**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 March 31, 2005**

**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 [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange
Act Rule 12b-2)   YES [  ]    NO [X]

At May 9, 2005, 89,685,177 shares of IPALCO Enterprises, Inc. common stock were
outstanding. All of such shares were owned by The AES Corporation.

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1)(a)
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.









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



|**PART I - Financial Information**                                                                                           | **Page No.**
|---------------------------------------------------------------------------------------------------------------------------- | ------------
|                                                                                                                             |             
|Item 1:   Financial Statements:                                                                                              |             
|                                                                                                                             |             
|Unaudited Consolidated Statements of Income for the Three-month
        
          Periods Ended March 31, 2005 and 2004     | 3           
|                                                                                                                             |             
|Unaudited Consolidated Balance Sheets as of March 31, 2005 
        
           and December 31, 2004                        | 4           
|                                                                                                                             |             
|Unaudited Consolidated Statements of Cash Flows for the
        
          Three-month Periods Ended March 31, 2005 and 2004 | 5           
|                                                                                                                             |             
|Notes to Unaudited Consolidated Financial Statements                                                                         | 6           
|                                                                                                                             |             
|Item 2:   Management's Discussion and Analysis of Financial Condition 
          
and Results of Operations                  | 10          
|                                                                                                                             |             
|Item 3:   Quantitative and Qualitative Disclosure About Market Risk                                                          | 14          
|                                                                                                                             |             
|Item 4:  Controls and Procedures                                                                                             | 14          
|                                                                                                                             |             
|**PART II - Other Information**                                                                                              |             
|                                                                                                                             |             
|Item 1:  Legal Proceedings                                                                                                   | 15          
|                                                                                                                             |             
|Item 6:  Exhibits                                                                                                            | 15          
|                                                                                                                             |             
|**Signature**                                                                                                                | 16          

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**PART I -- FINANCIAL INFORMATION**

Item 1.  Financial Statements

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**IPALCO ENTERPRISES, INC. and SUBSIDIARIES

Unaudited Consolidated Statements of Income

(In Thousands)**

`Three Months Ended
                                                                     March 31,
                                                               ---------------------
                                                                  2005       2004
                                                               ---------- ----------
UTILITY OPERATING REVENUES                                     $ 226,889  $ 215,356

UTILITY OPERATING EXPENSES:
 Operation:
   Fuel                                                           46,371     45,855
   Other operating expenses                                       33,484     27,345
 Power purchased                                                   4,205      2,683
 Maintenance                                                      17,822     19,691
 Depreciation and amortization                                    34,114     29,496
 Taxes other than income taxes                                     9,344      8,929
 Income taxes-net                                                 27,275     28,077
                                                               ---------- ----------
  Total utility operating expenses                               172,615    162,076
                                                               ---------- ----------
UTILITY OPERATING INCOME                                          54,274     53,280
                                                               ---------- ----------
OTHER INCOME AND (DEDUCTIONS):
 Allowance for equity funds used during construction                 606      1,039
 Gains on sales of assets - net                                       -         854
 Other - net                                                         655      1,012
 Income tax benefit-net                                            6,339      6,214
                                                               ---------- ----------
  Total other income and (deductions)-net                          7,600      9,119
                                                               ---------- ----------
INTEREST AND OTHER CHARGES:
 Interest on long-term debt                                       28,238     28,381
 Other interest                                                      140        125
 Allowance for borrowed funds used during construction              (343)      (720)
 Amortization of redemption premiums and expense on debt-net         648        604
 Preferred dividends of subsidiary                                   803        803
                                                               ---------- ----------
  Total interest and other charges-net                            29,486     29,193
                                                               ---------- ----------
NET INCOME                                                     $  32,388  $  33,206
                                                               ========== ==========`

See notes to unaudited consolidated financial statements.

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**IPALCO ENTERPRISES, INC. and SUBSIDIARIES

