UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         Washington, D. C.  20549
                                     
                                     
                                 FORM 10-K
                                     
                                     
             [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934
                For the fiscal year ended December 31, 1996
                                    OR
                                     
         [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                    THE SECURITIES EXCHANGE ACT OF 1934
           For the transition period from __________to_________



Commission       Registrant; State of Incorporation;      IRS Employer
File Number         Address; and Telephone Number      Identification No.

  1-10628      CIPSCO INCORPORATED                         37-1260920
                    (An Illinois Corporation)
                      607 East Adams Street
                      Springfield, Illinois  62739
                      217-523-3600

  1-3672       CENTRAL ILLINOIS PUBLIC SERVICE COMPANY     37-0211380
                    (An Illinois Corporation)
                      607 East Adams Street
                      Springfield, Illinois  62739
                      217-523-3600


Securities registered pursuant to Section 12(b) of the Act:

                                              Name of Each Exchange
     Title of Class                            on Which Registered

CIPSCO INCORPORATED
     Common Stock, without par value         New York Stock Exchange
                                             Chicago Stock Exchange

CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
     None

Securities registered pursuant to Section 12(g) of the Act:

CIPSCO INCORPORATED, None

CENTRAL ILLINOIS PUBLIC SERVICE COMPANY,
     Cumulative Preferred Stock, par value $100 per share
     Depositary Shares, each representing one-fourth of a share of 6.625%
       Cumulative
     Preferred Stock, par value $100 per share

     Indicate by check mark whether the Registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrants were required to file such reports), and (2)
have been subject to such filing requirements for the past 90 days.

     Yes  X    No

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. (X)

     Aggregate market value at February 1, 1997 of the voting stock held by
non-affiliates of CIPSCO Incorporated (CIPSCO) - $1,225,131,400 - Common
Stock, without par value.  Number of shares outstanding of each of CIPSCO's
classes of common stock at February 1, 1997:  34,069,542 shares of Common
Stock, without par value.

     Aggregate market value at February 1, 1997 of the voting stock held by
non-affiliates of Central Illinois Public Service Company (CIPS) -
$20,124,700 - Cumulative Preferred Stock (par value $100 per share) [Note:
Excludes value of 400,000 shares of Cumulative Preferred Stock for which
CIPS has been unable to determine market value.]  Number of shares
outstanding of each of CIPS' classes of common stock at February 1, 1997:
25,452,373 shares of Common Stock, without par value (all owned by CIPSCO).

                   Documents Incorporated By Reference:

     A portion of CIPSCO's Proxy Statement relating to its 1997 Annual
Meeting of Shareholders is incorporated by reference in Part III hereof.

     A portion of CIPS' Proxy Statement relating to its 1997 Annual Meeting
of Shareholders is incorporated by reference in Part III hereof.

===========================================================================

                            CIPSCO INCORPORATED
                                    AND
                  CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
                       1996 FORM 10-K ANNUAL REPORT
                             TABLE OF CONTENTS
                                     
                                     
                                     
                                  PART I
                                                                       PAGE
Item 1.   Business
             CIPSCO Incorporated and its Subsidiaries  . . . . . .       5
               General . . . . . . . . . . . . . . . . . . . . . .       5
               Merger. . . . . . . . . . . . . . . . . . . . . . .       5
             Non-Utility Subsidiary - CIPSCO Investment Company  .       6
               General . . . . . . . . . . . . . . . . . . . . . .       6
             Utility Subsidiary - Central Illinois Public
                Service Company. . . . . . . . . . . . . . . . . .       6
               General . . . . . . . . . . . . . . . . . . . . . .       6
               Revenues. . . . . . . . . . . . . . . . . . . . . .       7
               Competition -- General. . . . . . . . . . . . . . .       9
               Competition -- Electric Business. . . . . . . . . .       9
               Competition -- Gas Business . . . . . . . . . . . .      12
               Utility Industry. . . . . . . . . . . . . . . . . .      12
               Construction Program and Financing. . . . . . . . .      12
               Rate Matters. . . . . . . . . . . . . . . . . . . .      14
               Electric Operations . . . . . . . . . . . . . . . .      15
               Electric Power Sales/Participation Agreements . . .      16
               Gas Operations. . . . . . . . . . . . . . . . . . .      17
               Fuel. . . . . . . . . . . . . . . . . . . . . . . .      18
               Regulation. . . . . . . . . . . . . . . . . . . . .      19
               Environmental Matters . . . . . . . . . . . . . . .      19
               Employees . . . . . . . . . . . . . . . . . . . . .      21
               Cautionary Factors. . . . . . . . . . . . . . . . .      22
Item 2.   Properties . . . . . . . . . . . . . . . . . . . . . . .      22
Item 3.   Legal Proceedings  . . . . . . . . . . . . . . . . . . .      23
Item 4.   Submission of Matters to a Vote of Security Holders  . .      23
          Executive Officers of the Registrants  . . . . . . . . .      24

                                  PART II

Item 5.   Market for Registrants' Common Equity and Related
            Stockholder Matters . . . . . . . . . . . . . . . . . .     26
Item 6.   Selected Financial Data . . . . . . . . . . . . . . . . .     27
Item 7.   Management's Discussion and Analysis of Financial
            Condition and Results of Operations . . . . . . . . . .     28
Item 8.   Financial Statements and Supplementary Data . . . . . . .     38
          CIPSCO Consolidated Financial Statements. . . . . . . . .     38
          Report of Independent Public Accountants. . . . . . . . .     42
          Notes to Consolidated Financial Statements. . . . . . . .     43
          CIPS Financial Statements . . . . . . . . . . . . . . . .     64
          Report of Independent Public Accountants. . . . . . . . .     68
          Notes to Financial Statements . . . . . . . . . . . . . .     69
Item 9.   Changes In and Disagreements with Accountants on
            Accounting and Financial Disclosure . . . . . . . . . .     75

                            PART III

Item 10.  Directors and Executive Officers of the Registrants . . .     75
Item 11.  Executive Compensation. . . . . . . . . . . . . . . . . .     76
Item 12.  Security Ownership of Certain Beneficial Owners and
            Management. . . . . . . . . . . . . . . . . . . . . . .     76
Item 13.  Certain Relationships and Related Transactions. . . . . .     77

                            PART IV

Item 14.  Exhibits, Financial Statement Schedules, and
            Reports on Form 8-K . . . . . . . . . . . . . . . . . .     77
          Signatures. . . . . . . . . . . . . . . . . . . . . . . .     90
          Exhibits. . . . . . . . . . . . . . . . . . . . . . . . .     92


  Note:   Information included herein which relates solely to CIPSCO 
          Incorporated is provided solely by CIPSCO Incorporated and not by
          Central Illinois Public Service Company and shall be deemed not 
          included in the Annual Report on Form 10-K of Central Illinois 
          Public Service Company.



                                  PART I



Item 1.   Business

                 CIPSCO INCORPORATED AND ITS SUBSIDIARIES

     GENERAL.  CIPSCO Incorporated (CIPSCO) was incorporated in the State
of Illinois on July 11, 1986.  CIPSCO has two first-tier subsidiaries:
CIPSCO Investment Company (CIC), an investment subsidiary, and Central
Illinois Public Service Company (CIPS), an electric and gas public utility
engaged in the sale of electricity and natural gas in portions of central
and southern Illinois.  CIPSCO and Subsidiaries are sometimes referred to
as the "Company."

     Effective October 1, 1990, CIPSCO became the parent holding company of
CIPS.  CIPSCO owns 100% of the outstanding common stock of CIPS
representing in excess of 96% of the voting securities of CIPS.

     CIPSCO's business is conducted through properties and employees of
CIPS and CIPSCO reimburses CIPS for their use.  Each of CIPSCO's officers
is also an officer of CIPS.  CIPSCO's principal executive office is located
in Springfield, Illinois.

     CIPSCO is a public-utility holding company as defined in the Public
Utility Holding Company Act of 1935 (the "Holding Company Act"), but is
exempt, by virtue of an order issued September 18, 1990, from all the
provisions of the Holding Company Act except provisions relating to the
acquisition of securities of public utility companies.  CIPSCO is not
subject to regulation as a utility under the Illinois Public Utilities Act
or the Federal Power Act.

     The ability of CIPSCO to pay dividends on its common stock is
dependent upon distributions made to it by CIPS, CIC and on amounts earned by
CIPSCO on its other investments.

     MERGER.  On August 11, 1995, CIPSCO entered into an Agreement and Plan
of Merger (the "Merger Agreement") providing for a business combination
(the "merger") with Union Electric Company ("UE"), of St. Louis, Missouri
subject to approval of CIPSCO and UE shareholders and various regulatory
approvals.  Pursuant to the Merger Agreement, a new holding company -
Ameren Corporation ("Ameren") - will become the parent of CIPS, UE and the
other direct subsidiaries of CIPSCO. Ameren will be a registered holding
company under the Holding Company Act. When the merger is completed, each
outstanding share of common stock of CIPSCO will be converted into 1.03
shares of Ameren common stock and each outstanding share of common stock of
UE will be converted into one share of Ameren common stock.  The
transaction is expected to be tax-free to shareholders for federal income
tax purposes and to be accounted for as a "pooling of interests."
Shareholders of both companies approved the Merger Agreement on December
20, 1995.  Following certain regulatory approvals, the merger is expected
to be effective by the end of 1997.

     On February 21, 1997, the Missouri Public Service Commission entered a 
final order approving the merger. Under this order, UE will continue its 
alternative regulation plan through 2001 providing for sharing of earnings 
resulting from, among other things, merger related savings. The order approves 
recovery of the merger-related expenses (but not the merger premium) over a 10 
year period. The order requires UE to take steps to participate in or form an 
Independent System Operator to control operation, pricing and planning of its 
transmission system.

     On March 3, 1997, the Illinois Commerce Commission (the "Illinois
commission") expanded the scope of issues to be considered in reopened
proceedings on the merger which were ordered in January, 1997. The additional
issues relate to treatment of affiliate transactions and preservation of the
Illinois commission's jurisdiction in such matters in light of federal
regulation of CIPS as part of a registered public utility holding company
system.

     Hearings at the Federal Energy Regulatory Commission ("FERC") on the
merger have concluded and the administrative law judge's proposed order is
expected by April 30, 1997.

     Additional information relation to the merger can be found in
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Merger and in Notes 2 and 3 of the Notes to Consolidated
Financial Statements included under Item 8 of this report.


     UE serves about 1,140,000 electric customers and 123,000 gas customers
in Missouri and Illinois.  At December 31, 1996 it had assets of $6.9
billion.  For 1996, UE had electric revenues of about $2.2 billion, gas
revenues of $99 million and net income of $291.6 million.  Further
information concerning UE is contained in its Annual Report on Form 10-K
for the year ended December 31, 1996 and other reports to be filed with the
Securities and Exchange Commission.  See "Unaudited Pro Forma Combined
Condensed Financial Information of CIPSCO and Union Electric" contained
under Item 14 of this report for selected historical and unaudited pro
forma combined condensed financial information of CIPSCO and UE.

           NON-REGULATED SUBSIDIARY - CIPSCO INVESTMENT COMPANY

     GENERAL.  CIPSCO Investment Company (CIC), an Illinois corporation and
the non-regulated subsidiary of CIPSCO, was incorporated on October 2,
1990. CIC was formed for the purpose of managing non-regulated investments
and providing investment management services to CIPSCO and its affiliates.
CIC's investment portfolio principally includes common stocks, mutual
funds, hedged preferred and common stocks, equity interests in lease
transactions and energy related projects.  Investments are held in the four
subsidiaries of CIC:  CIPSCO Securities Company, CIPSCO Leasing Company,
CIPSCO Energy Company and CIPSCO Venture Company.  CIPSCO Securities
Company invests in marketable securities, CIPSCO Leasing Company makes long-
term investments in leveraged lease transactions, CIPSCO Energy Company
makes investments in energy-related projects and CIPSCO Venture Company
makes investments within the CIPS utility service territory.

       UTILITY SUBSIDIARY - CENTRAL ILLINOIS PUBLIC SERVICE COMPANY

     GENERAL.  Central Illinois Public Service Company (CIPS), an Illinois
corporation, was organized in 1902.  CIPS is a public utility operating
company engaged in the sale of electricity and natural gas in portions of
central and southern Illinois.  CIPS generates, transmits and distributes
electricity and, through interchange agreements with other utility systems,
purchases and sells power on a firm basis, in emergency situations or when
economical to do so.  CIPS sells and distributes natural gas which it
purchases from natural gas producers and other suppliers and transports
natural gas purchased by end-users directly from suppliers.  The principal
executive offices of CIPS are located in Springfield, Illinois.

     CIPS furnishes electric service to about 322,000 retail customers in
557 incorporated and unincorporated communities and adjacent suburban and
rural areas.  See Business - Electric Operations and - Electric Power
Sales/Participation Agreements regarding certain electric power
arrangements with other utility systems.

     CIPS also furnishes natural gas service to about 169,000 retail
customers in 267 incorporated and unincorporated communities and adjacent
suburban and rural areas and provides gas transportation service to about
425 end-users.  CIPS furnishes both electric and natural gas service in 236
of the communities served by it.

     The territory served by CIPS, located in 66 counties in Illinois, has
an estimated population of 820,000 and is devoted principally to
agriculture and diversified industrial operations.  Key industries include
petroleum and petrochemical industries, food processing, metal fabrication
and coal mining.


     The electric and gas utility business of CIPS is expected to provide
the major portion of CIPSCO's assets and earnings for the foreseeable
future.

     REVENUES.  The total operating revenues of CIPS for the year 1996 were
$886,186,000 of which about 82% was derived from the sale of electricity
and about 18% from the sale of natural gas.  The retail electric revenues
were derived approximately as follows (percentage of total electric
operating revenue):  31% from residential customers, 26% from commercial
customers, 16% from industrial customers and 3% from public authorities and
other.  The electric revenues from sales for resale were derived
approximately as follows (percentage of total electric operating revenue):
10% from power supply agreements, 11% from interchange sales
(economy/emergency) and 3% from full requirements service for cooperatives and
municipal customers.  The natural gas revenues for the year 1996 were derived
approximately as follows:  65% from residential customers, 23% from commercial
customers, 7% from industrial customers and 5% from transportation service
customers and miscellaneous.

     The sources of the operating revenues of CIPS for the years indicated
were as follows:

          Electric                                  1996      1995      1994
                                                         (in thousands)

Residential . . . . . . . . . . . . . . .         $229,865  $230,103  $213,377
Commercial. . . . . . . . . . . . . . . .          186,836   180,831   178,723
Industrial. . . . . . . . . . . . . . . .          117,113   116,030   118,917
Public authorities and other. . . . . . .           20,028    19,828    13,799
                                                  --------  --------  --------
    Total retail revenues . . . . . . . .          553,842   546,792   524,816

Power supply agreements . . . . . . . . .           71,142    70,333    78,613
Interchange sales (economy/emergency) . .           82,399    64,188    71,779
Cooperatives and municipals . . . . . . .           23,451    22,196    22,250
                                                  --------  --------  --------
   Total sales for resale . . . . . . . .          176,992   156,717   172,642

   Total electric operating revenues. . .         $730,834  $703,509  $697,458
                                                  ========  ========  ========

         Natural Gas                                1996      1995      1994
                                                         (in thousands)

Residential . . . . . . . . . . . . . . .         $101,378  $ 85,202  $ 86,919
Commercial. . . . . . . . . . . . . . . .           35,039    28,234    30,577
Industrial. . . . . . . . . . . . . . . .           11,152     8,464    12,897
Transportation service. . . . . . . . . .            7,373     7,335     7,586
Miscellaneous . . . . . . . . . . . . . .              410       375       445
                                                  --------  --------  --------
  Total gas operating revenues. . . . . .         $155,352  $129,610  $138,424
                                                  ========  ========  ========

     The portions of operating income of CIPS, before income taxes,
attributable to electric operations were approximately $148,407,000 (90%)
in 1996, $137,379,000 (92%) in 1995 and $147,070,000 (93%) in 1994.  The
portions of operating income, before income taxes, attributable to gas
operations were approximately $15,817,000 (10%) in 1996, $12,192,000 (8%)
in 1995, and $11,528,000 (7%) in 1994.


     Identifiable assets relating to electric and gas operations were as
follows:

                                             1996        1995          1994
                                                     (in thousands)

Electric operations . . . . . . . . . .  $1,505,767    $1,495,433  $1,469,601
Gas operations. . . . . . . . . . . . .     203,901       181,677     176,788
Other . . . . . . . . . . . . . . . . .      43,650        37,695      32,261
                                         ----------    ----------  ----------  
  Total assets. . . . . . . . . . . . .  $1,753,318    $1,714,805  $1,678,650
                                         ==========     ========== ==========


     COMPETITION -- ELECTRIC BUSINESS.  Competition is increasing in the
electric utility business.  A description of some of the competitive
factors, including state and federal restructuring efforts, and the
potential impact of such matters on the Company and CIPS, are described in
Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations - Consolidated Results of Operations - Regulation and
Competition.  Future regulatory, legislative, technological and economic 
changes can be expected to further increase competition in wholesale as well 
as retail markets.

     During 1996, CIPS had generating capacity sales agreements with other 
utility systems which represented approximately 520 megawatts or 18% of CIPS' 
total generating capacity.  This reflects a reduction of 115 megawatts as a 
result of a scheduled contract reduction in 1995.  Other agreements expire at 
various dates over the next several years.  (See Business - Utility 
Subsidiary - Central Illinois Public Service Company - Electric Power 
Sales/Participation Agreements.)  Although most of the contracts extend to 
the period 2007 to 2014, contracts representing about $17 million in annual 
revenues expire in 1999.  When such contacts expire, CIPS may not be able to 
sell the available capacity or energy at the margins provided under the existing
contracts.  In addition to such wholesale power sales contracts, CIPS also
has long-term transmission service agreements with certain customers.
There are proceedings underway before the FERC regarding open access
transmission tariffs for CIPS (to be applicable prior to the proposed
merger with UE) and CIPS and UE, jointly (to be applicable after the
proposed merger).  CIPS' open access transmission tariffs to be effective
before and after the proposed merger are expected to offer transmission at 
rates lower than those reflected in certain existing long-term transmission 
agreements.  Certain customers under these long-term transmission agreements 
have attempted to challenge such agreements (and one such challenge is still
pending) before FERC on the basis that the rates under these agreements are
higher than those to be available under the open access tariffs.  CIPS
believes that its existing wholesale power sales agreements and
transmission service agreements are just and reasonable and should not be
altered by FERC.

     Competition in the interchange sales market (economy and emergency power),
which is based primarily on price and availability of energy, has become
much more intense in recent years.  Approximately 11 percent of total
electric operating revenues for 1996 were derived from interchange sales.

     In 1996, two Illinois electric utilities received approval from the
Illinois commission for experimental "open access" programs which would provide 
certain customers within the authorized service area of each such utility the 
opportunity to obtain electric power from a supplier other than such utility.  
These pilot programs differ from the regulatory reform process (as described 
under Item 7. Management's Discussion and Analysis of Financial Condition and 
Results of Operations - Consolidated Results of Operations - Regulation and
Competition) in that they are temporary in nature and are approved under
the existing Illinois Public Utilities Act.  CIPS is monitoring the
progress of both programs.


     The competitive pressures on CIPS' wholesale and retail business
referred to above and in Management's Discussion could have a negative
impact on revenues and earnings.  In response to these pressures, CIPS is
working closely with its wholesale, industrial and other customers to find
mutually beneficial solutions to the challenges brought about by
competition.  CIPS initiated a new marketing function in 1995 and the
Company and CIPS have taken a number of other steps in recent years to
prepare for increasing competition and to reduce costs and increase sales
in light of the factors outlined above and other circumstances.  For
example, CIPS has renegotiated several major coal supply contracts (see
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Consolidated Results of Operations - Coal Contract
Restructuring), instituted a business process re-engineering program and
reduced its workforce through attrition and a voluntary separation program
to reduce costs.  Finally, the Company has entered into the Merger
Agreement with UE to form a strategic alliance to enhance the Company's
competitive positions.  Certain of these initiatives are described further
below.

     In order to assess the various opportunities emerging in the electric and
natural gas energy marketplace and to implement strategies which take
advantage of those opportunities, effective January 1, 1995, CIPS
established a new marketing function.  The efforts of this new function are
being directed at product and service development programs, customer
retention and economic development.  As a result of the marketing efforts
emphasized during the past two years, CIPS has introduced consumer products
related to lighting and home safety, provided added customer service
options and technical energy and industrial process service assistance.

     The CIPS economic development program has been expanded in recent years to
include new customer and community development initiatives.  Additional
services to customers have included energy technology assistance and market
development programs.  CIPS works in partnership with communities
throughout the service area to implement projects to respond to growth
opportunities.  This, in combination with the ongoing business development
initiatives including industrial site location assistance, community
profiles technical development services, and innovative industrial building
design programs, is designed to maximize economic development throughout
the CIPS territory.

     In January 1985, CIPS first received approval from the Illinois commission
for an economic development rate.  The rate is designed to encourage
industrial expansion and stimulate job creation in the service territory of
CIPS.  Under the economic development rate, each qualifying electric
customer receives lower incentive rates for incremental load for a maximum
period of five years.  In June 1986, CIPS received further approval which
grants flexibility to renegotiate agreements to fit the specific needs of
certain industrial prospects.  The Illinois commission granted CIPS
approval to offer qualifying customers the economic development rate
through January 1, 2000.  Since the rate was instituted in 1985, about 207
new or existing business expansions have led to the creation of over 11,475
new jobs in the CIPS service territory.  In addition, on July 10, 1995,
CIPS filed a tariff rider with the Illinois commission applicable to
existing electric service customers billed on certain commercial and
industrial rates.  This rider allows CIPS to negotiate contractual rates
with customers at rates equal to or greater than the incremental costs of
serving that customer.  Such contracts are intended for customers having the 
potential to utilize an energy source other than CIPS' electric service
and/or where the total or partial loss of customer load is imminent.  This
will allow CIPS to maintain a positive contribution to fixed costs and
avoid permanent loss of revenue.

     On August 7, 1996, the Company's new systemwide call center at Pawnee,
Illinois became operational.  The new facility will enable CIPS to provide
better customer services regarding billing, credit, energy services and
other matters.

     In addition to a general program of controlling costs, in 1987 CIPS
initiated a major program of renegotiating long-term coal supply contracts.
A major coal contract restructuring was completed early in 1997.  (See Item 7. 
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Consolidated Results of Operations - Coal Contract
Restructuring).  CIPS continues to evaluate opportunities to initiate
further renegotiation efforts.  This program has helped and will continue
to help CIPS control its fuel costs.

     During 1996, CIPS continued its "business process re-engineering" program
focusing on two major areas:  field operations (including general office
departments directly supporting field operations) and power generation
(including general office departments directly supporting the power
stations).  Multi-disciplined teams were formed in early 1995 to study each
of these areas, with the objective of significantly reducing costs,
improving customer satisfaction, and achieving the Company's strategic
goals.  A pilot program in each area was initiated to confirm the
effectiveness of various recommendations submitted by the teams.  The field
operations pilot program began in October 1995.  A regional office concept
in field operations replaces the division-based organizational structure
whereby separate area and district offices reported to one of three
division offices.  At the power stations, a work area maintenance concept
was initiated as a pilot program at the Meredosia Power Station in January,
1996.  The Meredosia pilot program has been extended with the mutual
consent of plant management and employees represented by International
Union of Operating Engineers Local 148.  Similarly, in January, 1997, the
work area maintenance concept was initiated for a trial period of up to one
year at the Coffeen Power Station.  Further implementation of changes in
these areas will occur in 1997.

     Early in 1995, CIPS instituted a voluntary separation program.  Under the
program, eligible employees could leave CIPS and receive a package of
benefits.  Of the employees eligible to participate, 151 accepted the
offer.


