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

# FORM 10-Q

(Mark One)

|(X) | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

or

|(   ) | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from____________ to ____________
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|CommissionFile Number | Registrant, State of Incorporation,Address and Telephone Number                                                            | I.R.S. EmployerIdentification No.
|--------------------- | -------------------------------------------------------------------------------------------------------------------------- | ---------------------------------
|                      |                                                                                                                            |                                  
|1-11377               | CINERGY CORP.(A Delaware Corporation)139 East Fourth StreetCincinnati, Ohio 45202
(513) 287-1099                           | 31-1385023                       
|                      |                                                                                                                            |                                  
|1-1232                | THE CINCINNATI GAS & ELECTRIC COMPANY(An Ohio Corporation)139 East Fourth Street
Cincinnati, Ohio 45202(513) 287-1099      | 31-0240030                       
|                      |                                                                                                                            |                                  
|1-3543                | PSI ENERGY, INC.(An Indiana Corporation)1000 East Main StreetPlainfield, Indiana 46168
(513) 287-1099                      | 35-0594457                       
|                      |                                                                                                                            |                                  
|2-7793                | THE UNION LIGHT, HEAT AND POWER COMPANY(A Kentucky Corporation)139 East Fourth Street
Cincinnati, Ohio 45202(513) 287-1099 | 31-0473080                       

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 specified in General Instruction H(2) of Form 10-Q.

As of October 31, 2000, shares of Common Stock outstanding for each registrant were as listed:

|Registrant                              | Description                                   | Shares     
|--------------------------------------- | --------------------------------------------- | -----------
|                                        |                                               |            
|Cinergy Corp.                           | Par value $.01 per share                      | 158,967,661
|                                        |                                               |            
|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    

---

### TABLE OF CONTENTS

### ItemNumber

### PART 1 FINANCIAL INFORMATION

1          Financial Statements
                 Cinergy Corp.
                    Consolidated Statements of Income
                    Consolidated Balance Sheets
                    Consolidated Statements of Changes in Common Stock Equity
                    Consolidated Statements of Cash Flows

                 The Cincinnati Gas & Electric Company
                    Consolidated Statements of Income and Comprehensive Income
                    Consolidated Balance Sheets
                    Consolidated Statements of Cash Flows

                 PSI Energy, Inc.
                    Consolidated Statements of Income and Comprehensive Income
                    Consolidated Balance Sheets
                    Consolidated Statements of Cash Flows

                 The Union Light, Heat and Power Company
                    Statements of Income and Comprehensive Income
                    Balance Sheets
                    Statements of Cash Flows

             Notes to Financial Statements

             Cautionary Statements Regarding Forward-Looking Information

  2         Managements Discussion and Analysis of Financial Condition and                Results of
Operations
                 Introduction
                 Liquidity
                 Capital Resources
                 2000 Quarterly Results of Operations- Historical
                 2000 Year to Date Results of Operations- Historical
                 2000 Results of Operations- Future

  3         Quantitative and Qualitative Disclosures About Market Risk

### PART II OTHER INFORMATION

1         Legal Proceedings

  6         Exhibits and Reports on Form 8-K

             Signatures

---

`CINERGY CORP.
                                            CONSOLIDATED STATEMENTS OF INCOME



                                                 Quarter Ended                        Year To Date
                                                  September 30                        September 30
                                              2000              1999              2000             1999
                                                (dollars in thousands, except per share amounts)
                                                                   (unaudited)
Operating Revenues
   Electric                             $   1,599,468  $     1,396,837    $    3,916,518  $     3,307,462
   Gas                                        677,917          375,837         1,668,272        1,125,812
   Other                                       22,400            9,524            67,586           26,602
                                               ------            -----            ------           ------
Total Operating Revenues                    2,299,785        1,782,198         5,652,376        4,459,876


Operating Expenses
   Fuel and purchased and
     exchanged power                        1,048,189          891,351         2,249,519        1,775,586
   Gas purchased                              634,917          349,259         1,490,868          977,174
   Operation and maintenance                  259,950          245,330           795,453          726,310
   Depreciation and amortization               94,066           88,734           277,512          263,412
   Taxes other than income taxes               66,892           70,077           201,481          208,688
                                               ------           ------           -------          -------
Total Operating Expenses                    2,104,014        1,644,751         5,014,833        3,951,170


Operating Income                              195,771          137,447           637,543          508,706


Equity in Earnings of Unconsolidated
   Subsidiaries                                   165              372             6,340           58,076
Gain on Sale of Investment in
   Unconsolidated Subsidiary                        -           99,272                 -           99,272
Miscellaneous - Net                            12,073            8,729            12,187           (2,965)
Interest Expense                               60,166           56,404           164,709          177,957


Income Before Taxes                           147,843          189,416           491,361          485,132


Income Taxes                                   52,959           66,489           180,285          173,173
Preferred Dividend Requirements
   of Subsidiaries                              1,070            1,364             3,708            4,093
                                                =====            =====             =====            =====
Net Income                              $      93,814  $       121,563    $      307,368  $       307,866


Average Common Shares Outstanding
                                              158,938          158,907           158,928          158,844


Earnings Per Common Share
   Net Income                           $        0.59  $          0.77     $        1.93  $          1.94


Earnings Per Common Share-Assuming
    Dilution
   Net income                           $        0.58   $         0.76     $        1.92  $          1.93


Dividends Declared Per Common Share
                                        $        0.45   $         0.45     $        1.35  $          1.35



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

`CINERGY CORP.
                                                CONSOLIDATED BALANCE SHEETS

ASSETS
                                                                September 30                December 31
                                                                     2000                       1999
                                                                 (unaudited)
                                                                          (dollars in thousands)

Current Assets
   Cash and cash equivalents                                $      121,486              $       81,919
   Restricted deposits                                                 781                         628
   Notes receivable                                                 34,626                         481
   Accounts receivable less accumulated provision for
      doubtful accounts of $26,211 at September 30, 2000,
      and $26,811 at December 31, 1999                           1,358,987                     706,068
   Materials, supplies, and fuel - at average cost                 183,841                     205,749
   Prepayments and other                                           103,601                      77,701
   Energy risk management current assets                           376,025                     131,145
                                                                   -------                     -------
                Total Current Assets                             2,179,347                   1,203,691


Utility Plant - Original Cost
   In service
     Electric                                                    9,602,010                   9,414,744
     Gas                                                           849,027                     824,427
     Common                                                        210,826                     189,124
                                                                   -------                     -------
        Total                                                   10,661,863                  10,428,295
   Accumulated depreciation                                      4,489,017                   4,259,877
                                                                 ---------                   ---------
        Total                                                    6,172,846                   6,168,418
   Construction work in progress                                   346,759                     249,054
                                                                   -------                     -------
                Total Utility Plant                              6,519,605                   6,417,472


Other Assets
   Regulatory assets                                             1,020,328                   1,055,012
   Investments in unconsolidated subsidiaries                      481,962                     358,853
   Energy risk management non-current assets                        74,383                      26,624
   Other                                                           677,406                     555,296
                                                                   -------                     -------
                Total Other Assets                               2,254,079                   1,995,785


Total Assets                                                $   10,953,031              $    9,616,948
                                                            ==============              ==============



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

`CINERGY CORP.
                                                 CONSOLIDATED BALANCE SHEETS



LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                  September 30               December 31
                                                                      2000                      1999
                                                                   (unaudited)
                                                                           (dollars in thousands)

Current Liabilities
   Accounts payable                                            $     1,317,180           $     734,937
   Accrued taxes                                                       250,906                 219,266
   Accrued interest                                                     62,832                  49,354
   Long-term debt due within one year                                   21,716                  31,000
   Notes payable and other short-term obligations                      818,629                 550,194
   Energy risk management current liabilities                          424,955                 126,682
   Other                                                                87,674                  76,774
                                                                        ------                  ------
               Total Current Liabilities                             2,983,892               1,788,207


Non-Current Liabilities
   Long-term debt                                                    3,033,059               2,989,242
   Deferred income taxes                                             1,174,500               1,174,818
   Unamortized investment tax credits                                  140,457                 147,550
   Accrued pension and other post-retirement
     benefit costs                                                     401,992                 355,917
   Energy risk management non-current liabilities                      123,337                 132,041
   Other                                                               267,524                 282,855
                                                                       -------                 -------
               Total Non-Current Liabilities                         5,140,869               5,082,423


Total Liabilities                                                    8,124,761               6,870,630


Cumulative Preferred Stock of Subsidiaries
   Not subject to mandatory redemption                                  62,834                  92,597


Common Stock Equity
   Common Stock - $0.01 par value;
     authorized shares  -  600,000,000; outstanding shares-
     158,967,661 at September 30, 2000 and 158,923,399 at
     December 31, 1999                                                   1,590                   1,589
   Paid-in capital                                                   1,616,456               1,597,554
   Retained earnings                                                 1,158,328               1,064,319
   Accumulated other comprehensive income (loss)                       (10,938)                 (9,741)
                                                                       -------                  ------
               Total Common Stock Equity                             2,765,436               2,653,721


Commitments and Contingencies (Note 4)

Total Liabilities and Shareholders' Equity                     $    10,953,031           $   9,616,948
                                                               ===============           =============




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

`CINERGY CORP.
                                        CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY

                                                                                        Accumulated
                                                                                           Other           Total
                                                 Common    Paid-in       Retained      Comprehensive   Common Stock
                                                 Stock     Capital       Earnings      Income/(Loss)      Equity
                                                                        (dollars in thousands)
                                                                                (unaudited)

Quarter Ended September 30, 2000

Balance at July 1, 2000                        $   1,589 $  1,612,572  $    1,135,703  $       (5,316) $   2,744,548
Comprehensive income:
   Net income                                          -            -          93,814               -         93,814
   Other comprehensive income (loss),
     net of tax effect of($2,954)
      Foreign currency translation adjustment          -            -               -          (5,466)        (5,466)
      Unrealized gain (loss) on grantor and
       rabbi trusts                                    -            -               -            (156)          (156)
                                                                                                 ----           ----
   Total comprehensive income                          -            -               -               -         88,192
Issuance of 44,262 shares of common stock-net          1        1,769               -               -          1,770
Treasury shares reissued                               -        2,115               -               -          2,115
Dividends on common stock (see page 5 for
   per share amounts)                                  -            -         (71,516)              -        (71,516)
Other                                                  -            -             327               -            327
                                                 -------      -------         -------         -------        -------
Ending balance at September 30, 2000           $   1,590 $  1,616,456  $    1,158,328  $      (10,938) $   2,765,436
                                               ========= ============  ==============  ==============  =============


Quarter Ended September 30, 1999

Balance at July 1, 1999                        $   1,589 $  1,602,608  $      988,598  $      (10,359) $   2,582,436
Comprehensive income:
  Net income                                           -            -         121,563               -        121,563
  Other comprehensive income (loss), net of
    tax effect of ($683)
     Foreign currency translation adjustment           -            -               -           3,774          3,774
     Minimum pension liability adjustment              -            -               -              85             85
     Unrealized gain (loss) on grantor trust           -            -               -            (819)          (819)
     Unrealized gain (loss) on securities
       available for sale                              -            -               -            (237)          (237)
                                                                                                                ----
   Total comprehensive income                          -            -               -               -        124,366
Issuance of 31,043 shares of common stock-net          -        2,216               -               -          2,216
Treasury shares reissued                               -          850               -               -            850
Dividends on common stock (see page 5 for
   per share amounts)                                  -            -         (71,499)              -        (71,499)
Other                                                  -            -              (2)              -             (2)
                                                 -------      -------         -------         -------        -------
Ending balance at September 30, 1999           $   1,589 $  1,605,674  $    1,038,660  $       (7,556) $   2,638,367
                                               ========= ============  ==============  ==============  =============



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

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

Nine Months Ended September 30, 2000

Balance at January 1, 2000                      $   1,589 $   1,597,554   $ 1,064,319   $        (9,741)$  2,653,721
Comprehensive income:
   Net income                                           -             -       307,368                 -      307,368
  Other comprehensive income (loss), net of
    tax effect of($2,927)
     Foreign currency translation adjustment            -             -             -            (1,180)      (1,180)
     Unrealized gain (loss) on grantor and
       rabbi trusts                                     -             -             -               (17)         (17)
                                                                                                                 ---
   Total comprehensive income                           -             -             -                 -      306,171
Issuance of 44,262 share of common stock-net            1         1,769             -                 -        1,770
Treasury shares reissued                                -        17,133             -                 -       17,133
Dividends on common stock (see page 5 for per
   share amounts)                                       -             -      (213,707)                -     (213,707)
Other                                                   -             -           348                 -          348
                                                  -------       -------       -------           -------      -------
Ending balance at September 30, 2000            $   1,590 $   1,616,456   $ 1,158,328   $       (10,938)$  2,765,436
                                                ========= =============   ===========   =============== ============


Nine Months Ended September 30, 1999

Balance at January 1, 1999                      $   1,587 $   1,595,237   $   945,214   $          (807)$  2,541,231
Comprehensive income:
  Net income                                            -             -       307,866                 -      307,866
  Other comprehensive income (loss), net of
    tax effect of $2,409
     Foreign currency translation adjustment            -             -             -            (6,258)      (6,258)
     Minimum pension liability adjustment               -             -             -                85           85
     Unrealized gain (loss) on grantor trust            -             -             -              (339)        (339)
     Unrealized gain (loss) on securities
       available for sale                               -             -             -              (237)        (237)
                                                                                                                ----
   Total comprehensive income                           -             -             -                 -      301,117
Issuance of 252,678 shares of common stock-net          2         6,493             -                 -        6,495
Treasury shares purchased                               -          (233)            -                 -         (233)
Treasury shares reissued                                -         4,177             -                 -        4,177
Dividends on common stock (see page 5 for per
   share amounts)                                       -             -      (214,413)                -     (214,413)
Other                                                   -             -            (7)                -           (7)
                                                  -------       -------       -------           -------      -------
Ending balance at September 30, 1999            $   1,589 $   1,605,674   $ 1,038,660   $        (7,556)$  2,638,367
                                                ========= =============   ===========   =============== ============



