**UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549**

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**FORM 10-Q**

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

**For the quarterly period ended June 30, 2002**

**IPALCO ENTERPRISES, INC.**
(Exact name of Registrant as specified in its Charter)

**Commission file number 1-8644**



|**Indiana**                                                    | **35-1575582**                         
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**One Monument CircleIndianapolis, IN    46204**(Address of Principal Executive Offices including Zip Code)

**(317) 261-8261**(Registrant's Telephone Number, Including Area Code)







Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file reports), and (2) has been subject to such filing
requirements for the past 90 days.   YES [X]    NO [  ]







**IPALCO ENTERPRISES, INC.
                                    FORM 10-Q
                                     INDEX**



|**PART I - Financial Information**                                                                                                                           | **Page No.**
|------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------
|                                                                                                                                                             |             
|Item 1:   Financial Statements:                                                                                                                              |             
|                                                                                                                                                             |             
|                                                                                                                                                             |             
|Unaudited Statements of Consolidated Operations for the
        
          Three-Month and Six-Month Periods ended June 30, 2002
        
          and 2001 | 3           
|                                                                                                                                                             |             
|Consolidated Balance Sheets as of June 30, 2002 (unaudited)
        
           and December 31, 2001                                                        | 4           
|                                                                                                                                                             |             
|Unaudited Statements of Consolidated Cash Flows for the
        
          Six Months ended June 30, 2002 and 2001                                           | 5           
|                                                                                                                                                             |             
|Notes to Unaudited Consolidated Financial Statements                                                                                                         | 6           
|                                                                                                                                                             |             
|Item 2:   Management's Discussion and Analysis of Financial Condition 
        
and Results of Operations                                                    | 8           
|                                                                                                                                                             |             
|Item 3:   Quantitative and Qualitative Disclosures About Market Risk                                                                                         | 12          
|                                                                                                                                                             |             
|**PART II - Other Information**                                                                                                                              |             
|                                                                                                                                                             |             
|Items 1-6                                                                                                                                                    | 13          
|                                                                                                                                                             |             
|**Signature**                                                                                                                                                | 14          

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**PART I -- FINANCIAL INFORMATION**

Item 1.  Financial Statements

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**IPALCO ENTERPRISES, INC. and SUBSIDIARIES

Unaudited Statements of Consolidated Operations

(In Thousands)**

`Three Months Ended     Six Months Ended
                                               June 30,               June 30,
                                        ---------------------  ---------------------
                                           2002       2001        2002       2001
                                        ---------- ----------  ---------- ----------
ELECTRIC UTILITY OPERATING REVENUES     $ 197,168  $ 205,473   $ 394,638  $ 414,525

UTILITY OPERATING EXPENSES:
 Operation:
   Fuel                                    38,700     45,476      82,664     91,759
   Other                                   23,721     27,244      48,782     70,059
 Power purchased                            6,309      1,537       7,209      2,111
 Maintenance                               20,605     21,877      33,823     41,455
 Termination benefit agreement costs            0      2,857           0     54,540
 Depreciation and amortization             28,138     27,810      55,936     55,381
 Taxes other than income taxes              9,096      8,951      18,255     18,534
 Income taxes-net                          23,322     22,987      49,718     23,633
                                        ---------- ----------  ---------- ----------
  Total operating expenses                149,891    158,739     296,387    357,472
                                        ---------- ----------  ---------- ----------
UTILITY OPERATING INCOME                   47,277     46,734      98,251     57,053
                                        ---------- ----------  ---------- ----------
OTHER INCOME AND (DEDUCTIONS):
 Allowance for equity funds used
   during construction                      1,162        266       2,940        376
 Other-net                                 (1,607)    (3,013)     (1,112)    (2,775)
 Gains on sales of assets, net              2,455        523       2,455        523
 Termination benefit agreement costs            0         78           0     (4,669)
 Merger costs                                   0          0           0     (6,283)
 Income tax benefit-net                     5,222        864      10,570      3,157
                                        ---------- ----------  ---------- ----------
  Total other income (deductions)-net       7,232     (1,282)     14,853     (9,671)
                                        ---------- ----------  ---------- ----------
INCOME BEFORE INTEREST AND OTHER CHARGES   54,509     45,452     113,104     47,382
                                        ---------- ----------  ---------- ----------
INTEREST AND OTHER CHARGES:
 Interest on long-term debt                24,146      9,678      48,292     19,021
 Other interest                               119        252         271      1,212
 Allowance for borrowed funds used
  during construction                        (545)      (128)     (1,379)      (183)
 Amortization of redemption premiums
  and expense on debt-net                     945        522       1,889      1,041
 Preferred dividends of subsidiary            804        804       1,607      1,607
                                        ---------- ----------  ---------- ----------
  Total interest and other charges-net     25,469     11,128      50,680     22,698
                                        ---------- ----------  ---------- ----------
NET INCOME                              $  29,040  $  34,324   $  62,424  $  24,684
                                        ========== ==========  ========== ==========`

See notes to consolidated financial statements.