     COMPETITION -- GAS BUSINESS.  Competition in the natural gas industry
is increasing.  For a number of years, CIPS customers have had the ability
to purchase natural gas from producers or other suppliers and transport
that gas through the interstate pipelines and the CIPS system.  CIPS
collects a rate for transportation through its system.  Policies of the
FERC have increased the competitive nature of the gas business.  In certain
cases customers have the ability to receive their gas supply directly from
pipelines and bypass the CIPS system.  Illinois utilities, under special
rate provisions authorized by the Illinois commission, are authorized to
negotiate special contractual sales arrangements with their larger natural
gas customers as a means of retaining such customers.  CIPS has negotiated
or is currently negotiating with a number of its larger industrial gas
customers regarding flexible rates to address the more competitive
environment in which CIPS is operating.  While CIPS has had to provide
lower rates to retain some customers, CIPS has used this same flexibility
to obtain some new loads.

     UTILITY INDUSTRY.  CIPS is experiencing some of the problems common to
electric and gas utility companies, namely, increased competition for
customers, increased construction costs, delays and uncertainties in the
regulatory process and costs of compliance with environmental and other
laws and regulations.

     CONSTRUCTION PROGRAM AND FINANCING.  Total construction expenditures
for CIPS for 1997 through 2001 are estimated at $482 million.  For 1997,
anticipated construction expenditures are $113 million for replacements and
improvements and consist of about $51 million for electric production
facilities, $11 million for electric transmission facilities, $42 million
for electric distribution and general facilities, and $9 million for gas
utility facilities.  The projected 5-year amounts include up to $28 million
for environmental compliance, including compliance with regulations under
the Clean Air Act Amendments of 1990.  Capital requirements for the 1997-
2001 period are expected to be met primarily through internally generated
funds.  In addition to funds required to refinance maturing short-term and
long-term borrowings, external financing requirements are expected to total
about $175 million for the 1997-2001 period which include amounts for
projected construction expenditures and a coal contract restructuring
payment.  Such financing could consist of capital from the parent, the
issuance of short-term debt, long-term debt or preferred stock, or any
combination of the four.  In addition, refinancings to lower the costs of
capital also may occur, depending on market conditions.  (See Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Central Illinois Public Service Company - Capital and Financing
Requirements and - Forward Looking Statements and -- Consolidated Results
of Operations - Clean Air Act and - Coal Contract Restructuring.)

     CIPS continuously reviews its construction program, which may be
affected by numerous factors, including availability and cost of capital,
the rate of load growth, escalation of construction costs, Clean Air Act
compliance strategies, changes in governmental and environmental
regulations, customers' patterns of consumption and conservation of energy
and the adequacy of rate relief. Load growth projections are subject to a
number of uncertainties due to various influences on customer consumption,
economic conditions and the effect of rates on consumption and peak load
demand.


     CIPS has no electric generating units under construction.  On June 30,
1995, CIPS filed its current "least cost resource" plan with the Illinois
commission.  The plan includes the 20-year generating unit plan of the
utility.  As demonstrated by the plan, CIPS is not expected to require
additional generating capacity or demand-side resources during the 1996-
2016 planning period.  Pursuant to the plan, CIPS will engage in several
demand-side management activities intended to enhance its capability to
deliver demand-side management resources in the future.  Following
consummation of the merger, CIPS and UE will each re-examine the timing of
additional electric generation resources.

     For a discussion of the funds requirements for the period 1997-2001
and the assumptions as to the sources of funds to meet those requirements,
see Management's Discussion and Analysis of Financial Condition and Results
of Operations - Central Illinois Public Service Company - Capital and
Financing Requirements.

     CIPS has filed shelf registration statements with the Securities and
Exchange Commission, covering up to $200 million of first mortgage bonds
and medium-term notes.  CIPS currently has authority from the Illinois
commission to issue or incur up to $200 million of first mortgage bonds,
medium-term notes and bank borrowings outstanding at any time through
December 31, 1998.  Pursuant to this authority, in February 1997 CIPS entered 
into long-term credit facilities with banks providing for up to $75 million 
of borrowings.  See Management's Discussion and Analysis of Financial 
Condition and Results of Operations - Central Illinois Public Service Company 
-- Capital and Financing Requirements.

     The issuance by CIPS of first mortgage bonds, medium-term notes and/or
other secured debt securities, common stock, preferred stock and certain
unsecured debt securities is subject to the receipt of necessary regulatory
approvals.  See Business - Utility Subsidiary - Central Illinois Public
Service Company -  Regulation.

     The Mortgage Indenture of CIPS, as presently operative, permits the
issuance of additional first mortgage bonds up to 60% of available net
expenditures for bondable property, provided the "net earnings" of CIPS
(determined after deducting income taxes and otherwise as provided in the
Mortgage Indenture) for a recent 12-month period equal at least twice the
annual interest requirements on all first mortgage bonds outstanding (and
on all equally secured and prior lien indebtedness) and on the bonds
then to be issued.  At December 31, 1996, the more restrictive of these
requirements was the "net earnings" test.  The "net earnings" of CIPS for
the year ended December 31, 1996, so computed, were equal to 5.63 times the
interest for one year on the aggregate amount of bonds outstanding under
the Mortgage Indenture at December 31, 1996.  Based on the "net earnings"
of CIPS (so computed) for the year ended December 31, 1996, and the bonds
outstanding under the Mortgage Indenture at December 31, 1996, CIPS could
have issued about $480 million of additional first mortgage bonds under the
foregoing interest coverage provision (assuming an annual interest rate of
7.75% on such bonds).


     The Articles of Incorporation of CIPS provide, in effect, that so long
as any CIPS preferred stock is outstanding, CIPS shall not, without the
requisite vote of the holders of preferred stock, unless the retirement of
such stock is provided for, (a) issue any preferred or equal ranking stock
(except to retire or in exchange for an equal amount thereof) unless the
"gross income available for interest" of CIPS for a recent 12-month period
is at least one and one-half (1-1/2) times the sum of (i) one year's
interest on all funded debt and notes maturing more than 12 months after
the date of issuance of such shares and (ii) one year's dividend
requirement on all preferred stock to be outstanding after such issue, or
(b) issue or assume any unsecured debt securities maturing less than two
years from the date of issuance or assumption (except for certain refunding
or retirement purposes) if immediately after such issuance or assumption
the total amount of all such unsecured debt securities would exceed 20% of
the sum of all secured debt securities and the capital and surplus of CIPS.
For the year ended December 31, 1996, the "gross income available for
interest" of CIPS equalled 3.13 times the sum of the annual interest
charges and dividend requirements on all such funded debt, notes and
preferred stock outstanding at December 31, 1996.  Such "gross income
available for interest" was sufficient under the test to support the
issuance of additional preferred stock (assuming an annual dividend rate on
such preferred stock of 6.50%) in an amount in excess of the maximum amount
($185 million) of authorized and unissued preferred stock under the
Articles.

     RATE MATTERS.  The most recent CIPS retail rate case before the
Illinois commission resulted in electric and natural gas rate increases
which became effective March 20, 1992.  In its decision, the Illinois
commission allowed a return on net original cost rate base of 9.77%
(electric) and 9.88% (natural gas) reflecting a return on common equity of
12.28% (electric) and 12.50% (natural gas).

     In April 1993, CIPS began recovering amounts under environmental 
adjustment clause riders for the cleanup and restoration of former 
manufactured gas plant sites (environmental remediation sites).  A total of 
$2.9 million was collected from customers through December 31, 1993 under 
the riders and no amounts have been collected since January 1994.  The 
Illinois commission has initiated reconciliation proceedings to determine 
whether the costs incurred by CIPS for environmental remediation activities 
in 1993, 1994 and 1995 were prudently incurred costs and whether revenues 
collected under the riders can be reconciled with the level of prudent costs 
properly incurred for environmental remediation activities.  The Illinois 
commission can order refunds to customers if it determines that costs 
incurred for environmental remediation activities were not prudently incurred 
or revenues collected under the riders were in excess of costs properly 
recoverable under the riders.  Management believes that any costs properly 
incurred in connection with the sites that are not recovered from others will 
be recovered through the environmental rate riders.  Accordingly, management 
believes that costs incurred in connection with these sites will not have a 
material adverse effect on financial position, results of operations or 
liquidity of the Company or CIPS.  See Note 4 to Consolidated Financial 
Statements.

     The Illinois commission conducts annual proceedings to determine
whether the electric fuel and purchased gas charges collected by CIPS in
each year pursuant to the applicable fuel adjustment and purchased gas
adjustment clauses reflect the actual costs of electric fuel and natural gas 
prudently purchased in that year and to reconcile revenues collected
under the clauses during the year with actual costs incurred.  The Illinois
commission can order refunds to customers if it determines that actual
costs of fuel or purchased gas were less than the amounts charged to 
customers pursuant to the clauses or if it finds that CIPS was imprudent in 
its purchases of fuel or gas.  The Illinois commission has completed its 
review of fuel adjustment and purchased gas adjustment charges for all years 
prior to 1994.  No significant refunds or adjustments were required for 
those years.  Fuel reconciliation proceedings for the years 1994 through 1996 
are pending.  The 1994 fuel reconciliation proceeding has been marked heard 
and taken by the Illinois commission.  (See Business - Utility Subsidiary - 
Central Illinois Public Service Company - Fuel.)

     The most recent general rate increase of CIPS approved by the FERC
became effective in 1984.  There are currently no rate increase proceedings
pending at the FERC, and CIPS has no plans for any such rate increase filings.
All of CIPS' requirements sales to cooperatives and municipals for resale are
through negotiated service agreements.

     As a result of the retail rate increase granted to CIPS in 1992
referred to above, a corresponding rate adjustment was granted by the FERC
for certain customers who purchase power from CIPS for resale.  This rate
adjustment was provided for in the service agreements between CIPS and
these customers.

     ELECTRIC OPERATIONS.  Since 1977 CIPS has been a net off-system seller
of electricity and during 1996 it generated 130% of its system
requirements.

     The maximum gross system load to date on the CIPS electrical system,
on a one-hour integrated basis, occurred on August 14, 1995, and was
2,319,000 kilowatts.  Gross system load includes sales to electric
cooperative and municipal customers (but excludes emergency and interchange
sales).  The 1996 maximum gross system load of 2,283,000 kilowatts was 1.6%
less than the historical maximum gross system load of 2,319,000 which
occurred in 1995.

     CIPS, Illinois Power Company and UE are parties to an Interconnection
Agreement providing for the coordination and interconnected operation of
their respective electric systems and the interchange of power and energy
at rates and under conditions set forth therein, including the maintenance
by the parties of minimum reserve capacity positions.  The Agreement
provides that CIPS will maintain a minimum 15% system reserve capacity.
CIPS, Illinois Power and Union Electric are parties to an Interconnection
Agreement with Tennessee Valley Authority (TVA) providing for the
interconnection of the TVA system with the systems of the three companies
to exchange economy and emergency power and for other working arrangements.

     In addition, CIPS has interconnection agreements with various other
neighboring utilities, including Central Illinois Light Company,
Commonwealth Edison Company, Indiana Michigan Power Company, Public Service
Company of Indiana, Inc., IES Utilities, Inc. and Northern Indiana Public 
Service Company.  These agreements provide for various interchanges, 
emergency services and other working arrangements.


     CIPS owns 20%, (Union Electric owns 40% and two other utilities own
the remaining 40%) of the common stock of Electric Energy, Inc. (EEI).  The
owners, including CIPS, are entitled to receive from EEI varying amounts of
power.  Electric Energy, Inc. owns and operates a 1,015,000 kilowatt coal-
fired power station located in Joppa, Illinois.

     CIPS is a member of the Mid-America Interconnected Network reliability
council made up of utilities, public power generators, power marketers and
others, which has as its purpose the promotion of maximum coordination of
planning, construction and utilization of generation and transmission
facilities on a regional basis in order to assure the reliability of
electric bulk power supply in the area served.

     One municipal agency, one cooperative agency and one cooperative are
engaged in the generation of electricity within, or in close proximity to,
portions of the territory served by CIPS.

     Electric and magnetic fields (sometimes referred to as EMF) surround
electric wires or conductors of electricity, such as electrical tools,
household wiring and appliances and electric transmission and distribution
lines, such as those owned by CIPS.  A number of statistical and laboratory
studies have investigated whether EMF pose human health risks.  The United
States Environmental Protection Agency (USEPA) stated in its December 1992
brochure "Questions and Answers about Electric and Magnetic Fields" that
"Some epidemiological evidence is suggestive of an association between
surrogate measurements of magnetic field exposure and certain cancer
outcomes.  Though the body of evidence cannot be dismissed, it is not
complete enough at this time to draw meaningful conclusions."  The nation's
electric utilities, including CIPS, have participated in the sponsorship of
millions of dollars of EMF research.  CIPS has also agreed to participate
in the National EMF Research and Public Information Dissemination Program,
a 5-year $65 million effort headed by the United States Department of
Energy aimed at furthering EMF research.  Through its participation with
Electric Power Research Institute, CIPS will continue its investigation and
research with regard to the possible health effects posed by exposure to
EMF.

     ELECTRIC POWER SALES/PARTICIPATION AGREEMENTS.  As shown in the table
below, CIPS currently has contracts with Norris Electric Cooperative, City
of Newton, Village of Greenup and Mt. Carmel Public Utility Company for the
sale of electric power.  These contracts provide for firm full requirements
service which obligates CIPS to maintain adequate system reserves to
support the contracts, or to supply the requirements with off-system
purchases.

                                                1996
                                                Peak         Contract
                                               Demand       Expiration
Contract                                     (Megawatts)       Date

Norris Electric Cooperative. . . . . .           60 MW         2007
City of Newton . . . . . . . . . . . .            8 MW         1999
Village of Greenup . . . . . . . . . .            3 MW         1999
Mt. Carmel Public Utility Co.  . . . .           41 MW         2001


     Since 1990, CIPS has entered into three successive agreements with
Central Illinois Light Company ("CILCO") to sell to CILCO, Limited Term
Power.  These agreements provide for contract delivery periods and amounts
as shown in the following table:

                                                    Contract
                             Delivery                Amount
                              Period                   (MW)

                      June 1994 - May 1996. . . .      70
                      June 1996 - May 1997. . . .      80
                      June 1997 - May 1998. . . .      90
                      June 1998 - May 2002. . . .     150
                      June 2002 - May 2009. . . .      50

     In addition, CIPS sells electric power to three power pooling agencies
through negotiated capacity participation agreements identified in the
following table.  These agencies include Soyland Power Cooperative
(Soyland), Illinois Municipal Electric Agency (IMEA) and Wabash Valley
Power Association (WVPA).
                                              Maximum
                                             Capability      Contract
                                             Entitlement    Expiration
Contract                                     (Megawatts)       Date

Soyland. . . . . . . . . . . . . . . .         103 MW          1999
IMEA . . . . . . . . . . . . . . . . .         122 MW          2014
WVPA . . . . . . . . . . . . . . . . .          65 MW          2011

(See Business - Utility Subsidiary - Central Illinois Public Service
Company - Competition -- Electric Business above.)

     GAS OPERATIONS.  CIPS distributes and sells natural gas to 267
incorporated and unincorporated communities located in 41 counties of
central and southern Illinois.  The CIPS service territory is predominantly
made up of small towns and rural areas.  Of the communities served, only 5
have populations greater than 15,000.  Customer density on the CIPS gas 
system is approximately 37 customers per mile of main.

     Six interstate pipelines pass through various portions of the CIPS
service area:  Panhandle Eastern Pipe Line Company, Texas Eastern
Transmission Corporation, Natural Gas Pipeline Company, Texas Gas
Transmission Company, Midwestern Gas Transmission Company and Trunkline Gas
Company.  CIPS has multiple interconnections with each of these pipelines,
with the total of all such interconnections being 46.  Most of the CIPS
system is integrated by virtue of CIPS owned pipelines, or by
transportation agreements with interstate pipelines.

     CIPS owns and operates four underground storage fields which provide a
total peak day capacity of 34,500 thousand cubic feet per day (mcf/day).
CIPS also operates one propane-air peak shaving facility which has a peak
day capacity rating of 10,000 mcf/day.

     The peak day firm demand recorded by CIPS in 1996 was 302,550 mcf
which was reached on February 2, 1996.  This demand level is 5.2% less than
the all-time peak demand of 319,033 mcf which occurred on December 24,
1983.  During  1996, the CIPS throughput (total of sales and
transportation) was 39.2 billion cubic feet (bcf) compared to 37.2 bcf


experienced in 1995, the year of highest historical throughput prior to
1996.  In 1996, CIPS transported 13.4 bcf of customer-owned gas which
represented 34% of the total system throughput.  Volumes of customer-owned
gas transported in 1995 and 1994 were 14.5 bcf and 12.0 bcf, respectively.
The average cost per mcf of natural gas purchased from all suppliers was
about $3.53 in 1996, $3.04 in 1995 and $3.41 in 1994.

     The rate schedules of CIPS applicable to all of its gas sales include
a uniform purchased gas adjustment clause, which permits CIPS to adjust its
rates to its customers to reflect substantially all changes in the cost of
purchased gas.  (See Note 1 of Notes to Consolidated Financial Statements
included under Item 8 of this report.  See Business - Utility Subsidiary -
Central Illinois Public Service Company - Rate Matters.)

     CIPS maintains a diversified portfolio of gas supply, transportation,
leased storage and no-notice service contracts to reliably serve its gas
customers.  In addition, CIPS' owned storage and propane-air facilities
provide additional reliability and flexibility to meet peak day and peak
season requirements.  In recent years CIPS has made investments to
construct additional pipeline interconnections, increase CIPS owned storage
capacity, improve reliability of existing storage facilities, modernize
propane-air facilities and improve data acquisition capabilities.  At the
same time CIPS has reorganized and enhanced its gas supply planning and
procurement functions.

     FUEL.  Over 99% of the net kilowatthour generation of CIPS in 1996 was
provided by coal-fired generating units and the remainder by an oil-fired
unit.

     The average costs of fuel consumed by CIPS, per ton and per million
Btu, for the periods shown were as follows:

                                        1996      1995      1994

Per ton ($) . . . . . . . . . . . .     36.16     37.69     35.44
Per million Btu ($) . . . . . . . .      1.71      1.76      1.65

     In 1996, approximately 20.1% of the coal purchased for electric
generation was purchased on a spot basis at average delivered costs of
$26.11 per ton and $1.19 per million Btu.

     The retail fuel adjustment clause (FAC) of CIPS is consistent with the
uniform FAC mandated by the Illinois commission for all electric utilities
as applicable to retail electric sales in Illinois. The FAC provides for
the recovery of changes in electric fuel costs, including certain
transportation costs of coal, in billings to retail customers.  CIPS
adjusts fuel expense to recognize over- or under-recoveries of allowable
fuel costs.  The cumulative effect is deferred on the Balance Sheet as a
Current Asset or Current Liability, pending automatic reflection in future
billings to customers.  In 1992, CIPS received Illinois commission approval
to include certain coal transportation costs in the FAC in accordance with
the August 1991 modifications to the Illinois Public Utilities Act.

     CIPS also has contractual arrangements with certain other utility
system customers which contain a fuel adjustment clause or provide for a
sharing of fuel costs which permit CIPS to adjust its rates to such
customers to reflect substantially all changes in the cost of fuel
(including all transportation costs) used to supply those customers.

     The amount of coal supplies on hand at the generating stations of CIPS
varies from time to time.  CIPS generally attempts to maintain a 65-day
supply.  Approximately 80% of the annual coal requirements of the
generating facilities of CIPS are being met by long-term coal contracts
expiring at various dates from 1997 to 2010.  As contracts approach their
expiration, or when appropriate, CIPS evaluates alternative supply
arrangements based on then current and expected market conditions for coal.
CIPS believes there are adequate reserves reasonably available to supply
its existing generating units with the quantity and quality of coal
required for the foreseeable future.

     See Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Central Illinois Public Service
Company - Capital and Financing Requirements and - Consolidated Results of
Operations - Clean Air Act and - Coal Contract Restructuring.

     REGULATION.  CIPS is subject to regulation by the Illinois commission
as to rates, accounting practices, issuance of certain securities and in
other respects as provided by Illinois law.  The Illinois commission may
consider alternatives to rate-of-return regulation.  Further 
deregulation and open access proposals are being made in the Illinois
General Assembly.  See Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Consolidated Results of
Operations - Regulation and Competition.  The Electric Supplier Act of
Illinois permits utilities and electric cooperatives to delineate their
respective service areas, subject to the approval of the Illinois
commission, and gives the Illinois commission power to determine, pursuant
to guidelines provided in the Act, whether a prospective electric customer
will be furnished service by a public utility or by a cooperative.

     The FERC has jurisdiction under the Federal Power Act over certain of
the electric utility facilities and operations, accounting practices,
issuance or acquisition of certain securities and electric rates of CIPS
for resale and interchange customers.  CIPS has been classified as a
"public utility" within the meaning of that Act.  CIPS has been declared
exempt from the federal Natural Gas Act.

     CIPS is presently exempt from all the provisions of the Public Utility
Holding Company Act of 1935, except provisions thereof relating to the
acquisition of securities of other public utility companies, until further
action by the Securities and Exchange Commission, by virtue of an annual
exemption statement filed by CIPS with the Commission pursuant to Rule 2
under the Act.  See Business - CIPSCO Incorporated and Its Subsidiaries -
Merger.

     ENVIRONMENTAL MATTERS.  CIPS is subject to regulation with respect to
air and water quality standards, standards relating to the discharge and
disposal of solid and hazardous wastes and other environmental matters by
various federal, state and local authorities.  The Illinois Pollution
Control Board (the "Board") has jurisdiction over all phases of
environmental control by the State of Illinois and has authority to grant
variances from environmental requirements.  The Illinois Environmental
Protection Agency (the "Agency") has authority to issue permits,
investigate violations and recommend enforcement cases.  The Illinois
Attorney General has the authority to prosecute enforcement cases.  The
USEPA has jurisdiction to promulgate and enforce air and water quality
standards in addition to those standards which relate to the discharge and
disposal of solid and hazardous wastes.


     Air pollution control regulations promulgated by the Board impose
restrictions on emissions of particulate, sulfur dioxide, nitrogen oxides
and other air pollutants and require that CIPS obtain permits from the
Agency for the construction and operation of its generating facilities in
compliance with these regulations.  CIPS has secured all necessary
operating permits for all of its existing generating facilities and is in
substantial compliance with the provisions contained therein.  Future
construction projects may require additional construction permits.

     Under the Clean Air Act Amendments each utility must have sufficient
emission allowances, which are granted by the USEPA, to cover the amount of
sulfur dioxide to be emitted each year from its generating stations.  Any
emission allowances in excess of a utility's needs for a year can be
retained by it for future use or sold.  CIPS' current compliance strategy
relies on fuel-switching to lower sulfur coals supplemented with the
purchases of emission allowances.  CIPS believes an adequate supply of
emission allowances will be available at a reasonable price for the
foreseeable future.  (See Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Consolidated Results of
Operations - Clean Air Act and - Coal Contract Restructuring.)

     USEPA has proposed revisions to the National Ambient Air Quality 
Standards for ozone and particulate matter which may result in the USEPA 
seeking additional reductions of sulfur dioxide and nitrogen oxide emissions 
from coal fired boilers. Because of the magnitude of these additional 
reductions, substantial costs could be incurred to meet future compliance 
obligations for CIPS' coal fired boilers. The proposed revisions are expected
to be finalized in 1997. The revisions would be effective some time after the 
effective date of the Phase II acid rain control provisions of the Clean Air
Act Amendments.