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

`CINERGY CORP.
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                       Year to Date
                                                                       September 30
                                                                 2000                  1999
                                                                  (dollars in thousands)
                                                                       (unaudited)
Operating Activities
   Net income                                             $     307,368           $    307,866
   Items providing or (using) cash currently:
     Depreciation and amortization                              277,512              1,263,412
     Deferred income taxes and investment tax
       credits-net                                                3,414                  4,283
     Gain on sale of investment in unconsolidated
       subsidiaries                                                   -                (99,272)
     Unrealized (gain) loss from energy risk
       management activities                                     (3,070)               (51,397)
     Equity in earnings of unconsolidated subsidiaries           (6,340)               (46,059)
     Allowance for equity funds used during construction         (4,667)                (2,841)
     Regulatory assets-net                                       (5,111)              (221,470)
     Changes in current assets and current liabilities:
       Restricted deposits                                         (153)                 2,162
       Accounts and notes receivable, net of reserves on
          receivables sold                                     (692,256)              (187,136)
       Materials, supplies, and fuel                             21,908                 (6,184)
       Accounts payable                                         582,243                266,570
       Accrued taxes and interest                                45,118                  6,228
     Other items-net                                           (100,535)               263,840
                                                               --------                -------

               Net cash provided by operating activities        425,431                500,002
                                                                =======                =======

Financing Activities
   Change in short-term debt                                    268,435               (539,920)
   Issuance of long-term debt                                   126,420                541,915
   Redemption of long-term debt                                 (95,570)              (528,900)
   Retirement of preferred stock of subsidiaries                (29,392)                   (34)
   Issuance of common stock                                       1,770                  6,495
   Dividends on common stock                                   (213,707)              (214,413)
                                                               --------               --------

               Net cash provided by (used in) financing
                    activities                                   57,956               (734,857)
                                                                 ======               ========

Investing Activities
   Construction expenditures (less allowance for equity
     funds used during construction)                           (332,922)              (262,719)
   Investments in unconsolidated subsidiaries                  (110,898)              (235,363)
   Sale of investment in unconsolidated subsidiary                    -                690,269
                                                               --------               --------
               Net cash provided by (used in)
                    investing activities                       (443,820)               192,187
                                                               ========                =======

Net increase (decrease) in cash and cash equivalents             39,567                (42,668)

Cash and cash equivalents at beginning of period                 81,919                100,154
                                                                 ------                -------

Cash and cash equivalents at end of period                $     121,486           $     57,486
                                                          =============           ============



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

`THE CINCINNATI GAS & ELECTRIC COMPANY
                                 CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


                                                    Quarter Ended                       Year to Date
                                                     September 30                       September 30
                                                  2000            1999               2000              1999
                                                                (dollars in thousands)
                                                                     (unaudited)
Operating Revenues
   Electric                               $     791,655      $    699,981    $     1,976,646   $     1,658,604
   Gas                                           48,733            38,510            286,793           255,855
                                                -------           -------          ---------         ---------
Total Operating Revenues                        840,388           738,491          2,263,439         1,914,459



Operating Expenses
   Fuel and purchased and exchanged
     power                                      522,958           411,132          1,102,486           826,258
   Gas purchased                                 21,534            14,254            135,396           113,560
   Operation and maintenance                    110,860           103,150            338,945           311,527
   Depreciation and amortization                 52,872            51,395            156,670           152,691
   Taxes other than income taxes                 51,504            54,201            155,326           163,184
                                                -------           -------          ---------         ---------
Total Operating Expenses                        759,728           634,132          1,888,823         1,567,220


Operating Income                                 80,660           104,359            374,616           347,239


Miscellaneous - Net                                 671              (287)              (340)             (911)
Interest Expense                                 24,400            25,090             73,873            74,068


Income Before Taxes                              56,931            78,982            300,403           272,260


Income Taxes                                     17,835            30,830            109,462           104,949
                                                -------           -------          ---------         ---------
Net Income                                $      39,096      $     48,152    $       190,941   $       167,311

Preferred Dividend Requirement                      211               213                636               641
                                                -------           -------          ---------         ---------
Net Income Applicable to Common Stock     $      38,885      $     47,939    $       190,305   $       166,670


Net Income                                $      39,096      $     48,152    $       190,941   $       167,311

Other Comprehensive Income (Loss),
   Net of Tax                                         -                 -                  -                 -
                                                -------           -------          ---------         ---------
Comprehensive Income                      $      39,096      $     48,152    $       190,941   $       167,311
                                          =============      ============    ===============   ===============





The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.`

`THE CINCINNATI GAS & ELECTRIC COMPANY
                                            CONSOLIDATED BALANCE SHEETS

ASSETS
                                                       September 30          December 31
                                                           2000                 1999
                                                        (unaudited)
                                                             (dollars in thousands)

Current Assets
  Cash and cash equivalents                       $          16,730      $       9,554
  Restricted deposits                                           130                132
  Notes receivable from affiliated
    companies                                                17,144                  -
  Accounts receivable less accumulated
    provision for doubtful accounts of
    $17,582 at September 30, 2000, and
    $16,740 at December 31, 1999                            453,991            279,591
  Accounts receivable from affiliated companies               3,743             12,718
  Materials, supplies, and fuel - at average cost           114,690             98,999
  Prepayments and other                                      36,255             35,527
  Energy risk management current assets                     183,140             63,926
                                                            -------             ------
                Total Current Assets                        825,823            500,447


Utility Plant - Original Cost
  In service
    Electric                                              4,958,520          4,875,633
    Gas                                                     849,027            824,427
    Common                                                  210,826            189,124
                                                            -------            -------
        Total                                             6,018,373          5,889,184
  Accumulated depreciation                                2,409,601          2,279,587
                                                          ---------          ---------
        Total                                             3,608,772          3,609,597
  Construction work in progress                             193,800            153,229
                                                          ---------          ---------
                 Total Utility Plant                      3,802,572          3,762,826


Other Assets
  Regulatory assets                                         545,983            536,224
  Energy risk management non-current assets                  25,164              7,368
  Other                                                     132,817            109,753
                                                            -------            -------
                 Total Other Assets                         703,964            653,345


Total Assets                                      $       5,332,359      $   4,916,618
                                                  =================      =============



The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.`

`THE CINCINNATI GAS & ELECTRIC COMPANY
                                            CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDER'S EQUITY
                                                        September 30           December 31
                                                            2000                   1999
                                                        (unaudited)
                                                             (dollars in thousands)

Current Liabilities
   Accounts payable                                  $     529,648         $      253,115
   Accounts payable to affiliated
     companies                                              31,962                 65,256
   Accrued taxes                                           159,545                136,118
   Accrued interest                                         24,253                 17,375
   Notes payable and other short-term
     obligations                                           215,468                234,702
   Notes payable to affiliated companies                    26,414                 60,360
   Energy risk management current liabilities              206,443                 60,478
   Other                                                    30,361                 25,468
                                                         ---------                -------
          Total Current Liabilities                      1,224,094                852,872



Non-Current Liabilities
   Long-term debt                                        1,206,175              1,205,916
   Deferred income taxes                                   736,482                720,168
   Unamortized investment tax credits                      100,050                104,655
   Accrued pension and other post-retirement
     benefit costs                                         162,790                154,718
   Energy risk management non-current liabilities           43,216                 57,644
   Other                                                   150,358                140,794
                                                         ---------                -------
        Total Non-Current Liabilities                    2,399,071              2,383,895


Total Liabilities                                        3,623,165              3,236,767


Cumulative Preferred Stock
   Not subject to mandatory redemption                      20,486                 20,686


Common Stock Equity
   Common Stock-$8.50 par value;
     Authorized shares-120,000,000; outstanding
     shares-89,663,086 at September 30, 2000
     and December 31, 1999                                 762,136                762,136
   Paid-in capital                                         562,883                562,851
   Retained earnings                                       364,655                335,144
   Accumulated other comprehensive income (loss)              (966)                  (966)
                                                         ---------              ---------
          Total Common Stock Equity                      1,688,708              1,659,165



Commitments and Contingencies (Note 4)

Total Liabilities and Shareholder's Equity           $   5,332,359         $    4,916,618
                                                     =============         ==============



The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.`

`THE CINCINNATI GAS & ELECTRIC COMPANY
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                        Year to Date
                                                                        September 30
                                                               2000                     1999
                                                                      (dollars in thousands)
                                                                         (unaudited)

Operating Activities
   Net income                                             $   190,941              $      167,311
   Items providing or (using) cash currently:
     Depreciation and amortization                            156,670                     152,691
     Deferred income taxes and investment tax
       credits-net                                              6,110                       9,151
     Unrealized (gain) loss from energy risk
       management activities                                   (5,473)                    (25,699)
     Allowance for equity funds used during construction       (3,560)                     (2,083)
     Regulatory assets-net                                    (15,881)                     10,343
     Changes in current assets and current liabilities:
         Accounts and notes receivable, net of reserves
           on receivables sold                               (184,125)                     24,555
         Materials, supplies, and fuel                        (15,691)                      5,867
         Accounts payable                                     243,239                      71,390
         Accrued taxes and interest                            30,305                     (55,710)
     Other items-net                                          (11,390)                     (7,274)
                                                              -------                     -------
               Net cash provided by operating activities      391,145                     350,542


Financing Activities
   Change in short-term debt                                  (53,180)                    108,487
   Issuance of long-term debt                                       -                      19,818
   Redemption of long-term debt                                     -                    (164,264)
   Retirement of preferred stock                                 (168)                        (26)
   Dividends on preferred stock                                  (630)                       (642)
   Dividends on common stock                                 (160,800)                   (196,500)
                                                              -------                     -------
               Net cash used in financing activities         (214,778)                   (233,127)

Investing Activities
   Construction expenditures (less allowance for equity
     funds used during construction)                         (169,191)                   (130,024)
                                                              -------                     -------
               Net cash used in investing activities         (169,191)                   (130,024)

Net increase (decrease) in cash and cash equivalents            7,176                     (12,609)

Cash and cash equivalents at beginning of period                9,554                      26,989
                                                              -------                     -------
Cash and cash equivalents at end of period                $    16,730              $       14,380
                                                          ===========              ==============



The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated financial
statements.`

`PSI ENERGY, INC.
                                  CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


                                                     Quarter Ended                       Year to Date
                                                      September 30                       September 30
                                                  2000              1999             2000                1999
                                                                 (dollars in thousands)
                                                                      (unaudited)
Operating Revenues
   Electric                                $     804,234    $      707,193      $   1,957,746      $   1,653,144


Operating Expenses
   Fuel and purchased and exchanged power        586,480           495,015          1,255,716            967,099
   Operation and maintenance                     103,738           115,254            338,951            345,734
   Depreciation and amortization                  36,144            34,025            106,105            101,889
   Taxes other than income taxes                  14,850            15,427             43,259             44,184
                                                 -------           -------          ---------          ---------
Total Operating Expenses                         741,212           659,721          1,744,031          1,458,906



Operating Income                                  63,022            47,472            213,715            194,238


Miscellaneous - Net                                3,421            (1,794)             3,904             (1,096)
Interest Expense                                  18,309            19,620             58,162             61,480


Income Before Taxes                               48,134            26,058            159,457            131,662


Income Taxes                                      17,521            10,400             59,715             50,583
                                                 -------           -------          ---------          ---------
Net Income                                 $      30,613    $       15,658      $      99,742      $      81,079

Preferred Dividend Requirement                       858             1,150              3,071              3,451
                                                 -------           -------          ---------          ---------
Net Income Applicable to Common Stock      $      29,755    $       14,508      $      96,671      $      77,628


Net Income                                 $      30,613    $       15,658      $      99,742      $      81,079

Other Comprehensive Income (Loss),
   Net of Tax                                       (784)             (819)              (749)              (339)
                                                 -------           -------          ---------          ---------
Comprehensive Income                       $      29,829    $       14,839      $      98,993      $      80,740
                                           =============    ==============      =============      =============





The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.`

`PSI ENERGY, INC.
                                           CONSOLIDATED BALANCE SHEETS

ASSETS
                                                                September 30          December 31
                                                                   2000                  1999
                                                                (unaudited)
                                                                      (dollars in thousands)
Current Assets
   Cash and cash equivalents                                  $     10,800        $      8,842                                                                                     $                    $
   Restricted deposits                                                 155                   -
   Notes receivable                                                      3                 481
   Notes receivable from affiliated companies                       26,414              60,360
   Accounts receivable less accumulated
     provision for doubtful accounts of $8,629 at
     September 30, 2000, and $9,934 at December 31, 1999           536,434             253,022
   Accounts receivable from affiliated companies                    18,141              42,715
   Materials, supplies, and fuel - at average cost                  64,843             103,490
   Prepayments and other                                            41,270              36,173
   Energy risk management current assets                           183,140              63,927
                                                                   -------              ------
                  Total Current Assets                             881,200             569,010


Electric Utility Plant-Original Cost
   In service                                                    4,643,490           4,539,111
   Accumulated depreciation                                      2,079,416           1,980,290
                                                                 ---------           ---------
       Total                                                     2,564,074           2,558,821
   Construction work in progress                                   152,959              95,825
                                                                   -------              ------
                  Total Electric Utility Plant                   2,717,033           2,654,646


Other Assets
   Regulatory assets                                               474,345             518,788
   Energy risk management non-current assets                        25,164               7,368
   Other                                                           104,985              85,024
                                                                   -------              ------
                  Total Other Assets                               604,494             611,180


Total Assets                                                  $  4,202,727        $  3,834,836                                                                                     $                    $
                                                              ============        ============                                                                                     ======================



The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.`

`PSI ENERGY, INC.
                                           CONSOLIDATED BALANCE SHEETS

LIABILITIES AND SHAREHOLDER'S EQUITY
                                                             September 30          December 31
                                                                 2000                 1999
                                                             (unaudited)
                                                                    (dollars in thousands)

Current Liabilities
   Accounts payable                                          $   495,465          $    241,072                                                                                     $                    $
   Accounts payable to affiliated companies                       14,612                 6,762
   Accrued taxes                                                  61,877                93,056
   Accrued interest                                               24,560                26,989
   Notes payable and other short-term obligations                214,974               232,597
   Notes payable to affiliated companies                          66,663                 6,707
   Long-term debt due within one year                             20,696                31,000
   Energy risk management current liabilities                    206,443                60,478
   Other                                                           3,381                 1,986
                                                                   -----                 -----
                 Total Current Liabilities                     1,108,671               700,647


Non-Current Liabilities
   Long-term debt                                              1,192,003             1,211,552
   Deferred income taxes                                         458,587               460,748
   Unamortized investment tax credits                             40,407                42,895
   Accrued pension and other post-retirement
     benefit costs                                               146,525               129,103
   Energy risk management non-current liabilities                 48,413                57,645
   Other                                                          68,004               104,638
                                                                  ------               -------
                 Total Non-Current Liabilities                 1,953,939             2,006,581