Unaudited Consolidated Balance Sheets

(In Thousands)**

`March 31,   December 31,
                                                        2005         2004
                                                   ------------- ------------
                      ASSETS
UTILITY PLANT:
 Utility plant in service                          $  3,424,936  $ 3,421,828
 Less accumulated depreciation                        1,380,256    1,356,364
                                                   ------------- ------------
     Utility plant in service - net                   2,044,680    2,065,464
 Construction work in progress                          102,141       76,303
 Property held for future use                             1,085        1,085
                                                   ------------- ------------
     Utility plant - net                              2,147,906    2,142,852
                                                   ------------- ------------
OTHER ASSETS:
 Nonutility property - at cost, less
  accumulated depreciation                                1,496        1,499
 Other investments                                        8,461        7,270
                                                   ------------- ------------
     Other assets - net                                   9,957        8,769
                                                   ------------- ------------
CURRENT ASSETS:
 Cash and cash equivalents                                6,121        3,779
 Short term investments                                  41,900       12,250
 Accounts receivable and unbilled revenue
   (less allowance for doubtful accounts
    of $2,575 and $2,137, respectively)                  49,191       56,125
 Fuel - at average cost                                  18,864       22,392
 Materials and supplies - at average cost                51,552       48,929
 Net income tax refunds receivable                           -         3,164
 Prepayments and other current assets                     6,741        4,377
                                                   ------------- ------------
     Total current assets                               174,369      151,016
                                                   ------------- ------------
DEFERRED DEBITS:
 Regulatory assets                                      133,026      132,042
 Miscellaneous                                           31,973       32,669
                                                   ------------- ------------
     Total deferred debits                              164,999      164,711
                                                   ------------- ------------
             TOTAL                                 $  2,497,231  $ 2,467,348
                                                   ============= ============
          CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
 Common shareholder's deficit:
   Premium on 4% cumulative preferred stock        $        649  $       649
   Paid in capital                                          961          791
   Accumulated deficit                                  (73,429)     (58,194)
   Accumulated other comprehensive loss                 (51,418)     (51,328)
                                                   ------------- ------------
     Total common shareholder's deficit                (123,237)    (108,082)
 Cumulative preferred stock of subsidiary                59,135       59,135
 Long-term debt                                       1,502,062    1,502,064
                                                   ------------- ------------
     Total capitalization                             1,437,960    1,453,117
                                                   -------------  -----------
CURRENT LIABILITIES:
  Accounts payable                                       35,881       39,310
  Accrued expenses                                       18,231       19,806
  Dividends payable                                         803          -
  Accrued real estate and personal property taxes        20,031       15,840
  Accrued income taxes                                   34,874        9,700
  Accrued interest                                       38,749       27,869
  Customer deposits                                      12,312       11,706
  Other current liabilities                               4,237        1,342
                                                   ------------- ------------
     Total current liabilities                          165,118      125,573
                                                   ------------- ------------
 DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES:
 Accumulated deferred income taxes - net                352,681      355,285
 Regulatory liabilities and other removal costs         388,661      382,559
 Unamortized investment tax credit                       24,803       25,464
 Accrued postretirement benefits                          7,215        6,799
 Accrued pension benefits                               108,994      107,080
 Miscellaneous                                           11,799       11,471
                                                   ------------- ------------
     Total deferred credits and other
          long-term liabilities                         894,153      888,658
                                                   ------------- ------------
COMMITMENTS AND CONTINGENCIES (Note 6)

             TOTAL                                 $  2,497,231  $ 2,467,348
                                                   ============= ============`

See notes to unaudited consolidated financial statements.

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**IPALCO ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)**

`Three Months Ended
                                                                       March 31,
                                                                ---------- ---------
                                                                   2005       2004
                                                                ---------  ---------
Cash Flows from Operations:
 Net income                                                    $  32,388  $  33,206
 Adjustments to reconcile net income to net cash
  provided by operating activities:
    Depreciation and amortization                                 33,659     29,891
    Amortization of regulatory assets                                825        673
    Deferred income taxes and investment tax credit
      adjustments - net                                           (5,220)    (2,277)
    Gain on sale of land held for sale                                -      (4,127)
    Gain on sales of assets                                           -        (854)
    (Gain) loss on investments                                      (398)       154
    Allowance for funds used during construction                    (606)    (1,039)
  Change in certain assets and liabilities:
    Accounts receivable                                            6,934      1,549
    Fuel, materials and supplies                                     905      2,004
    Income taxes receivable or payable                            28,172     28,644
    Accounts payable and accrued expenses                        (11,820)   (14,074)
    Accrued real estate and personal property taxes                4,191      3,725
    Pension benefits                                               1,914      1,461
    Accrued interest                                              10,880     12,588
    Other - net                                                    2,194     (4,032)
                                                                ---------  ---------
Net cash provided by operating activities                        104,018     87,492
                                                                ---------  ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Construction expenditures - utility                            (23,762)   (55,989)
  Proceeds from sales of assets                                       -       9,206
  Purchase of available-for-sale securities                     (321,972)  (401,875)
  Proceeds from sales and maturities of
      available-for-sale securities                              292,322    387,025
  Other                                                             (619)        92
                                                                ---------  ---------
Net cash used in investing activities                            (54,031)   (61,541)
                                                                ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Long-term borrowings                                                -      98,953
  Retirement of long-term debt                                        -     (80,000)
  Dividends on common stock                                      (47,622)   (44,400)
  Other                                                              (23)        -
                                                                ---------  ---------
Net cash used in financing activities                            (47,645)   (25,447)
                                                                ---------  ---------
Net change in cash and cash equivalents                            2,342        504
Cash and cash equivalents at beginning of period                   3,779      4,274
                                                                ---------  ---------
Cash and cash equivalents at end of period                     $   6,121  $   4,778
                                                                =========  =========
Supplemental disclosures of cash flow information:
  Cash paid (received) during the period for:
    Interest (net of amount capitalized)                       $  17,220  $  15,199
                                                                =========  =========
    Income taxes                                               $  (2,076) $      -
                                                                =========  =========`

See notes to unaudited consolidated financial statements.