     Water pollution control regulations promulgated by the Board impose
restrictions on effluent discharges, set water quality standards and
require CIPS to obtain construction permits for certain facilities and
National Pollutant Discharge Elimination System ("NPDES") permits for
discharges into public waters.  CIPS has secured all necessary NPDES
permits for all of its generating units and is in substantial compliance
with the currently effective provisions contained therein, except as noted
in the following paragraph.

     On August 2, 1996, the Company received notice that the Illinois
Attorney General had filed a complaint with the Board alleging various
violations of wastewater discharge permit conditions at the Hutsonville
Power Station.  The allegations had been the subject of prior pre-
enforcement conference letters.  The complaint seeks monetary penalties and
the award of attorney fees.  The Company, the Agency, and the Attorney
General are continuing to work on a plan to resolve these issues.  While
the Company cannot predict the final outcome of this matter, it does not
believe that the final resolution will have a material adverse effect on
financial position, results of operations or liquidity of the Company.

     Pollution control regulations promulgated by the Board impose
restrictions on the discharge and disposal of solid and hazardous waste,
and determine design standards to prevent contamination of groundwater.
CIPS has secured all necessary permits and authorizations for disposal and
is in substantial compliance with the provisions contained therein.  Future
construction projects may require additional authorizations or permits.

     On January 16, 1997, the Agency issued CIPS a notice of violation
concerning an incident at the Newton Power Station.  On September 9, 1996,
a truck driver delivering sodium hydroxide mistakenly unloaded the caustic
material into an acid storage tank.  When the two chemicals mixed, a
violent reaction occurred and the ensuing explosion discharged acid and
caustic material into the environment.  The Agency is seeking a thorough
site investigation followed up by appropriate remedial actions.  The site
has been extensively cleaned up.  The Company believes that sole 
responsibility for this incident rests with the trucking company and will
vigorously defend any further action by the Agency.

     See the subcaption "Environmental Remediation Costs" under Note 4 of
the Notes to Consolidated Financial Statements, included under Item 8 of
this report, for information relating to costs incurred and to be incurred
in connection with the remediation of certain sites where gas had been
manufactured from coal and which contain potentially harmful materials.

     EMPLOYEES.  The businesses of CIPSCO and CIC are conducted through the
use of employees of CIPS, and CIPSCO and CIC reimburse CIPS for the cost of 
using those employees.

     The composition of the work force of CIPS at the payroll period
nearest year-end 1996 and 1995 was as follows:

                                             Number of Employees
Employee Group                               1996           1995

Salaried. . . . . . . . . . . . . . . . .      980          1,053
IBEW - 702. . . . . . . . . . . . . . . .      877            922
IUOE - 148. . . . . . . . . . . . . . . .      454            453
                                             -----          -----
Total . . . . . . . . . . . . . . . . . .    2,311          2,428
                                             =====          =====

     Contracts with IBEW - 702 and IUOE - 148 extend through June 30, 1999.
See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Consolidated Results of Operations -- Labor Issues
and Note 4 of the Notes to Consolidated Financial Statements under the
subcaption "Labor Issues" included under Item 8. Financial Statements and
Supplementary Data for a discussion of matters involving those employees
represented by labor unions.

     CAUTIONARY FACTORS.  See Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations for information concerning
forward looking statements made in this Form 10-K. All statements made
herein which are not historical facts are forward looking and, accordingly,
involve risks and uncertainties that could cause actual results to differ
materially from those discussed.  In addition to those forward looking
statements and cautionary factors referred to in Management's Discussion and
Analysis, forward looking statements included in this Form 10-K include those
relating to:

  1.  The expected effective date of the merger with UE;

  2.  The expected contribution of a major portion of CIPSCO's assets and
      earnings coming from CIPS;

  3.  The expected changes leading to increased competition;

  4.  CIPS' ability to make additional sales when existing contracts expire;

  5.  CIPS' belief that existing wholesale power sales agreements and
      transmission agreements are just and reasonable and should not be
      altered by FERC;

  6.  Estimated construction ependitures, sources of funds and financing
      requirements;

  7.  The expected recovery of environmental remediation expenses through
      rates;

  8.  The expected availability of fuel supplies and emmission allowances;

  9.  The anticipated outcome of identified environmental proceedings and
      litigation.

All such statements are based on management's belief, judgment and analysis 
as well as assumptions made by and information available to management. In 
addition to any assumptions and other factors referred to specifically in 
connection with such forward looking statements, factors that could cause the 
Company's or CIPS' actual results to differ materially from those 
contemplated in any forward looking statements include, among others, those 
identified in Exhibit 99.03 hereto, which is incorporated herein by reference.

Item 2.   Properties.

     Currently, CIPSCO and CIC principally conduct their business through
the use of the properties of CIPS.  CIPSCO has no other material
properties.

     The electric generating facilities of CIPS consist of the following:

                                                             Estimated
                                                            1997 Summer
                                               Year         Capability
Station and Unit                   Fuel      Installed         (KW)

Newton
  Unit 1 . . . . . . . . .         Coal        1977            555,000
  Unit 2 . . . . . . . . .         Coal        1982            555,000
Coffeen
  Unit 1 . . . . . . . . .         Coal        1965            340,000
  Unit 2 . . . . . . . . .         Coal        1972            560,000
Grand Tower
  Unit 3 . . . . . . . . .         Coal        1951             82,000
  Unit 4 . . . . . . . . .         Coal        1958            104,000
Hutsonville
  Unit 3 . . . . . . . . .         Coal        1953             76,000
  Unit 4 . . . . . . . . .         Coal        1954             77,000
  Diesel Unit. . . . . . .         Oil         1968              3,000
Meredosia
  Unit 1 . . . . . . . . .         Coal        1948             62,000
  Unit 2 . . . . . . . . .         Coal        1949             62,000
  Unit 3 . . . . . . . . .         Coal        1960            215,000
  Unit 4 . . . . . . . . .         Oil         1975            168,000
                                                             ---------
     Total . . . . . . . .                                   2,859,000
                                                             =========


     All of the generating stations are located in Illinois on land owned
in fee by CIPS.

     At December 31, 1996, CIPS owned 13,051 pole miles of overhead
electric lines and 997 miles of underground electric lines.  At that date,
CIPS also owned 4,620 miles of natural gas transmission and distribution
mains, four underground gas storage fields and one propane-air gas plant
used to supplement the available pipeline supply of natural gas during
periods of abnormally high demands.

     Substantially all of the permanent fixed utility property of CIPS is
subject to the lien of the Mortgage Indenture securing CIPS first mortgage
bonds.

Item 3.   Legal Proceedings.

     CIPSCO is not involved in any material legal proceedings.

     With regard to CIPS, on December 22, 1995, a complaint was filed in
the Circuit Court for the Seventh Judicial Circuit, Sangamon County,
Illinois against CIPS and several other defendants.  The complaint seeks 
unspecified monetary damages and alleges that, as a result of exposure to 
carcinogens contained in coal tar at the CIPS Taylorville gas plant site, 
plaintiffs' children had suffered from a rare form of childhood cancer known 
as "neuroblastoma."  The plaintiffs in this complaint are the plaintiffs who 
on October 5, 1995 voluntarily dismissed claims in a similar complaint in the 
Circuit Court for the Fourth Judicial Circuit, Christian County, Illinois.  
On April 17, 1996, the Seventh Judicial Circuit Court, Sangamon County, 
Illinois granted approval of the petition by CIPS requesting transfer of this 
case to the Circuit Court for the Fourth Judicial Circuit, Christian County, 
Illinois.  CIPS will vigorously defend the action and believes it has 
meritorious defenses.  Management believes that final disposition of this 
matter will not have a material adverse effect on financial position, results 
of operations or liquidity of the Company or CIPS.

     Reference is made to the caption "Coal Contract Restructuring" under 
Item 7. Management's Discussion and Analysis of Financial Condition and 
Results of Operations and in Note 4 of Notes to Consolidated Financial 
Statements for a discussion of the order of the Illinois commission approving 
a coal contract restructuring, including recovery through the automatic fuel 
adjustment clause ("FAC"), over a period estimated to be 72 months, of a $70
million restructuring charge and associated carrying costs. On February 28,
1997, a group of industrial customers who had intervened in the proceeding 
before the Illinois commission filed an appeal of the order with the Illinois 
Third District Appellate Court. The industrial customers have asked the court 
to reverse or remand that portion of the order authorizing CIPS to recover the
restructuring charge through the FAC. If the customers were ultimately to 
prevail, CIPS would be required to cease FAC recovery of the restructuring 
charge, and could be required to refund any portion of the restructuring 
charge that had been collected through the FAC. Any such refund would most
likely occur in the form of a credit in future FAC calculations. In such an  
event, CIPS could initiate a rate filing seeking new base rates designed to 
recover the restructuring charge.  The outcome of any such rate filing cannot 
be predicted.  Although CIPS believes the Illinois commission's order in this 
matter is lawful and proper and will vigorously defend its position that the
Illlinois commission order be upheld as entered, it cannot predict the outcome
of this matter. 

     See Item 1.  Business - Utility Subsidiary - Central Illinois Public
Service Company - Rate Matters, - Gas Operations and - Environmental
Matters with respect to certain matters involving CIPS.  See also Item 1. 
Business - CIPSCO Incorporated and its Subsidiaries - Merger and Notes 3 and 
4 of Notes to Consolidated Financial Statements included under Item 8 of this
report.

Item 4.   Submission of Matters to a Vote of Security Holders.

     There were no matters submitted to a vote of security holders of
either CIPSCO or CIPS during the three months ended December 31, 1996.


Executive Officers of CIPSCO (ages at December 31, 1996).

Name                     Age       Positions Held

C. L. Greenwalt          63        President and Chief Executive Officer
                                   of CIPSCO* and CIPS, and Chairman of
                                   the Board of CIC

G. L. Rainwater          50        Executive Vice President of CIPSCO and CIPS

W. A. Koertner           47        Vice President, Secretary and Chief
                                   Financial Officer of CIPSCO; Vice
                                   President Finance and Secretary of
                                   CIPS; President and Chief Executive
                                   Officer of CIC

F. J. Kinsinger          57        Controller and Chief Accounting Officer of
                                   CIPSCO and CIPS and Controller of CIC

R. C. Porter             40        Treasurer and Assistant Secretary of
                                   CIPSCO, and CIPS; Vice President, Chief
                                   Financial Officer, Treasurer and
                                   Secretary of CIC
______________________
*    Mr. Greenwalt is a director of CIPSCO.

     The present term of office of the above executive officers extends to
the first meeting of CIPSCO's Board of Directors after the next annual
election of Directors, scheduled to be held on April 23, 1997.  There is no
family relationship between any executive officer and any other executive
officer or any director.

     Each of the officers named above has been employed by CIPSCO and/or
CIPS for more than the past five years in various executive capacities
except as noted below.

Executive Officers of CIPS (ages at December 31, 1996).

Name                Age       Positions Held

C.   L. Greenwalt   63        President and Chief Executive Officer*
G. L. Rainwater     50        Executive Vice President*
W. A. Koertner      47        Vice President Finance and Secretary*
C. D. Nelson        43        Vice President Corporate Services
J. T. Birkett       59        Vice President Power Generation
D. R. Patterson     60        Vice President Regional Operations
G. W. Moorman       53        Vice President Regional Operations
F. J. Kinsinger     57        Controller (Principal Accounting Officer)*
R. C. Porter        40        Treasurer and Assistant Secretary*
______________________
*    Mr. Greenwalt is a director of CIPS and is also an officer and
director of CIPSCO.  Mr. Rainwater, Mr. Koertner, Mr. Kinsinger and   Mr.
Porter are also officers of CIPSCO.


     The present term of office of the above executive officers extends to
the first meeting of the Board of Directors of CIPS after the next annual
election of Directors, scheduled to be held on April 23, 1997.  There is no
family relationship between any executive officer and any other executive
officer or any director.

     All of the officers named above have been employed by CIPS in their
present positions for more than the past five years except as indicated
below:

     Mr. Rainwater began his employment with UE on September 1, 1979 in the
Distribution Engineering Department.  After having served in various
capacities in the Corporate Planning Department at UE, Mr. Rainwater became
General Manager of that department on July 1, 1988.  On July 1, 1993, Mr.
Rainwater was named Vice President Corporate Planning at UE and he served
in that capacity through January 10, 1997 after which he began employment
in the position of Executive Vice President of CIPSCO and CIPS effective
January 13, 1997.

     Mr. Koertner served as Vice President Financial Services from August
1, 1989 to April 1, 1993, and as Vice President Corporate Services from
April 1, 1993 to July 1, 1995 when he was named Vice President Finance and
Secretary.

     Mr. Nelson served as Treasurer and Assistant Secretary from August 1,
1989 to December 3, 1996 when he was named Vice President Corporate
Services.  Mr. Nelson also served as Treasurer, Assistant Secretary and
Assistant Controller of CIPSCO Incorporated from April 1, 1993 to December
3, 1996.

     Mr. Birkett served as Manager of Purchasing and Stores from March 1,
1985 to July 1, 1995 when he was named Vice President Power Generation.

     Mr. Patterson served as Western Division Manager from March 1, 1985 to
July 1, 1995, and as Vice President Corporate Services from July 1, 1995 to
October 1, 1996 when he was named Vice President Regional Operations.

     Mr. Moorman served as Vice President Power Supply from June 1, 1988 to
October 1, 1996 when he was named Vice President Regional Operations.

     Mr. Kinsinger served as Assistant Controller in the Accounting
Department from December 12, 1977 to June 4, 1996 when he was named
Controller.

     Mr. Porter served as Revenue Contracts Supervisor in the Accounting
Department from January 18, 1990 to March 18, 1992 and as Assistant
Secretary in the Treasury Department from March 18, 1992 to July 31, 1995,
at which time he was also named Assistant Treasurer, until August 1, 1995.
Since August 1, 1995 he has served as Vice President, Chief Financial
Officer, Treasurer and Secretary of CIC and was assigned the additional
duties of Treasurer and Assistant Secretary of CIPS and CIPSCO on December
3, 1996.


                                    PART II



Item 5.   Market for Registrant's Common Equity and Related Stockholder
Matters.

                                  CIPSCO

     CIPSCO's common stock is publicly held and traded on both the New York
Stock Exchange and the Chicago Stock Exchange.  The table below sets forth,
for the periods indicated, the dividends per share of common stock of
CIPSCO and the high and low sales prices of the CIPSCO common stock as
reported in New York Stock Exchange Composite listings.

                                             Quarter

1996                           First    Second     Third    Fourth

Price Range
High                          $41 1/4   $38 5/8   $38 1/2   $38 1/4
Low                            37 1/8    35 7/8    34 7/8    34 7/8
Close                          38 5/8    38 5/8    35 5/8    36

Cash dividends
declared (cents)              $   .51   $   .52   $   .52   $   .52
                              =======   =======   =======   =======

1995                           First    Second     Third    Fourth

Price Range
High                          $29 1/2   $30 3/4   $34 1/2   $39
Low                            27        28 1/2    28 3/4    34 3/8
Close                          28 5/8    29 7/8    34 3/8    39

Cash dividends
declared (cents)              $   .50   $   .51   $   .51   $   .51
                              =======   =======   =======   =======

     The number of CIPSCO common shareholders of record as of December 31,
1996, was 35,658.

     The market price for CIPSCO Common Stock increased in the third and
fourth quarter of 1995 partially in response to the announcement of the
Merger Agreement with UE.  See Item 1. Business - CIPSCO Incorporated and
its Subsidiaries - Merger.  Consummation of the merger is subject to the
receipt of all necessary regulatory approvals.

                                   CIPS

     All the common stock of CIPS, 25,452,373 shares, is owned by CIPSCO
and is not publicly traded.  The following table sets forth the cash
distributions on common stock paid to CIPSCO by CIPS and CIC:

                            1996                    1995
                       CIPS       CIC           CIPS     CIC
                                (in thousands)
   First Quarter     $16,500    $    -        $17,500   $   -
   Second Quarter     17,500         -         17,500       -
   Third Quarter      16,250         -         17,500       -
   Fourth Quarter     12,700     5,000         18,500       -

                           DIVIDEND RESTRICTIONS

     CIPSCO and CIPS are subject to restrictions on the use of retained
earnings for cash dividends on common stock as described in Note 8 of Notes
to Consolidated Financial Statements included under Item 8 of this report.
The ability of CIPSCO to pay dividends on its common stock is dependent
upon distributions made to it by CIPS, CIC, and on amounts earned by CIPSCO
on its other investments.

Item 6.   Selected Financial Data.
<TABLE>
                                  CIPSCO

For the Years Ended
December 31,            1996        1995         1994        1993       1992
                               (in thousands, except per share data)
<S>                 <C>         <C>         <C>         <C>         <C>
Operating Revenues  $  896,715  $  842,262  $  844,615  $  844,760  $  739,877
Operating Income       173,009     156,742     165,345     170,735     142,986
Net Income              80,057      72,015      83,954      85,498      72,499
Earnings per common
  share                   2.35        2.11        2.46        2.51        2.13
Dividends declared
  per common share        2.07        2.03        1.99        1.95        1.91

As of December 31,

Total Assets        $1,871,656  $1,827,911  $1,777,357  $1,757,750  $1,725,456
Long-Term Debt         421,227     478,926     474,619     494,323     503,700
</TABLE>

<TABLE>
                                   CIPS

For the Years Ended
December 31,            1996        1995        1994        1993        1992
                                           (in thousands)
<S>                 <C>         <C>         <C>         <C>         <C>
Operating Revenues  $  886,186  $ 833,119  $  835,882  $  834,556  $  729,402
Operating Income       116,531    106,029     110,678     113,651      97,372
Net Income              77,393     70,631      81,913      84,011      72,601
Preferred Stock 
 Dividends               3,721      3,850       3,510       3,718       4,549
Earnings for Common
  Stock                 73,672     66,781      78,403      80,293      68,052
Common Stock Dividends  62,950     71,000      68,600      33,500*          -*

As of December 31,

Total Assets        $1,753,318  $1,714,805  $1,678,650  $1,668,462  $1,645,059
Long-Term Debt         421,228     478,926     474,619     494,323     503,700

* Reflects the repurchase of common shares of CIPS.
</TABLE>

Item 7.   Management's Discussion and Analysis of Financial Condition and
Results of Operations.

                   MANAGEMENT'S DISCUSSION AND ANALYSIS

     CIPSCO Incorporated (CIPSCO or the Company) is a holding company
incorporated under the laws of Illinois.  Its principal subsidiary is
Central Illinois Public Service Company (CIPS), an electric and natural gas
utility.  Another subsidiary, CIPSCO Investment Company (CIC), has
subsidiaries engaged in non-regulated investing activities.  Material
changes in the consolidated financial condition and results of operations
are primarily attributable to CIPS operations, except where noted.

Merger

On August 11, 1995, CIPSCO entered into an Agreement and Plan of Merger
providing for a business combination (the merger) with Union Electric
Company (UE) of St. Louis, Missouri, subject to the approval of
shareholders of both companies and various regulatory agencies.  As a
result of the merger, a newly formed holding company - Ameren Corporation
(Ameren) - will become the parent of CIPS, UE, and CIC.  The merged entity
is expected to realize $644 million in net savings over 10 years from
combining certain operations of the two companies and is expected to adopt
UE's dividend payment level, currently $2.54 per share.  Shareholders of
both companies approved the merger agreement on December 20, 1995.
Following regulatory approvals, the merger is expected to be effective by
the end of 1997.  (See Notes 2 and 3 to Consolidated Financial Statements.)


CIPSCO Incorporated

The fundamental financial position of CIPSCO and its subsidiaries remained
strong in 1996.  CIPSCO's business activities are conducted by CIPS and
CIC.  A discussion of the financial condition of CIPS and CIC follows
below.
     The total number of shares of common stock authorized under CIPSCO's
articles of incorporation is 100 million.  At year-end 1996, a total of
34,069,542 shares of common stock was outstanding, which was unchanged from
1995.  No underwritten offerings of common stock are planned.
     Dividends paid to common stock shareholders during 1996 resulted in
payout ratios of 88 percent of consolidated earnings and 41 percent of net
cash provided by operating activities.
     CIPSCO is authorized to issue 4.6 million shares of preferred stock,
none of which has been issued.  There are no constraints in the CIPSCO
articles of incorporation as to the amount of debt which may be issued.
     At year-end 1996 CIPSCO had $0.9 million of temporary investments and
no debt outstanding.

CIPSCO Investment Company

At year-end 1996 there were $117 million of non-regulated investments
managed by CIC and its subsidiaries.
     One subsidiary, CIPSCO Securities Company, manages marketable
securities.  At year-end 1996 it had $51 million invested in hedged
portfolios of preferred and common stocks and other marketable securities.
     A second subsidiary, CIPSCO Leasing Company, invests in long-term
leveraged lease transactions.  At year-end 1996 it had $34 million invested
in leased assets consisting of real estate and equipment.
     A third subsidiary, CIPSCO Energy Company, seeks energy-related
investment opportunities.  At year-end 1996 it had $28 million invested in
leases, or interests in leases, of combustion turbine generating units and
an interest in a partnership which owns a power sales agreement.
     A fourth subsidiary, CIPSCO Venture Company, invests primarily within
the CIPS service territory.  At year-end 1996 it had less than $1 million
invested in real estate.
     At year-end 1996 CIC had $3 million of temporary investments and no
short-term borrowings.


Central Illinois Public Service Company

FINANCIAL CONDITION.  The utility's financial position remained
fundamentally strong during 1996.  Neither CIPSCO nor CIPS has had to raise
additional capital through the sale of common stock to the general public
since 1980.
     The long-range financial objectives for CIPS' capital structure are:
a debt ratio of no more than 45 percent, a common equity ratio of no less
than 45 percent, and a preferred equity ratio of no more than 10 percent.
At December 31, 1996, the capitalization at CIPS consisted of 39 percent
long-term debt, 54 percent common equity and 7 percent preferred stock.
     At year end, 25,452,373 shares of CIPS common stock were outstanding,
all of which were held by CIPSCO.

CAPITAL AND FINANCING REQUIREMENTS.  Construction expenditures were $106
million in 1996.  Of that amount, $93 million and $13 million related to
improvements and replacements to the electric and natural gas systems,
respectively.  For the 12 months ended December 31, 1996, 95 percent of
CIPS' total capital requirements was provided from internal sources.
     Construction expenditures are expected to be about $113 million in
1997.  Of that amount, $104 million is scheduled for electric facilities,
while gas system expenditures are estimated at $9 million.
     For the five-year period 1997-2001, construction expenditures are
estimated at $482 million.  This is $25 million less than was spent in the
preceding five years.  The projected five-year amounts include up to $28
million for environmental compliance, including compliance with the Clean
Air Act Amendments of 1990.
     Capital requirements for the 1997-2001 period are expected to be met
primarily through internally generated funds.  In addition to funds
required to refinance maturing short-term and long-term borrowings,
external financing requirements are expected to total about $175 million
for the 1997-2001 period which include amounts for projected construction
expenditures and a coal contract restructuring payment.  Such financing
could consist of capital from the parent, the issuance of short-term debt,
long-term debt or preferred stock, or any combination of the four.  In
addition, refinancings to lower the costs of capital also may occur,
depending on market conditions.
     CIPS currently has authority from the Illinois Commerce Commission
(Illinois commission) to issue or incur up to $200 million of first
mortgage bonds, medium-term notes and bank borrowings through December 31,
1998.  Registration statements covering $200 million of first mortgage
bonds and medium-term notes have been filed with the Securities and
Exchange Commission.
     Capital and financing requirements may be affected by such factors as
the coal contract restructuring, availability and cost of capital, load
growth, changes in construction expenditures, changes in Clean Air Act
compliance strategies, regulatory and legislative developments, changes in
environmental regulations and other governmental activities.