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**IPALCO ENTERPRISES, INC. and SUBSIDIARIES

Consolidated Balance Sheets

(In Thousands)**

`June 30,   December 31,
                                                               2002         2001
                                                           ------------ ------------
                          ASSETS                            (Unaudited)
UTILITY PLANT:
 Utility plant in service                                  $ 3,020,054  $ 2,942,190
 Less accumulated depreciation                               1,495,929    1,443,736
                                                           ------------ ------------
     Utility plant in service - net                          1,524,125    1,498,454
 Construction work in progress                                 177,113      156,522
 Property held for future use                                   10,768       10,741
                                                           ------------ ------------
     Utility plant - net                                     1,712,006    1,665,717
                                                           ------------ ------------
OTHER ASSETS:
 Nonutility property - at cost, less
  accumulated depreciation                                       1,834        1,742
 Other investments                                              10,594       52,904
                                                           ------------ ------------
     Other assets - net                                         12,428       54,646
                                                           ------------ ------------
CURRENT ASSETS:
 Cash and cash equivalents                                      19,733       28,933
 Accounts receivable and unbilled revenue
   (less allowance for doubtful accounts
    of $963 and $1,095, respectively)                           42,372       48,001
 Fuel - at average cost                                         40,615       28,970
 Materials and supplies - at average cost                       49,262       48,376
 Prepayments and other current assets                              962        1,283
                                                           ------------ ------------
     Total current assets                                      152,944      155,563
                                                           ------------ ------------
DEFERRED DEBITS:
 Regulatory assets                                             114,234       97,809
 Miscellaneous                                                  22,906       22,195
                                                           ------------ ------------
     Total deferred debits                                     137,140      120,004
                                                           ------------ ------------
             TOTAL                                         $ 2,014,518  $ 1,995,930
                                                           ============ ============
              CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
 Common shareholder's equity:
   Premium on 4% cumulative preferred stock                $       649  $       649
   Retained earnings                                             5,473       15,049
   Accumulated other comprehensive loss                        (12,740)     (11,469)
                                                           ------------ ------------
     Total common shareholder's equity (deficit)                (6,618)       4,229
 Cumulative preferred stock of subsidiary                       59,135       59,135
 Long-term debt (less current maturities and sinking
   fund requirements)                                        1,371,964    1,371,930
                                                           ------------ ------------
     Total capitalization                                    1,424,481    1,435,294

CURRENT LIABILITIES:
 Current maturities and sinking fund requirements                  300          300
 Accounts payable                                               43,585       47,798
 Accrued expenses                                               14,813       16,285
 Dividends payable                                                 901          910
 Accrued taxes                                                  31,585        9,438
 Accrued interest                                               21,796       21,892
 Other current liabilities                                      20,426       19,897
                                                           ------------ ------------
     Total current liabilities                                 133,406      116,520
                                                           ------------ ------------
DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES:
 Accumulated deferred income taxes - net                       280,105      271,195
 Unamortized investment tax credit                              32,307       33,690
 Accrued postretirement benefits                                 8,621        9,504
 Accrued pension benefits                                      129,748      125,549
 Miscellaneous                                                   5,850        4,178
                                                           ------------ ------------
     Total deferred credits and other long-term liabilities    456,631      444,116
                                                           ------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
             TOTAL                                         $ 2,014,518  $ 1,995,930
                                                           ============ ============`

See notes to consolidated financial statements.