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IPALCO ENTERPRISES, INC. and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements



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.
These include its regulated electric utility subsidiary, Indianapolis Power & Light Company
("IPL"), and its unregulated subsidiary, Mid-America Capital Resources, Inc. ("Mid-
America"). Substantially all of IPALCO's business consists of the generation, transmission,
distribution and sale of electric energy conducted through IPL. IPL has more than 460,000 retail
customers in the city of Indianapolis and neighboring cities, towns and communities, and adjacent
rural areas all within the state of Indiana, the most distant point being approximately forty miles
from Indianapolis. IPL has an exclusive right to provide electric service to those customers. IPL
owns and operates two primarily coal-fired generating plants, one combination coal and gas-fired
plant and a separately-sited combustion turbine that are all used for generating electricity. IPL's
net electric generation capability for winter is 3,370 megawatts and net summer capability is 3,252
megawatts. Mid-America conducts IPALCO's unregulated activities.

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 annual
fiscal reporting periods. In the opinion of management, all adjustments of a normal recurring nature
necessary for fair presentation, have been included. The electric utility business is affected by
seasonal weather patterns throughout the year and, therefore, the operating revenues and associated
operating expenses are not generated evenly by month during the year. 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, 2004, included in its annual report on
Form 10-K and should be read in conjunction therewith.

The preparation of financial statements in conformity with GAAP requires that management make
certain estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements. The
reported amounts of revenues and expenses during the reporting period may also be affected by the
estimates and assumptions management is required to make. Actual results may differ from those
estimates.

Certain prior period amounts have been reclassified to conform to current year presentation. The
accompanying unaudited consolidated balance sheet as of December 31, 2004 reflects a
reclassification of instruments used in IPALCO's cash management program from cash and cash
equivalents to short-term investments of $12.3 million. This reclassification is to present certain
auction rate securities and other highly-liquid instruments as short-term investments rather than as
cash equivalents. The reclassification is being made based on recent accounting interpretations
considering the stated tenor of the maturities of these investments. Corresponding changes were made
to the unaudited consolidated statements of cash flows for the quarters ended March 31, 2005 and
2004, resulting in reductions of $41.9 million and $24.6 million, respectively, in amounts presented
as cash and cash equivalents. In the unaudited consolidated statements of cash flows, cash and cash
equivalents of $9.7 million at December 31, 2003 was also revised to reflect the reclassification of
these instruments from cash and cash equivalents to short-term investments.

IPALCO actively invests a portion of its available cash balances in various financial
instruments, such as tax-exempt debt securities that frequently have stated maturities of 20 years
or more and taxable and tax-exempt auction rate securities. These instruments provide for a high
degree of liquidity through features such as daily and seven day notice put options and 7, 28, and
35 day auctions which allow for the redemption of the investments at their face amounts plus earned
income. As IPALCO intends to sell these instruments within one year or less, typically within 90
days, they are classified as current assets. IPALCO has classified all short-term investments that
are debt securities as available-for-sale under Statement of Financial Accounting Standards No. 115,
"Accounting For Certain Investments in Debt and Equity Securities," and they are
carried at fair market value.
Certain other prior period amounts have been reclassified to
conform to current year presentation, all of which management deems to be immaterial individually
and in the aggregate with the reclassifications describe above.

3.  NEW ACCOUNTING PRONOUNCEMENT

In March 2005, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations, an
interpretation of FASB Statement No. 143" ("FIN 47"). FASB Statement No. 143,
"Accounting for Asset Retirement Obligations" ("FASB 143"), addressed
financial accounting and reporting for obligations associated with retirement of tangible long-lived
assets and the associated asset retirement costs. FIN 47 clarifies that the term conditional
asset retirement obligation as used in FASB 143 refers to a legal obligation to perform
an asset retirement activity in which the timing and (or) method of settlement are conditional on a
future event that may or may not be within the control of the entity. FIN 47 also clarifies when an
entity would have sufficient information to reasonably estimate the fair value of an asset
retirement obligation. The provisions of FIN 47 are effective for IPALCO no later than the fiscal
year ending December 31, 2005. Retrospective application for interim financial information is
permitted but is not required. Management is evaluating what impact, if any, the provisions of FIN
47 will have on our financial statements.