FINANCING FLEXIBILITY AND LIQUIDITY.  The utility's ability to finance its
construction program and to provide for other capital needs at reasonable
cost is dependent upon its ability to earn a fair return on capital.
Financing flexibility is enhanced by providing a high percentage of total
capital requirements from internal sources and having the ability, if
necessary, to issue long-term securities and to obtain short-term credit.
Flexibility also is provided by the parent corporation which is capable of
providing additional capital if circumstances warrant.  Securities issued
by the utility are subject to regulatory approvals.
     The utility's mortgage indenture limits the amount of first mortgage
bonds which may be issued.  At December 31, 1996, CIPS could have issued
about $480 million of additional first mortgage bonds under the indenture,
assuming an annual interest rate of 7.75 percent.
     CIPS' articles of incorporation limit amounts of preferred stock which
may be issued.  Assuming a preferred dividend rate of 6.50 percent, the
utility could have issued all $185 million of authorized but unissued
preferred stock as of year-end.
     At year-end 1996 CIPS had no temporary investments and $58 million of
short-term borrowings.

                    CONSOLIDATED RESULTS OF OPERATIONS

EARNINGS.  Net income and earnings per share improved by 11 percent in 1996
to $80.1 million and $2.35, respectively, following declines of 14 percent
in 1995.  The return on average common equity for 1996 was 12.2 percent
compared with 11.1 percent in 1995 and 13.1 percent in 1994.
     The improvement in net income, earnings per share and return on
average common equity in 1996 is a result of increased sales, lower
maintenance costs and fewer unusual costs in 1996 than 1995.
Merger-related expenses reduced earnings 15 cents per common share in 1996.
Costs related to a workforce reduction, merger-related expenses, and the
write off of certain system development costs reduced earnings 34 cents per
common share in 1995.

INVESTMENT REVENUES.  Investment revenues are comprised of income from
temporary investments, long-term marketable securities, leveraged leases
and partnership income.  Investment revenues increased 15 percent in 1996
due principally to gains on marketable securities.  Investment revenues
increased in 1995 due to additional investments and increased earnings from
marketable securities.

ELECTRIC OPERATIONS.  Electric kilowatthour sales increased 5 percent in
1996 primarily due to an increase in interchange sales.  Cooling degree
days were 11 percent lower than in 1995 and 7 percent lower than average.
However, heating degree days were 6 percent above 1995, and 8 percent above
average.
     Total electric kilowatthour sales declined 2 percent in 1995 due
principally to a decline in wholesale kilowatthour sales and discontinued
sales to two industrial customers who ceased operations.  A capacity
participation agreement with one of CIPS' wholesale customers called for a
115-megawatt reduction for the customer starting in 1995.  This reduced
wholesale power supply participation revenues for CIPS by $8.7 million.


     The electric margins for the three years ended December 31, were:

ELECTRIC MARGIN                         1996      1995      1994
(millions of dollars)

Electric revenues                       $731      $704      $697
Less:  Revenue taxes                     (25)      (25)      (24)
       Fuel                             (221)     (189)     (196)
       Purchased power                   (53)      (59)      (55)

Electric margin                         $432      $431      $422
                                        ====      ====      ====

     The 1996 electric margin was favorably impacted by colder weather
early in the year which increased sales to residential and commercial
customers and a 14 percent increase in interchange sales to other utilities
and brokers.  The 1995 electric margin improved primarily because warmer
weather during July and August increased residential and commercial sales
and provided opportunities for interchange sales.  Fuel costs were $1.71
per million Btu in 1996, $1.76 in 1995 and $1.65 in 1994.  Purchased power
amounts fluctuated between years according to system requirements and sales
opportunities.

GAS OPERATIONS.  Therms sold and transported increased 5 percent in 1996
due principally to colder weather.  Heating degree days for 1996 were 6
percent higher than in 1995 and 8 percent above average.

     The gas margins for the three years ended December 31, were:

GAS MARGIN                              1996      1995      1994
(millions of dollars)

Gas revenues                            $155      $130      $138
Less:  Revenue taxes                      (7)       (7)       (7)
       Gas costs                         (96)      (74)      (85)

Gas margin                              $ 52      $ 49      $ 46
                                        ====      ====      ====

     The 1995 gas margin was favorably impacted by colder weather as
evidenced by a 6 percent increase in heating degree days from the prior
year.  Gas costs fluctuated according to system requirements in each year.
The average price paid for gas from suppliers increased nearly five cents
per therm in 1996 and decreased more than three and one-half cents per therm 
in 1995.

OPERATING EXPENSES.  Other operation expenses declined 6 percent in 1996.
The decline results from unusual costs in 1995 which included $5.8 million
related to a voluntary separation program and $5.7 million related to write
offs of system development costs.  Other operation expenses increased 11
percent in 1995 over 1994 primarily due to these costs.


     The following table shows other operation expenses for the years ended
December 31, adjusted for unusual costs.

OTHER OPERATION EXPENSES                     1996      1995      1994
(millions of dollars)

Other operation                              $147      $155      $140
  Voluntary separation                          -        (6)        -
  Write off of system costs                     -        (6)        -
  Merger-related system costs                  (2)        -         -

Other operation, adjusted                    $145      $143      $140
                                             ====      ====      ====

     Maintenance expense changes between years are due to normal planning
and scheduling of major power plant maintenance outages.
     Depreciation and amortization expense increases primarily are related
to property additions.
     Income taxes reflect the changes in pre-tax income between years.
     Taxes other than income taxes change primarily in relation to changes
in retail revenues.
     Miscellaneous, net, reflects $2.0 million of merger transaction costs
(not tax deductible) and $2.9 million of merger transition costs in 1996.
Miscellaneous, net, reflects $4.7 million of merger transaction costs (not
tax deductible) in 1995.

CHANGES IN CONSOLIDATED BALANCE SHEET ACCOUNTS.  Significant changes in the
balance sheet accounts at December 31, 1996, compared to balances at
December 31, 1995 are:  fuel for electric generation declined 49 percent
during 1996 due to increased burn of coal inventories resulting primarily
from higher electric sales; gas stored underground increased 37 percent due
to both higher gas prices and greater net volumes of gas injected into
storage; regulatory assets increased due to undepreciated plant costs plus
cost of removal being reflected as a regulatory asset attributable to the
retirement of the Newton Unit 1 scrubber, and increases in recoverable
costs for environmental remediation; other liabilities increased due to
inclusion of scrubber removal costs and increases in recoverable costs for
environmental remediation.

CLEAN AIR ACT.  In 1996, CIPS adopted a revised compliance strategy to meet
the requirements of the Clean Air Act Amendments of 1990.  The new strategy
relies primarily on switching to a lower sulfur coal at its generating
units rather than increased scrubbing and use of higher sulfur coal at its
Newton Unit 1.  The estimated capital costs of compliance are included in
the CIPS five-year construction forecast.

COAL CONTRACT RESTRUCTURING.  In June 1996, CIPS and a major coal supplier
for the Newton and Grand Tower power stations signed a letter of intent
calling for a restructuring of their existing long-term contract.  Under
the restructuring, CIPS paid the supplier a $70 million restructuring
charge plus interest from November 1, 1996 to the payment date on February
13, 1997; will be able to purchase low-sulfur, out-of-state coal at market
prices through the supplier (in substitution for the high-sulfur Illinois
coal CIPS was obligated to purchase under the original contract); and
received options for future purchases of low-sulfur, out-of-state coal from
the supplier in 1997 through 1999 at set negotiated prices.


     By switching to low-sulfur coal, CIPS will be able to discontinue
operating the Newton Unit 1 scrubber.  The benefits of the restructuring
include lower-cost coal; avoidance of significant capital expenditures to
renovate the scrubber; and elimination of scrubber operating and
maintenance costs (offset by scrubber retirement expenses).  The net
benefits of the restructuring are expected to exceed $100 million over the
next 10 years.  In December 1996, the Illinois commission entered an order
approving the switch to out-of-state coal, recovery of the restructuring
charge plus associated carrying costs through the fuel adjustment clause
over six years, and continued recovery in rates of the undepreciated
scrubber investment plus costs of removal.  The order approving the
restructuring will be subject to appeal through mid-March 1997.  Any such
appeal would likely result in lengthy further proceedings.  (See Note 4 to
Consolidated Financial Statements.)

REGULATION AND COMPETITION.  The electric utility industry is becoming more
competitive due to market forces and a changing regulatory and legislative
environment.  To maintain market position in this environment and to take
advantage of opportunities presented through increased competition, CIPS
may from time to time consider and implement various business strategies,
including the restructuring of its wholesale and retail business
operations.  Increased competition has reduced margins on certain wholesale
and retail electricity and gas sales and further reductions can be expected
in the future.
     Large gas and electric customers often have the ability to choose
alternative energy supplies.  Deregulation will bring choice to additional
customers.  To the extent CIPS is unable to reduce costs, increase
efficiency and attract new sales, these competitive pressures could
negatively affect future revenues and earnings.
     On April 24, 1996, the Federal Energy Regulatory Commission (FERC)
issued Orders 888 and 889.  Citing a goal of enhancing competition in the
wholesale market for generation sales, Order 888 requires transmission-
owning utilities, such as CIPS, to provide transmission access and service
to others in a manner similar and comparable to that which the utility has
by virtue of transmission ownership.  Order 888 implements the provisions
of the National Energy Policy Act of 1992 which were designed to promote
competition in the wholesale and generation segments of the electric
utility industry.
     CIPS has filed an open access transmission tariff in compliance with
Order 888.  In addition, CIPS and UE have filed tariffs covering the
combined system to be effective upon completion of the merger.
     Order 889 sets forth the standards of conduct and information
requirements that must be put in place and observed by transmission-owning
public utilities doing business under the open access rule.  These include
establishment by each utility of an open access, same-time information
system, or OASIS.  This system will provide information, on a real-time
basis, needed by the utility's customers to apply for and obtain
transmission service.  Using OASIS, the utility must obtain transmission
service for its own use in the same manner its customers will obtain such
service.  This will help mitigate market power through control of
transmission facilities.  CIPS is implementing the requirements of Order
889.
     Additional changes in federal energy policy leading to further
deregulation can be expected.  Deregulation efforts also are increasing at
the state level.


     In July 1995, legislation was passed authorizing the Illinois
commission, after hearings, to approve a public utility's petition to
operate under alternative forms of regulation.  The Illinois commission can
now consider, on a trial basis, alternatives to rate-of-return regulation
which could reward or penalize utilities based on performance.  CIPS plans
to make an alternative regulation filing after completing the merger with
UE, to establish a mechanism for sharing merger-related and other savings
between ratepayers and shareholders.
     On November 18, 1996, the Illinois Coalition for Responsible
Electricity Choice, which includes CIPS, most other Illinois utilities,
business and consumer groups, submitted a retail competition proposal to
the Illinois State Legislative Reference Bureau.  The proposal contemplates
a phase-in of direct access beginning in the year 2000 and continuing until
2005 for all retail customers.  Other deregulation proposals urge faster
transition to full deregulation and certain groups are urging adoption of
federal legislation that would mandate nationwide retail open access.
     Although the final design and impact of federal and state regulatory
policies and legislation relating to wholesale and retail wheeling are not
known, CIPS is actively planning its transition to a competitive
environment.
     Deregulation also could force utilities to change accounting methods.
Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for
Effects of Certain Types of Regulation," applies to regulated entities
whose rates are designed to recover costs of providing service to customers
through the ratemaking process.  CIPS periodically reviews the criteria of
SFAS No. 71 to ensure that continuing application is appropriate.  Changes
in regulation or in the competitive environment for regulated services
could cause CIPS to no longer be eligible to apply SFAS No. 71 to
established regulatory assets and liabilities.  CIPS has evaluated the
possibility that SFAS No. 71 would no longer apply to it, along with
various factors and conditions that are expected to impact future cost
recovery, and currently believes that its net regulatory assets are
probable of future recovery.  (See Note 3 to Consolidated Financial
Statements.)

ENVIRONMENTAL REMEDIATION COSTS.  CIPS has identified 13 former
manufactured gas plant sites which may contain potentially harmful
materials.  In 1990, one site was added to the United States Environmental
Protection Agency Superfund list.  The utility is implementing an approved
long-term remedial plan for the site.
     Since 1987, the costs related to studies and remediation at these
sites, associated legal and litigation expenses and certain carrying
charges are being accrued and deferred rather than expensed currently.
This is being done pending recovery of these expenses from rates, insurance
carriers, other parties or a combination of these.
     Management believes that costs properly incurred in connection with
the sites that are not recovered from others will be recovered through
environmental rate riders.  Accordingly, management believes that costs
incurred in connection with these sites will not have a material adverse
effect on financial position, results of operations or liquidity of the
Company or CIPS.  (See Note 4 to Consolidated Financial Statements.)


LABOR ISSUES.  The International Union of Operating Engineers Local 148 and
the International Brotherhood of Electrical Workers Local 702 have filed
unfair labor practice charges with the National Labor Relations Board
(NLRB) relating to the legality of the 1993 lockout by CIPS.  The Peoria
Regional Office of the NLRB has issued complaints against CIPS concerning
its lockout.  Both unions seek, among other things, back pay and other
benefits for the period of the lockout.  CIPS estimates the amount of back
pay and other benefits for both unions to be less than $16 million.  An
administrative law judge of the NLRB has ruled that the lockout was
unlawful.  On July 23, 1996, the Company appealed to the NLRB.  Management
believes the lockout was both lawful and reasonable and that the final
resolution of the disputes will not have a material adverse effect on
financial position, results of operations or liquidity of the Company or
CIPS.  CIPS successfully negotiated renewed contracts with both unions in
1996 which extend through June 30, 1999.  (See Note 4 to Consolidated
Financial Statements.)

FORWARD LOOKING STATEMENTS.  This report includes forward looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995.  All statements made herein which are not based on historical
facts are forward looking and, accordingly, involve risks and uncertainties
that could cause actual results to differ materially from those discussed.
Such forward looking statements include those under Management's Discussion
and Analysis relating to (i) the timing of regulatory approvals and
consummation of the merger with UE, (ii) the long-range financial
objectives for the capital structure of CIPS, (iii) amounts of future
construction expenditures, sources of funds to meet capital requirements
and financing requirements, (iv) anticipated benefits of the coal contract
restructuring, (v) levels of capital and operating costs needed to comply
with environmental requirements, (vi) the anticipated impact of competitive
conditions and deregulation on revenues, earnings and margins, (vii) the
anticipated recovery of manufactured gas plant site cleanup costs and
associated legal and litigation expenses through environmental rate riders
and (viii) anticipated results of the NLRB proceedings regarding the
legality of the lockout of union employees by CIPS.  Such statements are
based on management's belief, judgment and analysis as well as assumptions
made by and information available to management at the date hereof.  In
addition to any assumptions and cautionary factors referred to specifically
in this report in connection with such forward looking statements, factors
that could cause actual results to differ materially from those
contemplated by the forward looking statements include (i) the speed and
the nature of increased competition and deregulation in the electric and
gas utility industry, (ii) economic or weather conditions affecting future
sales and margins, (iii) changing energy prices, (iv) availability and cost
of capital, (v) unanticipated or adverse decisions in regulatory
proceedings or litigation, (vi) changes in laws and other governmental
actions, and (vii) other matters detailed from time to time in the
Company's or CIPS' reports filed with the Securities and Exchange
Commission.  Customer usage of electricity and natural gas varies with
weather conditions, general business conditions, the state of the economy
and the cost of energy services.  The level of sales also is impacted by
conditions in the interchange market.


OTHER MATTERS.  Rates for retail electric and gas service are regulated by
the Illinois commission.  Non-retail electric rates are regulated by FERC.
     The utility's rates are designed to recover operating costs including
traditional depreciation and capital costs on utility plant investment.
Changes in the cost of fuel for electric generation and gas costs generally
are reflected in billings to customers on a timely basis through fuel and
purchased gas adjustment clauses.  Inflation continues to be a factor
affecting operations, earnings, shareholders' equity and financial
performance.


Item 8.   Financial Statements and Supplementary Data.


                   CIPSCO INCORPORATED AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
                                                   Years Ended December 31,
                                                 1996        1995        1994
                                         (in thousands, except per share data)


<S>                                          <C>         <C>         <C>
Operating Revenues:
  Electric                                   $  730,812  $  703,483  $ 697,427
  Gas                                           155,348     129,606    138,418
  Investment                                     10,555       9,173      8,770
                                                -------     -------    -------
    Total operating revenues                    896,715     842,262    844,615

Operating Expenses:
  Fuel for electric generation                  220,936     188,731    196,324
  Purchased power                                53,279      59,495     55,543
  Gas costs                                      96,228      74,054     85,043
  Other operation                               146,588     155,368    140,068
  Maintenance                                    61,461      67,996     65,176
  Depreciation and amortization                  87,397      83,263     81,099
  Taxes other than income taxes                  57,817      56,613     56,017
                                                -------     -------    -------
    Total operating expenses                    723,706     685,520    679,270

Operating Income                                173,009     156,742    165,345

Interest and Other Charges:
  Interest on long-term debt of subsidiary       33,118      32,871     32,842
  Other interest charges                          4,633         898        378
  Allowance for funds used during construction     (861)       (962)      (919)
  Preferred stock dividends of subsidiary         3,721       3,850      3,510
  Miscellaneous, net                              2,784       2,298     (3,502)
    Total interest and other charges             43,395      38,955     32,309
                                                 ------      ------     ------
Income Before Income Taxes                   $  129,614  $  117,787  $ 133,036

Income taxes                                     49,557      45,772     49,082

Net Income                                   $   80,057  $   72,015  $  83,954
                                             ==========  ==========  ==========

Average Shares of Common Stock Outstanding       34,070      34,070     34,107

Earnings per Average Share of Common Stock   $     2.35  $     2.11  $    2.46
</TABLE>


The accompanying notes to consolidated financial statements are an integral
part of these statements.


                   CIPSCO INCORPORATED AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

                                          Years Ended December 31,
                                       1996         1995         1994
                                   (in thousands, except per share data) 

Balance, beginning of year          $ 294,720    $ 290,801    $ 277,040
 Add (deduct):
  Net income                           80,057       72,015       83,954
  Common stock dividends 
    ($2.07, $2.03 and $1.99 per
    share, respectively)              (70,524)     (69,161)     (67,874)
  Other                                   529        1,065       (2,319)    
                                    ---------    ---------    ---------
Balance, end of year                $ 304,782    $ 294,720    $ 290,801

                                     
The accompanying notes to consolidated financial statements are an integral
part of these statements.

                   CIPSCO INCORPORATED AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS



                                                       December 31,
                                                1996           1995
Assets                                             (in thousands)
Utility Plant, at original cost:
  Electric                                   $2,244,571     $2,296,402
  Gas                                           242,664        229,118
                                              ---------      ---------
                                              2,487,235      2,525,520
  Less - Accumulated depreciation             1,099,261      1,132,355
                                              ---------      ---------
                                              1,387,974      1,393,165
  Construction work in progress                  70,150         72,490
                                              ---------      ---------
                                              1,458,124      1,465,655
                                              ---------      ---------
Current Assets:
  Cash                                            2,287          1,088
  Temporary investments, at cost which
   approximates market                            3,983          7,147
  Accounts receivable, net                       74,693         65,267
  Accrued unbilled revenues                      30,126         27,234
  Materials and supplies, at average cost        38,806         40,246
  Fuel for electric generation, at average cost  21,610         42,634
  Gas stored underground, at average cost        13,361          9,774
  Prepayments                                    14,403         10,649
  Other current assets                            7,704          8,197
                                              ---------      ---------
                                                206,973        212,236
Investments and Other Assets:
  Marketable securities                          51,293         45,967
  Leveraged leases and energy investments        62,017         59,114
  Regulatory assets                              64,754         19,851
  Other                                          28,495         25,088
                                              ---------      ---------
                                                206,559        150,020
                                              ---------      ---------

                                             $1,871,656     $1,827,911
                                              =========      =========
Capitalization and Liabilities
Capitalization:
  Common shareholders' equity:
    Common stock, no par value, authorized
    shares, 100,000,000; outstanding
    34,069,542 shares                        $  356,812     $  356,812
  Retained earnings                             304,782        294,720
                                             ----------     ----------
                                                661,594        651,532
  Preferred stock of subsidiary                  80,000         80,000
  Long-term debt of subsidiary                  421,227        478,926
                                             ----------     ----------
                                              1,162,821      1,210,458
                                             ----------     ----------
Current Liabilities:
  Long-term debt of subsidiary due within
  one year                                       58,000              -
  Short-term borrowings                          57,768         47,921
  Accounts payable                               62,774         60,603
  Accrued wages                                  10,294          9,335
  Accrued taxes                                  13,692         11,266
  Accrued interest                                8,432          9,525
  Other                                          49,302         33,265
                                             ----------     ----------
                                                260,262        171,915
                                             ----------     ----------
Deferred Credits:
  Accumulated deferred income taxes             341,373        325,181
  Investment tax credits                         48,885         52,234
  Regulatory liabilities, net                    58,315         68,123
                                             ----------     ----------
                                                448,573        445,538

                                             $1,871,656     $1,827,911
                                              =========      =========



The accompanying notes to consolidated financial statements are an integral
part of these statements.
                                     

                   CIPSCO INCORPORATED AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>

                                               Years Ended December 31,
                                           1996        1995          1994
                                                   (in thousands)
<S>                                   <C>           <C>           <C>
OPERATING ACTIVITIES:
Net income                            $   80,057    $   72,015    $   83,954
Adjustments to reconcile net income
   to net cash provided:
  Depreciation and amortization           87,397        83,263        81,099
  Allowance for equity funds used
   during construction (AFUDC)              (378)         (889)         (630)
  Deferred income taxes, net               7,219        10,577        19,891
  Investment tax credit amortization      (3,349)       (3,361)       (3,367)
Cash flows impacted by changes in
   assets and liabilities:
  Accounts receivable, net and accrued
   unbilled revenues                     (12,318)        5,562         2,156
  Fuel for electric generation            21,024       (12,329)       (4,259)
  Other inventories                       (2,147)        2,964         2,175
  Prepayments                             (3,754)          276          (783)
  Other assets                            (6,941)       (6,724)        5,955
  Accounts payable and other               6,208         8,359        (5,433)
  Accrued wages, taxes and interest        2,292        (1,744)       (3,082)
Other                                     (2,285)       (9,581)          626
                                       ----------    ----------    ----------
Net cash provided by operating
   activities                            173,025       148,388       178,302
                                       ----------    ----------    ----------
INVESTING ACTIVITIES:
  Utility construction expenditures,
   excluding AFUDC                      (105,740)     (102,820)      (95,682)
  Allowance for borrowed funds used
   during construction                      (483)          (73)         (289)
  Changes in temporary investments         3,164        (3,864)         (489)
  Long-term marketable securities         (4,881)         (866)       (2,843)
  Long-term leveraged leases and
   energy investments                     (2,903)       (9,181)       (7,717)
                                       ----------    ----------    ----------
  Net cash used in investing
   activities                           (110,843)     (116,804)     (107,020)
                                       ----------    ----------    ----------

FINANCING ACTIVITIES:
  Common stock dividends paid            (70,524)      (69,161)      (67,874)
  Proceeds from issuance of
   long-term debt of subsidiary                -        20,000             -
  Repayment of long-term debt of
   subsidiary                                  -       (16,000)      (20,000)
  Retirement of common stock                   -             -        (1,020)
  Proceeds from short-term borrowings      9,847        32,936        14,985
  Issuance expense, discount and
   premium                                  (306)         (234)          (40)
                                       ----------    ----------    ----------
  Net cash used in financing
   activities                            (60,983)      (32,459)      (73,949)
                                       ----------    ----------    ----------

Net increase (decrease) in cash            1,199          (875)       (2,667)
Cash at beginning of year                  1,088         1,963         4,630
                                      ----------     ----------   ----------
Cash at end of year                  $     2,287   $     1,088   $     1,963
                                     ===========   ===========   ===========

Supplemental disclosures of
 cash flow information:
Cash payments during the year:
  Interest, net of amounts
   capitalized                       $    36,512   $    31,490   $    30,714
  Income taxes                       $    47,053   $    40,147   $    34,264
</TABLE>


The accompanying notes to consolidated financial statements are an integral
part of these statements.