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**IPALCO ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED STATEMENTS OF CONSOLIDATED CASH FLOWS

(In Thousands)**

`Six Months Ended
                                                                    June 30,
                                                              ---------- ---------
                                                                 2002       2001
                                                              ---------  ---------
Cash Flows from Operations:
 Net income                                                  $  62,424  $  24,684
 Adjustments to reconcile net income to net cash
  provided by operating activities:
    Depreciation and amortization                               56,400     55,211
    Amortization of regulatory assets                            1,513      1,527
    Deferred income taxes and investment tax credit
      adjustments - net                                        (10,279)     6,751
    Gains on sales of assets, net                               (2,455)      (523)
    Allowance for funds used during construction                (4,319)      (559)
  Change in certain assets and liabilities:
    Accounts receivable                                          5,629     17,642
    Fuel, materials and supplies                               (12,531)       168
    Accounts payable and accrued expenses                       (5,685)   (15,324)
    Accrued taxes                                               22,147    (18,143)
    Accrued pension benefits                                     4,199       (746)
    Accrued interest                                               (96)       (18)
    Other - net                                                    361     (1,405)
                                                              ---------  ---------
Net cash provided by operating activities                      117,308     69,265
                                                              ---------  ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Construction expenditures - utility                          (56,464)   (41,896)
  Construction expenditures - nonutility                          (107)         0
  Proceeds from sales of assets                                  4,220     14,077
  Other                                                         (1,462)       (19)
                                                              ---------  ---------
Net cash used in investing activities                          (53,813)   (27,838)
                                                              ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Retirement of long-term debt                                       0     (6,150)
  Common dividends paid                                              0    (14,434)
  Dividends to AES                                             (72,000)   (86,523)
  Proceeds from sales of common stock, net                           0      8,328
  Other                                                           (695)     8,061
                                                              ---------  ---------
Net cash used in financing activities                          (72,695)   (90,718)
                                                              ---------  ---------
Net decrease in cash and cash equivalents                       (9,200)   (49,291)
Cash and cash equivalents at beginning of period                28,933     68,652
                                                              ---------  ---------
Cash and cash equivalents at end of period                   $  19,733  $  19,361
                                                              =========  =========
Supplemental disclosures of cash flow information:
  Cash paid during the period for:
    Interest (net of amount capitalized)                     $  47,286  $  20,079
                                                              =========  =========
    Income taxes                                             $  31,426  $  34,038
                                                              =========  =========`

See notes to consolidated financial statements.

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IPALCO ENTERPRISES, INC. and SUBSIDIARIES

Notes to Unaudited Consolidated
Financial Statements

(Dollars in Millions)

1.  Organization



IPALCO Enterprises, Inc. (IPALCO) is a wholly-owned
subsidiary of The AES Corporation (AES). IPALCO owns all of the outstanding
common stock of its subsidiaries (collectively referred to as Enterprises).
These include its regulated utility subsidiary, Indianapolis Power & Light
Company (IPL) and its unregulated subsidiary, Mid-America Capital Resources,
Inc. (Mid-America). IPL provides electric service to the Indianapolis
metropolitan area and is the primary subsidiary of IPALCO. Mid-America is the
parent company of nonutility energy-related businesses.



2.  Basis of Presentation



The accompanying consolidated financial statements include
the accounts of IPALCO, IPL and Mid-America. All significant intercompany
amounts have been eliminated. The accompanying financial statements are
unaudited; however, they have been prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP) for interim
financial information and in conjunction with the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
disclosures required by GAAP for complete financial statements. In the opinion
of management, all adjustments necessary for fair presentation, consisting of
only normal recurring adjustments, have been included. Due to the seasonal
nature of the electric utility business, the annual results are not generated
evenly by quarter during the year. Certain amounts from prior year financial
statements have been reclassified to conform to the current year presentation.
These unaudited financial statements have been prepared in accordance with the
accounting policies described in IPALCO's audited financial statements for the
year ended December 31, 2001 included in its registration statement on Form S-4
and should be read in conjunction therewith.



3. The AES Acquisition



On March 27, 2001, AES acquired IPALCO through a share
exchange transaction (the AES Acquisition) in accordance with the Agreement and
Plan of Share Exchange dated as of July 15, 2000, among AES and IPALCO (the
Share Exchange Agreement). During the first quarter of 2001, IPALCO expensed
$6.3 of AES Acquisition related costs, which are included in OTHER INCOME AND
(DEDUCTIONS) - Merger Costs. Total AES Acquisition related costs were $12.1.
Also as a result of the AES Acquisition, in the first quarter 2001, IPALCO
recorded $71.8 ($44.8 after tax) of one-time costs related to the termination of
certain management employees. The pretax expenses included $56.4 in costs
associated with termination benefit agreements, $9.2 in supplemental retirement
costs, and $6.2 in restricted stock expense. Substantially all of the
termination benefit agreement costs, supplemental retirement costs, and
restricted stock costs were paid out by March 31, 2001.