4.  SEGMENT INFORMATION

IPALCO's operations are made up almost entirely of its ownership of IPL, its consolidated
electric utility, which is a reportable business segment. In addition, IPALCO has outstanding $750
million of Senior Secured Notes; approximately $2.2 million and $2.6 million of nonutility cash and
cash equivalents, as of March 31, 2005 and December 31, 2004, respectively; nonutility investments
of $7.4 million and $6.5 million at March 31, 2005 and December 31, 2004, respectively; and income
taxes and interest related to those items. There was no operating income for any nonutility
activities during the periods covered by this report. Nonutility assets represented less than 1% of
IPALCO's total assets as of March 31, 2005 and December 31, 2004 and there were no nonutility
capital expenditures during the three month periods ended March 31, 2005 and 2004.

5.  PENSION BENEFITS

Employees' Retirement Plan: Most of IPL's employees are covered by the Employees'
Retirement Plan of Indianapolis Power & Light Company (the "Defined Benefit Pension
Plan"). The Defined Benefit Pension Plan is noncontributory and is funded through a trust.
Benefits are based on each individual employee's pension band and years of service as opposed to
their compensation. Pension bands are based primarily on job duties and responsibilities.

Supplemental Retirement Plan: Additionally, a select group of former management employees
of IPALCO and IPL who have terminated vested benefits are covered under a funded supplemental
retirement plan.

Pension Funding: IPL's funding policy for the Defined Benefit Pension Plan and the
supplemental retirement plan (the "Pension Plans") is to contribute annually not less than
the minimum required by applicable law, nor more than the maximum amount that can be deducted for
federal income tax purposes. IPL has not made any contributions to the Pension Plans during the
first three months of 2005. Depending on the timing of contributions, pending legislation, and other
factors related to our funding strategy, we estimate potential cash contributions to the Pension
Plans of up to $25 million in 2005, but we may elect not to make any contributions since none are
anticipated to be required to meet our minimum funding targets. This estimate is based on actuarial
assumptions using a discount rate of 6.0% and an assumed long-term rate of return on plan assets of
8.0%.

The following table presents information relating to the Defined Benefit Pension Plan and
supplemental retirement plan:

`For the Three Months
                                            Ended March 31,
                                         --------------------
                                            2005      2004
                                         --------------------
Pension Benefits                            (IN THOUSANDS)

Components of net periodic benefit cost
Service cost                                $1,033      $914
Interest cost                                6,473     6,426
Expected return on plan assets              (6,489)   (6,717)
Amortization of transition asset              (318)     (353)
Amortization of prior service costs            434       386
Amortization of actuarial loss                 781       953
                                         --------------------
Net periodic benefit cost                   $1,914    $1,609
                                         ====================`

6.  COMMITMENTS AND CONTINGENCIES

Legal

IPALCO and certain former officers and directors of IPALCO are named as defendants in
class action lawsuits under the Employment Retirement Income Security Act ("ERISA") and
the Federal securities laws (see below), respectively, each filed in the U.S. District Court for the
Southern District of Indiana, and each making allegations regarding matters arising from the
acquisition of IPALCO by AES. The class action ERISA lawsuit was filed in March 2002 and the class
action lawsuit under the Federal securities laws was filed in September 2002. The ERISA suit alleges
breach of fiduciary duties with respect to shares held in IPL's 401(k) thrift plan. IPALCO filed a
motion for summary judgment in the ERISA suit in October 2003, as did the plaintiffs. While we
cannot predict the outcomes, we do not believe that the suits will have a material adverse effect on
IPALCO's consolidated financial statements.

In September 2002, IPALCO and certain of its former officers and directors were sued in the U.S.
District Court for the Southern District of Indiana in connection with IPALCO's acquisition by AES.
That suit was consolidated with other actions in that court with the result that the only remaining
IPALCO defendants are three former officers who were insured under IPALCO's liability insurance
policies. The lawsuit was filed on behalf of all persons who exchanged their shares of IPALCO common
stock for shares of AES common stock. The complaint alleged violations of Section 11 of the
Securities Act; Sections 10(b), 14(a) and 20(a) of the Exchange Act and Rules 10b-5 and 14a-9. On
November 17, 2004, the court entered an order dismissing the claims against the former IPALCO
officers but that order will not be final until the balance of the case is resolved.

Since May 2003, IPALCO, IPL, AES and certain former directors and officers of IPALCO and/or IPL
received subpoenas from the Securities Division of the Indiana Secretary of State seeking
information related to the acquisition of IPALCO by AES. IPALCO, IPL, AES and the individuals have
produced various materials in response to the subpoenas and otherwise cooperated fully with the
Secretary of State in connection with the inquiry. Since August 11, 2004, no further inquiries or
other communications from the Secretary of State have been made concerning the matter. While we
cannot predict the outcome, we do not expect this matter to have a material adverse effect on
IPALCO's consolidated financial statements.