                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To CIPSCO Incorporated and Subsidiaries:

We have audited the accompanying consolidated balance sheets of CIPSCO
Incorporated (an Illinois corporation) and subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of income, retained
earnings and cash flows for each of the three years in the period ended
December 31, 1996.  These financial statements are the responsibility of
the Company's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CIPSCO Incorporated and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.




                                        ARTHUR ANDERSEN LLP

Chicago, Illinois
January 31, 1997


                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



            Note 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation.  The consolidated financial statements include
the accounts of CIPSCO Incorporated (CIPSCO or the Company), a holding
company, Central Illinois Public Service Company (CIPS), a combination
electric and gas utility, and CIPSCO Investment Company (CIC) engaged in
non-regulated investing activities.  All significant intercompany balances
and transactions have been eliminated from the consolidated financial
statements.  Certain items previously reported for years prior to 1996 have
been reclassified to conform with the current-year presentation.
     The operating revenues of all investment activities are included under
the caption Operating Revenues, "Investment."  Operating expenses are
included under the appropriate captions as shown on the Consolidated
Statements of Income.

Concentration of Credit Risk.  CIPS is engaged principally in the
production, purchase, transmission, distribution and sale of electricity to
a diversified retail base of about 322,000 residential, commercial and
industrial customers in 557 communities.  CIPS also is engaged in the
purchase, transport, distribution and sale of natural gas to a diversified
retail base of approximately 169,000 residential, commercial and industrial
customers in 267 communities.  The combined electric and gas service
territory has an area of approximately 20,000 square miles in central and
southern Illinois and has an estimated population of approximately 820,000.
Credit risk is spread over the diversified retail base of electric and gas
customers from which approximately four-fifths of total operating revenues
were derived in 1996.  Furthermore, CIPS has wholesale power supply
agreements and power service agreements with seven other utilities,
cooperatives, municipal associations and municipalities, and engages in the
purchase and sale of interchange power with about 50 other utilities and
utility power marketers, from which approximately one-fifth of total
operating revenues was derived in 1996.
     See Note 5 to Consolidated Financial Statements for a discussion of
receivables related to leveraged lease investments.

Use of Estimates.  The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions.  These affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.


Regulation.  CIPS is a public utility subject to regulation by the Illinois
Commerce Commission (Illinois commission) and the Federal Energy Regulatory
Commission (FERC).  The utility maintains its accounts in accordance with
the Uniform System of Accounts as prescribed by these agencies.  Its
accounting policies conform to generally accepted accounting principles
applicable to rate-regulated enterprises and reflect the effects of the
ratemaking process.  (See Note 3 to Consolidated Financial Statements.)

Operating Revenues.  CIPS accrues an estimate of electric and gas revenues
for service rendered but unbilled at the end of each accounting period.
     Investment revenues are comprised of interest on temporary investments
and income from long-term marketable securities, leveraged leases and
partnership income.

Utility Plant.  Utility plant in service is stated at original cost.
Substantially all of the utility plant of CIPS is subject to the lien of
its first mortgage bond indenture.  Additions to utility plant include the
cost of contracted services, material, labor, overheads and an allowance
for funds used during construction.  Maintenance and repair of property and
replacement of minor items of property are charged to operating expenses.
Property retired is removed from utility plant accounts and charged to
accumulated depreciation.

Allowance for Funds Used During Construction (AFUDC).  AFUDC is included in
Construction Work in Progress (CWIP) and represents the cost of financing
that construction.  AFUDC does not represent a current source of cash
funds.  The inclusion of AFUDC in CWIP affords the opportunity to earn a
return on the cost of construction capital after the related asset is
placed in service and included in the rate base.
     The AFUDC rate, based on a formula prescribed by FERC, on a before-tax
basis, was 7.7 percent for 1996 and 9 percent for the years 1995 and 1994.

Depreciation.  Depreciation expense is based on remaining life straight-
line rates (composite, approximately 3.5 percent for 1996, 3.3 percent for
1995, and 3.4 percent for 1994) applied to the various classes of
depreciable property.

Fuel and Gas Costs.  CIPS adjusts fuel expense to recognize over- or under-
recoveries from customers of allowable fuel costs through the uniform fuel
adjustment clause (FAC).  The FAC provides for the current recovery of
changes in the cost of fuel for electric generation in billings to
customers.  Monthly, the difference between revenues recorded through
application of the FAC and recoverable fuel costs is recorded as a current
asset or liability, pending reflection in future billings to customers,
with a corresponding decrease or increase in cost of fuel for electric
generation.


     The uniform purchased gas adjustment clause (PGA) provides a matching
of gas costs with revenues.  Monthly, the difference between revenues
recorded through application of the PGA and recoverable gas costs is
recorded as a current asset or liability with a corresponding decrease or
increase in the gas cost.
     The Illinois commission conducts annual reconciliation proceedings
with respect to each year's FAC and PGA revenues and has completed its
review for all years prior to 1994.  Reconciliation proceedings for 1994
through 1996 are pending.

Income Taxes and Investment Tax Credits.  CIPSCO and its subsidiaries file
a consolidated federal income tax return.  Income taxes are allocated to
the individual companies, based on their respective taxable income or loss.
Investment tax credits are being amortized over the estimated average
useful lives of the related properties.
     The Company uses the liability method of accounting for deferred
income taxes.  The liability method requires the establishment of deferred
tax liabilities and assets for all temporary differences between the tax
basis of assets and liabilities and the amounts reported in the financial
statements.  Deferred income taxes are recorded resulting from the use of
accelerated depreciation methods, rapid amortization, repair allowance and
certain other temporary differences in recognition of income and expense
for tax and financial statement purposes.  (See Note 12 to Consolidated
Financial Statements.)

Cash and Temporary Investments.  Temporary investments principally consist
of U.S. Treasury obligations.  For purposes of Consolidated Statements of
Cash Flows, temporary investments are not considered cash equivalents.

Marketable Securities.  CIC holds a portfolio consisting primarily of
common and preferred stocks that are substantially hedged with futures and
options.  (See Note 13 to Consolidated Financial Statements.)  All
securities are publicly traded.  The investments and related hedging
instruments are managed by professional investment managers in an overall
managed portfolio strategy.  Common stocks consist of investments that are
representative of the Standard & Poor's 100 Index.  Preferred stocks
consist of perpetual and sinking fund issues primarily of public utilities,
utility holding companies, commercial banks and bank holding companies.
The portfolio also includes investments in limited partnerships which pool
money from multiple investors to invest in a variety of investment
vehicles, principally marketable securities.
     The investments in common and preferred stocks and the options and
futures used to hedge these investments are measured at market value on the
Consolidated Balance Sheets, with the change in value reflected in the
Consolidated Income Statements.  For hedged investments, the investment and
related hedging instrument have been combined on the Consolidated Balance
Sheets.


                         Note 2.  MERGER AGREEMENT

On August 11, 1995, the Company entered into an Agreement and Plan of
Merger with Union Electric Company (UE), and Ameren Corporation (Ameren), a
newly formed, jointly owned entity, pursuant to which among other things,
the Company will be merged with Ameren.  Pursuant to the merger agreement,
CIPS, UE and CIC will be wholly-owned operating subsidiaries of Ameren.  As
a result of the merger, each outstanding share of the Company's common
stock will be converted into 1.03 shares of common stock of Ameren, or cash
in lieu of fractional shares.  Each outstanding share of UE's common stock
will be converted into one share of Ameren common stock.  The preferred
stock of CIPS and UE will remain outstanding and unchanged.  The merger is
expected to be tax-free for federal income tax purposes and will be
accounted for under the "pooling of interests" method of accounting.
     With the execution and delivery of the merger agreement, the Company
and UE entered into stock option agreements, pursuant to one of which the
Company granted UE the right, upon the terms and subject to the conditions
set forth therein, to purchase up to 6,779,838 shares of the Company's
common stock at a price of $37.02 per share.  Pursuant to the other stock
option agreement, UE granted the Company the right, upon the terms and
subject to the conditions set forth therein, to purchase up to 6,983,233
shares of UE's common stock at a price of $35.94 per share.  These options
will expire upon consummation of the merger.
     After the merger, Ameren will become a registered public utility
holding company under the Public Utility Holding Company Act of 1935.  In
December 1995, the merger was approved by the shareholders of CIPSCO and
UE.  The merger is conditioned upon, among other things, receipt of certain
regulatory and governmental approvals.  (See Note 3 to Consolidated
Financial Statements.)


     The following unaudited pro forma financial information at December
31, reflects the effects of combining CIPSCO and UE into Ameren under the
pooling-of-interests method of accounting.

                                              (unaudited)
                                (in thousands, except per share data)
                                 1996           1995           1994

Total revenues                $3,333,505     $3,240,923     $3,269,471
Net income                       371,684        372,872        391,459
Earnings per share            $     2.71     $     2.72     $     2.85

     The pro forma financial information consolidates the financial results
of Electric Energy, Inc. (EEI), which will be 60 percent owned by Ameren
subsequent to the merger as a result of the current ownership interest in
EEI by CIPS and UE.

                        Note 3.  REGULATORY MATTERS

CIPS and UE filed joint applications for approval of the merger with the
Illinois commission and FERC.  UE has filed an application for approval of
the transaction with the Missouri Public Service Commission (Missouri
commission).  In those applications, CIPS and UE are requesting a sharing
between ratepayers and shareholders, over the 10-year period following the
merger, of merger savings, net of merger premium and merger expenses.
     On July 12, 1996, UE, the Missouri commission staff, the Missouri
Office of Public Counsel, several customer groups and others filed a joint
agreement with the Missouri commission that recommends approval of the
merger.  On September 25, 1996, the Missouri commission ordered that
additional information be filed in the proceeding.
     On November 7, 1996, a Hearing Examiner for the Illinois commission
issued a proposed order in connection with the Company's and UE's merger
proceedings.  In the proposed order, the Hearing Examiner recommended that
the merger be approved subject to conditions.  In addition, the Hearing
Examiner recommended that a decision on the Company's and UE's proposals
for sharing the merger savings be made after the merger.  Under the
proposed order, the Company and UE would be required to file a rate case or
alternative regulation plan within one year after closing the merger.  At
that time, an appropriate sharing of net merger savings between
stockholders and customers would be determined.  On January 27, 1997, the
Illinois commission reopened the proceedings to take additional evidence on
the issue of market power.
     On October 16, 1996, the FERC set the proposed merger for hearing.
The FERC directed the presiding administrative law judge in the case to
issue a proposed order no later than April 30, 1997.  On December 18, 1996,
the FERC issued Order 592 relating to its merger policy.  The Company
believes its proposed merger with UE meets the criteria set forth in Order
592, but the effect of this order on the timing of the administrative law
judge's proposed order is uncertain.
     In October 1996 the Company and UE filed an application with the
Securities and Exchange Commission for approval of the merger pursuant to
the Public Utility Holding Company Act of 1935.
     At this time, the Company expects to receive all required regulatory
approvals and to complete the merger by the end of 1997.
     Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting
for Effects of Certain Types of Regulation," applies to regulated entities
whose rates are designed to recover the cost of providing service to


customers through the ratemaking process.  SFAS No. 71 allows certain costs
that would normally be reflected in net income to be deferred on the
balance sheet as regulatory assets.  These costs are then amortized as the
related amounts are reflected in rates.  Under current accounting
pronouncements, if a loss becomes probable, any unamortized balance, net of
tax, would reduce net income.  The Company continually assesses the
recoverability of its regulatory assets and currently believes there would
be no adverse impact on results of operations, financial position, or
liquidity if CIPS were to discontinue SFAS No. 71.
     SFAS No. 71 also provides for the recognition of regulatory
liabilities, which represent probable future reduction in revenues
associated with amounts that are to be credited to customers through the
regulatory process.

     At December 31, 1996 and 1995 the Company had recorded the following
regulatory assets and regulatory liabilities:

                                                    1996           1995
                                                      (in thousands)

Regulatory Assets:
  Undepreciated plant costs                       $ 40,876       $      -
  Unamortized costs related to reacquired debt      12,208         13,397
  Deferred environmental remediation costs          11,174          5,018
  Take-or-pay costs                                    496          1,436

Regulatory Assets                                 $ 64,754       $ 19,851
                                                  ========       ========

Regulatory Liabilities:
  SFAS 109 - Income taxes, net                    $ 57,957       $ 67,669
  Clean Air Act allowances, net                        358            454

Regulatory Liabilities, net                       $ 58,315       $ 68,123
                                                  ========       ========


                  Note 4.  COMMITMENTS AND CONTINGENCIES

Environmental Remediation Costs.  The utility has identified 13 sites where
it and certain of its predecessors and other affiliates previously operated
facilities that manufactured gas from coal.  This manufacturing produced
various potentially harmful by-products which may remain on some sites.
One site was added to the United States Environmental Protection Agency
Superfund list in 1990.  A ground water pump-and-treat remediation program
being conducted by CIPS at the Superfund site has received applicable
approvals.
     CIPS has received cash settlements from certain of its insurance
carriers for, among other things, costs incurred by CIPS in connection with
the manufactured gas plant sites.  In addition, in 1993 CIPS collected $2.9
million for such costs under environmental adjustment clause rate riders
(riders) approved by the Illinois commission.
     Costs relating to studies and remediation at the 13 sites and
associated legal and litigation expenses are being accrued and deferred
rather than expensed currently.  This is being done pending recovery
through rates or from other parties.  Through December 31, 1996, $49
million had been deferred representing costs incurred and estimates for
costs of completing studies at various sites and an estimate of future
remediation costs to be incurred at the Superfund and other sites.  The
total of the costs deferred, net of recoveries from insurers and through
the riders, was $11 million at December 31, 1996.
     The Illinois commission has initiated a reconciliation proceeding to
review CIPS' environmental remediation activities in 1993, 1994 and 1995
and to determine whether the revenues collected under the riders in 1993
were consistent with the amount of remediation costs prudently and properly
incurred.  Amounts found to have been incorrectly included under the riders
would be subject to refund.  This proceeding is expected to indicate what
incurred or accrued costs are appropriate to defer for future rider
recovery and how insurance recoveries should be allocated to such
environmental cost.

     Management believes that costs properly incurred in connection with
the sites that are not recovered from others will be recovered through
environmental rate riders.  Accordingly, management believes that costs
incurred in connection with these sites will not have a material adverse
effect on financial position, results of operations or liquidity of the
Company or CIPS.

Coal Contract Restructuring.  In June, 1996, CIPS and a major coal supplier
for Newton and Grand Tower power stations signed a letter of intent calling
for a restructuring of their existing long-term contract.  Under the
restructuring, CIPS would pay the supplier a $70 million restructuring
charge (plus interest from November 1, 1996); would be able to purchase at
market prices low-sulfur, out-of-state coal through the supplier
(in substitution for the high-sulfur Illinois coal CIPS is obligated to
purchase under the original contract); and would receive options for future
purchases of low-sulfur, out-of-state coal from the supplier in 1997
through 1999 at set negotiated prices.
     By switching to low-sulfur coal, CIPS will be able to discontinue
operating the Newton Unit 1 scrubber.  The benefits of the restructuring
include lower cost coal, avoidance of significant capital expenditures to
renovate the scrubber, and elimination of scrubber operating and
maintenance costs (offset by scrubber retirement expenses).  The net
benefits of restructuring are expected to exceed $100 million over the next
10 years.  In December 1996, the Illinois commission entered an order


approving the switch to out-of-state coal, recovery of the restructuring
charge plus associated carrying costs through the fuel adjustment clause
over six years, and continued recovery in rates of the undepreciated
scrubber investment plus costs of removal.  CIPS has determined that the
order is satisfactory, and thus intends to pay the restructuring charge and
otherwise implement the restructuring.  The order, however, will be subject
to possible appeal through mid-March 1997.  Any appeal would likely result
in further lengthy proceedings.

Labor Issues.  The International Union of Operating Engineers Local 148 and
the International Brotherhood of Electrical Workers Local 702 filed unfair
labor practice charges with the National Labor Relations Board (NLRB)
relating to the legality of the lockout by CIPS of both unions during 1993.
     The Peoria Regional Office of the NLRB has issued complaints against
CIPS concerning its lockout.  Both unions seek, among other things, back
pay and other benefits for the period of the lockout.  CIPS estimates the
amount of back pay and other benefits for both unions to be less than $16
million.  An administrative law judge of the NLRB has ruled that the
lockout was unlawful.  On July 23, 1996, the Company appealed to the NLRB.
Management believes the lockout was both lawful and reasonable and that the
final resolution of the disputes will not have a material adverse effect on
financial position, results of operations or liquidity of the Company or
CIPS.

Other Issues.  CIPS is involved in other legal and administrative
proceedings before various courts and agencies with respect to rates,
taxes, gas and electric fuel cost reconciliations, service area disputes,
environmental torts and other matters.  Although unable to predict the
outcome of these matters, management believes that appropriate liabilities
have been established and that final disposition of these actions will not
have a material adverse effect on financial position, results of operations
or liquidity of the Company or CIPS.

                         Note 5.  LEVERAGED LEASES

CIC and its subsidiaries are the lessors in several leveraged lease
arrangements involving interests in a natural gas liquids plant, natural
gas processing equipment, a commercial jet aircraft, retail department
store properties and combustion turbine generating units.  These leases
expire in various years from 1999 through 2013.

     The aggregate residual values are estimated to be 42 percent of the
aggregate cost.  CIC's aggregate equity investment represents 22 percent of
the aggregate purchase price of the properties.  The remaining 78 percent
was financed by nonrecourse debt provided by lenders who have been granted,
as their sole remedy in the event of default by the lessees, an assignment
of rentals due under the leases and a security interest in the leased
properties.


     The following is a summary of the components of CIC's net investment
in leveraged leases at December 31:

                                          1996      1995      1994
                                                 (in thousands)
Rentals receivable
  (net of nonrecourse debt)             $ 22,247  $ 23,282  $ 24,894
Estimated residual value of
  leased property                         64,598    64,598    64,599
                                        --------  --------  --------
Unearned and deferred income             (30,422)  (34,870)  (39,560)
Investment in leveraged leases            56,423    53,010    49,933
Deferred taxes                           (35,432)  (30,771)  (25,817)
                                        --------  --------  --------
Net investment                          $ 20,991  $ 22,239  $ 24,116
                                        ========  ========  ========

     The following is a summary of the components of income from leveraged
leases for the years ended December 31:

                                          1996      1995      1994
                                                 (in thousands)

Income before income taxes              $  4,415  $  4,677  $  4,664
Income tax expense                        (1,771)   (1,868)   (1,874)
                                        --------  --------  -------- 
Income from leveraged leases            $  2,644  $  2,809  $  2,790
                                        ========  ========  ========


            Note 6.  PENSIONS AND OTHER POSTRETIREMENT BENEFITS

CIPS sponsors a defined benefit pension plan covering substantially all of
its employees.  The benefits are based on years of service and employees'
final average pay.  Pension costs are accrued on a current basis in
accordance with actuarial determinations.  The pension plan is funded in
compliance with income tax regulations and federal funding requirements.
CIPS uses a September 30 measurement date for its valuation of pension plan
assets and liabilities.  The utility also provides certain employees with
pension benefits which exceed the qualified plan limits imposed by federal
tax law.

                       Funded Status of Pension Plan
                              (in thousands)

                                          1996      1995      1994

Fair value of plan assets*              $253,326  $221,013  $188,449
                                        --------  --------  --------

Accumulated benefit obligations:**
  Vested benefits                        147,858   121,181   120,032
  Nonvested benefits                      22,976    20,989     3,644
Effect of projected future
  compensation levels (based on 4.5%
  annual increases in 1996 and 1995,
  and 4.8% in 1994)                       40,774    38,830    38,974
                                        --------  --------  --------
     Total projected benefit
       obligation                        211,608   181,000   162,650
                                        --------  --------  --------
Plan assets in excess of projected
  benefit obligation                    $ 41,718  $ 40,013  $ 25,799
                                        ========  ========  ========

________________________
 * Plan assets are invested in common and preferred stocks, bonds, money
  market instruments and real estate.
** The assumed weighted average discount rate was 7.50% for 1996 and 1995,
  and 7.75% for 1994.


       Pension Plan Assets in Excess of Projected Benefit Obligation
                              (in thousands)

                                          1996      1995      1994

Plan assets in excess of projected
  benefit obligation                    $ 41,718  $ 40,013  $ 25,799
Unrecognized transition asset (being
  amortized over 18.2 years)              (3,473)   (3,936)   (4,399)
Unrecognized net gain                    (39,824)  (33,690)  (23,146)
Unrecognized prior service cost           11,557     5,167     5,679
                                        --------  --------  --------
Prepaid pension costs at September 30      9,978     7,554     3,933
Expense, net of funding October to
  December                                 1,504       207       (80)
                                        --------  --------  --------
Prepaid pension costs at December 31    $ 11,482  $  7,761  $  3,853
                                        ========  ========  ========


               Components of Net Pension Expense
                         (in thousands)

                                          1996      1995      1994

Service cost (present value of benefits
  earned during the year)               $  7,282  $  6,873  $  8,053
Interest cost on projected benefit
  obligation                              13,433    12,497    10,846
Actual return on plan assets (expected
  long-term rate of return was 8.5%
  for 1996 and 8.0% for 1995 and 1994)   (30,603)  (34,364)   (6,795)
Deferred investment gains (losses)        14,365    20,658    (6,242)
Amortization of the unrecognized prior
  service cost                               372       372        61
Amortization of the transition amount       (463)     (463)     (463)
                                        --------  --------  --------
Net pension expense                     $  4,386  $  5,573  $  5,460
                                        ========  ========  ========

CIPS recognizes the cost of providing postretirement medical and life
insurance benefits over the employees' service periods.  CIPS is funding
the medical benefits under two Voluntary Employee Beneficiary Association
trusts (VEBA), and a 401(h) account established within the CIPS retirement
income trust.
     CIPS sponsors postretirement plans providing medical and life benefits
for certain of its retirees and their eligible dependents.  The medical
plan pays percentages of eligible medical expenses incurred by covered
retirees, after a deductible has been met and after taking into account
payment by Medicare or other providers.  Currently, participants become
eligible for coverage if they retire from CIPS after meeting age and years-
of-service eligibility requirements.  The life insurance plan continues for
all retirees who have been in the plan as employees for 10 years or more.
CIPS uses a September 30 measurement date for its valuation of
postretirement assets and liabilities.


               Funded Status of Postretirement Benefit Plans
                              (in thousands)

                                          1996      1995      1994

Fair value of plan assets*              $ 71,083  $ 49,385  $ 26,874
                                        --------  --------  --------
Accumulated benefit obligations:
Retirees                                  51,535    50,030    47,494
Fully eligible active employees           19,039    17,577    15,407
Other active employees                    64,302    75,595    64,188
                                        --------  --------  --------
Total accumulated benefit obligations    134,876   143,202   127,089
                                        --------  --------  --------
Accumulated benefit obligations in
 excess of plan assets                   (63,793)  (93,817) (100,215)
Unrecognized prior service costs               -       191         -
Unrecognized transition obligation
 (being amortized over 20 years)          87,103    98,878   104,695
Unrecognized net gain (including
 changes in assumptions)                 (38,579)  (23,855)  (21,307)
                                        --------  --------  --------
Accrued postretirement benefit cost
 at September 30                         (15,269)  (18,603)  (16,827)
Expense, net of funding, October to
  December                                13,557    14,711    14,906
                                        --------  --------  --------
Accrued postretirement benefit cost
 at December 31                         $ (1,712) $ (3,892) $ (1,921)
                                        ========  ========  ========



* Plan assets are invested in common and preferred stocks, bonds, money
 market instruments and real estate.


