<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q

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

                  For Quarterly Period Ended September 30, 1998

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

                 For The Transition Period From       to



                         Commission file number 1-2967.


                             UNION ELECTRIC COMPANY
             (Exact name of registrant as specified in its charter)


           Missouri                                              43-0559760
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)


                 1901 Chouteau Avenue, St. Louis, Missouri 63103
              (Address of principal executive offices and Zip Code)



                         Registrant's telephone number,
                       including area code: (314) 621-3222



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




                     Yes    X   .   No        .
                         -------       -------


Shares outstanding of each of registrant's classes of common stock as of October
   31, 1998:
       Common Stock,  $5 par value,  held by Ameren  Corporation  (parent
          company of Registrant) - 102,123,834


<PAGE>


                             Union Electric Company

                                      Index

                                                                        Page No.

Part I         Financial Information (Unaudited)

               Management's Discussion and Analysis                        2

               Balance Sheet
               - September 30, 1998 and December 31, 1997                  8

               Statement of Income
               - Three months, nine months and 12 months ended
                  September 30, 1998 and 1997                              9

               Statement of Cash Flows
               - Nine months ended September 30, 1998 and 1997            10

               Notes to Financial Statements                              11


Part II        Other Information                                          12


<PAGE>

                    PART I. FINANCIAL INFORMATION (UNAUDITED)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OVERVIEW

Union Electric  Company  (AmerenUE or the  Registrant) is a subsidiary of Ameren
Corporation  (Ameren),  a holding  company which is registered  under the Public
Utility  Holding  Company Act of 1935 (PUHCA).  In December  1997,  AmerenUE and
CIPSCO Incorporated (CIPSCO) combined to form Ameren, with AmerenUE and CIPSCO's
subsidiaries,  Central  Illinois Public Service Company  (AmerenCIPS) and CIPSCO
Investment  Company (CIC),  becoming  wholly-owned  subsidiaries  of Ameren (the
Merger).

The following  discussion and analysis  should be read in  conjunction  with the
Notes  to  Financial  Statements  beginning  on page  10,  and the  Management's
Discussion and Analysis of Financial Condition and Results of Operations (MD&A),
the Audited Financial Statements and the Notes to Financial Statements appearing
in the Registrant's 1997 Form 10-K.

RESULTS OF OPERATIONS

Earnings
Third  quarter 1998 earnings of $204 million  increased $23 million  compared to
1997 third quarter  earnings.  Earnings for the nine months ended  September 30,
1998  increased $18 million from the year-ago  period to $296 million.  Earnings
for the twelve months ended September 30, 1998, were $311 million, a $20 million
increase from the preceding 12-month period.  Excluding the extraordinary charge
recorded  in the  fourth  quarter  of 1997 to write  off the  generation-related
regulatory  assets and liabilities of the Registrant's  Illinois retail electric
business,  earnings for the 12-month  period ended September 30, 1998, were $338
million.

Earnings  fluctuated  due to many  conditions,  the primary ones being:  weather
variations,  credits to electric customers,  sales growth, fluctuating operating
costs,  the  write-off  of  certain  generation-related  regulatory  assets  and
liabilities,  merger-related  costs, and targeted  separation plan expense.  The
significant items affecting revenues, costs and earnings during the three-month,
nine-month and 12-month  periods ended September 30, 1998, and 1997 are detailed
below.

<TABLE>
<CAPTION>

Electric Operations
Electric Operating Revenues                     Variations for periods ended September 30, 1998
                                                      from comparable prior-year periods
--------------------------------------------- ---------------- --------------- ------------------
(Millions of Dollars)                           Three Months     Nine Months      Twelve Months
--------------------------------------------- ---------------- --------------- ------------------
<S>                                                <C>            <C>                <C>   
Credit to customers                                 $    -         $  (24)            $ (22)
Effect of abnormal weather                              42             64                66
Growth and other                                        (6)            41                50
Interchange sales                                       35             23                 9
--------------------------------------------- ------------------- ------------ ------------------
                                                   $    71          $ 104             $ 103
--------------------------------------------- ------------------- ------------ ------------------
</TABLE>

The $71 million  increase in third  quarter  electric  revenues  compared to the
year-ago  quarter was  primarily  due to warmer  summer  weather  and  increased
interchange sales.  Weather-sensitive residential and commercial sales increased
15 percent  and 7 percent,  respectively,  while  industrial  sales  increased 3
percent, due to the strong regional economy.