In November 2002, IPL was sued in a Fair Labor Standards Act ("FLSA") collective action lawsuit
filed in the U.S. District Court for the Southern District of Indiana. The complaint alleges that
certain of IPL's current and former employees were not paid overtime pay at the rate required by the
FLSA. We believe that IPL did not violate the FLSA. While we cannot predict the outcome, we do not
believe the suit will have a material adverse effect on IPALCO's consolidated financial statements.

Many years ago, IPL obtained, through purchases from several owners, a substantial tract of land
as a potential site for a future power plant. IPL later determined it no longer intended to build a
power plant on that land and sold it in 2004. In September 2004, a former owner of a parcel included
within IPL's land sued IPL in Morgan County Superior Court in a purported class action to force IPL
to pay any profit on the sale to the various former owners, as well as profits received from ground
leases and timber sales. The plaintiff contended, in essence, that IPL obtained the various parcels
through eminent domain or the threat of eminent domain and alleged violations of Indiana's eminent
domain statute, conversion and unjust enrichment. IPL believes the suit is without merit. At this
time discovery has not yet begun and the court has not certified a class. While we cannot predict
the outcome, we do not expect the matter will have a material adverse effect on IPALCO's
consolidated financial statements.

As of March 31, 2005, IPL is a defendant in approximately 113 pending 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. IPL has insurance coverage for many of these claims; currently, these cases are being defended
by counsel retained by various insurers who wrote 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 IPALCO's
business or operations, we are unable to predict the number or effect any additional suits may have.
Accordingly, we cannot assure that the pending or any additional suits will not have a material
adverse effect on IPALCO's consolidated financial statements.

In addition, IPALCO and IPL are 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
IPALCO's consolidated financial statements.

Environmental

We are subject to various federal, state and local environmental protection and health
and safety laws and regulations governing, among other things, the generation, storage, handling,
use, disposal and transportation of hazardous materials; the emission and discharge of hazardous and
other materials into the environment; and the health and safety of our employees. These laws and
regulations often require a lengthy and complex process of obtaining and renewing permits and other
governmental authorizations from federal, state and local agencies. Violation of these laws,
regulations or permits can result in substantial fines, other sanctions, permit revocation and/or
facility shutdowns. We believe that we operate in material compliance with environmental laws,
regulations and permits and health and safety laws. We cannot assure, however, that we have been or
will be at all times in full compliance with such laws, regulations and permits. Please see Note 12
"Commitments and Contingencies - Environmental" of IPALCO's audited financial statements
for the year ended December 31, 2004, included in its annual report on Form 10-K, for a more
comprehensive discussion of environmental matters impacting IPALCO and IPL.

7.  SUBSEQUENT EVENT

During April 2005, IPL issued, in two separate series, $71.9 million of variable-rate first
mortgage bonds, which are auctioned weekly. The 2005A Series bonds in the principal amount of $41.9
million mature January 1, 2016. The 2005B Series bonds in the principal amount of $30.0 million
mature October 1, 2023. The initial interest rate on both series was 2.25%. The net proceeds will be
used to retire two series of existing fixed-rate first mortgage bonds: (i) $41.9 million at 6.10%
maturing January 2016 and (ii) $30.0 million at 5.5% maturing October 2023.

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Item 2.	Management's Discussion And Analysis Of Financial Condition
And Results Of Operations

Cautionary Note Regarding Forward-Looking Statements

This Report on Form 10-Q includes ``forward-looking statements''
including, in particular, the statements about our plans, strategies and prospects under the heading
``Item 2. 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, our 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 ``could,'' ``may,'' ``predict,'' ``anticipate,''
``would,'' ``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:

- changes in our credit ratings
- performance of pension plan assets
- fluctuations in customer growth and demand
- weather and weather-related damage
- fuel costs
- generating unit availability and capacity
- transmission and distribution system reliability and capacity
- purchased power costs and availability
- regulatory action
- our ownership by The AES Corporation
- federal and state legislation
- changes in financial or regulatory accounting policies
- environmental matters
- interest rates and the availability and other cost of capital
- labor strikes or other workforce factors
- unanticipated maintenance and capital expenditures
- local economic conditions
- acts of terrorism
- unanticipated generation outages, facility maintenance or repairs
- costs and effects of legal and administrative proceedings, settlements, investigations and
claims and the ultimate disposition of litigation
- industry restructuring, deregulation and competition
- issues related to our participation in the Midwest ISO, including recovery of costs
incurred
- product development and technology changes

Most of these factors affect us through our consolidated subsidiary Indianapolis Power &
Light Company. All such factors are difficult to predict, contain uncertainties that may materially
affect actual results and many are beyond our control. We undertake no obligation to publicly update
or review any forward-looking information, future events or otherwise.