                 Components of Postretirement Benefit Cost
                              (in thousands)

                                            1996     1995      1994

Service costs on benefits earned        $  4,461  $  3,809  $  4,108
Interest costs on accumulated benefit
  obligations                             10,564    10,307     8,918
Actual return on plan assets              (8,620)   (8,390)     (212)
Deferred investment gains (losses)         3,510     5,304    (1,601)
Amortization of transition amounts         5,816     5,816     5,816
                                        --------  --------  --------
Postretirement benefit cost             $ 15,731  $ 16,846  $ 17,029
                                        ========  ========  ========

For purposes of calculating the postretirement benefit obligation it is
assumed that health-care costs will increase by 9.8 percent in 1997, and
that the rate of increase thereafter (the health-care cost trend rate) will
decline to 4.5 percent in 2005 and subsequent years.  The health-care cost
trend rate has a significant effect on the amounts reported for costs each
year as well as on the accumulated postretirement benefit obligation.  To
illustrate, increasing the assumed health-care cost trend rate by one
percentage point in each year would increase the accumulated postretirement
benefit obligation as of September 30, 1996 by $22.6 million and the
aggregate of the service and interest cost components of the net periodic
postretirement benefit cost $2.9 million annually.  The weighted-average
discount rate used to determine the accumulated postretirement benefit
obligation was 7.5 percent in 1996 and 1995, and 8.25 percent in 1994.  The
expected long-term rate of return on plan assets was 8.5 percent in 1996
and 8 percent in 1995 and 1994.


                         Note 7.  PREFERRED STOCK

At December 31, 1996 and 1995 there were 4.6 million shares of CIPSCO
preferred stock authorized and unissued.  There were 2 million shares of
CIPS cumulative preferred and 2.6 million shares of CIPS preferred without
par value (aggregate stated value not to exceed $65 million) authorized, of
which 800,000 shares of CIPS cumulative preferred stock are outstanding.
The Board of Directors has the authority to fix and determine the relative
rights and preferences of the authorized and unissued shares.
     The CIPS cumulative preferred stock, par value of $100 per share, is
generally redeemable at the option of CIPS on 30 days notice at the
redemption prices shown below:

                                                  1996         1995
                     Current                     Amount       Amount
                    Redemption                    (in          (in
    Series           Price(a)       Shares     thousands)   thousands)

     4.00%          $101.00         150,000     $ 15,000    $ 15,000
     4.25%           102.00          50,000        5,000       5,000
     4.90%           102.00          75,000        7,500       7,500
     4.92%           103.50          50,000        5,000       5,000
     5.16%           102.00          50,000        5,000       5,000
1993 Auction(b)      100.00         300,000       30,000      30,000
    6.625%           100.00(c)      125,000       12,500      12,500
                                    -------     --------    --------
                                    800,000     $ 80,000    $ 80,000
                                    =======     ========    ========

_________________________
(a)  Plus accrued dividends, if any.
(b)  Dividend rate for each dividend period (currently every 49 days) is
     set at a then current market rate according to an auction procedure.
     The rate at December 31, 1996 was 3.87%.
(c)  Not redeemable prior to October 1, 1998.

                   Note 8.  COMMON SHAREHOLDERS' EQUITY

Common Stock.  In December 1994, CIPSCO purchased 38,164 shares from
shareholders who held less than 100 shares.  The repurchase reduced common
stock and retained earnings.

Retained Earnings.  CIPSCO is subject to restrictions on the use of
retained earnings for cash dividends on common stock applicable to all
corporations under the Illinois Business Corporation Act.  CIPS is subject
to the same restrictions, as well as those contained in its mortgage
indenture and articles of incorporation.  At December 31, 1996, 1995 and
1994, no amount of retained earnings was restricted.


            Note 9.  LINES OF CREDIT AND SHORT-TERM BORROWINGS

External financing needs may be met from the sale of commercial paper or
short-term borrowings from banks.  CIPSCO and CIC have joint bank lines of
credit of $30 million.  The banks are compensated for these lines of
credit.
     CIPS has arrangements for bank lines of credit which totaled $77.5
million at December 31, 1996.  CIPS compensates banks for these lines of
credit.  The bank lines of credit are for corporate purposes including the
support of commercial paper borrowings.  At December 31, 1996 there were no
short-term borrowings under the lines of credit by CIPSCO, CIC, or CIPS;
however, CIPS did have $57.8 million at December 31, 1996 and $47.9 million
at December 31, 1995 in commercial paper outstanding.

                  Note 10.  LONG-TERM DEBT OF SUBSIDIARY

Sinking fund requirements were satisfied in 1996 and 1995 by the
application of net expenditures for bondable property in an amount equal to
166-2/3 percent of the annual requirement.  There are no future sinking
fund requirements.


Long-term debt outstanding at December 31, was:

                                               1996           1995
                                              Amount         Amount
                                                   (in thousands)
First Mortgage Bonds:
  Series L,   5 7/8% due   5/1/1997          $ 15,000       $ 15,000
  Series W,   7 1/8% due  5/15/1999            50,000         50,000
  Series W,   8 1/2% due  5/15/2022            33,000         33,000
  Series X,   6 1/8% due   7/1/1997            43,000         43,000
  Series X,   7 1/2% due   7/1/2007            50,000         50,000
  Series Y,   6 3/4% due  9/15/2002            23,000         23,000
  Series Z,       6% due   4/1/2000            25,000         25,000
  Series Z,   6 3/8% due   4/1/2003            40,000         40,000
  Series 1995-1, 6.49% due 6/1/2005            20,000         20,000
                                             --------       -------- 
                                             $299,000       $299,000
                                             --------       --------
Pollution Control Loan Obligations:
  1990 Series A,    7.60% due   3/1/2014     $ 20,000       $ 20,000
  1990 Series B,    7.60% due   9/1/2013       32,000         32,000
  1993 Series A,   6 3/8% due   1/1/2028       35,000         35,000
  1993 Series B-1, 4 3/8% due   6/1/2028       17,500         17,500
  1993 Series B-2,  5.90% due   6/1/2028       17,500         17,500
  1993 Series C-1,  4.20% due  8/15/2026       35,000         35,000
  1993 Series C-2,  5.70% due  8/15/2026       25,000         25,000
                                             --------       --------
                                             $182,000       $182,000
Unamortized Net Debt Premium and Discount      (1,773)        (2,074)
Maturities Due Within One Year                (58,000)             -
                                             --------       --------
                                             $421,227       $478,926
                                             ========       ========

Interest rates on the 1993 Series B-1 and 1993 Series C-1 bonds will be
adjusted to a then current market rate on June 1, 1998 and August 15, 1998,
respectively.  Interest rates on the 1993 Series B-2 and 1993 Series C-2
bonds are subject to redetermination at the option of CIPS commencing June
1, 2003 and August 15, 2003, respectively.

Maturities of CIPS' long-term debt through 2001 are as follows:

                                        Principal
                                         Amount
                                      (in thousands)

                         1997            $58,000
                         1998                  -
                         1999             50,000
                         2000             25,000
                         2001                  -

               Note 11.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
at December 31, 1996 and 1995 of each class of financial instruments for
which it is practicable to make such estimates.


Cash and Temporary Investments.  The carrying amounts approximate fair
value because of the short-term maturity of these instruments.

Marketable Securities.  The fair value is based on quoted market prices
obtained from dealers or investment managers.

Financial Derivatives.  The fair value was estimated using market values of
options, calls and futures contracts on organized exchanges.

Short-term Borrowings.  The carrying amounts approximate fair value due to
their short-term maturities.

Preferred Stock of Subsidiary.  The fair value was estimated using market
values provided by independent pricing services.

Long-term Debt of Subsidiary.  The fair value was estimated using market
values provided by independent pricing services.

     The estimated fair values of the Company's financial instruments as of
December 31, are shown below:

                                    1996               1995
                              Carrying   Fair     Carrying   Fair
                               Amount    Value     Amount    Value
                                           (in thousands)

Marketable securities         $ 50,510  $ 50,510  $ 45,950  $ 45,950
Financial derivatives              783       783        17        17
Preferred stock                 80,000    65,381    80,000    66,108
Long-term debt                 421,227   430,375   478,926   501,826
Current portion long-term 
 debt                           58,000    58,105         -         -


                          Note 12.  INCOME TAXES

The Company uses the liability method of accounting for deferred income
taxes.  Income tax expense includes provisions for deferred taxes to
reflect the effect of temporary differences between the time certain costs
are recorded for financial reporting and when they are deducted for income
tax return purposes.  As temporary differences reverse, the related
accumulated deferred income taxes and a portion of the regulatory assets
and liabilities are also reversed.  Investment tax credits have been
deferred and will continue to be credited to income over the lives of the
related property.


     The components of federal and state income tax provisions and
investment tax credits at December 31, were:

                                          1996      1995      1994
                                                 (in thousands)

Current - federal                       $ 41,509  $ 31,676  $ 29,048
        - state                            8,905     6,020     4,534
                                        --------  --------  --------
                                          50,414    37,696    33,582
                                        --------  --------  --------

Deferred - federal                         1,138     8,500    14,738
         - state                           1,354     2,937     4,129
                                        --------  --------  --------
                                           2,492    11,437    18,867
                                        --------  --------  --------

Amortization of investment tax credits    (3,349)   (3,361)   (3,367)
                                        --------  --------  --------

Total income tax expense                $ 49,557  $ 45,772  $ 49,082
                                        ========  ========  ========

     Reconciliations with statutory federal income tax rates at December
31, were:

                                          1996      1995      1994

Effective income tax rate                 37.2%     37.6%     35.9%
Amortization of investment tax credits     2.5       2.8       2.5
Tax exempt interest and dividends          1.5       1.6       1.6
State income tax rate, net of federal
  income tax benefits                     (5.0)     (4.8)     (4.0)
Non-deductible merger expenses            (0.6)     (1.4)        -
Other, net                                (0.6)     (0.8)     (1.0)
                                        ------    ------    ------
Statutory federal income tax rate         35.0%     35.0%     35.0%
                                        ======    ======    ======

     The accumulated deferred income taxes as set forth below and in the
Consolidated Balance Sheets arise from the following temporary differences
at December 31:

                                              1996           1995
                                                 (in thousands)
Accumulated deferred income tax
  liabilities related to:
  Depreciable property                      $330,577       $320,677
  Investment tax credits                     (19,502)       (20,831)
  Regulatory liabilities, net                (22,990)       (26,843)
  Leveraged leases                            35,432         30,771
  Other                                       17,856         21,407
                                            --------       --------
Accumulated deferred income
  taxes per consolidated balance
  sheets                                    $341,373       $325,181
                                            ========       ========

Deferred tax assets
  (included in prepayments)                 $ 10,928       $  6,787
                                            ========       ========


                Note 13.  DERIVATIVE FINANCIAL INSTRUMENTS

CIC has limited involvement with derivative financial instruments which
include futures contracts, purchased options and written options in
combination with purchased options.  These instruments are used to hedge
the market risk associated with CIC's common and preferred stock
investments.  (See Note 1 to Consolidated Financial Statements.)  CIC does
not hold or issue these instruments for trading purposes.
     Financial futures contracts are for U.S. Treasury obligations and
options contracts are for S & P Indexes and U.S. Treasury obligations.
Futures and options contracts have terms that are one year or less and have
little credit risk as these instruments are traded on organized exchanges.
     CIC bears the risk of unfavorable price changes associated with
futures and options which are intended to hedge the opposite change in the
market value of the common and preferred stocks.

                          Note 14.  SFAS NO. 121

Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" became effective on January 1, 1996.  SFAS No. 121 requires
that regulatory assets which are no longer probable of recovery through
future revenues be charged to earnings.  SFAS No. 121 did not have an
impact on the financial position, results of operations or liquidity of the
Company or CIPS upon adoption.

                      Note 15.  SEGMENTS OF BUSINESS

CIPSCO's primary subsidiary, CIPS, is a public utility engaged in the sale
of electricity which it generates, transmits and distributes.  CIPS also
sells natural gas, which it purchases from producers and suppliers and
distributes through its system, and transports customer-owned natural gas.
The investments of CIPSCO and subsidiaries include temporary investments
and long-term investments including marketable securities, leveraged leases
and energy investments.


     The following is a summary of operations:

                                           Years Ended December 31,
                                       1996           1995           1994
                                                 (in thousands)
OPERATING INFORMATION

Electric operations:
  Operating revenues               $  730,812     $  703,483     $  697,427
  Operating expenses, excluding
    provision for income taxes        582,427        566,130        550,386
                                   ----------     ----------     ----------
  Pretax operating income             148,385        137,353        147,041
                                   ----------     ----------     ----------
Gas operations:
  Operating revenues                  155,348        129,606        138,418
  Operating expenses, excluding
    provision for income taxes        139,535        117,418        126,896
                                   ----------     ----------     ----------
  Pretax operating income              15,813         12,188         11,522
                                   ----------     ----------     ----------
Investments:
  Operating revenues                   10,555          9,173          8,770
  Operating expenses, excluding
    provision for income taxes          1,744          1,972          1,988
                                   ----------     ----------     ----------
  Pretax investment income              8,811          7,201          6,782
                                   ----------     ----------     ----------
     Total                         $  173,009     $  156,742     $  165,345
                                   ----------     ----------     ----------
  Less interest and other charges      43,395         38,955         32,309
  Less income taxes                    49,557         45,772         49,082
                                   ----------     ----------     ----------
  Net income per Consolidated
    Statements of Income           $   80,057     $   72,015     $   83,954
                                   ==========     ==========     ==========
Depreciation and amortization
  expense:
  Electric                         $   79,699     $   75,869     $   74,496
  Gas                                   7,238          6,803          6,100
  Corporate                               460            591            503
                                   ----------     ----------     ----------
    Total                          $   87,397     $   83,263     $   81,099
                                   ==========     ==========     ==========

INVESTMENT INFORMATION

Identifiable assets:
  Electric                         $1,505,767     $1,495,433     $1,469,601
  Gas                                 203,901        181,677        176,788
  Temporary investments                 3,983          7,147          5,875
  Marketable securities                51,293         45,967         43,929
  Leveraged leases and
    energy investments                 62,017         59,114         49,933
  Corporate                            44,695         38,573         31,231
                                   ----------     ----------     ----------
    Total                          $1,871,656     $1,827,911     $1,777,357
                                   ==========     ==========     ==========
Construction expenditures:
  Electric                         $   93,007     $   90,151     $   82,673
  Gas                                  13,594         13,631         13,928
                                   ----------     ----------     ----------
    Total                          $  106,601     $  103,782     $   96,601
                                   ==========     ==========     ==========


           Note 16.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

     The fluctuations in quarterly results is primarily due to the seasonal
nature of the utility business of CIPS.
<TABLE>
                                                               Cash
                                                  Earnings    Dividends  Book
            Total       Total                       Per        Per      Value
            Operating  Operating      Net          Common     Common   (end of
Quarters    Revenues    Income       Income        Share       Share    period)
                         (in thousands, except per share data)
<S>         <C>        <C>        <C>             <C>          <C>      <C>
1996
    First   $237,879    $44,416    $21,118 (1)    $0.62 (1)    $0.51    $19.25
    Second   193,772     30,216     11,982 (2)     0.35 (2)     0.52     19.08
    Third    237,281     70,244     35,418 (3)     1.04 (3)     0.52     19.60
    Fourth   227,783     28,133     11,539 (4)     0.34 (4)     0.52     19.42

  1995
    First   $210,462    $28,252    $12,568 (5)    $0.37 (5)    $0.50    $18.90
    Second   183,944     29,158     12,886         0.38         0.51     18.80
    Third    243,863     77,089     41,731         1.22         0.51     19.52
    Fourth   203,993     22,243      4,830 (6)     0.14 (6)     0.51     19.12

</TABLE>

(1)  Includes $.7 million of merger costs which reduced net income by $.7
     million and earnings by 2 cents per share.
(2)  Includes $1.3 million of merger costs which reduced net income by $1.1
     million and earnings by 3 cents per share.
(3)  Includes $2.3 million of merger costs and system conversion costs
     which reduced net income by $1.6 million and earnings by 5 cents per  
     share.
(4)  Includes $2.8 million of merger costs and system conversion costs
     which reduced net income by $1.7 million and earnings by 5 cents per
     share.
(5)  Includes $5.8 million of voluntary separation program expenses which
     reduced net income by $3.5 million and earnings by 10 cents per share.
(6)  Includes $10.4 million of merger-related transaction expenses and
     write off of system development expenses which reduced net income by
     $8.2 million and earnings by 24 cents per share.


Item 8.  Financial Statements and Supplementary Data.


                  CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
                           STATEMENTS OF INCOME


                                           Years Ended December 31,
                                        1996        1995         1994
                                               (in thousands)

Operating Revenues:
  Electric                         $  730,834   $  703,509   $  697,458
  Gas                                 155,352      129,610      138,424
                                   ----------   ----------   ----------
       Total operating revenues       886,186      833,119      835,882
                                   ----------   ----------   ----------
Operating Expenses:
  Fuel for electric generation        220,936      188,731      196,324
  Purchased power                      53,279       59,495       55,543
  Gas costs                            96,228       74,054       85,043
  Other operation                     145,332      154,014      138,622
  Maintenance                          61,458       67,994       65,172
  Depreciation and amortization        86,937       82,672       80,596
  Taxes other than income taxes        57,792       56,588       55,984
  Income taxes                         47,693       43,542       47,920
                                   ----------   ----------   ----------
       Total operating expenses       769,655      727,090      725,204
                                   ----------   ----------   ----------

Operating Income                      116,531      106,029      110,678
                                   ----------   ----------   ----------

Other Income and Deductions:
  Allowance for equity funds
   used during construction               378          889          630
  Nonoperating income taxes               407         (941)        (603)
  Miscellaneous, net                   (2,652)      (1,695)       4,119
                                   ----------   ----------   ----------
       Total other income and
         deductions                    (1,867)      (1,747)       4,146
                                   ----------   ----------   ----------

Income Before Interest Charges        114,664      104,282      114,824
                                   ----------   ----------   ----------

Interest Charges:
  Interest on long-term debt           33,118       32,871       32,842
  Other interest charges                4,636          853          358
  Allowance for borrowed funds
   used during construction              (483)         (73)        (289)
                                   ----------   ----------   ----------
        Total interest charges         37,271       33,651       32,911

Net Income                             77,393       70,631       81,913
Preferred stock dividends               3,721        3,850        3,510
                                   ----------   ----------   ----------

Earnings for Common Stock          $   73,672   $   66,781   $   78,403
                                   ==========   ==========   ==========



The accompanying notes to financial statements are an integral part of
these statements.


                 CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
                     STATEMENTS OF RETAINED EARNINGS 

                                       Years Ended December 31,
                                     1996        1995        1994
                                           (in thousands)
                                       
Balance, beginning of year        $ 449,137   $ 453,463   $ 443,741 
Add (deduct):
  Net income                         77,393      70,631      81,913
  Dividends:
    Preferred stock                  (3,721)     (3,850)     (3,510)   
    Common Stock                    (62,950)    (71,000)    (68,600)  
Other                                    83        (107)        (81)   
                                  ---------   ---------   --------- 
Balance, end of year              $ 459,942   $ 449,137   $ 453,463

The accompanying notes to financial statements are an integral part of these
statements.



                  CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
                              BALANCE SHEETS



                                               December 31,
                                            1996          1995
                                             (in thousands)
ASSETS
Utility Plant, at original cost:
Electric                                $2,244,571     $2,296,402
Gas                                        242,664        229,118
                                        ----------     ----------
                                         2,487,235      2,525,520
Less--Accumulated depreciation           1,099,261      1,132,355
                                        ----------     ----------
                                         1,387,974      1,393,165
Construction work in progress               70,150         72,490
                                        ----------     ----------
                                         1,458,124      1,465,655
                                        ----------     ----------

Current Assets:
Cash                                         2,261          1,006
Accounts receivable, net                    74,761         65,574
Accrued unbilled revenues                   30,126         27,234
Materials and supplies, at
 average cost                               38,806         40,246
Fuel for electric generation, at
 average cost                               21,610         42,634
Gas stored underground, at average cost     13,361          9,774
Prepayments                                 14,323         10,268
Other current assets                         7,704          8,226
                                        ----------     ----------
                                           202,952        204,962
                                        ----------     ----------
Other Assets:
Regulatory Assets                           64,754         19,851
Other Assets                                27,488         24,337
                                        ----------     ----------
                                            92,242         44,188
                                        ----------     ----------
                                        $1,753,318     $1,714,805
                                         =========      =========

CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholder's equity:
  Common stock, no par value,
   authorized 45,000,000 shares;
   outstanding 25,452,373 shares        $  121,282     $  121,282
  Retained earnings                        459,942        449,137
                                        ----------     ----------
                                           581,224        570,419
Preferred stock                             80,000         80,000
Long-term debt                             421,228        478,926
                                        ----------     ----------
                                         1,082,452      1,129,345
                                        ----------     ----------

Current Liabilities:
Long-term debt due within one year          58,000              -
Short-term borrowings                       57,768         47,921
Accounts payable                            62,243         60,791
Accrued wages                               10,279          9,320
Accrued taxes                               13,943         11,155
Accrued interest                             8,432          9,525
Other                                       49,301         33,264
                                        ----------     ----------
                                           259,966        171,976
                                        ----------     ----------

Deferred Credits:
Accumulated deferred income taxes          303,700        293,127
Investment tax credits                      48,885         52,234
Regulatory liabilities, net                 58,315         68,123
                                        ----------     ----------
                                           410,900        413,484
                                        ----------     ----------
                                        $1,753,318     $1,714,805
                                         =========      =========



The accompanying notes to financial statements are an integral part of
these statements.


                  CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
                         STATEMENTS OF CASH FLOWS



                                                Years Ended December 31,
                                             1996        1995         1994
                                                     (in thousands)

OPERATING ACTIVITIES:
Net income                              $   77,393   $   70,631   $   81,913
Adjustments to reconcile net income
   to net cash provided:
  Depreciation and amortization             86,937       82,672       80,596
  Allowance for equity funds used
   during construction (AFUDC)                (378)        (889)        (630)
  Deferred income taxes, net                 1,600        4,575       14,146
  Investment tax credit amortization        (3,349)      (3,361)      (3,367)
Cash flows impacted by changes in
   assets and liabilities:
  Accounts receivable, net and
   accrued unbilled revenues               (12,079)       5,362        2,195
  Fuel for electric generation              21,024      (12,329)      (4,259)
  Other inventories                         (2,147)       2,964        2,175
  Prepayments                               (4,055)         571         (992)
  Other assets                              (6,656)      (6,942)       6,061
  Accounts payable and other                 5,489        8,667       (5,438)
  Accrued wages, taxes and interest          2,654       (2,204)      (3,111)
Other                                       (1,909)      (8,884)       1,129
                                          --------     --------     --------
  Net cash provided by operating
   activities                              164,524      140,833      170,418
                                          --------     --------     --------

INVESTING ACTIVITIES:
Construction expenditures,
   excluding AFUDC                        (105,740)    (102,820)     (95,682)
Allowance for borrowed funds
   used during construction                   (483)         (73)        (289)
                                          --------     --------     --------
  Net cash used in investing
   activities                             (106,223)    (102,893)     (95,971)
                                          --------     --------     --------

FINANCING ACTIVITIES:
Proceeds from issuance of
  long-term debt                                 -       20,000            -
Repayment of long-term debt                      -      (16,000)     (20,000)
Proceeds from short-term borrowings          9,847       32,936       14,985
Dividends paid:
  Preferred stock                           (3,637)      (3,956)      (3,510)
  Common stock                             (62,950)     (71,000)     (68,600)
Issuance expense, discount and premium        (306)        (234)         (40)
                                           -------      -------      -------
  Net cash used in financing activities    (57,046)     (38,254)     (77,165)
                                           -------      -------      -------

Net increase (decrease) in cash              1,255         (314)      (2,718)
Cash at beginning of year                    1,006        1,320        4,038
                                           -------      -------      -------
Cash at end of year                     $    2,261   $    1,006   $    1,320
                                           =======      =======      =======

Supplemental disclosures of cash
 flow information:
Cash paid during the year for:
  Interest, net of amounts capitalized  $   36,512   $   31,490   $   30,693
  Income taxes                          $   50,960   $   45,550   $   39,829



The accompanying notes to financial statements are an integral part of
these statements.