Total Liabilities                                              3,062,610             2,707,228


Cumulative Preferred Stock
   Not subject to mandatory redemption                            42,348                71,911


Common Stock Equity
   Common Stock-without par value;  $.01 stated value;
     authorized shares-60,000,000; outstanding shares-
     53,913,701 at September 30, 2000 and December 31, 1999          539                   539
   Paid-in capital                                               411,534               411,198
   Retained earnings                                             685,054               642,569
   Accumulated other comprehensive income (loss)                     642                 1,391
                                                                     ---                 -----
                 Total Common Stock Equity                     1,097,769             1,055,697


Commitments and Contingencies (Note 4)

Total Liabilities and Shareholder's Equity                   $ 4,202,727          $  3,834,836                                                                                     $                    $
                                                             ===========          ============                                                                                     ======================



The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.`

`PSI ENERGY, INC.
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                           Year to Date
                                                                            September 30
                                                                   2000                      1999
                                                                       (dollars in thousands)
                                                                            (unaudited)

Operating Activities
   Net income                                            $          99,742     $           81,079
   Items providing or (using) cash currently:
     Depreciation and amortization                                 106,105                101,889
     Deferred income taxes and investment tax
       credits-net                                                     318                 10,707
     Unrealized (gain) loss from energy risk
       management activities                                          (276)               (25,698)
     Allowance for equity funds used during construction            (1,107)                  (758)
     Regulatory assets-net                                          10,770               (231,813)
     Changes in current assets and current liabilities:
         Restricted deposits                                          (155)                 2,161
         Accounts and notes receivable, net of reserves
           on receivables sold                                    (228,050)              (244,456)
         Materials, supplies, and fuel                              38,647                (15,679)
         Accounts payable                                          262,243                 75,145
         Accrued taxes and interest                                (33,608)                45,016
     Other items-net                                               (11,284)               263,850
                                                                   -------                -------

               Net cash provided by operating activities           243,345                 61,443

Financing Activities
   Change in short-term debt                                        42,333                103,754
   Issuance of long-term debt                                       53,075                323,593
   Redemption of long-term debt                                    (86,276)              (355,192)
   Retirement of preferred stock                                   (29,226)                    (8)
   Dividends on preferred stock                                     (3,259)                (3,451)
   Dividends on common stock                                       (54,000)               (17,900)
                                                                   -------                -------

               Net cash provided by (used in) financing
                   activities                                      (77,353)                50,796

Investing Activities
   Construction expenditures (less allowance for equity
     funds used during construction)                              (164,034)              (129,152)
                                                                  --------               --------

               Net cash used in investing activities              (164,034)              (129,152)

Net increase (decrease) in cash and cash equivalents                 1,958                (16,913)

Cash and cash equivalents at beginning of period                     8,842                 18,788
                                                                     -----                 ------

Cash and cash equivalents at end of period               $          10,800     $            1,875
                                                         =================     ==================



The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.`

`THE UNION LIGHT, HEAT AND POWER COMPANY
                                       STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


                                                     Quarter Ended                     Year to Date
                                                     September 30                      September 30
                                                  2000              1999            2000              1999
                                                               (dollars in thousands)
                                                                    (unaudited)
Operating Revenues
   Electric                                  $   61,540       $     63,041    $   165,908       $   160,781
   Gas                                            9,871              6,242         54,418            48,326
                                                  -----              -----         ------            ------
Total Operating Revenues                         71,411             69,283        220,326           209,107


Operating Expenses
   Fuel and purchased and exchanged power        47,242             49,166        122,382           122,756
   Gas purchased                                  4,475              2,229         27,457            23,112
   Operation and maintenance                      9,328              8,720         28,022            27,595
   Depreciation and amortization                  3,992              3,906         11,650            10,983
   Taxes other than income taxes                    955              1,024          3,078             3,134
                                                    ---              -----          -----             -----
Total Operating Expenses                         65,992             65,045        192,589           187,580


Operating Income                                  5,419              4,238         27,737            21,527



Miscellaneous - Net                                 (72)              (464)          (702)           (1,153)
Interest Expense                                  1,662              1,437          4,806             4,432


Income Before Taxes                               3,685              2,337         22,229            15,942


Income Taxes                                      1,500              1,226          9,121             6,869
                                                  -----              -----          -----             -----

Net Income                                  $     2,185       $      1,111   $     13,108      $      9,073

Other Comprehensive Income (Loss),
  Net of Tax                                          -                  -              -                 -
                                                  -----              -----         ------            ------
Comprehensive Income                        $     2,185       $      1,111   $     13,108      $      9,073
                                            ===========       ============   ============      ============




The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial statements.`

`THE UNION LIGHT, HEAT AND POWER COMPANY
                                                  BALANCE SHEETS



ASSETS
                                                    September 30       December 31
                                                        2000              1999
                                                    (unaudited)
                                                         (dollars in thousands)

Current Assets
   Cash and cash equivalents                       $     7,288       $      3,641
   Accounts receivable less accumulated
     provision for doubtful accounts of
     $1,517 at September 30, 2000, and
     $1,513 at December 31, 1999                         7,952             17,786
   Accounts receivable from affiliated companies           278                775
   Materials, supplies, and fuel-at average cost         7,562              7,654
   Prepayments and other                                   548                219
                                                           ---                ---
                Total Current Assets                    23,628             30,075


Utility Plant - Original Cost
   In service
     Electric                                          231,287            222,035
     Gas                                               180,816            173,011
     Common                                             44,513             42,351
                                                        ------             ------
           Total                                       456,616            437,397
   Accumulated depreciation                            166,157            154,607
                                                       -------            -------
           Total                                       290,459            282,790
   Construction work in progress                        13,580             13,761
                                                        ------             ------
                Total Utility Plant                    304,039            296,551


Other Assets
   Regulatory assets                                    10,250             10,639
   Other                                                 5,665              5,000
                                                         -----              -----
                Total Other Assets                      15,915             15,639


Total Assets                                       $   343,582       $    342,265
                                                   ===========       ============



The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.`

`THE UNION LIGHT, HEAT AND POWER COMPANY
                                                      BALANCE SHEETS



LIABILITIES AND SHAREHOLDER'S EQUITY
                                                   September 30     December 31
                                                       2000              1999
                                                   (unaudited)
                                                        (dollars in thousands)

Current Liabilities
   Accounts payable                                $    3,365      $     8,487
   Accounts payable to affiliated companies            17,567           20,122
   Accrued taxes                                        3,074              739
   Accrued interest                                     1,251            1,298
   Notes payable to affiliated companies               30,259           37,752
   Other                                                9,043            4,062
                                                        -----            -----
               Total Current Liabilities               64,559           72,460


Non-Current Liabilities
   Long-term debt                                      74,581           74,557
   Deferred income taxes                               20,158           23,000
   Unamortized investment tax credits                   3,753            3,961
   Accrued pension and other post-retirement
     benefit costs                                     12,892           12,333
   Amounts due to customers - income taxes             13,070           11,308
   Other                                               14,387           12,596
                                                       ------           ------
               Total Non-Current Liabilities          138,841          137,755


Total Liabilities                                     203,400          210,215


Common Stock Equity
   Common Stock-$15.00 par value; authorized
     shares-1,000,000; outstanding shares-585,333
     at September 30, 2000 and December 31, 1999        8,780            8,780
   Paid-in capital                                     20,142           20,142
   Retained earnings                                  111,260          103,128
                                                      -------          -------
               Total Common Stock Equity              140,182          132,050


Commitments and Contingencies (Note 4)

Total Liabilities and Shareholder's Equity         $  343,582      $   342,265
                                                   ==========      ===========



The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial statements.`

`THE UNION LIGHT, HEAT AND POWER COMPANY
                                                  STATEMENTS OF CASH FLOWS

                                                                       Year to Date
                                                                       September 30
                                                                2000                   1999
                                                                 (dollars in thousands)
                                                                      (unaudited)

Operating Activities
Net income                                                $    13,108           $       9,073
  Items providing or (using) cash currently:
   Depreciation and amortization                               11,650                  10,983
   Deferred income taxes and investment tax
     credits - net                                             (1,289)                   (936)
   Allowance for equity funds used during construction            (32)                    (43)
   Regulatory assets - net                                        237                     103
   Changes in current assets and current liabilities:
      Accounts and notes receivable, net of reserves
        on receivables sold                                     9,286                   6,770
      Materials, supplies, and fuel                                92                    (961)
      Accounts payable                                         (7,677)                  2,536
      Accrued taxes and interest                                2,288                  (1,618)
  Other items - net                                             7,482                   2,425
                                                                -----                   -----

            Net cash provided by operating activities          35,145                  28,332

Financing Activities
  Change in short-term debt                                    (7,493)                 (1,650)
  Issuance of long-term debt                                        -                  19,818
  Redemption of long-term debt                                      -                 (20,000)
  Dividends on common stock                                    (4,975)                 (4,975)
                                                               ------                  ------

            Net cash used in financing activities             (12,468)                 (6,807)

 Investing Activities
  Construction expenditures (less allowance for
      equity funds used during construction)                  (19,030)                (19,036)
                                                              -------                 -------

Net cash used in investing activities                         (19,030)                (19,036)

Net increase in cash and cash equivalents                       3,647                   2,489

Cash and cash equivalents at beginning of period                3,641                   3,244
                                                                -----                   -----

Cash and cash equivalents at end of period                $     7,288           $       5,733
                                                          ===========           =============



The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.`

### NOTES TO FINANCIAL STATEMENTS

### 1.     Summary of Significant Accounting Policies

(a)     Presentation     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 1999 Form 10-K of the
registrants.

Certain amounts in the 1999 Financial Statements have been reclassified to conform to the 2000 presentation.

(b)     Energy Marketing and Trading     We market and trade electricity, natural gas,
and other
energy-related products. We designate transactions as physical or trading at the time they are originated.
Physical refers to our intent and projected ability to fulfill obligations from
company-owned assets. We sell generation to third parties when it is not
required to meet native load requirements (end-use customers within our
operating companies franchise service territory). We account for physical
transactions on a settlement basis and trading transactions using the
mark-to-market method of accounting. Under the mark-to-market method of
accounting, trading transactions are shown at fair value in our Consolidated
Balance Sheets as Energy risk management assets - current and non-current, and
Energy risk management liabilities - current and non-current. We reflect changes
in fair value resulting in unrealized gains and losses in Fuel and purchased and
exchanged power and Gas purchased. We record the revenues and costs for all
transactions in our Consolidated Statements of Income when the contracts are
settled. We recognize revenues in Operating revenues; costs are recorded in Fuel
and purchased and exchanged power and Gas purchased.

Although we intend to settle physical sales contracts with company-owned generation, there are times when we have to settle
these contracts with power purchased on the open trading markets.  The cost of these purchases could be in excess of the
associated revenues.  We recognize the gains or losses on these transactions as the power is delivered.  Open market
purchases may occur for reasons such as:

- generating station outages;
- least-cost alternative;
- native load requirements; and
- extreme weather.

We value contracts in the trading portfolio using end-of-the-period market prices, utilizing the following factors (as
applicable):

- closing exchange prices (that is, closing prices for standardized electricity products traded on an organized
         exchange such as the New York Mercantile Exchange);
- broker-dealer and over-the-counter price quotations; and
- model pricing (which considers time value and historical volatility factors of electricity pricing underlying any
         options and contractual commitments).

We anticipate that some of these obligations, even though considered trading contracts, will ultimately be settled using
company-owned generation.  The cost of this generation is usually below the market price at which the trading portfolio has
been valued.

Earnings volatility may occur from period to period due to the risks associated with marketing and trading electricity,
natural gas, and other energy-related products.

(c)     Financial Derivatives     We use derivative financial instruments to manage: (1)
funding costs; (2) exposures to
fluctuations in interest
rates; and (3) exposures to foreign currency exchange rates. These financial
instruments must be designated as a hedge (for example, an offset of foreign
exchange or interest rate risks) at the inception of the contract and must be
effective at reducing the risk associated with the underlying instrument. An
underlying instrument is one that gives rise to the derivative financial
instrument, for example, a foreign currency denominated contract. Accordingly,
changes in the market values of instruments designated as hedges must be highly
correlated with changes in the market values of the underlying
instrument.

From time to time, we may utilize foreign exchange forward contracts (for example, a contract obligating one party to buy,
and the other to sell, a
specified quantity of a foreign currency for a fixed price at a future date) and
currency swaps (for example, a contract whereby two parties exchange principal
and interest cash flows denominated in different currencies) to hedge certain of
our net investments in foreign operations. Accordingly, any translation gains
and losses are recorded in Accumulated other comprehensive income (loss), which
is a component of Common stock equity. Aggregate translation losses related to
these instruments are reflected net in Current liabilities in our Consolidated
Balance Sheets. At September 30, 2000, no such instruments were
held.

We also use interest rate swaps (an agreement by two parties to exchange fixed-interest rate cash flows for
floating-interest rate cash
flows). We use the accrual method to account for these interest rate swaps.
Accordingly, gains and losses are calculated based on the difference between the
fixed-rate and the floating-rate interest amounts, using agreed upon principal
amounts. These gains and losses are recognized in our Consolidated Statements of
Income as a component of Interest expense over the life of the
agreement.

Holders of the $100 million principal amount Liquid Asset Notes with Coupon Exchange (LANCE) exercised their option to
convert from a fixed interest rate to a rate based on the three-month London Inter-Bank Offered Rate
(LIBOR). The first floating rate interest payment occurred on October 1, 2000.
Based on favorable market conditions at the time, The Cincinnati Gas &
Electric Company (CG&E) entered into an interest rate swap agreement to
limit floating rate debt exposure. Under the agreement, which has a notional
amount of $100 million, CG&E will pay a fixed rate and receive a floating
rate for the remaining seven-year term of the note. The floating rate CG&E
receives will be based on three-month LIBOR. The agreement effectively fixes
CG&Es interest rate on the LANCEs. The swap agreement will be
designated as a hedge of the LANCEs upon CG&Es adoption of Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (Statement 133) in the first quarter of
2001.