Electric  revenues for the first nine months of 1998 increased $104 million over
the same period in 1997  primarily due to warmer summer  weather,  growth in the
service  territory  and  increased  interchange  revenues,  partially  offset by
increased  credits to customers (see Note 5 under Notes to Financial  Statements
for  further  information).   Residential,   commercial,  and  industrial  sales
increased 10 percent, 5 percent, and 2 percent, respectively.

The $103 million increase in electric revenues for the 12 months ended September
30, 1998,  compared to the prior 12-month  period was primarily due to favorable
weather  and  growth  in the  service  territory,  partially  offset by a higher
estimated  Missouri customer credit recorded during the period (see Note 5 under
Notes to Financial Statements for further information).  Residential, commercial
and  industrial   sales  increased  9  percent,   4  percent,   and  2  percent,
respectively.

                                      -2-

<PAGE>
<TABLE>
<CAPTION>
Fuel and Purchased Power                       Variations for periods ended September 30, 1998
                                                      from comparable prior-year periods
--------------------------------------------- ---------------- --------------- -----------------
(Millions of Dollars)                           Three Months     Nine Months     Twelve Months
--------------------------------------------- ---------------- --------------- -----------------
<S>                                                <C>            <C>               <C>
Fuel:
    Variation in generation                         $  15          $   7             $   6
     Price                                             (6)             1                (5)
     Generation efficiencies and other                  -              3                 2
Purchased power variation                              14             29                29
--------------------------------------------- ---------------- --------------- ----------------
                                                    $  23          $  40             $  32
--------------------------------------------- ---------------- --------------- ----------------
</TABLE>

The increase in fuel and purchased  power costs for the three,  nine, and twelve
months ended  September 30, 1998,  versus the comparable  prior year periods was
primarily due to increased sales volumes and higher purchased power prices.

While  unprecedented  prices for power  purchases  occurred  in the  marketplace
during the last week of June 1998, the Registrant was able to effectively manage
its power costs in the face of soaring wholesale  electricity  prices.  Overall,
the abnormally  high prices for power purchases in June had little impact on the
Registrant's financial results for the periods presented.

Gas Operations
Gas  revenues  were  relatively  flat  compared to prior year due to lower sales
resulting  from milder winter  weather,  which were offset in part by the annual
$11.5 million Missouri gas rate increase  effective February 1998. Gas costs for
the nine and twelve months ended  September  30, 1998,  decreased $9 million and
$12 million,  respectively,  compared to the same year-ago periods primarily due
to lower gas prices and a decline in sales.

Other Operating Expenses
Other operating expense variations  reflected  recurring factors such as growth,
inflation, labor and benefit increases, in addition to a one-time charge for the
targeted separation plan, as discussed below.

In March 1998,  Ameren  announced plans to reduce its other operating  expenses,
including plans to eliminate  approximately  400 employee  positions by mid-1999
through a hiring freeze and a targeted  separation plan (the TSP). In July 1998,
Ameren  offered  separation  packages to employees  whose  positions  were to be
eliminated  through  the TSP.  In the  third  quarter  of 1998,  the  Registrant
recorded a one-time  charge of $18 million (which reduced  earnings $11 million)
representing  its share of costs  incurred to implement the TSP. The  Registrant
expects  that the hiring freeze and TSP  will reduce its operating  expenses  by
approximately  $7 - $11  million  in  1998  and   $14 - $18   million   annually
thereafter.

Other  operations  expenses  for the three  months  ended  September  30,  1998,
increased  $20 million  compared to the three months ended  September  30, 1997,
primarily due to the $18 million charge for the TSP.

Other  operations  expenses for the nine and twelve  months ended  September 30,
1998, increased $46 million and $53 million, respectively,  compared to the same
year-ago  periods  primarily  due to the $18  million  charge  for the  targeted
separation  plan and  increases  in injuries  and damages  expense,  information
system-related costs and professional services expenses.

Maintenance  expenses for the three and 12-month  periods  ended  September  30,
1998,  decreased  $3  million  and $4  million,  respectively,  compared  to the
year-ago  periods due to decreased  scheduled  fossil  power plant  maintenance.
Maintenance  expenses  for  the  nine  months  ended  September  30,  1998  were
comparable  to the same  year-ago  period  as costs  incurred  to  complete  the
refueling of the Callaway  Nuclear Plant in 1998 were offset by higher scheduled
fossil power plant maintenance in 1997.

Depreciation  and  amortization  expense for the three,  nine, and  twelve-month
periods ended  September  30, 1998,  increased $3 million,  $9 million,  and $11
million,  respectively,  versus the  comparable  1997 periods,  primarily due to
increased  depreciable  property and  amortization  of the  Missouri  portion of
merger-related costs which were recorded as a regulatory asset upon Merger close
under the  conditions of the Missouri  Public Service  Commission  (MoPSC) order
approving the Merger.