                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Central Illinois Public
Service Company:

We have audited the accompanying balance sheets of Central Illinois Public
Service Company (an Illinois corporation and a wholly owned subsidiary of
CIPSCO Incorporated) as of December 31, 1996 and 1995, and the related
statements of income, retained earnings and cash flows for each of the
three years in the period ended December 31, 1996.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Central Illinois Public
Service Company as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.




                                   ARTHUR ANDERSEN LLP

Chicago, Illinois
January 31, 1997


                       Notes to Financial Statements



            Note 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The information contained in Note 1 of Notes to Consolidated Financial
Statements beginning on page 43 is incorporated herein by reference (except
for the caption "Principles of Consolidation", the second paragraph under
the caption "Concentration of Credit Risk", the second paragraph under the
caption "Operating Revenues" and the caption "Marketable Securities" which
are not included herein).

                         Note 2.  MERGER AGREEMENT

The information contained in Note 2 of Notes to Consolidated Financial
Statements beginning on page 46 is incorporated herein by reference.

                        Note 3.  REGULATORY MATTERS

The information contained in Note 3 of Notes to Consolidated Financial
Statements beginning on page 47 is incorporated herein by reference.

                  Note 4.  COMMITMENTS AND CONTINGENCIES

The information contained in Note 4 of Notes to Consolidated Financial
Statements beginning on page 49 is incorporated herein by reference.

                         Note 5.  LEVERAGED LEASES

Not applicable.

            Note 6.  PENSIONS AND OTHER POSTRETIREMENT BENEFITS

The information contained in Note 6 of Notes to Consolidated Financial
Statements beginning on page 52 is incorporated herein by reference.

                         Note 7.  PREFERRED STOCK

The information contained in Note 7 of Notes to Consolidated Financial
Statements beginning on page 56 is incorporated herein by reference.

                   Note 8.  COMMON SHAREHOLDERS' EQUITY

Common Stock.  The authorized common stock, no par value, for CIPS was
45,000,000 shares as of December 31, 1996, 1995 and 1994.  All outstanding
shares were exchanged with CIPS shareholders for CIPSCO Incorporated stock
on October 1, 1990.  Common shares were neither retired nor issued during
the three year period ended December 31, 1996.  CIPSCO Incorporated holds
all CIPS common shares.

Retained Earnings.  CIPS is subject to restrictions on the use of retained
earnings for cash dividends on common stock applicable to all corporations
under the Illinois Business Corporation Act, as well as those contained in
its mortgage indenture and articles of incorporation.  At December 31,
1996, 1995 and 1994, no amount of retained earnings was restricted.


            Note 9.  LINES OF CREDIT AND SHORT-TERM BORROWINGS

CIPS has arrangements for bank lines of credit which totaled $77.5 million
at December 31, 1996.  CIPS compensates banks for these lines of credit.
The bank lines of credit are for corporate purposes including the support
of certain commercial paper borrowings.  At December 31, 1996 there were no
short-term borrowings from the lines of credit at CIPS, however, CIPS did
have $57.8 million at December 31, 1996 and $47.9 million at December 31,
1995 in commercial paper outstanding.

                         Note 10.  LONG-TERM DEBT

The information contained in Note 10 of Notes to Consolidated Financial
Statements beginning on page 57 is incorporated herein by reference.

               Note 11.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value
at  December 31, 1996 and 1995 of each class of financial instruments for
which it is practicable to make such estimates.

Short-Term Borrowings.  The carrying amounts approximate fair value due to
their short-term maturities.


Preferred Stock.  The fair value was estimated using market values provided
by independent pricing services.

Long-Term Debt.  The fair value was estimated using market values provided
by independent pricing services.

     The estimated fair values of CIPS' financial instruments as of
December 31, are shown below:

                                    1996               1995
                              Carrying   Fair     Carrying   Fair
                               Amount    Value     Amount    Value
                                         (in thousands)

Preferred stock               $ 80,000  $ 65,381  $ 80,000  $ 66,108
Long-term debt                 421,227   430,375   478,926   501,826
Current portion 
 long-term debt                 58,000    58,105         -         -

                          Note 12.  INCOME TAXES

CIPS uses the liability method of accounting for deferred income taxes.
Income tax expense includes provisions for deferred taxes to reflect the
effect of temporary differences between the time certain costs are recorded
for financial reporting and when they are deducted for income tax return
purposes.  As temporary differences reverse, the related accumulated
deferred income taxes and a portion of the regulatory assets and
liabilities are also reversed.  Investment tax credits have been deferred
and will continue to be credited to income over the lives of the related
property.
     The components of federal and state income tax provisions and
investment tax credits at December 31, were:

                                          1996      1995      1994
                                               (in thousands)

Current - federal                       $ 44,139  $ 34,384  $ 32,826
        - state                            9,708     6,892     5,271
                                        --------  --------  --------
                                          53,847    41,276    38,097


Deferred - federal                        (3,201)    3,813    10,084
         - state                             396     1,814     3,106
                                        --------  --------  --------
                                          (2,805)    5,627    13,190
                                        --------  --------  --------
Amortization of investment tax credits    (3,349)   (3,361)   (3,367)
                                        --------  --------  --------
  Total                                   47,693    43,542    47,920
Nonoperating income taxes:
  Current                                   (382)    1,420       687
  Deferred                                   (25)     (479)      (84)
                                        --------  --------  --------
                                            (407)      941       603
                                         --------  --------  -------

Total income taxes                      $ 47,286  $ 44,483  $ 48,523
                                        ========  ========  ========


     Reconciliations with statutory federal income tax rates at December
31, were:

                                             1996      1995      1994

Effective income tax rate                    37.9%     38.6%     37.2%
Amortization of investment tax credits        2.7       2.9       2.6
Tax exempt interest and dividends              .7        .7        .7
State income tax rate, net of federal
  income tax benefits                        (5.2)     (4.9)     (4.2)
Non-deductible merger expense                (0.6)     (1.5)        -
Other, net                                   (0.5)     (0.8)     (1.3)
                                             ----      ----      ----
Statutory federal income tax rate            35.0%     35.0%     35.0%
                                             ====      ====      ====

     The accumulated deferred income taxes as set forth below and in the
Balance Sheets arise from the following temporary differences at December
31:

                                               1996           1995
                                                   (in thousands)
Accumulated deferred income tax
  liabilities related to:
  Depreciable property                       $330,577       $320,677
  Investment tax credits                      (19,502)       (20,831)
  Regulatory liabilities, net                 (22,990)       (26,843)
  Other                                        15,615         20,124
                                             --------       -------- 
Accumulated deferred income taxes
 per Balance Sheets                          $303,700       $293,127
                                             ========       ========
Deferred tax assets (included in
  prepayments)                               $ 10,874       $  6,444
                                             ========       ========

                Note 13.  DERIVATIVE FINANCIAL INSTRUMENTS

Not applicable.
                          Note 14.  SFAS NO. 121

The information contained in Note 14 of Notes to Consolidated Financial
Statements beginning on page 61 is incorporated herein by reference.


                      Note 15.  SEGMENTS OF BUSINESS

     CIPS is a public utility engaged in the sale of electricity which it
generates, transmits and distributes.  CIPS also sells natural gas, which
it purchases from producers and suppliers and distributes through its
system, and transports customer-owned natural gas.  The following is a
summary of operations:

                                              Years Ended December 31,
                                            1996      1995      1994
                                                   (in thousands)
OPERATING INFORMATION

Electric operations:
  Operating revenues                $  730,834    $  703,509    $  697,458
  Operating expenses, excluding
    provision for income taxes         582,427       566,130       550,388
                                    ----------    ----------    ----------
  Pretax operating income              148,407       137,379       147,070
                                    ----------    ----------    ----------

Gas operations:
  Operating revenues                   155,352       129,610       138,424
  Operating expenses, excluding
    provision for income taxes         139,535       117,418       126,896
                                    ----------    ----------    ----------
  Pretax operating income               15,817        12,192        11,528
                                    ----------    ----------    ----------
    Total                              164,224       149,571       158,598
                                    ----------    ----------    ----------

Plus other income and deductions        (1,867)       (1,747)        4,146
Less interest charges                   37,271        33,651        32,911
Less income taxes                       47,693        43,542        47,920
Less preferred stock dividends           3,721         3,850         3,510
                                    ----------    ----------    ----------
Earnings for common stock           $   73,672    $   66,781    $   78,403
                                    ==========    ==========    ==========

Depreciation expense:
  Electric                          $   79,699    $   75,869    $   74,496
  Gas                                    7,238         6,803         6,100
                                    ----------    ----------    ----------
    Total                           $   86,937    $   82,672    $   80,596
                                    ==========    ==========    ==========

INVESTMENT INFORMATION

Identifiable assets:
  Electric                          $1,505,767    $1,495,433    $1,469,601
  Gas                                  203,901       181,677       176,788
  Corporate                             43,650        37,695        32,261
                                    ----------    ----------    ----------
    Total                           $1,753,318    $1,714,805    $1,678,650
                                    ==========    ==========    ==========

Construction expenditures:
  Electric                          $   93,007    $   90,151    $   82,673
  Gas                                   13,594        13,631        13,928
                                    ----------    ----------    ----------
    Total                           $  106,601    $  103,782    $   96,601
                                    ==========    ==========    ==========


           Note 16.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

     The fluctuation in the quarterly results is primarily due to the
seasonal nature of the electric and gas utility business.

                   Total          Total                         Common
                 Operating      Operating      Earnings for      Stock
Quarters        Revenues (a)   Income (a)    Common Stock (a)   Dividends
                                     (in thousands)

  1996
    First        $235,714        $29,758         $19,653 (1)     $16,500
    Second        190,871         20,680          10,271 (2)      17,500
    Third         234,904         45,282          34,029 (3)      16,250
    Fourth        224,698         20,812           9,720 (4)      12,700

  1995
    First         $208,883        $20,869         $11,803 (5)    $17,500
    Second         182,110         19,873          11,653         17,500
    Third          241,449         49,227          40,368         17,500
    Fourth         200,677         16,060           2,957 (6)     18,500

(a)  The quarterly amounts for total operating revenues, total operating 
     income and earnings for common stock may not add to the total for the
     year due to rounding.

(1)  Includes $.7 million of merger costs which reduced earnings for common
     stock by $.7 million.
(2)  Includes $1.3 million of merger costs which reduced earnings for
     common stock by $1.1 million.
(3)  Includes $2.3 million of merger costs and system conversion costs
     which reduced earnings for common stock by $1.6 million.
(4)  Includes $2.8 million of merger costs and system conversion costs
     which reduced earnings for common stock by $1.7 million.
(5)  Includes $5.8 million of voluntary separation program expenses which
     reduced earnings for common stock by $3.5 million.
(6)  Includes $10.4 million of merger-related transaction expenses and
     write off of system development expenses which reduced earnings for
     common stock by $8.2 million.


Item 9.   Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.

          None for CIPSCO or CIPS.


                                 PART III

Item 10.  Directors and Executive Officers of the Registrants.

                                  CIPSCO

     The information required by Item 10 relating to each person who is a
nominee for election as director at CIPSCO's 1997 Annual Meeting of
Shareholders is to be set forth in CIPSCO's definitive proxy statement (the
"CIPSCO Proxy Statement") to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A under the Securities Exchange Act of
1934 in connection with CIPSCO's 1997 Annual Meeting of Shareholders.  Such
information is incorporated herein by reference to the material appearing
under the caption "Election of Directors -- Director Information" in the
CIPSCO Proxy Statement.  Information required by Item 10 relating to
executive officers of CIPSCO is set forth under a separate caption
"Executive Officers of CIPSCO" in Part I hereof.

                                   CIPS

     The information required by Item 10 relating to each person who is a
nominee for election as director at CIPS' 1997 Annual Meeting of
Shareholders is to be set forth in CIPS' definitive proxy statement (the
"CIPS Proxy Statement") to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A under the Securities Exchange Act of
1934 in connection with CIPS' 1997 Annual Meeting of Shareholders.  Such
information is incorporated herein by reference to the material appearing
under the caption "Election of Directors -- Director Information" in the
CIPS Proxy Statement.  Information required by Item 10 relating to
executive officers of CIPS is set forth under a separate caption "Executive
Officers of CIPS" in Part I hereof.


Item 11.  Executive Compensation.

                                  CIPSCO

     The information required by Item 11 is to be set forth in the CIPSCO
Proxy Statement.  Such information is incorporated herein by reference to
the material appearing under the caption "Election of Directors --
Executive Compensation" and -- "Directors' Compensation" appearing in the
CIPSCO Proxy Statement; provided, however, that no part of the information
appearing under the portion of the CIPSCO Proxy Statement entitled
"Election of Directors -- Compensation Committee Report on Executive
Compensation" or -- "Total Return Summary Based on Initial Investment of
$100 on December 31, 1991" is deemed to be filed as part of this Form 10-K
Annual Report.

                                   CIPS

     The information required by Item 11 is to be set forth in the CIPS
Proxy Statement.  Such information is incorporated herein by reference to
the material appearing under the caption "Election of Directors --
Executive Compensation" and -- "Directors' Compensation" appearing in the
CIPS Proxy Statement; provided, however, that no part of the information
appearing under the portion of the CIPS Proxy Statement entitled "Election
of Directors -- Compensation Committee Report on Executive Compensation" or
-- "Total Return Summary Based on Initial Investment of $100 on December 31, 
1991" is deemed to be filed as part of this Form 10-K
Annual Report.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

                                  CIPSCO

     The information required by Item 12 is to be set forth in the CIPSCO
Proxy Statement.  Such information is incorporated herein by reference to
the material appearing under the captions "Voting Securities Beneficially
Owned by Principal Holders, Directors, Nominees and Executive Officers" and
"Election of Directors -- Director Information" appearing in the CIPSCO
Proxy Statement.

                                   CIPS

     The information required by Item 12 is to be set forth in the CIPS
Proxy Statement.  Such information is incorporated herein by reference to
the material appearing under the captions "Voting Securities Beneficially
Owned by Principal Holders, Directors, Nominees and Executive Officers" and
"Election of Directors -- Director Information" appearing in the CIPS Proxy
Statement.


Item 13.  Certain Relationships and Related Transactions.

                              CIPSCO AND CIPS

     CIPSCO is the parent company of CIPS.  At December 31, 1996, CIPSCO
owned 100% of the common stock of CIPS (representing 96% of the voting
shares of CIPS).  There are situations where CIPS interacts with its
affiliated companies through the use of shared facilities, common employees
and other business relationships.  In these situations, CIPS receives
payment in accordance with regulatory requirements for the services
provided to affiliated companies.

     Each individual who is a member of the Board of Directors of CIPSCO is
also a member of the Board of Directors of CIPS.  Each of the officers of
CIPSCO is also an officer of CIPS.

                                  PART IV

                              CIPSCO AND CIPS

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

                                                         Page of this report
                                                             on Form 10-K
                                                                         Pro
                                                          CIPSCO   CIPS  Forma
(a) 1.  Financial statements
         Statements of Income for the years ended
         December 31, 1996, 1995 and 1994. . . . . . . .     38     64    -
         Statements of Retained Earnings for the years
         ended December 31, 1996, 1995 and 1994  . . . .     38     64    -     
         Balance Sheets - December 31, 1996 and 1995 . .     39     65    -
         Statements of Cash Flows for the years ended
         December 31, 1996, 1995 and 1994. . . . . . . .     40     66    -
         Report of Independent Public Accountants. . . .     42     68    -
         Notes to Financial Statements . . . . . . . . .     43     69    -

        The CIPSCO consolidated financial statements,
        including notes, are not included in the CIPS
        Annual Report on Form 10-K.

(a) 2.  Schedules supporting financial statements. . . .      -      -    -

        All Financial Statement Schedules have been
        omitted as not applicable or not required
        or because the information required to be
        shown therein is included in the financial
        statements or notes thereto.

(a) 3.  Unaudited Pro Forma Combined Condensed Financial
        Information of CIPSCO And Union Electric
           Balance Sheet - December 31, 1996 . . . . . .      -      -    84
           Statements of Income for the years ended
             December 31, 1996, 1995 and 1994. . . . . .      -      -    85
           Notes to Unaudited Pro Forma Combined
             Condensed Financial Statements. . . . . . .      -      -    88


                                                               Applicable to
                                                               Form 10-K of
                                                               CIPSCO   CIPS

(a) 4. Exhibits

       2.01  Agreement and Plan of Merger, dated as
             of August 11, 1995, by and among CIPSCO
             Incorporated, Union Electric Company, Ameren
             Corporation and Arch Merger Inc. (Exhibit 2(a)
             filed with CIPSCO's and CIPS' Form 10-Q/A
             (Amendment No. 1) for the quarter ended June 30,
             1995.)  Incorporated by Reference. . . . . . .       X       X

       3.01  Amended and Restated Articles of Incorporation
             of CIPSCO.  (Exhibit 3.01 filed with CIPSCO's
             1990 Annual Report on Form 10-K.)  Incorporated
             by Reference . . . . . . . . . . . . . . . . . . .   X

       3.02  Restated Articles of Incorporation of CIPS.
             (Exhibit 3(b) filed with CIPS' Form 10-Q for
             the quarter ended March 31, 1994.)  Incorporated
             by Reference . . . . . . . . . . . . . . . . . . .           X

       3.03  Bylaws of CIPSCO (Exhibit 3.02 filed with CIPSCO's
             1993 Annual Report on Form 10-K.)  Incorporated by
             Reference. . . . . . . . . . . . . . . . . . . . .   X

       3.04  Bylaws of CIPS (Exhibit 3(c) filed with CIPS'
             Form 10-Q for the quarter ended March 31, 1994.)
             Incorporated by Reference. . . . . . . . . . . . .           X



                                                              Applicable to
                                                              Form 10-K of
Exhibits (Continued)                                          CIPSCO  CIPS

4   Indenture of Mortgage or Deed of Trust dated October
1, 1941, from CIPS to Continental Illinois National Bank and
Trust Company of Chicago and Edmond B. Stofft, as Trustees.
(Exhibit 2.01 in File No. 2-60232.)  Supplemental Indentures
dated, respectively September 1, 1947, January 1, 1949,
February 1, 1952, September 1, 1952, June 1, 1954,February 1,
1958, January 1, 1959, May 1, 1963, May 1, 1964, June 1, 1965,
May 1, 1967, April 1, 1970, April 1, 1971, September 1, 1971,
May 1, 1972, December 1, 1973, March 1, 1974, April 1, 1975,
October 1, 1976, November 1, 1976, October 1, 1978, August 1,
1979, February 1, 1980, February 1, 1986, May 15, 1992,
July 1, 1992, September 15, 1992, April 1, 1993, and June 1,
1995 between CIPS and the Trustees under the Indenture of
Mortgage or Deed of Trust referred to above (Amended Exhibit
7(b) in File No. 2-7341; Second Amended Exhibit 7.03 in File
No. 2-7795; Second Amended Exhibit 4.07 in File No. 2-9353;
Amended Exhibit 4.05 in file No. 2-9802; Amended Exhibit 4.02
in File No. 2-10944; Amended Exhibit 2.02 in File No. 2-13866;
Amended Exhibit 2.02 in File No. 2-14656; Amended Exhibit 2.02
in File No. 2-21345; Amended Exhibit 2.02 in File No. 2-22326;
Amended Exhibit 2.02 in File No. 2-23569; Amended Exhibit 2.02
in File No. 2-26284; Amended Exhibit 2.02 in File No. 2-36388;
Amended Exhibit 2.02 in File No. 2-39587; Amended Exhibit 2.02
in File No. 2-41468; Amended Exhibit 2.02 in File No. 2-43912;
Exhibit 2.03 in File No. 2-60232; Amended Exhibit 2.02 in
File No. 2-50146; Amended Exhibit 2.02 in File No. 2-52886;
Second Amended Exhibit 2.04 in File No. 2-57141; Amended Exhibit
2.04 in File No. 2-57557; Amended Exhibit 2.06 in File No.
2-62564; Exhibit 2.02(a) in File No. 2-65914; Amended Exhibit
2.02(a) in File No. 2-66380; and Amended Exhibit 4.02 in File No.
33-3188; Exhibit 4.02 to Form 8-K dated May 15, 1992; Exhibit
4.02 to Form 8-K dated July 1, 1992; Exhibit 4.02 to Form 8-K
dated September 15, 1992; Exhibit 4.02 to Form 8-K dated March 30,
1993; Exhibit 4.03 to Form 8-K dated June 5, 1995.)  Incorporated
by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . .  X    X


                                                           Applicable to
                                                           Form 10-K of
                                                       CIPSCO   CIPS   Page(s)
Exhibits (Continued)

10.01  Form of Deferred Compensation Agreement for
       Directors (Exhibit 10.01 filed with
       CIPSCO's and CIPS' 1990 Annual Report on
       Form 10-K) Incorporated by Reference. . . . . .    X       X      -

10.02  Amended Form of Deferred Compensation
       Agreement for Directors (Exhibit 10.02
       filed with CIPSCO's and CIPS' 1993
       Annual Report on Form 10-K) Incorporated
       by Reference. . . . . . . . . . . . . . . . . .    X       X      -

10.03  Form of Management Continuity Agreement
       (Exhibit 10.05 filed with CIPSCO's and
       CIPS' 1994 Annual Report on Form 10-K.)
       Incorporated by Reference . . . . . . . . . . .    X       X      -

10.04  Form of Director's Retirement Income Plan
       (Exhibit 10.06 filed with CIPSCO's and
       CIPS' 1990 Annual Report on Form 10-K)
       Incorporated by Reference . . . . . . . . . . .    X       X      -

10.05  Form of Management Incentive Plan (Exhibit
       10.09 filed with CIPSCO's and CIPS' 1990
       Annual Report on Form 10-K) Incorporated
       by Reference . . . . . . . . . . . . . . . . . .   X       X      -

10.06  Form of Excess Benefit Plan
       (Exhibit 10.10 filed with CIPSCO's and
       CIPS' 1994 Annual Report on Form 10-K.)
       Incorporated by Reference . . . . . . . . . . .    X       X      -

10.07  Amendment to Form of Excess Benefit Plan
       (Exhibit 10.07 filed with CIPSCO's and
       CIPS' 1995 Annual Report on Form 10-K.)
       Incorporated by Reference . . . . . . . . . . .    X       X      -

10.08  Form of Special Executive Retirement Plan
       (Exhibit 10.11 filed with CIPSCO's and
       CIPS' 1994 Annual Report on Form 10-K.)
       Incorporated by Reference . . . . . . . . . . .    X       X      -

10.09  Amendment to Form of Special Executive
       Retirement Plan (Exhibit 10.09 filed with
       CIPSCO's and CIPS' 1995 Annual Report
       on Form 10-K.)  Incorporated by Reference . . .    X       X      -

10.10  Stock Option Agreement, dated as of August
       11, 1995, by and between CIPSCO Incorporated
       and Union Electric Company.  (Exhibit
       10(a) filed with CIPSCO's and CIPS' Form
       10-Q for the quarter ended June 30, 1995.)
       Incorporated by Reference . . . . . . . . . . .    X       X      -



                                                         Applicable to
                                                          Form 10-K of
                                                       CIPSCO   CIPS   Page(s)

Exhibits (Continued)

10.11  Stock Option Agreement, dated as of August
       11, 1995, by and between Union Electric
       Company and CIPSCO Incorporated.  (Exhibit
       10(b) filed with CIPSCO's and CIPS' Form
       10-Q for the quarter ended June 30, 1995.)
       Incorporated by Reference . . . . . . . . . . .    X       X       -

12.01  Computation of Ratio of Earnings to Fixed
       Charges - CIPSCO. . . . . . . . . . . . . . . .    X               92

12.02  Computation of Ratio of Earnings to Fixed
       Charges - CIPS. . . . . . . . . . . . . . . . .            X       93

21     Subsidiaries of CIPSCO and CIPS . . . . . . . .    X       X       94

23.01  Consent of Independent Public Accountants -
       CIPSCO. . . . . . . . . . . . . . . . . . . . .    X               95

23.02  Consent of Independent Public Accountants -
       CIPS. . . . . . . . . . . . . . . . . . . . . .            X       96

24.01  Powers of Attorney - CIPSCO . . . . . . . . . .    X             97-103

24.02  Powers of Attorney - CIPS . . . . . . . . . . .            X    104-110

27.1   Financial Data Schedule of CIPSCO*. . . . . . .    X               -

27.2   Financial Data Schedule of CIPS*. . . . . . . .            X       -

99.01  Description of Capital Stock - CIPSCO . . . . .    X            111-113

99.02  Description of Capital Stock - CIPS . . . . . .            X    114-115

99.03  Cautionary Factors regarding Forward Looking
       Statements. . . . . . . . . . . . . . . . . . .    X       X    116-117


     Exhibits 10.01 through 10.11 are management contracts or compensatory
plans or arrangements required to be filed as exhibits pursuant to Item
14(c) hereof.