(d)     Accounting Changes     On August 31, 2000, the Public Utilities Commission of
Ohio (PUCO) approved CG&E's
stipulation agreement with respect to its proposal to implement electric customer choice in the state of
Ohio. In connection with the approval of the stipulation agreement, CG&E
discontinued the application of Statement of Financial Accounting Standards No.
71, Accounting for the Effects of Certain Types of Regulation (Statement 71) for
the generation portion of its business and adopted Statement of Financial
Accounting Standards No. 101, Regulated Enterprises  Accounting for
Discontinuation of Application of FASB Statement No. 71. For a further
discussion on Ohio deregulation, see Note 7 of the Notes to Financial
Statements in Part 1. Financial Information beginning on page
39.

During the second quarter of 1998, the Financial Accounting Standards Board (FASB) issued Statement 133.  This standard
requires companies to record derivative instruments as assets or liabilities, measured at fair value.
Changes in the derivatives fair value must be recognized currently in
earnings unless specific hedge accounting criteria are met. Hedges are
transactions entered into for the purpose of reducing exposure to one or more
types of business risk. Gains and losses on derivatives that qualify as hedges
can offset related results on the hedged item in the income
statement.

In June 1999, the FASB issued Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments
and Hedging Activities-Deferral of the Effective Date of FASB Statement No.133 (Statement
137). Statement 137 deferred the effective date of Statement 133 by one year. As
a result, Statement 133 will be effective for fiscal years beginning after June
15, 2000.

Statement of Financial Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities - an Amendment of FASB Statement No. 133 (Statement 138) was issued in June 2000. Statement 138
addresses implementation issues and reflects decisions of the FASB regarding
recommendations of the FASB-sponsored Derivatives Implementation
Group.

We expect to reflect the adoption of Statement 133 in financial statements issued beginning in the first quarter of 2001.
In preparation for our implementation of this new standard, we have formed a cross-functional project
team. The project team is identifying and analyzing all contracts which could be
subject to the new standard, developing required documentation and reporting
systems, and promoting internal awareness of the requirements and potential
effects of the new standard. While we continue to analyze and follow the
development of implementation guidelines, at this time we are unable to predict
whether the implementation of this accounting standard will be material to our
results of operations and financial position. However, the adoption of Statement
133 could increase volatility in earnings and other comprehensive
income.

### 2.     Change in Preferred Stock of Subsidiaries

The following represents the changes during the year in preferred stock of CG&E and PSI Energy, Inc. (PSI):

---

`Registrant           Quarter          Series          Shares Redeemed          Par Value

CG&E                First                4 3/4%                   800           $        80,000
                    Second               4 3/4%                 1,100                   110,000
                    Third                4 3/4%                   100                    10,000

PSI                 First                3 1/2%                   600           $        60,000
                    Second               3 1/2%                 1,184                   118,400
                                         6.875%               105,150                10,515,000
                                         4.32%                 14,380                   359,500
                    Third                3 1/2%                 1,000                   100,000
                                         6.875%               184,100                18,410,000`

---

### 3.     Long-Term Debt

On February 15, 2000, PSI retired $150,000 principal amount of its Series YY First Mortgage Bonds.

On May 16, 2000, PSI issued $44,025,000 of Indiana Development Finance Authority Environmental Refunding Revenue Bonds
Series 2000A, due May 1, 2035 and $10,000,000 of Indiana Development Finance Authority Environmental
Refunding Revenue Bonds Series 2000B, due April 1, 2022. The initial interest
rates on the Series 2000A and Series 2000B bonds were 4.65% and 4.70%,
respectively. The rates reset every 35 days.

The proceeds from these issuances were used to pay a portion of the cost of refunding the $29,795,000 principal amount
outstanding of PSIs First Mortgage Bonds, Series YY, the $14,250,000 principal amount outstanding of
its First Mortgage Bonds, Series UU, and the $10,000,000 principal amount
outstanding of its First Mortgage Bonds, Series TT, each at a redemption price
of 102% of the principal amount thereof, plus accrued
interest.

On September 18, 2000, PSI retired $11,000,000 principal amount of 5.61% Series B Medium Term Notes, and on September 27,
2000, PSI retired $20,000,000 principal amount of 5.78% Series B Medium Term Notes.

On October 15, 2000, the holders of PSI's $100 million, 6.35% Debentures due November 15, 2006, elected to exercise their
option to put the securities back to the company effective November 15, 2000.

### 4.     Commitments and Contingencies

(i)     NOX SIP Call     Ozone transport refers to the alleged wind-blown movement of ozone or
ozone-causing materials across city and state boundaries.  As discussed in the 1999 Form 10-K, in October 1998, the United
States Environmental Protection Agency (EPA) finalized its ozone transport rule, also known as the NOX SIP Call.  (A SIP is
a state's implementation plan for achieving emissions reductions to address air quality concerns.)  It applied to 22 states
in the eastern half of the United States (U.S.), including the three states in which our electric utilities operate, and
also proposes a model nitrogen oxide (NOX) emission allowance trading program.  If implemented by the states, the trading
program would allow us to buy NOX emission allowances from, or sell NOX emission allowances to, other companies as
necessary.  This rule recommended that states reduce NOX emissions primarily from industrial and utility sources to a
certain level by May 2003.  The EPA gave the affected states until September 30, 1999, to incorporate NOX reductions and,
in the discretion of the state, a trading program into their SIPs.  The EPA proposed to implement a federal plan to
accomplish the equivalent NOX reductions by May 2003, if states failed to revise their SIPs.  The EPA must approve all
SIPs.

Ohio, Indiana, a number of
other states, and various industry groups (some of which we are a member) filed
legal challenges to the NOX SIP Call in late 1998. On May 25, 1999, the U.S.
Circuit Court of Appeals for the District of Columbia (Court of Appeals) granted
a request for a deferral of the rule and indefinitely suspended the September 30
filing deadline, pending further review by the Court of Appeals.

In March 2000, the Court of
Appeals substantially upheld the EPAs rule. On April 11, 2000, the EPA
asked the Court of Appeals to remove its May 25, 1999, suspension of the rule
and also directed the states to submit SIP revisions by September 1, 2000. On
April 17, 2000, various states and industry groups (some of which we are a
member) filed a request with the Court of Appeals for a rehearing of the NOX SIP
Call decisions. On April 24, 2000, the same group filed a request with the Court
of Appeals to require rulemaking and a comment period to determine a new
compliance date. The states also filed a request to obtain more time to file
their SIPs. On June 23, 2000, the Court of Appeals denied both requests and
directed the states to submit their SIP revisions by October 30, 2000. Indiana,
Kentucky, and Ohio submitted letters stating their intent to revise their SIPs
in response to the NOx SIP Call. The respective rulemaking procedures will allow
these states to provide draft SIP revisions to the EPA for comment during the
winter and final regulations in the late spring or summer of 2001.

In August 2000, the U.S.
Court of Appeals for the District of Columbia extended the May 1, 2003, deadline
for NOx reductions to May 31, 2004. The ultimate outcome of this matter is
uncertain. The states and other groups appealed the Court of Appeals ruling to
the U.S. Supreme Court (Supreme Court).

On September 25, 2000,
Cinergy announced a plan to invest approximately $700 million in pollution
control equipment and other methods to reduce NOx emissions. This expected
investment includes the following:

- Install up to 11 selective catalytic reduction units (SCRs) at several different generating stations;
- install other pollution control technologies, including new computer software, at all generating stations;
- make combustion improvements; and
- utilize market opportunities to buy and sell NOx allowances.

SCRs are the most proven technology currently available for reducing NOx emissions produced in coal-fired generating
stations.

(ii)     Section 126 Petitions     As discussed in the 1999 Form 10-K, in February 1998, the northeast
states filed petitions seeking the EPA's assistance in reducing ozone in the eastern U.S. under Section 126 of the Clean
Air Act (CAA).  The EPA believes that Section 126 petitions allow a state to claim that another state is contributing to
its air quality problem and request that the EPA require the upwind state to reduce its emissions.

In December 1999, the EPA
granted four Section 126 petitions relating to NOX emissions. This ruling
affects all of our Ohio and Kentucky facilities, as well as some of our Indiana
facilities, and requires us to reduce our NOX emissions to a certain level by
May 2003. The EPAs action granting the Section 126 petitions has been
appealed to the Court of Appeals. In April 2000, the parties to the appeal filed
a proposed scheduling order which, if approved, would set oral arguments in late
2000, with a court decision expected in the spring of 2001. We currently cannot
predict the outcome of this proceeding. We do not anticipate that any Section
126 rulings will have any significant financial impact in addition to that of
the NOX SIP Call.

(iii)     State Ozone Plans     As discussed in the 1999 Form 10-K, on November 15, 1999, the State of
Indiana and the Commonwealth of Kentucky (along with Jefferson County, Kentucky) jointly filed an amendment to their SIPs
on how they intend to bring the greater Louisville area, including Floyd and Clark Counties in Indiana, into attainment
with the one-hour ozone standard.  The SIP amendments call for, among other things, statewide NOX reductions from utilities
in Indiana, Kentucky, and surrounding states.  These rules are less stringent than the EPA's NOX SIP Call.  The states of
Indiana and Kentucky have committed to adopt utility NOX reduction rules by December 2000, which would require controls be
installed by May 2003.  We do not anticipate that the state NOX rules will have any significant financial impact in
addition to that of the NOX SIP Call.

(b)     New Source Review (NSR)
     As discussed in the 1999 Form 10-K, the CAAs NSR provisions require that a
company obtain a pre-construction permit if it plans to build a new stationary
source of pollution or make a major change to an existing facility unless the
changes are exempt. In July 1998, the EPA requested comments on proposed
revisions to the NSR rules that would change NSR applicability by eliminating
exemptions contained in the current regulation. We believe that if these changes
are finalized, it will be significantly harder to maintain our facilities
without triggering the NSR permit requirements.

Since July 1999, CG&E
and PSI have received requests from the EPA (Region 5), under Section 114 of the
CAA, seeking documents and information regarding capital and maintenance
expenditures at several of their respective generating stations. These
activities are part of an industry-wide investigation assessing compliance with
the NSR and the New Source Performance Standards (NSPS, emissions standards that
apply to new and changed units) of the CAA at electric generating stations.

On September 15, 1999, and
on November 3, 1999, the attorneys general of the states of New York and
Connecticut, respectively, issued letters notifying Cinergy (Cinergy Corp. and
all of its regulated and non-regulated subsidiaries) and CG&E of their
intent to sue under the citizens suit provisions of the CAA. New York and
Connecticut allege violations of the CAA by constructing and continuing to
operate a major change to CG&Es W.C. Beckjord Station (Beckjord)
without obtaining the required NSR pre-construction permits.

On November 3, 1999, the
EPA sued a number of holding companies and electric utilities, including
Cinergy, CG&E, and PSI, in various U.S. District Courts. The Cinergy,
CG&E, and PSI suit alleges violations of the CAA at certain of our
generating stations relating to NSR and NSPS requirements. The suit seeks (1)
injunctive relief to require installation of pollution control technology on
each of the generating units at Beckjord and PSIs Cayuga Generating
Station (Cayuga), and (2) civil penalties in amounts of up to $27,500 per day
for each violation.

On March 1, 2000, the EPA
filed an amended complaint against Cinergy, CG&E, and PSI. The amended
complaint added the alleged violations of the NSR requirements of the CAA
contained in the notice of violation (NOV) filed by the EPA on November 3, 1999.
It also added claims for relief alleging violations of (1) nonattainment NSR,
(2) Indiana and Ohio SIPs, and (3) particulate matter emission limits (as
discussed in Note 4(d) on page 34). The amended complaint seeks (1) injunctive
relief to require installation of pollution control technology on each of the
generating units at Beckjord, Cayuga, and PSIs Wabash River and Gallagher
Generating Stations, and such other measures as necessary, and (2) civil
penalties in amounts of up to $27,500 per day for each violation. We believe the
allegations contained in the amended complaint are without merit and plan to
defend the suit vigorously in court. The case is set for trial by jury in July
2002. At this time, it is not possible to determine the likelihood that the EPA
will prevail on its claims or whether resolution of this matter will have a
material effect on our financial condition. In addition, we cannot predict
whether any additional allegations will be added to this proceeding.

On March 1, 2000, the EPA
also filed an amended complaint alleging violations of the CAA relating to NSR,
Prevention of Significant Deterioration (PSD), and Ohio SIP requirements
regarding Conesville Station, which is operated by the Columbus Southern Power
Company (CSP) and jointly-owned by CSP, The Dayton Power and Light Company
(DP&L), and CG&E. The EPA is seeking injunctive relief and civil
penalties of up to $27,500 per day for each violation. We believe the
allegations in the amended complaint are without merit. At this time, it is not
possible to determine the likelihood that the EPA will prevail on its claims or
whether resolution of this matter will have a material effect on our financial
condition.

On June 28, 2000, the EPA
issued an NOV to Cinergy, CG&E, and PSI for alleged violations of NSR, PSD,
and SIP requirements at CG&Es Miami Fort Station and PSIs Gibson
Station. In addition, Cinergy and CG&E have been informed by DP&L, the
operator of J.M. Stuart Station (Stuart), that on June 30, 2000, the EPA issued
an NOV for alleged violations of NSR, PSD, and SIP requirements at this station.
CG&E owns 39% of Stuart. The NOVs indicated that the EPA may (1) issue an
order requiring compliance with the requirements of the SIP, or (2) bring a
civil action seeking injunctive relief and civil penalties of up to $27,500 per
day for each violation. At this time, it is not possible to determine the
likelihood that the EPA will prevail on its claims or whether resolution of this
matter will have a material effect on our financial condition.

(i)     General     As discussed in the 1999 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.

(ii)     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 sites which PSI or its predecessors previously owned.  PSI
acquired four of the sites from Northern Indiana Public Service Company (NIPSCO) in 1931.  At the same time, PSI sold
NIPSCO the sites located in Goshen and Warsaw, Indiana.  In 1945, PSI sold 19 of these sites (including the four sites it
acquired from NIPSCO) to the predecessor of the Indiana Gas Company, Inc. (IGC).  IGC later sold the site located in
Rochester, Indiana, to NIPSCO.

IGC (in 1994) and NIPSCO
(in 1995) both made claims against PSI. The basis of these claims was that PSI
is a Potentially Responsible Party with respect to the 21 MGP sites under the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
The claims further asserted that PSI is therefore legally responsible for the
costs of investigating and remediating the sites. In August 1997, NIPSCO filed
suit against PSI in federal court claiming recovery (pursuant to CERCLA) 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. This
agreement allocated CERCLA liability for past and future costs at seven MGP
sites in Indiana among the three companies. As a result of the agreement,
NIPSCOs lawsuit against PSI was dismissed. The parties have assigned lead
responsibility for managing further investigation and remediation activities at
each of the sites to one of the parties. Similar agreements were reached between
IGC and PSI that allocate CERCLA liability at 14 MGP sites with which NIPSCO was
not involved. These agreements conclude all CERCLA and similar claims between
the three companies related to MGP sites. The parties continue to investigate
and remediate the sites, as appropriate under the agreements and applicable
laws. The Indiana Department of Environmental Management (IDEM) oversees
investigation and cleanup of some of the sites.