Overview

IPALCO Enterprises, Inc. is a holding company incorporated under the laws
of the state of Indiana. Our principal subsidiary is Indianapolis Power & Light Company, a
regulated electric utility operating in the state of Indiana. Substantially all of our business
consists of the generation, transmission, distribution and sale of electric energy conducted through
IPL. Our other direct subsidiary, Mid-America Capital Resources, Inc., is the holding company for
our unregulated activities. Mid-America's only significant investment is a small minority ownership
interest in EnerTech Capital Partners II L.P., a venture capital fund. The investment was valued at
$4.9 million, as of March 31, 2005. Our business segments are electric and "all other."

IPL is engaged primarily in generating, transmitting, distributing and selling electric energy to
more than 460,000 retail customers in the city of Indianapolis and neighboring areas within the
state of Indiana. IPL has an exclusive right to provide electric service to those customers. IPL
owns and operates four generating stations, all within the state of Indiana. Historically,
approximately 99% of the total electricity produced by IPL was generated from coal. Natural gas and
fuel oil combined to provide the remaining kWh generation (primarily for peaking capacity). IPL's
net electric generation capability for winter and summer is 3,370 and 3,252 megawatts, respectively.
Our overall corporate mission is to serve our community's need for electric power in ways that
benefit all of our stakeholders, to build long-term value for our shareholder, and to assure
sustained excellence in performance for our owner, our people, and other individuals and
organizations which depend upon our company.

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

Results Of Operations

The electric utility business is affected by seasonal weather patterns
throughout the year and, therefore, the operating revenues and associated operating expenses are not
generated evenly by month during the year.

Comparison of Quarters Ended March 31, 2005 and March 31, 2004

Our first quarter 2005 net income of $32.4 million decreased slightly from net income
of $33.2 million in the first quarter of 2004. The following discussion highlights the significant
factors contributing to this change.

Utility Operating Revenues

Utility operating revenues increased by $11.5 million during the three months ended March 31,
2005 compared to the prior year as a result of the following (dollars in thousands):

`March 31     March 31     Increase   Percentage
                                         2005         2004      (Decrease)    Change
                                     --------------------------------------------------
Retail Revenues                         $210,613      $201,487      $9,126         4.5%
Wholesale Revenues                        12,805        10,374       2,431        23.4%
Miscellaneous Revenues                     3,471         3,495         (24)       -0.7%
                                     --------------------------------------
Total Utility Operating Revenues        $226,889      $215,356     $11,533         5.4%
                                     ======================================

Heating Degree Days                        2,676         2,780        (104)       -3.7%`

The 4.5% increase in retail revenues was primarily due to costs IPL recovered from its retail
customers associated with its NOx compliance construction program ($6.6 million) and a
$2.4 million increase in fuel costs charged to retail customers in 2005. The increase in wholesale
revenues was primarily due to a 32.8% increase in the price of wholesale kWhs sold (approximately
$3.4 million), partially offset by a 7.0% decrease in the quantity of wholesale kWhs sold
(approximately $1.0 million). The decrease in wholesale kWh sales was primarily due to significant
increases in our replacement cost of coal. The estimated average hourly market price at which we
could buy or sell wholesale power increased approximately 27% during the comparative periods. (See
also "-Regulatory Matters - Midwest ISO "Day 2" Operations.")

Utility Operating Expenses

Utility operating expenses increased $10.5 million, or 6.5% during the three months ended
March 31, 2005, as compared to the same period in 2004. This increase is primarily due to a $4.1
million gain recognized in the first quarter of 2004 on the sale of land held for sale; a $2.9
million increase in payroll and employee benefits and a $4.6 million increase in depreciation and
amortization, partially offset by a $1.9 million decrease in maintenance expenses. The gain from the
sale of land held for sale, recorded as a reduction of other operating expenses, is a portion of the
total gain of $5.9 million recognized during 2004 for the sale of approximately 4,000 acres of
undeveloped property near Martinsville, Indiana. The remaining $1.8 million gain was recognized in
the second quarter of 2004. The increase in payroll and employee benefits includes a 6.5% increase
in payroll costs and a 17.7% increase in employee group insurance benefit expenses. The increase in
payroll costs reflects annual wage increases and additional employees. The increase in employee
group insurance benefit expenses results primarily from escalating health insurance premiums and
additional employees. The increase in depreciation and amortization is primarily due to $3.9 million
of depreciation on $156.9 million of equipment placed in service in 2004 designed to reduce
NOx emissions and amortization of regulatory assets related to such equipment. The
decrease in maintenance expenses is primarily due to a decrease in planned outage activity, which
coincided with the NOx compliance construction program.

In addition, while we continued to rely primarily on our SO2 air emissions allowance
bank to remain in compliance with EPA SO2 regulations in the first quarter of 2005, we do
expect to be purchasing SO2 air emissions allowances during 2005 and 2006. The market
price for SO2 air emissions allowances has risen significantly in recent years. The price
per ton of SO2 air emissions allowances has increased from approximately $150 on January
1, 2003 to over $700 in December 2004 to approximately $880 in April 2005. Because the price of such
allowances has been so volatile, it is difficult to predict what our cost may be in the future, but
we do expect our SO2 air emissions allowance costs to increase in 2005 and 2006.