* Included in electronic filing only.


     The following instruments defining the rights of holders of certain
unregistered long-term debt of CIPS have not been filed with the Securities
and Exchange Commission but will be furnished upon request.

      1.  Loan Agreement dated as of March 1, 1990, between CIPS and the
      Illinois Development Finance Authority (IDFA) in connection with the
      IDFA's $20,000,000 Pollution Control Revenue Refunding Bonds, 1990
      Series A due March 1, 2014 and $32,000,000 Pollution Control Revenue
      Refunding Bonds, 1990 Series B due September 1, 2013.

      2.  Loan Agreement dated January 1, 1993, between CIPS and IDFA in
      connection with IDFA's $35,000,000, 6-3/8%   Pollution Control
      Revenue Refunding Bonds (Central Illinois Public Service Company
      Project) 1993 Series A, due January 1, 2028.

      3.  Loan Agreement dated June 1, 1993, between CIPS and IDFA in
      connection with IDFA's $17,500,000 Pollution Control Revenue
      Refunding Bonds, 1993 Series B-1 due June 1, 2028 and $17,500,000
      Pollution Control Revenue Refunding Bonds, 1993 Series B-2 due June
      1, 2028.

      4.  Loan Agreement dated August 15, 1993, between CIPS and IDFA in
      connection with IDFA's $35,000,000 Pollution Control Revenue
      Refunding Bonds, 1993 Series C-1 due August 15, 2026 and $25,000,000
      Pollution Control Revenue Refunding Bonds, 1993 Series C-2 due
      August 15, 2026.

      5.  CIPS Credit Agreements (effective February 12, 1997) with
      various banks providing $75,000,000 of unsecured long-term lines of
      credit.

(b)  Reports on Form 8-K


     Registrant               CIPSCO and CIPS

     Date of Report           Item Reported

     December 23, 1996        Item 5. Other Events.

                              Reports information regarding CIPS' coal
                              contract restructuring, legislative issues
                              related to utility restructuring in Illinois,
                              competitive pressure affecting energy sales, and
                              cautionary statements, assumptions and other
                              factors related to forward-looking statements
                              within the meaning of the Private Securities
                              Litigation Act of 1995.


                            AMEREN CORPORATION
       UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
                       OF CIPSCO AND UNION ELECTRIC



The following unaudited pro forma financial information combines the
historical balance sheets and statements of income of CIPSCO and Union
Electric, including their respective subsidiaries, after giving effect to
the merger.  The unaudited pro forma combined condensed balance sheet at
December 31, 1996 gives effect to the merger as if it had occurred at
December 31, 1996.  The unaudited pro forma combined condensed statements
of income for each of the three years ended December 31, 1996, 1995 and
1994 give effect to the merger as if it had occurred at the beginning of
the periods presented.  These statements are prepared on the basis of
accounting for the merger as a pooling of interests and are based on the
assumptions set forth in the notes thereto.  In addition, the pro forma
financial information does not give effect to the expected synergies of the
transaction.

The following pro forma financial information has been prepared from, and
should be read in conjunction with, the historical financial statements and
related notes thereto of CIPSCO and Union Electric.  The following
information is not necessarily indicative of the financial position or
operating results that would have occurred had the merger been consummated
on the date, or at the beginning of the periods, for which the merger is
being given effect nor is it necessarily indicative of future operating
results or financial position.

                                     

                            AMEREN CORPORATION
                  UNAUDITED PRO FORMA COMBINED CONDENSED
                               BALANCE SHEET
                           AT DECEMBER 31, 1996
                          (Thousands of Dollars)
<TABLE>

                                                     Pro Forma
                            As Reported  (Note 1)   Adjustments     Pro Forma
ASSETS                          UE          CIPSCO  (Notes 2, 9)     Combined
<S>                      <C>           <C>           <C>         <C>
Property and plant
  Electric               $  8,630,628  $  2,244,571  $  376,896  $  11,252,095
  Gas                         185,867       242,664           -        428,531
  Other                        35,965             -           -         35,965
                         ____________  ____________  __________  _____________
                            8,852,460     2,487,235     376,896     11,716,591
  Less accumulated
   depreciation and
   amortization             3,656,890     1,099,261     267,895      5,024,046
                         ____________  ____________  __________  _____________
                            5,195,570     1,387,974     109,001      6,692,545

  Construction work
   in progress:
    Nuclear fuel in
     process                   96,147             -           -         96,147
    Other                      90,953        70,150       1,311        162,414
                         ____________  ____________  __________  _____________
         Total
          property and
          plant, net        5,382,670     1,458,124     110,312      6,951,106

  Regulatory assets:
    Deferred income
     taxes (Note 6)           692,171        42,035           -        734,206
    Other                     178,760        64,754           -        243,514
                         ____________  ____________  __________  _____________
         Total
          regulatory
          assets              870,931       106,789           -        977,720

Other assets:
  Unamortized debt
   expense                     10,591         2,871         591         14,053
  Nuclear
   decommissioning
   trust fund                  96,601             -           -         96,601
  Investments in
   nonregulated
   activities                       -       113,310           -        113,310
  Other                        27,377        25,624      (2,399)        50,602
                         _____________  ___________  ___________  ____________
         Total other
          assets               134,569      141,805      (1,808)       274,566
Current assets:
  Cash and temporary
   investments                   4,897        6,270       4,715         15,882
  Accounts receivable, net     192,868       56,473      19,344        268,685
  Unbilled revenue              76,190       30,126           -        106,316
  Materials and supplies,
   at average cost -
    Fossil fuel                 63,651       34,971       7,531        106,153
    Other                       94,517       38,806       4,630        137,953
  Other                         50,516       40,327       3,343         94,186
                          ____________  ___________  __________  _____________
         Total current
          assets               482,639      206,973      39,563        729,175
                          ____________  ___________  __________  _____________
Total Assets              $  6,870,809  $ 1,913,691  $  148,067  $   8,932,567
                          ============  ===========  ==========  =============
CAPITAL AND LIABILITIES
Capitalization:
  Common stock (Note 2)   $    510,619  $   356,812  $ (866,059) $       1,372
  Other stockholders'
   equity (Note 2)           1,844,182      304,782     866,059      3,015,023
                          ____________  ___________  __________  _____________
         Total common
          stockholders'
          equity             2,354,801      661,594           -      3,016,395
  Preferred stock of
   subsidiary                  219,121       80,000           -        299,121
  Long-term debt             1,798,671      421,227     130,000      2,349,898
                          ____________  ___________  __________  _____________
         Total
          capitalization     4,372,593    1,162,821     130,000      5,665,414
Minority interest in
 consolidated subsidiary             -            -       3,534          3,534
Accumulated deferred
 income taxes                1,318,404      341,373      (6,682)     1,653,095
Accumulated deferred
 investment tax credits        160,342       48,885           -        209,227
Regulatory liability           203,822      100,350           -        304,172
Accumulated provision
 for nuclear
 decommissioning                98,274            -           -         98,274
Other deferred credits
 and liabilities               156,913       35,737       4,733        197,383
Current liabilities:
  Current maturity of
   long-term debt               73,966       58,000           -        131,966
  Short-term debt               11,300       57,768           -         69,068
  Accounts payable             170,383       62,774      13,600        246,757
  Wages payable                 39,966       10,294           -         50,260
  Taxes accrued                 95,478       13,692           8        109,178
  Interest accrued              45,173        8,432         416         54,021
  Other                        124,195       13,565       2,458        140,218
                          ____________  ___________  __________  _____________
         Total current
          liabilities          560,461      224,525      16,482        801,468
                          ____________  ___________  __________  _____________
Total Capital and
 Liabilities              $  6,870,809  $ 1,913,691  $  148,067  $   8,932,567
                          ============  ===========  ==========  =============
</TABLE>

See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.


                            AMEREN CORPORATION
                  UNAUDITED PRO FORMA COMBINED CONDENSED
                           STATEMENTS OF INCOME
                       YEAR ENDED DECEMBER 31, 1996
        (Thousands of Dollars Except Shares and Per Share Amounts)

<TABLE>
                                           CIPSCO
                                           (As
                                  UE       Reported)  Pro Forma
                            (As Reported)  (Notes    Adjustments    Pro Forma
                           (Notes 1,4,10)   1,4)    (Notes 2,9)     Combined
                           _____________   _________  _________    ___________
<S>                        <C>            <C>         <C>          <C>
OPERATING REVENUES:
  Electric                 $  2,160,815   $ 730,812   $ 175,313    $ 3,066,940
  Gas                            99,064     155,348           -        254,412
  Other                             485      10,555       1,113         12,153
                           _____________   _________  _________    ___________
       Total operating 
        revenues              2,260,364     896,715     176,426      3,333,505

OPERATING EXPENSES:
  Operations
    Fuel and purchased power    512,832     274,215      93,158        880,204
    Gas Costs                    64,548      96,228           -        160,776
    Other                       379,106     146,588      18,304        543,998
                           _____________   _________  _________    ___________
                                956,485     517,031     111,462      1,584,978
  Maintenance                   223,632      61,461      17,110        302,203
  Depreciation and
   amortization                 241,298      87,397      15,665        344,360
  Income taxes (Note 7)         197,369      49,557       7,943        254,869
  Other taxes                   213,266      57,817       1,951        273,034
                           _____________   _________  _________    ___________
       Total operating
        expenses              1,832,050     773,263     154,131      2,759,444

OPERATING INCOME                428,314     123,452      22,295        574,061

OTHER INCOME AND DEDUCTIONS:
  Allowance for equity
   funds used during
   construction                   6,492         378           -          6,870
  Minority interest in
  consolidated subsidiary             -           -      (4,875)       (4,875)
  Miscellaneous, net             (4,293)     (2,784)     (7,413)      (14,490)
                           _____________   __________  ________     __________
       Total other income
        and deductions,
        net                       2,199      (2,406)    (12,288)      (12,495)

INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS         430,513     121,046      10,007       561,566

INTEREST CHARGES AND
 PREFERRED DIVIDENDS:
  Interest                      132,644      37,751      10,007       180,402
  Allowance for borrowed
   funds used during
   construction                  (7,007)       (483)          -        (7,490)
  Preferred dividends
   of subsidiaries (Note 8)      13,249       3,721           -        16,970
                          _____________   _________   _________    ___________
    Net interest charges
     and preferred
     dividends                  138,886      40,989      10,007       189,882

NET INCOME                $     291,627   $  80,057  $        -   $   371,684
                          ==============  =========  ==========   ===========

EARNINGS PER SHARE OF
 COMMON STOCK
 (BASED ON AVERAGE SHARES
   OUTSTANDING)                   $2.86       $2.35                     $2.71
                                  =====       =====                     =====

AVERAGE COMMON SHARES
 OUTSTANDING (Note 2)       102,123,834  34,069,542   1,022,086   137,215,462
                           ============  ==========   =========   ===========
</TABLE>


See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.

                            AMEREN CORPORATION
                  UNAUDITED PRO FORMA COMBINED CONDENSED
                           STATEMENTS OF INCOME
                       YEAR ENDED DECEMBER 31, 1995
        (Thousands of Dollars Except Shares and Per Share Amounts)


<TABLE>

                                UE         CIPSCO     Pro Forma
                          (As Reported) (As Reported) Adjustments   Pro Forma
                          (Notes 1,4,10)(Notes 1,3,4) (Notes 2,9)    Combined
                          _____________  __________  __________  ____________
<S>                       <C>            <C>         <C>         <C>
OPERATING REVENUES:
  Electric                $  2,154,109   $  703,483  $  155,935  $  3,013,527
  Gas                           87,814      129,606           -       217,420
  Other                            441        9,173         362         9,976
                          _____________  __________  __________  ____________
       Total operating
        revenues             2,242,364      842,262     156,297     3,240,923

OPERATING EXPENSES:
  Operations
    Fuel and purchased power   504,815      248,226      70,910       823,951
    Gas Costs                   51,251       74,054           -       125,305
    Other                      367,870      155,368      19,148       542,386
                          _____________  __________  __________  ____________
                               923,936      477,648      90,058     1,491,642
  Maintenance                  221,609       67,996      17,941       307,546
  Depreciation and
   amortization                233,237       83,263      15,747       332,247
  Income taxes (Note 7)        209,541       45,772       7,857       263,170
  Other taxes                  212,145       56,613       1,912       270,670
                          _____________  __________  __________  ____________
       Total operating
        expenses             1,800,468      731,292     133,515     2,665,275

OPERATING INCOME               441,896      110,970      22,782       575,648

OTHER INCOME AND DEDUCTIONS:
  Allowance for equity
   funds used during
   construction                  6,827          889           -         7,716
  Minority interest in
   consolidated subsidiary           -            -      (4,558)       (4,558)
  Miscellaneous, net            (5,981)      (2,298)     (7,908)      (16,187)
                          _____________  ___________  _________   ____________
       Total other income and
        deductions, net            846       (1,409)    (12,466)       13,029

INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS        442,742      109,561      10,316       562,619

INTEREST CHARGES AND
 PREFERRED DIVIDENDS:
  Interest                     134,741       33,769      10,316       178,826
  Allowance for borrowed
   funds used during
   construction                 (6,106)         (73)          -        (6,179)
  Preferred dividends
   of subsidiaries (Note 8)     13,250        3,850           -        17,100
                          _____________  ___________  _________   ___________
    Net interest charges
     and preferred
     dividends                 141,885       37,546      10,316       189,747

NET INCOME                $    300,857   $   72,015    $      -    $  372,872
                          =============  ===========  =========   ===========

EARNINGS PER SHARE
 OF COMMON STOCK
 (BASED ON AVERAGE
  SHARES OUTSTANDING)            $2.95        $2.11                     $2.72
                                 =====        =====                     =====

AVERAGE COMMON SHARES
 OUTSTANDING (Note 2)      102,123,834   34,069,542   1,022,086   137,215,462
                           ============  ==========  ==========   ===========
</TABLE>


See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.

                            AMEREN CORPORATION
                  UNAUDITED PRO FORMA COMBINED CONDENSED
                           STATEMENTS OF INCOME
                       YEAR ENDED DECEMBER 31, 1994
        (Thousands of Dollars Except Shares and Per Share Amounts)


<TABLE>

                               UE          CIPSCO       Pro Forma
                         (As Reported)  (As Reported)  Adjustments   Pro Forma
                            (Note 1)      (Note 1)    (Notes 2,9)    Combined
                         _____________  _____________  __________ ____________
<S>                      <C>            <C>            <C>        <C>
OPERATING REVENUES:
  Electric                $  2,137,355  $  697,427     $ 200,730  $ 3,035,512
  Gas                           86,109     138,418             -      224,527
  Other                            474       8,770           188        9,432
                         _____________  _____________  __________ ___________
       Total operating
        revenues             2,223,938     844,615       200,918    3,269,471

OPERATING EXPENSES:
  Operations
    Fuel and purchased power   497,384     251,867       113,166      862,417
    Gas Costs                   60,096      85,043             -      145,139
    Other                      375,570     140,068        19,952      535,590
                         _____________  _____________  __________ ___________
                               933,050     476,978       133,118    1,543,146
  Maintenance                  197,760      65,176        19,076      282,012
  Depreciation and
   amortization                226,045      81,099        13,776      320,920
  Income taxes (Note 7)        206,421      49,082         9,739      265,242
  Other taxes                  210,476      56,017         1,929      268,422
                         _____________  _____________  __________ ___________
       Total operating
        expenses             1,773,752     728,352       177,638    2,679,742

OPERATING INCOME               450,186     116,263        23,280      589,729

OTHER INCOME AND DEDUCTIONS:
  Allowance for equity
   funds used during
   construction                  5,767        630              -        6,397
  Minority interest in
   consolidated subsidiary           -          -         (5,554)      (5,554)
  Miscellaneous, net               403      3,502         (8,297)      (4,392)
                          ____________  _____________  ___________ ___________
       Total other income
        and deductions, net      6,170      4,132        (13,851)      (3,549)

INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS        456,356    120,395          9,429      586,180

INTEREST CHARGES AND
 PREFERRED DIVIDENDS:
  Interest                     141,112     33,220          9,429      183,761
  Allowance for borrowed
   funds used during
   construction                 (5,513)      (289)             -       (5,802)
  Preferred dividends of
   subsidiaries (Note 8)        13,252      3,510              -       16,762
                          _____________  _____________  ___________ _________
    Net interest charges
     and preferred
     dividends                 148,851     36,441          9,429      194,721

NET INCOME                $    307,505   $ 83,954       $      -    $ 391,459
                          =============  =============  =========== =========

EARNINGS PER SHARE
 OF COMMON STOCK
 (BASED ON AVERAGE SHARES
   OUTSTANDING)                  $3.01      $2.46                       $2.85
                                 =====      =====                       =====

AVERAGE COMMON SHARES
 OUTSTANDING (Note 2)      102,123,834 34,106,585        1,023,198 137,253,617
                          ============ ===============  =========== ==========
</TABLE>


See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.


                            AMEREN CORPORATION
                                     
   NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS



 1.  Reclassifications were made to certain "as reported" account balances
     reflected in CIPSCO's and Union Electric's financial statements to
     conform to this reporting presentation (See Notes 6, 7 and 8).  All
     other financial statement presentation and accounting policy
     differences were immaterial and were not adjusted in the pro forma
     combined condensed financial statements.

 2.  The pro forma combined condensed financial statements reflect the
     conversion of each share of Union Electric Common Stock ($5 par value)
     outstanding into one share of Ameren Common Stock ($.01 par value) and
     the conversion of each share of CIPSCO Common Stock (no par value)
     outstanding into 1.03 shares of Ameren Common Stock, as provided in
     the Merger Agreement.  The pro forma combined condensed financial
     statements are presented as if the companies were combined during all
     periods included therein.

 3.  CIPSCO's net income for the year ended December 31, 1995 included pre-
     tax charges of $5.8 million for the voluntary separation program, and
     a pretax charge of $5.7 million for merger-related write-offs
     involving previously deferred system development costs.

 4.  The allocation between Union Electric and CIPSCO and their customers
     of the estimated cost savings, resulting from the merger, net of the
     costs incurred to achieve such savings, will be subject to regulatory
     review and approval.  Merger-related costs (which include transaction
     costs and costs to achieve such savings) are currently estimated to be
     approximately $73 million (including fees for financial advisors,
     attorneys, accountants, consultants, filings, printing, system
     integration, relocation, etc.).  None of these estimated cost savings
     or the costs to achieve such savings have been reflected in the pro
     forma combined condensed financial statements.  However, net income
     for the twelve months ended December 31, 1996 and 1995, included
     merger-related costs of $7.9 million and $9 million, net of income
     taxes, for Union Electric, and $4.9 million and $4.7 million, net of
     income taxes, for CIPSCO, respectively.

 5.  Intercompany transactions (including purchased and exchanged power
     transactions) between Union Electric and CIPSCO during the periods
     presented were not material and, accordingly, no pro forma adjustments
     were made to eliminate such transactions.

 6.  CIPSCO's regulatory asset related to deferred income taxes was
     reclassified from the regulatory liability account balance to conform
     to this reporting presentation.

 7.  CIPSCO's income taxes are reflected as operating expenses to conform
     to this reporting presentation.


 8.  Currently, the Union Electric Preferred Stock is not issued by a
     subsidiary; subsequent to the merger, the Union Electric Preferred
     Stock will be issued by a subsidiary of Ameren.  As a result, Union
     Electric's preferred dividend requirements have been reclassified to
     conform to this reporting presentation.

 9.  Pro forma adjustments have been made to consolidate the financial
     results of Electric Energy, Inc. (EEI), which will, in substance, be a
     60% owned subsidiary of Ameren subsequent to the merger.  Union
     Electric and CIPSCO hold 40% and 20% ownership interests,
     respectively, in EEI and account for these investments under the
     equity method of accounting.  All intercompany transactions between
     Union Electric, CIPSCO and EEI have been eliminated.

10.  Net income for the twelve months ended December 31, 1996 and 1995
     included credits for Missouri electric customers which reduced
     revenues and pre-tax income of Union Electric by $47 and $30 million,
     respectively.


                                SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

                                      CIPSCO Incorporated
                                        (Registrant)


                         By      /s/  C. L. GREENWALT
                           _____________________________________
                                      C. L. Greenwalt
                           President and Chief Executive Officer

Date:  March 10, 1997

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the date indicated.

     Signature                          Title

Principal Executive Officer:

/s/  C. L. GREENWALT
     C. L. GREENWALT     President and Chief Executive Officer
                           and Director

Principal Financial Officer:

/s/  W. A. KOERTNER
     W. A. KOERTNER      Vice President, Chief Financial Officer,
                           Secretary, and as Attorney-in-Fact*

Principal Accounting Officer:

/s/  F. J. KINSINGER
     F. J. KINSINGER          Controller and Chief Accounting Officer

JOHN L. HEATH*           Director
ROBERT W. JACKSON*       Director
GORDON R. LOHMAN*        Director
RICHARD A. LUMPKIN*      Director
HANNE M. MERRIMAN*       Director
THOMAS L. SHADE*         Director
JAMES W. WOGSLAND*       Director

Date:  March 10, 1997


                                SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) 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.

                          CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
                                         (Registrant)


                          By      /s/  C. L. GREENWALT
                            _____________________________________
                                       C. L. Greenwalt
                            President and Chief Executive Officer

Date:  March 10, 1997

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the date indicated.

     Signature                          Title

Principal Executive Officer:

/s/  C. L. GREENWALT
     C. L. GREENWALT     President and Chief Executive Officer
                           and Director

Principal Financial Officer:

/s/  W. A. KOERTNER
     W. A. KOERTNER      Vice President and Secretary, and as
Attorney-in-Fact*

Principal Accounting Officer:

/s/  F. J. KINSINGER
     F. J. KINSINGER          Controller

JOHN L. HEATH*           Director
ROBERT W. JACKSON*       Director
GORDON R. LOHMAN*        Director
RICHARD A. LUMPKIN*      Director
HANNE M. MERRIMAN*       Director
THOMAS L. SHADE*         Director
JAMES W. WOGSLAND*       Director

Date:  March 10, 1997