PSI notified its insurance
carriers of the claims related to MGP sites raised by IGC, NIPSCO, and the IDEM.
In April 1998, PSI filed suit in Hendricks County Circuit Court in the State of
Indiana against its general liability insurance carriers. Among other matters,
PSI requested a declaratory judgment that would obligate its insurance carriers
to (1) defend MGP claims against PSI, or (2) pay PSIs costs of defense and
compensate PSI for its costs of investigating, preventing, mitigating, and
remediating damage to property and paying claims related to MGP sites. The case
was moved to the Hendricks County Superior Court 1 on a request for a change of
judge. The Hendricks County Superior Court 1 had set the case for trial
beginning in May 2001, which has been moved to January 2002. It ordered the
parties to meet certain deadlines for discovery proceedings based upon this
trial date. PSI cannot predict the outcome of this litigation. Recently, PSI has
been involved in settlement discussions with some of the insurance carriers. At
the present time, PSI cannot predict either the progress or outcome of these
discussions.

PSI has accrued costs for
the sites related to investigation, remediation, and groundwater monitoring for
the work performed to date. The estimated costs for such remedial activities are
accrued when the costs are probable and can be reasonably estimated. PSI does
not believe it can provide an estimate of the reasonably possible total
remediation costs for any site before a remedial investigation/feasibility study
has been completed. To the extent remediation is necessary, the timing of the
remediation activities impacts the cost of remediation. Therefore, PSI currently
cannot determine the total costs that may be incurred in connection with the
remediation of all sites, to the extent that remediation is required. According
to current information, these future costs at the 21 Indiana MGP sites are not
material to our financial condition or results of operations. As further
investigation and remediation activities are performed at these sites, the
potential liability for the 21 Indiana MGP sites could be material to our
financial position or results of operations.

(iii)     CG&E     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 begun preliminary site assessments to obtain information about some of these MGP sites.

(d)     Other     As discussed in
the 1999 Form 10-K, on November 30, 1999, the EPA filed an NOV and a Finding of
Violation (FOV) against Cinergy and CG&E alleging that emissions of
particulate matter at Beckjord exceeded the allowable limit. The NOV indicated
that the EPA may (1) issue an administrative penalty order, or (2) file a civil
action seeking injunctive relief and civil penalties of up to $27,500 per day
for each violation. The allegations contained in this NOV were incorporated
within the March 1, 2000, amended complaint, as discussed in Note 4(b) on page
31. On June 22, 2000, the EPA issued an NOV and an FOV alleging additional
particulate emission violations at Beckjord and offered us an opportunity to
meet and discuss the allegations and corrective measures. The NOV/FOV indicated
that the EPA may (1) issue an administrative compliance order, (2) issue an
administrative penalty order, or (3) bring a civil or criminal action. We are
currently unable to determine whether resolution of these matters will have a
material effect on our financial condition.

### 5.     Financial Information by Business Segment

As discussed in the 1999
Form 10-K, during 1998, we adopted the requirements of Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an Enterprise and
Related Information (Statement 131). Statement 131 requires disclosures about
reportable operating segments in annual and interim condensed financial
statements.

The Energy Commodities
Business Unit (Commodities) operates and maintains our domestic electric
generating plants and some of our jointly-owned plants. It also conducts the
following activities: (1) wholesale energy marketing and trading, (2) energy
risk management, (3) financial restructuring services, and (4) proprietary
arbitrage activities. Commodities earns revenues from external customers from
its marketing, trading, and risk management activities. Commodities earns
intersegment revenues from the sale of electric power to the Energy Delivery
Business Unit (Delivery).

Delivery plans, constructs,
operates, and maintains our operating companies transmission and
distribution systems and provides gas and electric energy to consumers. Delivery
earns revenues from customers other than consumers primarily by transmitting
electric power through our transmission system. Delivery currently receives all
of its electricity from Commodities at a transfer price based upon current
regulatory ratemaking methodology.

The Cinergy Investments
Business Unit (Cinergy Investments) primarily manages the development,
marketing, and sales of our non-regulated retail energy and energy-related
products and services. This is accomplished through various subsidiaries and
joint ventures. Cinergy Investments earns all of its revenues from the sale of
such products and services to ultimate consumers. These products and services
include the following:

- energy management and consulting services to commercial customers that operate
retail facilities (for example, finding more efficient ways for a customer to
use energy);
- utility operations/services to other utilities (for example, providing underground locating and construction
         services for other utilities);
- building, operating, and maintaining combined heat and power facilities; and
- building and maintaining fiber optic telecommunication networks for businesses, municipalities, telecommunications
         carriers, and schools.

The International Business
Unit (International) directs and manages our international business holdings,
which include wholly- and jointly-owned companies in twelve countries. In
addition, International also directs our renewable energy investing activities
(for example, wind farms) both inside and outside the U.S. International
recognizes (1) revenues from consolidated subsidiaries, and (2) equity earnings
from unconsolidated subsidiaries primarily from energy-related businesses.

Financial results by
business unit for the quarters ended September 30, 2000, and 1999, are as
follows:

---

`Business Units

                                                                                                            2000
                                                                           Cinergy Business Units
                                                                                                                                                Reconciling
                                                                                   Cinergy                                        All Other     Eliminations
                                                Commodities       Delivery       Investments      International       Total          (1)            (2)          Consolidated
                                                                                                       (in thousands)
Operating revenues -
  External customers                            $1,455,842         $812,509         $18,301           $13,133       $2,299,785   $       -     $          -      $2,299,785
  Intersegment revenues                            520,682                -               -                 -          520,682           -         (520,682)              -
Segment profit (loss)                               67,399(3)        36,914          (4,997)           (5,502)          93,814           -                -          93,814


                                                                                                            1999
                                                                           Cinergy Business Units
                                                                                                                                                Reconciling
                                                                                   Cinergy                                        All Other     Eliminations
                                                Commodities       Delivery       Investments      International       Total           (1)           (2)          Consolidated
                                                                                                       (in thousands)
Operating revenues -
  External customers                           $   878,291         $880,987         $12,892           $10,028       $1,782,198   $       -     $          -      $1,782,198
  Intersegment revenues                            548,908                -               -                 -          548,908           -         (548,908)              -
Segment profit (loss)                                6,290           48,351          (1,485)           67,120(4)       120,276       1,287                -         121,563

(1) The All Other category represents miscellaneous corporate items which are not allocated to business units for purposes of segment profit measurement.
(2) The Reconciling Eliminations category eliminates the intersegment revenues of Commodities.
(3) The increase in 2000, as compared to 1999, is primarily due to improvements in gross margins and the increase in volumes and average price realized on non-firm wholesale
    transactions.
(4) Includes the earnings from our 50% ownership interest in Midlands Electricity plc and the gain on the sale which occurred in the third quarter of 1999.`

---

`Financial results by business unit for the nine months ended September 30, 2000, and 1999, are as follows:

Business Units

                                                                                                            2000
                                                                           Cinergy Business Units
                                                                                                                                                Reconciling
                                                                                   Cinergy                                        All Other     Eliminations
                                                Commodities       Delivery       Investments      International       Total          (1)            (2)          Consolidated
                                                                                                       (in thousands)
Operating revenues -
  External customers                              $3,130,379      $2,417,662        $57,303           $47,032       $5,652,376   $       -     $          -         $5,652,376
  Intersegment revenues                            1,420,276               -              -                 -        1,420,276           -       (1,420,276)                 -
Segment profit (loss)                                205,353(3)      118,124         (8,589)           (7,520)         307,368           -                -            307,368


                                                                                                            1999
                                                                           Cinergy Business Units
                                                                                                                                                Reconciling
                                                                                   Cinergy                                        All Other     Eliminations
                                                Commodities       Delivery       Investments      International       Total           (1)           (2)          Consolidated
                                                                                                     (in thousands)
Operating revenues -
  External customers                              $1,923,931      $2,456,546        $41,176           $38,223       $4,459,876   $       -      $         -         $4,459,876
  Intersegment revenues                            1,429,222               -              -                 -        1,429,222           -       (1,429,222)                 -
Segment profit (loss)                                 85,368         137,979         (6,399)           87,986(4)       304,934       2,932                -            307,866

(1) The All Other category represents miscellaneous corporate items which are not allocated to business units for purposes of segment profit measurement.
(2) The Reconciling Eliminations category eliminates the intersegment revenues of Commodities.
(3) The increase in 2000, as compared to 1999, is primarily due to improvements in gross margins, and the increase in volumes and average price realized on non-firm
    wholesale transactions.
(4) Includes the earnings from our 50% ownership interest in Midlands Electricity plc and the gain on the sale which occurred in the third quarter of 1999.`

---

`Total segment assets at September 30, 2000, and December 31, 1999, are as follows:


                                                                                Cinergy Business Units

                                                                                       Cinergy
                                                    Commodities       Delivery       Investments      International        Total       All Other (1)        Consolidated
                                                                                                       (in thousands)
Total segment assets at September 30, 2000             $5,843,109     $4,371,336       $212,186          $494,529        $10,921,160      $31,871             $10,953,031
Total segment assets at December 31, 1999               5,041,578      4,058,164        129,935           339,905          9,569,582       47,366               9,616,948

(1) The All Other category represents miscellaneous corporate items, which are not allocated to business units for purposes of segment profit measurement.`

---

### 6.     Earnings Per Common Share

A reconciliation of earnings per common share (EPS) to earnings per common share assuming dilution (diluted EPS) is
presented below:

---

`Income              Shares          EPS
                                                       (in thousands, except per share amounts)

Quarter ended September 30, 2000
Earnings per common share:
  Net income                                           $ 93,814            158,938           $0.59

Effect of dilutive securities:
  Common stock options                                                         667
  Share saver plan common stock                                                 11
  Contingently issuable common stock                                           426

EPS-assuming dilution:
  Net income plus assumed conversions                  $ 93,814            160,042           $0.58

Quarter ended September 30, 1999
Earnings per common share:
  Net income                                           $121,563            158,907           $0.77

Effect of dilutive securities:
  Common stock options                                                         329
  Share saver plan common stock                                                 26
  Contingently issuable common stock                                            26

EPS-assuming dilution:
  Net income plus assumed conversions                  $121,563            159,288           $0.76`

---

Options to purchase shares
of common stock are excluded from the calculation of diluted EPS when the
exercise prices of these options are greater than the average market price of
the common shares during the period. For the quarters ended September 30, 2000,
and 1999, approximately 1.7 million shares were excluded from the diluted EPS
calculation.

The Employee Stock Purchase
and Savings Plan is also excluded from the diluted EPS calculation since the
purchase price is greater than the average market price during this period. This
plan allows all full-time, regular employees to purchase shares of common stock
pursuant to a stock option feature. A detailed description of this plan is
available in the 1999 Form 10-K.

### 7.     Ohio Deregulation

As discussed in the 1999
Form 10-K, on July 6, 1999, Ohio Governor Robert Taft signed Amended Substitute
Senate Bill No. 3 (Electric Restructuring Bill), beginning the transition to
electric deregulation and customer choice for the state of Ohio. The Electric
Restructuring Bill creates a competitive electric retail service market
beginning January 1, 2001. The legislation provides for a market development
period that begins January 1, 2001, and ends no later than December 31, 2005.
Ohio electric utilities have an opportunity to recover PUCO-approved transition
costs during the market development period. The legislation also freezes retail
electric rates during the market development period, at the rates in effect on
October 4, 1999, except for a five-percent reduction in the generation component
of residential rates. Furthermore, the legislation contemplates that twenty
percent of the current electric retail customers will switch suppliers no later
than December 31, 2003.

On May 8, 2000, CG&E
reached a stipulation agreement with the PUCO staff and various other interested
parties with respect to its proposal to implement electric customer choice in
Ohio beginning January 1, 2001. On August 31, 2000, the PUCO approved
CG&Es stipulation agreement. The major features of this agreement
include:

- Residential customer rates will be frozen through December 31, 2005;
- Residential customers will receive a five-percent reduction in the generation
portion of their electric rates, effective January 1, 2001;
- CG&E has agreed to provide $4 million over the next five years in support of
energy efficiency and weatherization services for low income customers;
- The creation of a Regulatory Transition Charge (RTC), designed to recover
CG&Es regulatory assets and other transition costs over a ten-year
period;
- Authority for CG&E to transfer its generation assets to a separate,
non-regulated corporate subsidiary to provide flexibility to manage its
generation asset portfolio in a manner that enhances opportunities in a
competitive marketplace;
- Authority for CG&E to apply the proceeds of transition cost recovery to
costs incurred during the transition period including implementation costs and
purchased power costs that may be incurred by CG&E to maintain an operating
reserve margin sufficient to provide reliable service to its customers;
- CG&E will provide standard offer default supplier service (i.e., CG&E
will be the supplier of last resort, so that no customer will be without an
electric supplier); and
- CG&E has agreed to provide shopping credits to switching customers.

In connection with the PUCO
approval of the stipulation agreement, CG&E discontinued Statement 71 for
the generation portion of its business. The effect of discontinuation of
Statement 71 is immaterial to CG&Es results of operations and
financial condition. Additionally, pursuant to Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-lived Assets and for
Long-lived Assets to be Disposed Of, our analysis indicates future revenues will
be sufficient to recover the costs of CG&Es generating assets over
their estimated remaining lives.

### Cautionary Statements Regarding Forward-Looking Information

Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) discusses various matters that may make
managements corporate vision of the future more clear for you. Certain of
managements goals and aspirations are outlined and specific projections
may be made. These goals and projections are considered forward-looking
statements and are based on managements beliefs and assumptions.