4. New Accounting Pronouncements



In June 2001, the Financial Accounting Standards Board
issued new pronouncements: Statement of Financial Accounting Standards (SFAS)
No. 142, "Goodwill and Other Intangibles" and SFAS No. 143, "Accounting for
Asset Retirement Obligations." SFAS No. 142 requires the use of a non
amortization approach to account for purchased goodwill and certain intangibles.
Under a non amortization approach, goodwill and certain intangibles would not be
amortized into results of operations, but instead would be reviewed for
impairment at least annually and written down and charged to results of
operations in the periods in which the recorded value of goodwill and certain
intangibles are determined to be greater than their fair value. SFAS No. 142 was
effective for IPALCO beginning January 1, 2002. The adoption of SFAS No. 142 did
not have any impact on Enterprises' financial position or results of operations.



SFAS No. 143 addresses financial accounting and reporting for
obligations associated with retirement of tangible long-lived assets and the
associated asset retirement costs.  It requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the carrying amount
of the long-lived asset. This statement is effective for Enterprises beginning
January 1, 2003. Management is currently evaluating the impact this statement
will have on our consolidated financial position and results of operations.



In August 2001, the Financial Accounting Standards Board
issued SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived
Assets." SFAS 144 addresses accounting for and reporting of the impairment
or disposal of long-lived assets and was effective for IPALCO beginning January
1, 2002. The adoption of SFAS No. 144 did not have any impact on Enterprises'
financial position or results of operations.



5.  Segment Information



Enterprises' operations are made up almost entirely of its ownership
of IPL, its consolidated electric utility, which is a reportable business
segment. Enterprises' nonutility activities include costs associated with the
AES Acquisition, IPALCO's $750 Senior Secured Notes issued November 2001 (the
IPALCO Notes), approximately $4 and $20 of cash and cash equivalents as of June
30, 2002 and December 31, 2001, respectively, and income taxes related to those
items. There was no operating income for any nonutility activities during the
periods covered by this report and nonutility assets and capital expenditures
represented less than 5% of Enterprises' total assets and capital expenditures,
respectively, as of June 30, 2002 and December 31, 2001.

6. Indebtedness



During 2002, IPL terminated one unused line of credit
and chose not to renew another unused line of credit, which expired, aggregating
$55 of borrowing capacity; and replaced them with two new unsecured revolving
credit facilities with an aggregate borrowing capacity of $75. The new
facilities mature on May 23, 2003 and June 13, 2003 and are subject to certain
financial covenants, with which IPL is in compliance. IPL has not drawn on
either facility.



Also during 2002, Standard & Poor's Corporation
lowered its ratings of IPALCO and IPL, as a result of a similar reduction in its
ratings of AES. As a result, the interest rate on the IPALCO Notes will increase
by 50 basis points effective November 15, 2002. In addition, the downgrade put
IPL in default on a $40.6 credit agreement, which serves as a liquidity facility
for $40 of IPL variable rate debt and a receivables sale agreement related to
IPL's 1996 sale of $50 of its accounts receivables. Both such agreements were
amended to exclude the downgrade as an event of default. In addition, the $40.6
credit facility expired on July 31, 2002 and was replaced with a similar
facility that does not include covenants related to IPL's ratings. As of June
30, 2002, IPL and IPALCO were in compliance with all financial covenants and no
event of default existed.



7. Commitments and Contingencies



In March 2002, IPALCO and certain of its former
officers were sued in the U.S. District Court for the Southern District of
Indiana for alleged breaches of fiduciary duty stemming from declines in the
prices of AES and IPALCO stock held by certain of IPALCO's benefit plans. While
the results of such litigation cannot be predicted with certainty, management,
based upon advice of counsel, believes that the final outcome will not have a
material adverse effect on the consolidated financial statements.



In addition, Enterprises is involved in litigation
arising in the normal course of business. While the results of such litigation
cannot be predicted with certainty, management, based upon advice of counsel,
believes that the final outcome will not have a material adverse effect on the
consolidated financial statements.