Primarily as a result of the foregoing, utility operating income increased $1.0 million or 1.9%
during the first quarter of 2005 from the same period in 2004.

Other Income and Deductions

Other income and deductions decreased from income of $9.1 million in the first quarter of
2004 to $7.6 million in the first quarter of 2005, primarily due to a $1.4 million dividend received
in 2004, a $0.9 million gain on the sale of noncore real estate assets in 2004 and a $0.4 million
decrease in the allowance for equity funds used during construction. These decreases are partially
offset by a $0.6 million increase in our share of income from equity method investments, primarily
due to a land sale gain from one investment, and a $0.3 million increase in interest income. The
decrease in the allowance for equity funds used during construction resulted primarily from the
equipment placed in service in 2004 related to the NOx compliance construction
program.

Interest and Other Charges

Interest and other charges increased $0.3 million to $29.5 million in the first quarter of
2005 as compared to the same period in 2004. This increase is primarily the result of a $0.4 million
decrease in the allowance for borrowed funds used during construction, which resulted primarily from
the equipment placed in service in 2004 related to the NOx compliance construction
program.

Liquidity and Capital Resources

As of March 31, 2005, IPALCO had cash and cash equivalents of $6.1
million and highly liquid short-term investments of $41.9 million. In addition, IPL has available
borrowing capacity of $74.3 million, after existing letters of credit, under its $75.0 million
committed credit facilities. All long-term borrowings by IPL must first be approved by the IURC and
the aggregate amount of IPL's short-term borrowings must be approved by FERC. IPL has approval from
FERC to borrow up to $500 million of short-term indebtedness outstanding at any time through July
29, 2006. IPL and IPALCO also have restrictions on the amount of new debt that may be issued due to
contractual obligations of AES and by financial covenant restrictions under their existing debt
obligations. Under such restrictions, IPL is generally allowed to fully draw the amounts available
on its committed credit facilities, refinance existing debt, issue an additional $30 million of
long-term debt approved by the IURC and incur certain other indebtedness. We believe that existing
cash balances, cash generated from operating activities and borrowing capacity on IPL's committed
credit facilities will be adequate on a short-term and long-term basis to meet anticipated operating
expenses, interest expense on outstanding indebtedness, recurring capital expenditures and pay
dividends to AES. Sources for principal payments on outstanding indebtedness and nonrecurring
capital expenditures are expected to be obtained from: (i) existing cash balances;
(ii) cash generated from operating activities; (iii) borrowing capacity on IPL's committed
credit facilities and (iv) additional debt financing.

We actively invest a portion of our available cash balances in various financial instruments,
such as tax-exempt debt securities that frequently have stated maturities of 20 years or more and
taxable and tax-exempt auction rate securities. These instruments provide for a high degree of
liquidity through features such as daily and seven day notice put options and 7, 28, and 35 day
auctions which allow for the redemption of the investments at their face amounts plus earned income.
As we intend to sell these instruments within one year or less, they are classified as current
assets.

During April 2005, IPL issued, in two separate series, $71.9 million of variable-rate first
mortgage bonds, which are auctioned weekly. The 2005A Series bonds in the principal amount of $41.9
million mature January 1, 2016. The 2005B Series bonds in the principal amount of $30.0 million
mature October 1, 2023. The initial interest rate on both series was 2.25%. The net proceeds will be
used to retire two series of existing fixed-rate first mortgage bonds: (i) $41.9 million at 6.10%
maturing January 2016 and (ii) $30.0 million at 5.5% maturing October 2023.

Capital Requirements.  Our capital requirements are primarily related to IPL's
construction expenditures needed to meet customers' needs for electricity and for environmental
compliance. IPL's capital expenditures totaled $23.8 million during the three months ended March 31,
2005. This represented a decrease of $32.2 million from the comparable period in 2004, primarily
because expenditures associated with NOx emission reductions have decreased as the NOx
compliance construction program nears completion. Construction expenditures during the first three
months of 2005 were financed with internally generated cash provided by operations. IPL's
construction program is composed of capital expenditures necessary for prudent utility operations
and compliance with environmental laws and regulations, along with discretionary investments
designed to improve overall performance. Our capital expenditure program for the three-year period
2005-2007 is currently estimated to be approximately $473 million. The estimated cost of the overall
program by year is $129 million in 2005, $183 million in 2006 and $161 million in 2007. It
includes approximately $132 million for additions, improvements and extensions to transmission and
distribution lines, substations, power factor and voltage regulating equipment, distribution
transformers and street lighting facilities. The capital expenditure program also includes
approximately $27 million for construction projects designed to reduce NOx emissions;
$206 million for construction projects designed to reduce SO2 and mercury emissions; $96
million for power plant related projects; and $12 million primarily for miscellaneous office
equipment, furniture and leasehold improvements.