Forward-looking statements
involve risks and uncertainties that may cause actual results to be materially
different from the results predicted. Factors that could cause actual results to
differ are often presented with forward-looking statements. In addition, other
factors could cause actual results to differ materially from those indicated in
any forward-looking statement. These include:

- Factors affecting operations, such as:
unusual weather conditions;catastrophic weather-related damage;unscheduled generation outages;unusual maintenance or repairs;unanticipated changes in fossil fuel costs, gas supply costs, or availability constraints;environmental incidents; andelectric transmission or gas pipeline system constraints.
- unusual weather conditions;
- catastrophic weather-related damage;
- unscheduled generation outages;
- unusual maintenance or repairs;
- unanticipated changes in fossil fuel costs, gas supply costs, or availability constraints;
- environmental incidents; and
- electric transmission or gas pipeline system constraints.
- Legislative and regulatory initiatives regarding deregulation of the industry,
including potential deregulation legislation to be passed in Indiana, and
potential national deregulation legislation being contemplated by the United
States (U.S.) Congress.
- The timing and extent of the entry of additional competition in electric or gas
markets and the effects of continued industry consolidation through the pursuit
of mergers, acquisitions, and strategic alliances.
- Regulatory factors such as changes in the policies or procedures that set rates,
changes in our ability to recover investments made under traditional regulation
through rates, and changes to the frequency and timing of rate increases.
- Financial or regulatory
accounting principles or policies imposed by governing bodies.
- Political, legal, and economic conditions and developments in the U.S. and the foreign countries in which we have
     a presence.  This would include inflation rates and monetary fluctuations.
- Changing market conditions and other factors related to physical energy and
financial trading activities. These would include price, basis, credit,
liquidity, volatility, capacity, transmission, currency exchange rates, interest
rates, and warranty risks.
- The performance of projects undertaken by our non-regulated businesses and the
success of efforts to invest in and develop new opportunities.
- Availability of, or cost of, capital.
- Employee workforce factors, including changes in key executives, collective
bargaining agreements with union employees, and work stoppages.
- Legal and regulatory delays and other obstacles associated with mergers,
acquisitions, and investments in joint ventures.
- Costs and effects of legal and administrative proceedings, settlements,
investigations, and claims. Examples can be found in Note 4 of the Notes
to Financial Statements in Part 1. Financial Information
beginning on page 30.
- Changes in international, federal, state, or local legislative requirements,
such as changes in tax laws, tax rates, and environmental laws and regulations.

Unless we otherwise have a
duty to do so, the Securities and Exchange Commissions (SEC) rules do not
require forward-looking statements to be revised or updated (whether as a result
of changes in actual results, changes in assumptions, or other factors affecting
the statements). Our forward-looking statements reflect our best beliefs as of
the time they are made and may not be updated for subsequent developments.

### ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

### INTRODUCTION

In MD&A, we explain
liquidity, capital resources, and results of operations. Specifically, we
discuss the following:

- factors affecting current and future operations;
- why revenues and expenses changed from period to period; and
- how the above items affect our overall financial condition.

### LIQUIDITY

In the
Liquidity section, we discuss environmental issues and other
investing activities as they relate to our current and future cash needs. In the
Capital Resources section beginning on page 44, we discuss how we
intend to meet these capital requirements.

### Environmental Issues

See Notes 4(a), (b), (c), and (d), respectively, of the "Notes to Financial Statements" in "Part I.  Financial Information"
on pages 30 through 34.

### FUCO/EWG Investment Limitations

As discussed in the 1999
Form 10-K, our ability to invest in growth initiatives, such as Exempt Wholesale
Generators (EWG) and Foreign Utility Companies (FUCO), is limited by certain
legal and regulatory requirements, including the Public Utility Holding Company
Act of 1935, as amended (PUHCA). In late 1999, Cinergy (Cinergy Corp. and all of
its regulated and non-regulated subsidiaries) filed a request with the SEC under
the PUHCA for additional authority to, among other things, increase the amount
we can invest in EWGs and FUCOs. On June 23, 2000, the SEC issued an order
granting Cinergy approximately $676 million in additional authority under the
PUHCA to invest in EWGs and FUCOs. This order supplements our existing authority
under PUHCA, based on a prior SEC order, to make such investments, which had
been capped at an amount equal to 100 percent of Cinergys average
consolidated retained earnings for the preceding four calendar quarters
(approximately $1.055 billion). As of September 30, 2000, we had invested or
committed to invest approximately $752 million of the approximately $1.731
billion available.

### CAPITAL RESOURCES

### Debt

As discussed in the 1999
Form 10-K, Cinergy Corp. filed a request with the SEC under the PUHCA for
authority to increase its financing capacity. On June 23, 2000, the SEC issued
an order under the PUHCA authorizing Cinergy Corp. to increase its total
capitalization at December 31, 1999 (excluding retained earnings and accumulated
other comprehensive income) by an additional $5 billion, through issuance of any
combination of equity and debt securities. This increased authorization is
subject to certain conditions, including, among others, that common equity
comprises at least 30 percent of Cinergys consolidated capital structure
and that Cinergy, under certain circumstances, maintains an investment grade
rating on its senior debt obligations. This increased authority is intended to
provide Cinergy flexibility to respond quickly and efficiently to the
companys financing needs and available conditions in capital markets.

Short-term Debt     In connection with the current SEC authorization, Cinergy Corp. has established lines of
credit.  As of
September 30, 2000, Cinergy Corp. had $306 million remaining unused and available on its established lines.

Our operating companies
have regulatory authority to borrow up to a total of $853 million in short-term
debt ($453 million for The Cincinnati Gas & Electric Company (CG&E) and
its subsidiaries including $50 million for The Union Light, Heat and Power
Company (ULH&P), and $400 million for PSI Energy, Inc. (PSI)). In connection
with this authority, CG&E and PSI have established lines of credit, of
which, $139 million and $91 million, respectively, remained unused and available
at September 30, 2000.

Also, our non-regulated
subsidiaries have established lines of credit. As of September 30, 2000, $2.4
million was unused and available on these established lines. Our non-regulated
subsidiaries have the availability of funds from Cinergy Corp. if the need
arises.

A portion of each
companys committed lines is used to provide credit support for commercial
paper (discussed below) and other uncommitted lines. When committed lines are
reserved for commercial paper or other uncommitted lines, they are not available
for additional borrowings.

Commercial PaperThe
commercial paper (debt instruments exchanged between companies) program is
limited to a maximum outstanding principal amount of $400 million for Cinergy
Corp. As of September 30, 2000, Cinergy Corp. had issued $246 million in
commercial paper.

CG&E and PSI also have
the capacity to issue commercial paper, which must be supported by available
committed lines of the respective company. The maximum outstanding principal
amount for CG&E is $200 million and for PSI is $100 million. At September
30, 2000, neither CG&E nor PSI had issued any commercial paper.

Variable Rate Pollution
Control Notes     CG&E and PSI have issued variable rate pollution control notes
(tax-exempt notes obtained to finance equipment or land development for
pollution control purposes). Because the holders of these notes have the right
to redeem their notes on any business day, they are reflected in Notes payable
and other short-term obligations in the Consolidated Balance Sheets for Cinergy
on page 7, for CG&E on page 14, and for PSI on page 19. At September 30,
2000, CG&E and PSI had $184 million and $82.6 million, respectively,
outstanding in pollution control notes.

Money Pool     Our operating
companies and their subsidiaries participate in a money pool arrangement to
better manage cash and working capital requirements. Under this arrangement, our
operating companies and their subsidiaries with surplus short-term funds provide
short-term loans to each other. This surplus cash may be from internal or
external sources. The amounts outstanding under this money pool arrangement are
shown as Notes receivable from affiliated companies or Notes payable to
affiliated companies on the Consolidated Balance Sheets for CG&E on pages 13
through 14, PSI on pages 18 through 19, and the Balance Sheets for ULH&P on
pages 23 through 24.

Long-term Debt     Under the
PUHCA authorization mentioned above, we are able to issue and sell long-term
debt at the parent holding company level. As of September 30, 2000, Cinergy
Corp. has $400 million of long-term debt outstanding.

Currently, our operating
companies have the following types of outstanding long-term debt: First Mortgage
Bonds and other Secured Notes, and Senior and Junior Unsecured Debt. Under our
existing authority, the remaining unissued debt, as of September 30, 2000, is
reflected in the following table:

---

`Authorizing Agency                       CG&E         PSI        ULH&P
                                                                  (in millions)

      Applicable State Utility Commission
      (Secured or Unsecured Debt)                          $200         $346         $30`

---

We may, at any time, request additional long-term debt authorization.  This request is subject to regulatory approval,
which may or may not be granted.

As of September 30, 2000, through shelf registrations filed with the SEC under the Securities Act of 1933, we could issue
the following amounts of debt securities:

---

`CG&E         PSI        ULH&P
                                                                             (in millions)

                First Mortgage Bonds and Other Secured Notes         $300         $265         $20
                Senior or Junior Unsecured Debt                        50          400          30`

---

For information regarding recent issuances and redemptions of long-term debt securities, see Note 3 of the "Notes to
Financial Statements" in "Part I.  Financial Information" on page 29.

### Common Stock

Cinergy Corp. currently has
SEC authorization to issue and sell 30 million shares of common stock under
various stock-based plans. This authorization expires December 31, 2000. On
September 29, 2000, Cinergy Corp. filed a request with the SEC under the PUHCA
for authority to issue and/or sell up to 50 million shares of common stock over
a 10-year period under various stock-based plans. We intend to use the proceeds
from the transactions described for general corporate purposes.

### Securities Ratings

On June 1, 2000, Fitch IBCA, Inc. and Duff & Phelps Credit Rating Co. merged, and are now known as Fitch, thereby combining
their ratings of Cinergy Corp. and its affiliates.  As of September 30, 2000, the major credit rating agencies rated our
securities as follows:

---

`Fitch(1)       Moody's (2)          S&P (3)


Cinergy Corp.
    Corporate Credit                BBB+            Baa2               BBB+
    Commercial Paper                F-2             P-2                A-2


CG&E
    Secured Debt                    A-              A3                 A-
    Senior Unsecured Debt           BBB+            Baa1               BBB+
    Junior Unsecured Debt           BBB             Baa2               BBB
    Preferred Stock                 BBB             baa1               BBB
    Commercial Paper                F-2             P-2                Not Rated


PSI
    Secured Debt                    A-              A3                 A-
    Senior Unsecured Debt           BBB+            Baa1               BBB+
    Junior Unsecured Debt           BBB             Baa2               BBB
    Preferred Stock                 BBB             baa1               BBB
    Commercial Paper                F-2             P-2                Not Rated


ULH&P
    Secured Debt                    A-               A3                A-
    Unsecured Debt                  Not Rated        Baa1              BBB+


         (1)  Fitch (Fitch)
         (2)  Moody's Investors Service (Moody's)
         (3)  Standard & Poor's Ratings Services (S&P)`

---

These securities ratings
may be revised or withdrawn at any time, and each rating should be evaluated
independently of any other rating.

### Guarantees

We are subject to a SEC
order under the PUHCA, which limits the amounts Cinergy Corp. can have
outstanding under guarantees (promises to pay by one party in the event of
default by another party) at any one time to $2 billion. This is an increase
from the previous $1 billion guarantee level as a result of the June 23, 2000
order received from the SEC. As of September 30, 2000, we had $741 million
outstanding under the guarantees issued.

### 2000 RESULTS OF OPERATIONS

### SUMMARY OF RESULTS

Electric and gas margins and net income for Cinergy, CG&E, and PSI for the quarters ended September 30, 2000, and 1999,
were as follows:

---

`Cinergy (1)               CG&E                  PSI
                                 2000          1999      2000          1999       2000          1999
                                                            (in thousands)

   Electric gross margin        $551,279     $505,486   $268,697      $288,849   $217,754     $212,178
   Gas gross margin               43,000       26,578     27,199        24,256          -            -
   Net income                     93,814      121,563     39,096        48,152     30,613       15,658

  (1)  The results of Cinergy also include amounts related to non-registrants.`

---

Our diluted earnings per
share for the third quarter of 2000 increased to $.58 per share from $.33 per
share (before a gain of $.43 from the sale of the companys interest in
Midlands Electricity plc (Midlands) in July 1999).

Earnings from our regulated
operations, including the commodities supply business, increased $.22 per share
in the third quarter of 2000, when compared to the same period of 1999. The
improved results are primarily attributable to an increase in gross margins from
the commodities supply business. Offsetting this increase was a decrease of $.40
per share in the contribution to earnings of our non-regulated investment
activities. This decrease primarily reflects the loss of earnings from the
companys share in Midlands, which was sold in the third quarter of 1999.

The explanations below
follow the line items on the Statements of Income for Cinergy,
CG&E, and PSI, which begin on page 5. However, only the line items that
varied significantly from prior periods are discussed.

### ELECTRIC OPERATING REVENUES

---

`Cinergy (1)                  CG&E                   PSI

                2000       1999   % Change  2000       1999  % Change    2000       1999   % Change
                                                  (in millions)
Retail       $   714    $   799      (11)    $402      $426       (6)     $312      $374      (17)
Wholesale        788        564       40      383       269       42       478       322       48
Other             97         34      185        7         5       40        14        11       27
                  --         --                 -         -                 --        --
  Total       $1,599     $1,397       14     $792      $700       13      $804      $707       14

(1)   The results of Cinergy also include amounts related to non-registrants.`

---

Electric operating revenues
for Cinergy, CG&E, and PSI increased for the quarter ended September 30,
2000, as compared to 1999, mainly due to an increase in volumes and the average
price per kilowatt-hour (kWh) realized on non-firm wholesale transactions
related to the commodities supply business. Non-firm power is power without a
guaranteed commitment for physical delivery. This increase is somewhat offset by
a decrease in retail revenues, which reflects decreased volumes due to a 25
percent reduction in the number of cooling degree-days (a measure of temperature
variance from normal).

The increase in other
electric operating revenues for Cinergy primarily reflects marketing activities
of Cinergy Capital & Trading, Inc. (CC&T), a Cinergy affiliate.

### GAS OPERATING REVENUES

---

`Cinergy (1)                           CG&E
                    2000       1999   % Change        2000       1999    % Change
                                            (in millions)
Non-regulated       $629        $337      87         $   -     $   -         -
Retail                40          30      33            40        30        33
Transportation         8           8       -             8         8         -
Other                  1           1       -             1         1         -
                       -           -                     -         -
   Total            $678        $376      80           $49       $39        26

(1)  The results of Cinergy also include amounts related to non-registrants.`

---

Gas operating revenues for Cinergy increased in the third quarter of 2000, when compared to the same period last year.
This is primarily the result of an increase in gas commodity trading activity.  CG&E's retail revenues increased primarily
due to a higher price realized per thousand cubic feet (mcf) sold, when compared to the same period in 1999.

