The  annual  meeting of  shareholders  of Cinergy  was held April 21,  1999,  in
Cincinnati, Ohio.

At the meeting,  six Class II directors  were elected to the board of Cinergy to
serve three-year terms, expiring in 2002, as set forth below:

                                   Votes                           Votes
       Class II                     For                          Withheld    

Melvin Perelman, Ph.D.          128,436,454                      2,555,756
Thomas E. Petry                 128,566,730                      2,425,480
Jackson H. Randolph             128,212,529                      2,779,681
Mary L. Schapiro                128,329,336                      2,662,874
Philip R. Sharp, Ph.D.          128,557,852                     2,434,358
Dudley S. Taft                  128,586,398                      2,405,812

Also at the meeting,  the following matters were submitted to a vote of security
holders:

                                            Votes         Votes         Votes
                  Item                       For         Against       Abstain

Approval of Amended and Restated Cinergy
  Corp. Retirement Plan for Directors    107,613,574    21,666,413    1,712,217
Approval of Cinergy Corp. Directors'
  Equity Compensation Plan               112,705,936    16,438,145    1,848,122
Adoption of Amendment to Article III,
  Section 3.1, of the Company's By-laws  127,811,378     4,740,599    1,979,187

CG&E
(a)  In lieu of the annual  meeting of  shareholders  of CG&E, a resolution  was
     duly  adopted via  unanimous  written  consent of CG&E's sole  shareholder,
     effective April 20, 1999.

(b)  The following  members of the Board of Directors were elected via unanimous
     written  consent  of the sole  shareholder  of CG&E,  in lieu of its annual
     meeting, for one-year terms expiring in 2000:

                                Jackson H. Randolph
                                James E. Rogers
                                James L. Turner

PSI
(a)  The annual  meeting of  shareholders  of PSI was held  April 21,  1999,  in
     Cincinnati, Ohio.

(b)  Proxies were not  solicited for the annual  meeting,  at which the Board of
     Directors was re-elected in its entirety (see (c) below).

(c)  The following members of the Board of Directors were unanimously re-elected
     at the annual meeting for one-year terms expiring in 2000:

                                James K. Baker
                                Michael G. Browning
                                John A. Hillenbrand II
                                John M. Mutz
                                Jackson H. Randolph
                                James E. Rogers

ULH&P
Omitted pursuant to Instruction H(2)(b).


                            ITEM 5. OTHER INFORMATION

Cinergy and PSI
On April 20, 1999,  the Company  announced that John M. Mutz will retire May 31,
1999, as president of PSI. Mr. Mutz has served as president of PSI since October
1993.


                    ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits  identified  with a pound sign (#) are being filed herewith by the
     registrant  identified in the exhibit discussion below and are incorporated
     herein  by  reference  with  respect  to any other  designated  registrant.
     Exhibits not so identified are filed herewith:

       Exhibit
     Designation                 Nature of Exhibit                    

Cinergy
     3-a  By-laws of Cinergy, as amended on April 21, 1999.

     4-a  Indenture  between Cinergy and Fifth Third Bank, as Trustee,  dated as
          of April 15, 1999.

Cinergy and PSI
     4-b  #Fifty-second  Supplemental Indenture between PSI and LaSalle National
          Bank, as Trustee,  dated as of April 30, 1999. (Exhibit to PSI's March
          31, 1999, Form 10-Q in File No. 1-3543.)

     4-c  #Sixth  Supplemental  Indenture  between PSI and Fifth Third Bank,  as
          Trustee, dated as of April 30, 1999. (Exhibit to PSI's March 31, 1999,
          Form 10-Q in File No. 1-3543.)

Cinergy, CG&E, and PSI
     10-a #First Amended and Restated Employment  Agreement dated March 1, 1999,
          between  Cinergy,  Cinergy  Services,  Inc.,  CG&E, PSI, and Cheryl M.
          Foley.  (Exhibit to Cinergy's  March 31,  1999,  Form 10-Q in File No.
          1-11377.)