With respect to environmental issues, Enterprises has ongoing discussions
with various regulatory authorities and continues to believe that Enterprises is
in compliance with its various permits. On October 27, 1998, the U.S.
Environmental Protection Agency issued a final rule, which imposes more
stringent limits on nitrogen oxide (NOx) emissions from fossil fuel-
fired steam electric generators. IPL's current estimates are the NOx
SIP call will necessitate additional capital expenditures of up to $260 during
2002-2005 to achieve substantially all of the required NOx emission reductions. Alternatively, this amount could be reduced by purchasing some of the required
NOx emission allowances in the market. IPL filed a petition with the Indiana
Utility Regulatory Commission to recover a return on its capital investment,
depreciation and incremental operating and maintenance, together with allowances
purchased and consumed, in connection with the NOx emission reductions.



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

(Dollars in Millions)



FORWARD-LOOKING STATEMENTS

This Form 10-Q includes "forward-looking statements" including, in
particular, the statements about our plans, strategies and prospects under the
headings "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Forward-looking statements express an expectation
or belief and contain a projection, plan or assumption with regard to, among
other things, future revenues, income or capital structure. Such statements of
future events or performance are not guarantees of future performance and
involve estimates, assumptions and uncertainties. The words
"anticipate," "would," "should,"
"believe," "estimate," "expect,"
"forecast," "project," "objective," and similar
expressions are intended to identify forward-looking statements.

Some important factors that could cause our actual results or outcomes to
differ materially from those discussed in the forward-looking statements
include, but are not limited to, our control by AES, our credit ratings,
fluctuations in customer growth and demand, weather, fuel costs, generating unit
availability, purchased power costs and availability, regulatory action,
environmental matters, federal and state legislation, interest rates, labor
strikes, maintenance and capital expenditures, local economic conditions, the
ultimate disposition of litigation and the specific needs of plants to perform
unanticipated facility maintenance or repairs or outages. In addition, our
ability to have available an appropriate amount of production capacity in a
timely manner can significantly affect our financial performance. The timing of
deregulation and competition, product development and technology changes are
also important potential factors that may cause actual results or outcomes to
differ materially from those discussed in the forward-looking statements. Most
of these factors affect us through our consolidated subsidiary, IPL.

All such factors are difficult to predict, contain uncertainties that may
materially affect actual results and are beyond our control. We undertake no
obligation to publicly update or review any forward-looking information, future
events or otherwise.

LIQUIDITY AND CAPITAL RESOURCES

Material changes in the consolidated financial condition and results of
our operations, except where noted, are attributed to the operations of IPL.
Consequently, the following discussion is centered on IPL.

Overview

During 2002, IPL terminated one unused line of credit
and chose not to renew another unused line of credit, which expired, aggregating
$55 of borrowing capacity and replaced them with two new unsecured revolving
credit facilities with an aggregate borrowing capacity of $75. The new
facilities mature on May 23, 2003 and June 13, 2003 and are subject to certain
financial covenants, with which IPL is in compliance. IPL has not drawn on
either facility.



Also during 2002, Standard & Poor's Corporation
lowered its ratings of IPALCO and IPL, as a result of a similar reduction in its
ratings of AES. As a result, the interest rate on the IPALCO Notes (See Note 5)
will increase by 50 basis points effective November 15, 2002. In addition, the
downgrade put IPL in default on a $40.6 credit agreement, which serves as a
liquidity facility for $40 of IPL variable rate debt and a receivables sale
agreement related to IPL's 1996 sale of $50 of its accounts receivables. Both
such agreements were amended to exclude the downgrade as an event of default. In
addition, the $40.6 credit facility expired on July 31, 2002 and was replaced
with a similar facility that does not include covenants related to IPL's
ratings. As of June 30, 2002, IPL and IPALCO were in compliance with all
financial covenants and no event of default existed.

Our capital requirements are primarily related to IPL's construction
expenditures needed to meet customers' needs for electricity, for environmental
compliance and for energy and outage management systems. IPL's construction
expenditures totaled $56.5 during the six months ended June 30, 2002. This
represented an increase of $14.7 from the comparable period in 2001.
Construction expenditures during the first six months of 2002 were financed
using internally generated cash provided by operations.