### OTHER REVENUES

Other operating revenues
for Cinergy increased $13 million in the third quarter of 2000, when compared to
the same period in 1999, primarily due to revenues from the marketing of
energy-related services.

### OPERATING EXPENSES

---

`Cinergy (1)                      CG&E                          PSI
                           2000      1999    % Change   2000      1999     % Change   2000      1999     % Change
                                                              (in millions)
    Fuel                 $   181    $  200      (10)    $  87      $  91       (4)    $  90       $100      (10)
    Purchased and
      exchanged power        867       691       25       436        320       36       496        395       26
    Gas purchased            635       349       82        22         14       57         -          -        -
    Operation                212       207        2        86         81        6        81         99      (18)
    Maintenance               48        39       23        24         22        9        23         17       35
    Depreciation and
      amortization            94        89        6        53         52        2        36         34        6
    Taxes other than
      income taxes            67        70       (4)       52         54       (4)       15         15        -
                              --        --                 --         --                 --         --
      Total               $2,104    $1,645       28      $760       $634       20      $741       $660       12

(1)   The results of Cinergy also include amounts related to non-registrants.`

---

Fuel represents the cost of
coal, natural gas, and oil that is used to generate electricity. The following
table details the changes to fuel expense from the quarter ended September 30,
1999, to the quarter ended September 30, 2000:

---

`Cinergy (1)    CG&E        PSI

                                                    (in millions)
   Fuel expense - September 30, 1999       $200          $91        $100

   Increase (Decrease) due to changes in:
   Price of fuel                             (7)          (7)          -
   Deferred fuel cost                        (8)           3         (11)
   kWh generation                             1            -           1
   Other                                     (5)           -           -
                                             --           --          --
   Fuel expense - September 30, 2000       $181          $87        $ 90


   (1) The results of Cinergy also include amounts related to non-registrants.`

---

Purchased and exchanged
power expense increased for Cinergy, CG&E, and PSI for the third quarter of
2000, compared to last year, primarily due to an increase in purchases of
non-firm wholesale power as a result of an increase in sales volume in the
energy marketing and trading operations.

Gas purchased expense
increased for Cinergy for the third quarter of 2000, when compared to the same
period last year, primarily due to increased gas commodity trading activity and,
for both Cinergy and CG&E, an increase in the average cost per mcf of gas
purchased. CG&Es Gas purchased expense also increased due to higher
mcf volumes purchased during the third quarter of 2000, as compared to the same
period of 1999.

PSIs Operation
expenses decreased for the quarter ended September 30, 2000, as compared to the
same period last year, due to a number of factors, including a reduction in the
amortization of demand-side management costs as a result of the expiration of
the agreement in May 2000.

Cinergys,
CG&Es, and PSIs Maintenance expenses increased for the quarter
ended September 30, 2000, as compared to the same period last year, primarily
due to activities associated with planned PSI production projects and other
repairs performed at certain CG&E facilities.

Cinergys Depreciation
and amortization costs increased for the quarter ended September 30, 2000, as
compared to the same period last year, primarily due to additions to depreciable
plant.

### INTEREST

Cinergys Interest
expense increased $4 million for the third quarter of 2000, when compared to the
same period last year, due to an increase in short-term borrowings and average
short-term interest rates.

### 2000 RESULTS OF OPERATIONS

### SUMMARY OF RESULTS

Electric and gas margins
and net income for Cinergy, CG&E, and PSI for the nine months ended
September 30, 2000, and 1999, were as follows:

---

`Cinergy (1)                   CG&E                     PSI
                                2000          1999         2000          1999       2000          1999
                                                           (in thousands)

   Electric gross margin      $1,666,999   $1,531,876    $874,160      $832,346   $702,030     $686,045
   Gas gross margin              177,404      148,638     151,397       142,295          -            -
   Net income                    307,368      307,866     190,941       167,311     99,742       81,079

  (1)  The results of Cinergy also include amounts related to non-registrants.`

---

Our diluted earnings per share for the nine months ending September 30, 2000, decreased slightly to $1.92 per share from
$1.93 per share for the same period of 1999.

Earnings of our regulated operations, including the commodities supply business, increased $.56 per share for the nine
months ending September 30, 2000, when compared to the same period in 1999.  The improved results are primarily
attributable to an increase in gross margins from the commodities supply business.  Offsetting this increase was a decrease
of $.57 per share in the contribution to earnings of our non-regulated investment activities.  This decrease primarily
reflects the loss of earnings from the company's share in Midlands, which was sold in the third quarter of 1999.

The explanations below follow the line items on the "Statements of Income" for Cinergy, CG&E, and PSI, which begin on page
5.  However, only the line items that varied significantly from prior periods are discussed

### ELECTRIC OPERATING REVENUES

---

`Cinergy (1)                        CG&E                           PSI
                2000       1999   % Change     2000      1999    % Change    2000      1999    % Change
                                                    (in millions)
Retail        $2,015     $2,098       (4)     $1,114    $1,129       (1)   $   901   $   970       (7)
Wholesale      1,727      1,115       55         846       515       64      1,026       653       57
Other            175         94       86          17        15       13         31        30        3
                 ---         --                   --        --                  --        --
  Total       $3,917     $3,307       18      $1,977    $1,659       19     $1,958    $1,653       18

(1)   The results of Cinergy also include amounts related to non-registrants.`

---

Electric operating revenues for Cinergy, CG&E, and PSI increased for the nine months ended September 30, 2000, as compared
to 1999, mainly due to an increase in volumes and the average price per kWh realized on non-firm wholesale transactions
related to commodities supply business.  Non-firm power is power without a guaranteed commitment for physical delivery.
This increase is somewhat offset by a decrease in retail revenues, which reflects decreased volumes due to a 21 percent
reduction in the number of cooling degree-days.

The increase in other electric operating revenues for Cinergy primarily reflects marketing activities of CC&T.

### GAS OPERATING REVENUES

---

`Cinergy (1)                          CG&E
                    2000        1999  % Change       2000      1999     % Change
                                          (in millions)
Non-regulated     $1,383     $   871      59       $     -   $     -         -
Retail               241         214      13           241       214        13
Transportation        41          38       8            41        38         8
Other                  3           3       -             5         4        25
                       -           -                     -         -
   Total          $1,668      $1,126      48          $287      $256        12

(1)  The results of Cinergy also include amounts related to non-registrants.`

---

Gas operating revenues for Cinergy increased in the nine months ending September 30, 2000, when compared to the same period
last year.  This is primarily the result of an increase in gas commodity trading activity.

CG&E's retail revenues increased primarily due to a higher price realized per mcf sold.  Transportation revenues increased
due to the continued trend of full-service customers (customers who purchase gas and utilize the transportation services of
CG&E) purchasing gas directly from suppliers and using transportation services provided by CG&E.

### OTHER REVENUES

Other operating revenues for Cinergy increased $41 million for the nine months ending September 30, 2000, when compared to
the same period in 1999, primarily due to revenues from the marketing of energy-related services.

### OPERATING EXPENSES

---

`Cinergy (1)                      CG&E                          PSI
                           2000      1999    % Change   2000      1999     % Change   2000      1999     % Change
                                                              (in millions)
    Fuel                 $   574    $  584       (2)  $   256    $   253        1    $  302     $  311       (3)
    Purchased and
      exchanged power      1,676     1,192       41       847        573       48       954        656       45
    Gas purchased          1,491       977       53       135        114       18         -          -        -
    Operation                636       573       11       260        235       11       259        269       (4)
    Maintenance              159       153        4        79         76        4        80         77        4
    Depreciation and
      amortization           278       263        6       157        153        3       106        102        4
    Taxes other than
      income taxes           201       209       (4)      155        163       (5)       43         44       (2)
                             ---       ---                ---        ---                 --         --
      Total               $5,015    $3,951       27    $1,889     $1,567       21    $1,744     $1,459       20

(1)   The results of Cinergy also include amounts related to non-registrants.`

---

Fuel represents the cost of
coal, natural gas, and oil that is used to generate electricity. The following
table details the changes to fuel expense from the nine months ending September
30, 1999, to the nine months ending September 30, 2000:

---

`Cinergy (1)     CG&E         PSI
                                                   (in millions)
   Fuel expense - September 30, 1999       $584         $253        $311

   Increase (Decrease) due to changes
   in:
     Price of fuel                          (17)         (14)         (3)
     Deferred fuel cost                      (9)          10         (19)
     kWh generation                          20            7          13
     Other                                   (4)           -           -
                                             --           --          --
   Fuel expense - September 30, 2000       $574         $256        $302


   (1) The results of Cinergy also include amounts related to non-registrants.`

---

Purchased and exchanged power expense increased for Cinergy, CG&E, and PSI for the nine months ending September 30, 2000,
compared to last year.  This increase was primarily due to an increase in purchases of non-firm wholesale power as a result
of an increase in sales volume in the energy marketing and trading operations.

Gas purchased expense increased for Cinergy for the nine months ending September 30, 2000, when compared to the same period
last year, primarily due to increased gas commodity trading activity and, for both Cinergy and CG&E, an increase in the
average cost per mcf of gas purchased.

Cinergy's Operation expenses increased for the nine months ended September 30, 2000, as compared to the same period last
year, primarily due to an increase in expenses associated with the marketing of energy-related services.  Additionally,
operation expenses increased for Cinergy, CG&E, and PSI as a result of the limited early retirement plan (LERP).  For a
further discussion of the LERP, see the "Corporate Center Restructuring" section on page 62.  Cinergy's overall increase
was partially offset by PSI's reduction in the amortization of demand-side management costs as a result of the expiration
of the agreement in May 2000.

Cinergy's Depreciation and amortization costs increased for the nine months ending September 30, 2000, as compared to the
same period last year, primarily due to additions to depreciable plant.

### EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARIES

Cinergy's Equity in earnings of unconsolidated subsidiaries decreased $52 million for the nine months ending September 30,
2000, when compared to the same period last year.  This decrease is primarily due to the loss in earnings resulting from
our 50 percent ownership interest in Midlands, which was sold in the third quarter of 1999.

### INTEREST

Cinergy's Interest expense decreased $13 million for the nine months ending September 30, 2000, when compared to the same
period last year.  This decrease is primarily due to a reduction in short-term borrowings as a result of the sale of
Midlands.  This decrease was slightly offset by an increase in average short-term interest rates.

### ULH&P

The Results of Operations discussion for ULH&P is presented only for the nine months ended September 30, 2000, in
accordance with General Instruction H(2)(a).

Electric and gas margins and net income for ULH&P for the nine months ended
September 30, 2000, and 1999, were as follows:

---

`ULH&P
                                        2000           1999
                                          (in thousands)
   Electric gross margin              $43,526        $38,025
   Gas gross margin                    26,961         25,214
   Net income                          13,108          9,073`

---

Electric operating revenues
increased for the nine months ended September 30, 2000, when compared to last
year, mainly due to an increase in the average price per kWh realized and growth
in kWh usage for commercial and industrial customers. Partially offsetting this
increase was a decrease in residential revenues due to a 21 percent reduction in
the number of cooling-degree days.

The increase in Gas
operating revenues for the nine months ended September 30, 2000, compared to
last year, was mainly due to a higher price received per mcf sold. Gas purchased
expense increased due to an increase in the average cost per mcf of gas
purchased.

The increase in Depreciation and amortization costs for the nine months ended
September 30, 2000, as compared to the same period last year, was primarily due to additions to
depreciable plant.

Interest expense increased
for the nine months ended September 30, 2000, as compared to the same period
last year, primarily due to an increase in interest expense on long-term debt
and increased borrowings from CG&E and PSI.

### 2000 Results of Operations - Future

### FUTURE EXPECTATIONS/TRENDS

In the Future
Expectations/Trends section, we discuss electric industry developments;
market risk sensitive instruments and positions; accounting changes;
investments, acquisitions, and dispositions; the corporate center restructuring;
the shareholder rights plan; and a Gas Service Disruption. Each of these
discussions will address the current status and potential future impact on our
results of operations and financial condition.

### ELECTRIC INDUSTRY

### Wholesale Market Developments

Supply-side Actions     As
discussed in the 1999 Form 10-K, on September 30, 1999, one of our non-regulated
subsidiaries formed a partnership (each party having a 50 percent ownership)
with Duke Energy North America LLC, to increase the available generating
capacity for use during peak demand periods. The partnership was formed for the
purpose of jointly constructing and owning three wholesale generating
facilities.

On March 9, 2000, the
Indiana Utility Regulatory Commission (IURC) issued an order (Cause No. 41569),
requiring the partnership to immediately cease all construction activities at
the site located near Cadiz, (Henry County) Indiana (a peaking plant with a
total capacity of 132 megawatts (MW)). In making this decision the IURC found
that it needed additional information related to the project before issuing a
final decision. The IURC requested the Henry County Planning Commission and/or
the Henry County Commissioners to supply additional information, which was
provided on June 1, 2000. The issues raised were air quality, water supply,
noise control, landscaping, plant abandonment, and emergency services training.
During the third quarter, the partnership filed responses to the issues
indicating how it would address these concerns. The IURC scheduled another
hearing on this matter to be held on November 17, 2000. At this time, Cinergy
cannot predict the outcome of this matter.

The remaining facilities became fully operational in June 2000.  The total capacity of these operational plants is
approximately 1,268 MW.

### Retail Market Developments

Federal     The Clinton
Administration has introduced a billthe Comprehensive Electricity
Competition Actthat would grant all retail electric customers the right to
choose their electricity supplier beginning January 1, 2003. The legislation
would allow a state regulatory authority to opt out of the retail competition
system if the authority conducted a public proceeding and determined that the
electric customers of that state would be better served by a monopoly system or
an alternative retail competition plan. A compromise bipartisan
deregulation bill introduced on May 26, 1999, by Representatives Largent (R-OK)
and Markey (D-MA) includes similar mandates and opt out provisions with an
effective date of January 1, 2002.

After attempting for
several months to reach consensus on comprehensive electric restructuring
legislation, the U.S. Senate on June 30, 2000, approved S.2071, the Electric
Reliability 2000 Act. S.2071 would authorize the establishment of a North
American Electric Reliability Organization and would not legislate on additional
issues surrounding the restructuring of the electricity industry. It remains
uncertain whether federal retail customer choice legislation will be passed by
this Congress.