Pension Funding.  IPL has not made any contributions to the Pension Plans during
2005. Depending on the timing of contributions, pending legislation, and other factors related to
our funding strategy, we estimate potential cash contributions to the Pension Plans of up to $25
million in 2005, but we may elect not to make any contributions since none are anticipated to be
required to meet our minimum funding targets. This estimate is based on actuarial assumptions using
a discount rate of 6.0% and an assumed long-term rate of return on plan assets of 8.0%.

Dividends.  All of our outstanding common stock is held by AES. During the first
three months of 2005, we paid $47.6 million in dividends to AES. Future distributions will be
determined at the discretion of our board of directors and will depend primarily on dividends
received from IPL. Dividends from IPL are affected by IPL's results of operations, cash flows, the
timing of financings, financial condition, capital requirements, regulatory considerations, and such
other factors as IPL's board of directors deems relevant.

Regulatory Matters

Midwest ISO "Day 2" Operations.

Purchased Power. IPL is generally allowed to recover, through its fuel adjustment charge,
the fuel portion of purchased power costs incurred to meet jurisdictional retail load. Purchased
power costs below an established benchmark are presumed to be fuel costs. Prior to March 2005, the
benchmark for IPL was fixed at $77.50 per MWh. Under a new settlement agreement approved by the IURC
in March 2005, which expires March 31, 2007, the benchmark for IPL is established prospectively each
month based on the higher of the prompt month price (futures settlement price on the last trading
day of the current month for next month) for natural gas or no. 2 fuel oil. The settlement also
generally provides for recovery of 85% of power purchased up to $700/MWh to replace capacity losses
for certain full forced outages and environmental derates (unit impairment for environmental
conditions) for power purchases up to the first 11% of IPL's total rated summer capacity in any hour
and full recovery for power purchases exceeding 11% of IPL's total rated summer capacity in any
hour.

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Item 3.	Quantitative and Qualitative Disclosures About Market Risk

Not applicable pursuant to General Instruction H of the Form 10-Q.

---

Item 4.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

Based upon the controls evaluation performed, the CEO and CFO have concluded that as of March 31,
2005, our disclosure controls and procedures were effective to provide reasonable assurance that
material information relating to us and our consolidated subsidiaries is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange
Commission's rules and forms.



Changes in Internal Controls.  In the course of our evaluation of disclosure controls and
procedures, management considered certain internal control areas in which we have made and are
continuing to make changes to improve and enhance controls. Based upon that evaluation, the CEO and
CFO concluded that there were no changes in our internal controls over financial reporting
identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15
or 15d-15 that occurred during the first quarter ended March 31, 2005 that have materially affected,
or are reasonably likely to materially affect, our internal controls over financial reporting.



Compliance with Section 404 of the Sarbanes Oxley Act of 2002.  Beginning with the year
ending December 31, 2006, Section 404 of the Sarbanes-Oxley Act of 2002 will require us to include
an internal control report of management with our annual report on Form 10-K. The internal control
report must contain (1) a statement of management's responsibility for establishing and maintaining
adequate internal controls over financial reporting for our Company, (2) a statement identifying the
framework used by management to conduct the required evaluation of the effectiveness of our internal
controls over financial reporting, (3) management's assessment of the effectiveness of our internal
controls over financial reporting as of the end of our most recent fiscal year, including a
statement as to whether or not our internal controls over financial reporting are effective, and (4)
a statement that our independent auditors have issued an attestation report on management's
assessment of our internal controls over financial reporting.

Management has developed a comprehensive plan in order to achieve compliance with Section 404
within the prescribed period and to review, evaluate and improve the design and effectiveness of our
controls and procedures on an on-going basis. The comprehensive compliance plan includes (1)
documentation and assessment of the adequacy of our internal controls over financial reporting, (2)
remediation of control weaknesses, (3) validation through testing that controls are functioning as
documented and (4) implementation of a continuous reporting and improvement process for internal
controls over financial reporting. As a result of this initiative, we have made and will continue to
make changes from time to time in our internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Please refer to Note 6 of the accompanying consolidated financial
statements for a summary of significant legal proceedings involving IPALCO and/or IPL. We are also
subject to routine litigation, claims and administrative proceedings arising in the ordinary course
of business, none of which is expected to have a material adverse effect on our financial position
or results of operations.

Item 6.  Exhibits





|**Exhibit No.** | **Document**
|--------------- | ------------

`4.1  Forty-Ninth Supplemental Indenture dated as of April 1, 2005.

 4.2  Fiftieth Supplemental Indenture dated as of April 1, 2005.

31.1  Certification by Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a).

31.2  Certification by Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a).

  32  Certification required by Rule 13a-14(b) or 15d-14(b).`

---

**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: May 9, 2005



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

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