IPL's construction program for the four-year period 2002 - 2005 is
estimated to cost up to $581. The estimated cost of the program by year is $96
in 2002, $231 in 2003, $171 in 2004 and $83 in 2005. It includes $307 for
additions, improvements and extensions to transmission and distribution lines,
substations, power factor and voltage regulating equipment, distribution
transformer and street lighting facilities. The construction program also
includes $7.9 for energy and outage management systems. These projected costs
also include up to $260 of costs during the period associated with new
environmental standards imposed by the EPA and could be reduced by purchasing
some of the required NOx emission allowances in the market. IPL filed a petition
with the Indiana Utility Regulatory Commission to recover a return on its
capital investment, depreciation, and incremental operating and maintenance,
together with allowances purchased and consumed in connection with the NOx
emission reductions. Our capital expenditures may be financed through a
combination of; cash provided by operations, cash available on IPL's unused
credit facilities or long-term indebtedness.

A combustion turbine valued at $42.6 was included in Other
investments at December 31, 2001 and is now included in Utility plant in
service.

On March 27, 2002, the Board of Directors declared a dividend to AES of
$51 payable on March 29, 2002. On June 26, 2002, the Board of Directors declared
a dividend to AES of $21, which was paid on June 28, 2002. Total dividends paid
to AES during the six months ended June 30, 2002 were $72.

RESULTS OF OPERATIONS

Comparison of Quarters Ended June 30, 2002 and June 30, 2001

Our second quarter 2002 net income of $29.0 decreased $5.3 from net
income of $34.3 in the second quarter of 2001. The following discussion
highlights the factors contributing to this change.

Operating Revenues

Operating revenues decreased by $8.3 during the three-month period ended
June 30, 2002 compared to the prior year as a result of the following:

|                                   |  | Dollar
Change | Percentage
Change
|---------------------------------- |  | ------------- | -----------------
|Retail Revenues                    |  | $   2.6       | 1.4%             
|Wholesale Revenues                 |  | (11.1)        | (66.0%)          
|Miscellaneous Revenues             |  | 0.2           | 6.0%             
|Total Change in Operating Revenues |  | $  (8.3)      | 4.0%             

The increase in retail revenues in the second quarter of 2002 as compared
to the same period in 2001 was primarily due to increases in heating degree days
and cooling degree days, which resulted in a 2% increase in kWh sales. Wholesale
revenues decreased significantly due to both a 54% decrease in kWh sales and a
27% decrease in the average price per kWh sold. The decrease in the average
price per kWh sold is a direct result of less demand for electricity, due
primarily to a sluggish economy, and an increase in the supply of electricity,
as many of the producers of electricity have increased their production
capacity. IPL reduced its electricity generation due to the reductions in
electricity demand and price.



Operating Expenses

Fuel costs decreased $6.8 or 14.9% in the second quarter of 2002 compared
to the same period last year, primarily due to decreased kWh sales, as described
above. This decrease was partially offset by a $4.8 increase in the cost of
power purchased in the second quarter of 2002, as compared to the prior year.
The remaining decrease was primarily the result of a decrease in fuel
consumption, resulting from reduced electricity generation, as described
above.

Other operating expenses decreased $3.5 or 12.9% in the second quarter of
2002 compared to the same period in 2001, which was primarily due to decreases
related to the termination of certain employees in 2001 in connection with the
AES Acquisition. These decreases included $2.0 of supplemental retirement
expense incurred in 2001 and a $1.1 decrease in salaries and wages.

Termination benefit agreement costs of $2.9 were recognized in the second
quarter of 2001, due to the recognition of officer termination costs as a result
of the AES Acquisition (see Note 3).

Primarily as a result of the foregoing, utility operating income
increased $0.5 or 1.2% during the second quarter of 2002 from the comparable
2001 period, to $47.3.

Other Income and Deductions

Allowance for equity funds used during construction (AFUDC) increased by
$0.9 in the second quarter of 2002 compared to the same period in 2001 due to an
increased construction base.

Income tax benefit - net increased by $4.4 in the second quarter of 2002
compared to the same period in 2001, primarily due to interest on the IPALCO
Notes.

Interest Charges

Interest on long-term debt increased by $14.5 for the three months ended
June 30, 2002, as compared to the prior period, primarily as a result of $14.1
of interest associated with the IPALCO Notes.

Comparison of Six-Month Periods Ended June 30, 2002 and June 30, 2001

Our first six months 2002 net income of $62.4 increased $37.7 from net
income of $24.7 in the first six months of 2001. The following discussion
highlights the factors contributing to this change.