<PAGE>





       Exhibit
     Designation                    Nature of Exhibit

     10-b #First Amended and Restated Employment  Agreement dated March 1, 1999,
          between  Cinergy,  Cinergy  Services,  Inc., CG&E, PSI, and William J.
          Grealis.  (Exhibit to Cinergy's  March 31, 1999, Form 10-Q in File No.
          1-11377.)

     10-c #Employment  Agreement dated July 1, 1998,  between  Cinergy,  Cinergy
          Services,  Inc.,  CG&E,  PSI,  and M.  Stephen  Harkness.  (Exhibit to
          Cinergy's March 31, 1999, Form 10-Q in File No. 1-11377.)

     10-d #First Amended and Restated Employment  Agreement dated March 1, 1999,
          between  Cinergy,  Cinergy  Services,  Inc.,  CG&E, PSI, and Donald B.
          Ingle, Jr. (Exhibit to Cinergy's March 31, 1999, Form 10-Q in File No.
          1-11377.)

     10-e #First Amended and Restated Employment  Agreement dated March 1, 1999,
          between Cinergy,  Cinergy Services,  Inc., CG&E, PSI, and Madeleine W.
          Ludlow.  (Exhibit to Cinergy's  March 31, 1999,  Form 10-Q in File No.
          1-11377.)

     10-f #Employment  Agreement dated July 1, 1998,  between  Cinergy,  Cinergy
          Services,  Inc.,  CG&E,  PSI,  and  William L.  Sheafer.  (Exhibit  to
          Cinergy's March 31, 1999, Form 10-Q in File No. 1-11377.)

     10-g #Employment  Agreement dated July 1, 1998,  between  Cinergy,  Cinergy
          Services, Inc., CG&E, PSI, and John P. Steffen.  (Exhibit to Cinergy's
          March 31, 1999, Form 10-Q in File No. 1-11377.)

     10-h #Employment  Agreement  dated  February  16,  1999,  between  Cinergy,
          Cinergy  Services,  Inc., CG&E, PSI, and James L. Turner.  (Exhibit to
          Cinergy's March 31, 1999, Form 10-Q in File No. 1-11377.)

     10-i #First Amended and Restated Employment  Agreement dated March 1, 1999,
          between  Cinergy,  Cinergy  Services,  Inc., CG&E, PSI, and Charles J.
          Winger.  (Exhibit to Cinergy's  March 31, 1999,  Form 10-Q in File No.
          1-11377.)

     10-j #First Amended and Restated Employment  Agreement dated March 1, 1999,
          between  Cinergy,  Cinergy  Services,  Inc.,  CG&E,  PSI, and Larry E.
          Thomas.  (Exhibit to Cinergy's  March 31, 1999,  Form 10-Q in File No.
          1-11377.)

Cinergy, CG&E, PSI, and ULH&P
     27   Financial Data Schedules (included in electronic submission only)



<PAGE>






The following  reports on Form 8-K were filed during the quarter ended March 31,
1999.

   Date of Report                         Item Filed                     

Cinergy

December 31, 1998     Item 5.  Other Events
                      Item 7.  Financial Statements and Exhibits




<PAGE>




                                   SIGNATURES

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted pursuant to such rules and regulations,  although
Cinergy,  CG&E, PSI, and ULH&P believe that the disclosures are adequate to make
the information presented not misleading.  In the opinion of Cinergy, CG&E, PSI,
and ULH&P,  these  statements  reflect all  adjustments  (which include  normal,
recurring  adjustments)  necessary to reflect the results of operations  for the
respective periods.  The unaudited statements are subject to such adjustments as
the annual audit by independent public accountants may disclose to be necessary.

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrants  have duly  caused this report to be signed by an
officer  and the chief  accounting  officer on their  behalf by the  undersigned
thereunto duly authorized.

                                                  CINERGY CORP.
                                        THE CINCINNATI GAS & ELECTRIC COMPANY
                                                 PSI ENERGY, INC.
                                       THE UNION LIGHT, HEAT AND POWER COMPANY
                                                   Registrants






Date:  May 13, 1999                           /s/Bernard F. Roberts
                                      ---------------------------------------
                                                 Bernard F. Roberts
                                              Duly Authorized Officer
                                                        and
                                              Chief Accounting Officer