Ohio     As discussed in the
1999 Form 10-K, on July 6, 1999, Ohio Governor Robert Taft signed Amended
Substitute Senate Bill No. 3 (Electric Restructuring Bill), beginning the
transition to electric deregulation and customer choice for the state of Ohio.
The Electric Restructuring Bill creates a competitive electric retail service
market beginning January 1, 2001. The legislation provides for a market
development period that begins January 1, 2001, and ends no later than December
31, 2005. Ohio electric utilities have an opportunity to recover Public
Utilities Commission of Ohio (PUCO)-approved transition costs during the market
development period. The legislation also freezes retail electric rates during
the market development period, at the rates in effect on October 4, 1999, except
for a five-percent reduction in the generation component of residential rates.
Furthermore, the legislation contemplates that twenty percent of the current
electric retail customers will switch suppliers no later than December 31, 2003.

On May 8, 2000, CG&E
reached a stipulation agreement with the PUCO staff and various other interested
parties with respect to its proposal to implement electric customer choice in
Ohio beginning January 1, 2001. On August 31, 2000 the PUCO approved
CG&Es stipulation agreement. The major features of this agreement
include:

- Residential customer rates will be frozen through December 31, 2005;
- Residential customers will receive a five-percent reduction in the generation
portion of their electric rates, effective January 1, 2001;
- CG&E has agreed to provide $4 million over the next five years in support of
energy efficiency and weatherization services for low income customers;
- The creation of a Regulatory Transition Charge (RTC), designed to recover
CG&Es regulatory assets and other transition costs over a ten-year
period;
- Authority for CG&E to transfer its generation assets to a separate,
non-regulated corporate subsidiary to provide flexibility to manage its
generation asset portfolio in a manner that enhances opportunities in a
competitive marketplace;
- Authority for CG&E to apply the proceeds of transition cost recovery to
costs incurred during the transition period including implementation costs and
purchased power costs that may be incurred by CG&E to maintain an operating
reserve margin sufficient to provide reliable service to its customers;
- CG&E will provide standard offer default supplier service (i.e., CG&E
will be the supplier of last resort, so that no customer will be without an
electric supplier); and
- CG&E has agreed to provide shopping credits to switching customers.

With regard to the PUCO's order, two parties filed applications for a rehearing with the PUCO.  On October 18, 2000, the
PUCO denied these applications for rehearing.

In connection with the PUCO
approval of the stipulation agreement, CG&E discontinued Statement of
Financial Accounting Standards No. 71, Accounting for the Effects of Certain
Types of Regulation (Statement 71) for the generation portion of its business.
The effect of discontinuation of Statement 71 is immaterial to CG&Es
results of operations and financial condition. Additionally, pursuant to
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of, our
analysis indicates future revenues will be sufficient to recover the costs of
CG&Es generating assets over their estimated remaining lives.

### Midwest ISO

As part of the effort to
create a competitive wholesale power marketplace, the Federal Energy Regulatory
Commission (FERC) approved the formation of the Midwest Independent Transmission
System Operator, Inc. (Midwest ISO) during 1998. The Midwest ISO will oversee
the combined transmission systems of its members. The organization is expected
to begin operations in November of 2001. This effort will help to facilitate a
reliable and efficient market for electric power and create open transmission
access consistent with FERC policies. The Midwest ISO currently includes 16
members with over 50,000 miles of transmission lines in 11 states and an
aggregate investment of approximately $8 billion. Two members have indicated
their intent to leave the Midwest ISO by the end of 2001. It is unclear at this
time if these members will receive the necessary regulatory approvals to
withdraw, and how their potential withdrawal may impact the operations of the
Midwest ISO.

### Significant Rate Developments

Purchased Power Tracker     On
May 28, 1999, PSI filed a petition with the IURC seeking approval of a purchased
power tracking mechanism (Tracker). This request is designed to provide for the
recovery of costs related to purchases of power necessary to meet native load
requirements to the extent such costs are not sought through the existing fuel
adjustment clause. The Tracker is intended to apply to a limited number of
purchases made for the purpose of ensuring adequate power reserves to meet peak
retail native load requirements, which in recent years have coincided with
periods of extreme price volatility. As proposed by PSI, the Tracker would only
apply to capacity purchases, which are presented to the IURC for review and
approved by the IURC as reasonable under the circumstances. On May 31, 2000, the
IURC approved the Tracker for the summer of 2000. The IURC is now expected to
review PSIs purchases and rule on its associated request for recovery of
costs. The IURC will also determine whether it is appropriate for PSI to
continue using the Tracker for future periods. Costs have been deferred totaling
approximately $18 million for subsequent recovery in connection with this
matter.

On June 20, 2000, the
Indiana Office of Utility Consumer Counselor filed an application for a
rehearing regarding the Tracker. At the present time, PSI cannot predict the
outcome of this matter.

Purchased Power Agreement     ULH&P has a contract to purchase electric commodity requirements from
CG&E. This cost-based contract, which is due to expire December 31, 2001, is
currently under negotiation with the involvement of the Kentucky Public Service
Commission. The ultimate supplier(s) and the pricing of electric commodity
requirements contained in any new arrangement could reflect a market-based
approach. At the current time we are unable to predict the outcome of this
matter.

### MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS

### Energy Commodities Sensitivity

We market and trade
electricity, natural gas, and other energy-related products. We use
over-the-counter forward and option contracts for the purchase and sale of
electricity and also trade exchange-traded futures contracts. See Notes 1(b) and
1(c) of the Notes to Financial Statements in Part I. Financial
Information on pages 26 through 28, for our accounting policies for
certain derivative instruments. For additional information, see Item 7.
Managements Discussion and Analysis of Financial Condition and Results of
Operations pages 61 through 64, of our 1999 Form 10-K. Our market risks
have not changed materially from the market risks reported in the 1999 Form
10-K.

### Exchange Rate Sensitivity

From time to time, we may
utilize foreign exchange forward contracts and currency swaps to hedge certain
of our net investments in foreign operations. See Notes 1(b) and 1(c) of the
Notes to Financial Statements in Part I. Financial
Information on pages 26 through 28, for our accounting policies for
certain derivative instruments.

### Interest Rate Sensitivity

Our net exposure to changes
in interest rates primarily consist of debt instruments with floating interest
rates that are benchmarked to various market indices. To manage the exposure to
fluctuations in interest rates and to lower funding costs, we evaluate the use
of, and have entered into, interest rate swaps. See Notes 1(b) and 1(c) of the
Notes to Financial Statements in Part I. Financial
Information on pages 26 through 28, for our accounting policies for
certain derivative instruments. Our market risks have not changed materially
from the market risks reported in the 1999 Form 10-K.

### INVESTMENTS, ACQUISITIONS, AND DISPOSITIONS

On October 26, 2000, the
Greek government awarded a 30-year franchise for the development and operation
of the natural gas system in the Athens region of Greece to a consortium formed
by an international development affiliate of Cinergy and Shell Gas B.V. (Shell).
With an investment of 58 billion Greek drachmas (approximately $146 million),
the consortium will own 49 percent of the new gas company, EPA ATTIKI. The Greek
government will retain 51 percent ownership in EPA ATTIKI. Cinergy and Shell
will have day-to-day management of the business. The transaction is expected to
be complete in early 2001.

On October 31, 2000,
Reliant Services, LLC, a joint venture equally owned by subsidiaries of Cinergy
and Vectren Corporation, announced the signing of a definitive agreement to
purchase the common stock of Miller Pipeline Corporation (Miller Pipeline) from
NiSource, Inc. for $68 million. Miller Pipeline performs natural gas and water
distribution and transmission construction, repair and rehabilitation primarily
in the Midwest region and the repair and rehabilitation of gas, water, and waste
water facilities nationwide. The acquisition requires review by the United
States Department of Justice under the Hart Scott Rodino Act and should be
completed by the end of 2000.

### ACCOUNTING CHANGES

On August 31, 2000, the
PUCO approved CG&Es stipulation agreement with respect to its proposal
to implement electric customer choice in the state of Ohio. In connection with
the approval of the stipulation agreement, CG&E discontinued the application
of Statement 71 for the generation portion of its business and adopted Statement
of Financial Accounting Standards No. 101, Regulated Enterprises 
Accounting for Discontinuation of Application of FASB Statement No. 71. For a
further discussion on Ohio deregulation, see the Retail Market
DevelopmentsOhio section on page 58.

During the second quarter
of 1998, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (Statement 133). This standard requires companies to
record derivative instruments as assets or liabilities, measured at fair value.
Changes in the derivatives fair value must be recognized currently in
earnings unless specific hedge accounting criteria are met. Hedges are
transactions entered into for the purpose of reducing exposure to one or more
types of business risk. Gains and losses on derivatives that qualify as hedges
can offset related results on the hedged item in the income statement.

In June 1999, the FASB
issued Statement of Financial Accounting Standards No. 137, Accounting for
Derivative Instruments and Hedging Activities-Deferral of the Effective Date of
FASB Statement No.133 (Statement 137). Statement 137 deferred the effective date
of Statement 133 by one year. As a result, Statement 133 will be effective for
fiscal years beginning after June 15, 2000.

Statement of Financial Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities - an Amendment of FASB Statement No. 133 (Statement 138) was issued in June 2000.  Statement 138 addresses
implementation issues and reflects decisions of the FASB regarding recommendations of the FASB-sponsored Derivatives
Implementation Group.

We expect to reflect the
adoption of Statement 133 in financial statements issued beginning in the first
quarter of 2001. In preparation for our implementation of this new standard, we
have formed a cross-functional project team. The project team is identifying and
analyzing all contracts which could be subject to the new standard, developing
required documentation and reporting systems, and promoting internal awareness
of the requirements and potential effects of the new standard. While we continue
to analyze and follow the development of implementation guidelines, at this time
we are unable to predict whether the implementation of this accounting standard
will be material to our results of operations and financial position. However,
the adoption of Statement 133 could increase volatility in earnings and other
comprehensive income.

### CORPORATE CENTER RESTRUCTURING

On March 10, 2000, we
announced a plan to reorganize our corporate center that will eliminate
approximately 240 jobs. In connection with this reorganization, Cinergy offered
a limited early retirement plan (LERP). We have recorded expenses of
approximately $13 million relating to benefits provided to LERP participants.

### SHAREHOLDER RIGHTS PLAN

On July 19, 2000, Cinergy
Corp.s Board of Directors approved a Shareholder Rights Plan (the Plan),
subject to receipt of SEC authorization under PUHCA. On October 6, 2000, the SEC
issued an order authorizing the Plan.

Under the Plan, each
shareholder of record on October 30, 2000, will receive, as a dividend, a right
to purchase from Cinergy Corp. one share of common stock at a price of $100.
Initially, the rights will not be represented by separate certificates and will
not trade separately from Cinergy Corp. shares of common stock. The rights would
separate from the common stock ten days after either of the following occurred:

- the public announcement
of an acquisition of ten percent or more of the companys common stock, or
- the commencement of a tender offer or exchange offer by which a person or
group would acquire ten percent or more of the common stock of Cinergy Corp.

The rights become
exercisable if one of these events occurs and the rights are no longer
redeemable by the board of directors. If the rights become exercisable after
someone has acquired ten percent or more of the companys common stock,
holders of the rights will have the right to purchase the common stock of
Cinergy Corp. at a 50 percent discount. However, any rights held by the acquirer
would not be exercisable.

In addition, if the rights
become exercisable and Cinergy Corp. engages in a merger or consolidation in
which it is not the surviving corporation or in which all or part of its common
stock is changed or exchanged, or if 50 percent or more of the companys
assets are sold, each holder of a right would have the right to acquire common
stock of the acquirer at a 50 percent discount.

The board of directors may direct Cinergy Corp. to redeem the rights at $.01 per right at any time before the tenth day
following the acquisition of ten percent or more of Cinergy Corp. common stock.

### GAS SERVICE DISRUPTION

On October 5, 2000, natural
gas service to a large area of Newport, Kentucky was disrupted after a municipal
utility water main break caused large amounts of water and sediment to enter
ULH&P gas lines. Approximately 3,700 customers were affected. The
restoration required workers to go door-to-door to clean and inspect gas lines
and customer-owned equipment. This effort included assistance from several area
utilities, as well as local and regional heating and cooling contractors. We
currently estimate the total cost to be $4-5 million.

### ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                                      ABOUT MARKET RISK

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 on
page 60, and Notes 1(b) and 1(c) of the Notes to Financial
Statements in Part I. Financial Information on pages 26
through 28.

### PART II. OTHER INFORMATION

### ITEM 1. LEGAL PROCEEDINGS

### NEW SOURCE REVIEW, MANUFACTURED GAS PLANT SITES, AND OTHER

See Notes 4(b),  (c), and (d),  respectively,  of the "Notes to Financial  Statements" in "Part I. Financial  Information" on
pages 31 through 34.

### M METALS SUPERFUND SITE

On July 6, 2000, the EPA
identified PSI and the Indianapolis Power and Light Company (IPL) as potentially
responsible parties for the release of hazardous substances at the M Metals
Superfund Site (Site) located in Indianapolis, Indiana. The EPA advised that it
had taken response actions relating to the Site and had incurred costs of
approximately $500 thousand. The EPA has demanded reimbursement of the costs
incurred related to the Site and has encouraged PSI and IPL to work out an
allocation between themselves for the payment of the costs. However, PSI and IPL
will be held jointly and severally liable for the costs. PSI is considering how
to respond to the demand.

### ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      
Copies of the documents listed below which are identified with an asterisk (*)have heretofore been filed with the Securities
and            Exchange Commission and are
incorporated herein by reference and made a part hereof. 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      Registrant                  Nature of Exhibit                   Filed as Exhibit to:



     Financial Data
        Schedule

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

      Instruments
      defining the
       rights of
     holders, incl.
       indentures

           4         Cinergy         * Rights Agreement between Cinergy Corp. and        Cinergy's Registration
                                                                                         Statement on Form 8-A
                                       The Fifth Third Bank, as Rights Agent.            dated October 16, 2000`

---

(b)      
The following reports on Form 8-K were filed during the quarter or prior to the
filing of the Form 10-Q for the quarter ended
            September 30, 2000:

---

`Date of Report       Registrant          Item Filed


        October 16, 2000     Cinergy           Item 5  Other Events
                                               Item 7  Financial Statements and Exhibits`

---

### 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 Corp., The
Cincinnati Gas & Electric Company, PSI Energy Inc., and The Union Light,
Heat and Power Company 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:  November 13, 2000                             
                                          
      /s/  Bernard F. Roberts



Bernard F. Roberts                            
                                           
;
                                                                               Duly Authorized Officer                         
                                           
;
                                                                                           and                           
                                          
                  
                                                                              Chief Accounting Officer