Operating Revenues

Operating revenues decreased by $19.9 during the six-month period ended
June 30, 2002 as compared to the prior year, due to the following:

|                                   |  | Dollar
Change | Percentage
Change
|---------------------------------- |  | ------------- | -----------------
|Retail Revenues                    |  | $  (0.4)      | (0.1)%           
|Wholesale Revenues                 |  | (19.7)        | (54.6)%          
|Miscellaneous Revenues             |  | 0.2           | 4.9%             
|Total Change in Operating Revenues |  | $  (19.9)     | (4.8)%           

Wholesale revenues declined significantly due to both a 34% decrease in
kWh sales and a 31% decrease in the average price per kWh sold. The decrease in
the average price per kWh sold is a direct result of less demand for
electricity, due primarily to a sluggish economy, and an increase in the supply
of electricity, as many of the producers of electricity have increased their
production capacity. IPL reduced its electricity generation due to the
reductions in electricity demand and priced.

Operating Expenses

Fuel costs decreased $9.1 or 9.9% in the first six months of 2002
compared to the same period last year, primarily due to decreased kWh sales, as
described above. This decrease was partially offset by a $5.1 increase in the
cost of power purchased in 2002, as compared to the prior year. The remaining
decrease was primarily the result of a decrease in fuel consumption, resulting
from reduced electricity generation, as described above.

Other operating expenses decreased $21.3 or 30.4% in the first six months
of 2002 as compared to the same period in 2001, which was primarily due to
decreases related to the termination of certain employees in 2001 in connection
with the AES Acquisition. These decreases included $11.2 of supplemental
retirement expense incurred in 2001, $6.2 of restricted stock paid in 2001, and
a $5.3 decrease in salaries and wages.

Maintenance expenses decreased $7.6 or 18.4% in the first six months of
2002 compared to the same period in 2001. This decrease was primarily the result
of the timing of major generating unit overhauls.

Termination benefit agreement costs of $54.5 were recognized in the first
six months of 2001, due to the recognition of officer termination costs
resulting from the AES Acquisition.

Income taxes-net increased $26.1 or 110.4% in the first six months of
2002 compared to the same period in 2001 due to an increase in pretax operating
income.

Primarily as a result of the foregoing, utility operating income
increased $41.2 or 72.2% during the first six months of 2002 from the comparable
2001 period, to $98.3.

Other Income and Deductions

Allowance for equity funds used during construction (AFUDC) increased by
$2.6 in the first six months of 2002 compared to the same period in 2001 due to
an increased construction base.

Termination benefit agreement costs of $4.7 associated with "Other
Income and Deductions" were recognized in the first six months of 2001, due
to the recognition of non-utility officer termination costs as a result of the
AES Acquisition.

Income tax benefit - net increased by $7.4 in the first six months of
2002 compared to the same period in 2001, primarily due to an increase in
interest expense on the IPALCO Notes.

Interest Charges

Interest on long-term debt increased by $29.3 for the six months ended
June 30, 2002, as compared to the prior period, primarily due to $28.1 of
interest on the IPALCO Notes.

Other interest decreased by $0.9 in the first six months of 2002 compared
to the same period in 2001, primarily due to the pay off in February 2001 of the
commercial paper program, as well as the overall low interest rate environment
in 2002.

Allowance for borrowed funds used during construction increased by $1.2
in the first six months of 2002 compared to the same period in 2001 due to an
increased construction base.

Amortization of redemption premiums and expenses increased by $0.8 in the
first six months of 2002 compared to the same period in 2001, primarily due to
amortizing issuance costs associated with the IPALCO Notes.

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Item 3.	Quantitative and Qualitative Disclosures About Market Risk

Sensitivity Analysis. We manage our exposure to
interest rate risk through the use of interest rate protection agreements to
effectively fix our variable rate debt and by refinancing fixed rate debt at
times when rates and terms are appropriate. The primary market risk to which we
are exposed is interest rate risk. We use long-term debt as a significant source
of capital in our business. In addition, IPL has two credit facilities that bear
interest at variable rates based primarily on LIBOR. Although there currently is
no outstanding balance on either facility, IPL may use them in the future. Our
fair values relating to financial instruments are dependent upon prevalent
market rates of interest, primarily LIBOR. At June 30, 2002, we had $1,333
million notional amount fixed rate debt and a $40 million notional amount
variable rate debt issue, which was effectively fixed through a floating-to-
fixed rate swap. Based upon consolidated indebtedness and interest rates at June
30, 2002, a 50 basis point increase in the market rates of interest would
decrease the fair value of debt by approximately $106 million. A 50 basis point
decrease in the market rates of interest would increase the fair value of debt
by approximately $124 million. The fair value of IPL's swap agreement was $(4.1)
million at June 30, 2002.

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PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

IPL has been named as a defendant in approximately 44 lawsuits alleging
personal injury or wrongful death stemming from exposure to asbestos and
asbestos containing products formerly located in IPL power plants. IPL has been
named as a "premises defendant" in that IPL did not mine, manufacture,
distribute or install asbestos or asbestos containing products. These suits have
been brought on behalf of persons who worked for contractors or subcontractors
hired by IPL. Many of the primary defendants3⁄4
the asbestos manufacturers3⁄4
have filed for bankruptcy protection, and it is expected that many of the
remaining manufacturers will also be forced into bankruptcy. IPL has insurance
coverage for many of these claims; currently, these cases are being defended by
counsel retained by various insurers who wrote "occurrence" coverage
policies applicable to the period of time during which much of the exposure has
been alleged. Although we do not believe that any of the pending asbestos suits
in which IPL is a named defendant will have a material adverse effect on our
business or operations, we are unable to predict the number or effect any
additional suits may have, or the consequences to IPL of the bankruptcy of the
asbestos manufacturers; accordingly, we cannot assure you that the pending or
any additional suits will not have a material effect on our business or
operations. Trial of one asbestos case is set for trial in September 2002 and
one in November 2002.

On March 29, 2002, IPALCO and certain of its former officers were sued in a
purported class action in the U.S. District Court for the Southern District of
Indiana for alleged breaches of fiduciary duty stemming from declines in the
prices of AES and IPALCO stock held by certain of IPALCO's benefit plans seeking
compensation for alleged overpayment for the purchase of IPALCO stock, plus
interest. The plantiffs have amended their complaint to eliminate allegations
relating to benefit plans other than the IPALCO Thrift Plan. Defendants have
moved to dismiss the suit. We believe that this suit is without merit. While we
cannot predict the outcome, we do not believe that the suit will have a material
adverse effect on our financial condition, results of operations or
liquidity.

In addition to the foregoing, we are a defendant in various actions relating
to various aspects of our business. While it is impossible to predict the
ultimate disposition of any litigation, we do not believe that any of these
lawsuits, either individually or in the aggregate, will have a material adverse
effect on our financial condition, results of operations or liquidity.

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits





|**Exhibit No.** | **Document**                                                                                                                                                   
|--------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |                                                                                                                                                                
|10.1            | Credit Agreement by and among IPL, the various financial institutions party hereto, and Lasalle 
Bank National Association, as agent, dated as of June 14, 2002
|                |                                                                                                                                                                
|
|10.2            | Credit Agreement among IPL, the institutions from time to time parties hereto as lenders, and
The Huntington National Bank, as agent, dated as of May 24, 2002 
|               
|10.3            | Sixth Amendment, dated as of June 28, 2002 to Receivables Sale agreement, dated as of 
December 20, 1996                                                       
|                |                                                                                                                                                                
|                |                                                                                                                                                                

(b) Reports on Form 8-K - No reports on Form 8-K were filed during the period
covered by this report.







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**SIGNATURE**



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



| |                         
| | ------------------------
| | IPALCO ENTERPRISES, INC.

| |             
| | ------------
| |             
| | (Registrant)

Date: August 12, 2002



| |     |                         
| | --- | ------------------------
| | By: | /s/ Hamsa Shadaksharappa

| |                                                                           
| | --------------------------------------------------------------------------
| |                                                                           
| | Hamsa Shadaksharappa                                                      
| | Chief Financial Officer, Secretary and Vice
President - Financial Services
| | (Principal Financial Officer and Duly 
Authorized Officer)                

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Certification



Each of the undersigned officers hereby certifies that,
to his or her knowledge, (i) this report fully complies with the
requirements of Section 15(d) of the Securities Exchange Act of
1934 and (ii) the information contained in this report fairly
presents, in all material respects, the financial condition and
results of operations of IPALCO Enterprises, Inc.



|               
|---------------
|/s/ Ann Murtlow

| |                                      
| | -------------------------------------
| | Ann Murtlow                          
|
| | President and Chief Executive Officer

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