Taxes
Income taxes  charged to  operating  expenses  for the three,  nine,  and twelve
months ended  September  30, 1998  increased $14 million,  $15 million,  and $13
million,  respectively,  compared  to the same  year-ago  periods  due to higher
pretax income.
                                      -3-
<PAGE>

Other Income and Deductions
Miscellaneous,  net for the three  months and nine months  ended  September  30,
1998, increased $6 million and $10 million, respectively,  versus the comparable
1997 periods, primarily due to reduced merger-related costs. Miscellaneous,  net
increased $27 million for the 12-month period ended September 30, 1998, compared
to the year-ago period  primarily due to the reversal of the Missouri portion of
merger-related costs which were recorded as a regulatory asset upon Merger close
under conditions of the MoPSC order approving the Merger.

Balance Sheet
The $97 million increase in trade accounts  receivable and unbilled revenues was
due  primarily  to higher  revenues  in August and  September  1998  compared to
November and December 1997.

Changes in accounts and wages payable,  other taxes  accrued,  and other current
assets  result  from the timing of various  payments to taxing  authorities  and
suppliers.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating  activities  totaled $477 million for the nine months
ended September 30, 1998, compared to $538 million during the same 1997 period.

Cash flows used in  investing  activities  totaled $155 million and $209 million
for  the  nine  months  ended   September  30,  1998  and  1997,   respectively.
Construction  expenditures  for the nine  months  ended  September  30, 1998 for
constructing new or improving existing facilities,  and complying with the Clean
Air Act were $156 million.  In addition,  the Registrant expended $8 million for
the acquisition of nuclear fuel. Capital  requirements for the remainder of 1998
are expected to be principally for construction expenditures and the acquisition
of nuclear fuel.

Cash flows used in  financing  activities  were $298 million for the nine months
ended September 30, 1998,  compared to $307 million during the same 1997 period.
The  Registrant's  principal  financing  activities  for the nine  months  ended
September 30, 1998,  included the  redemption of debt and the nuclear fuel lease
of $56 million and $54 million, respectively, and the payment of dividends.

On September 4, 1998, the  Registrant  issued $160 million in long-term debt due
2033.  The  initial  interest  rates on the debt were  determined  by an auction
procedure.  The method for  determining the interest rate may be changed from an
auction rate to a daily rate, weekly rate,  commercial paper rate or a long-term
interest  rate.  The  Registrant  plans to use the  proceeds to redeem  existing
long-term debt in December 1998.

The Registrant  plans to continue  utilizing  short-term  debt to support normal
operations and other temporary requirements. The Registrant is authorized by the
Securities  and  Exchange  Commission  under PUHCA to have up to $1.1 billion of
short-term  unsecured debt instruments  outstanding at any one time.  Short-term
borrowings  consist of bank loans  (maturities  generally on an overnight basis)
and commercial paper  (maturities  generally within 10 to 45 days). At September
30, 1998, the Registrant  had committed  bank lines of credit  aggregating  $154
million  (all of which were  unused at such date) which make  available  interim
financing at various rates of interest based on LIBOR,  the bank  certificate of
deposit rate or other  options.  The lines of credit are  renewable  annually at
various dates  throughout the year. At September 30, 1998, the Registrant had no
outstanding short-term borrowings.

The  Registrant  also has a bank  credit  agreement  due 2000 which  permits the
borrowing  of up to $300 million on a long-term  basis,  all of which was unused
and available at September 30, 1998.

Additionally,  the  Registrant  has a  lease  agreement  that  provides  for the
financing of nuclear fuel. At September 30, 1998,  the maximum amount that could
be financed  under the agreement was $120 million.  Cash provided from financing
for the first  nine  months  of 1998  included  redemptions  under the lease for
nuclear  fuel of $54  million,  offset in part by $10 million of  issuances.  At
September 30, 1998, $74 million was financed under the lease.

RATE MATTERS

As a result of the Electric  Service Customer Choice and Rate Relief Law of 1997
(the Law) providing for electric  utility  restructuring  in Illinois,  AmerenUE
filed a proposal with the Illinois Commerce Commission to eliminate the electric
fuel

                                      -4-

<PAGE>
adjustment  clause for  Illinois  retail  customers,  thereby  including a
historical level of fuel costs in base rates. The ICC approved AmerenUE's filing
on April 28, 1998.

In June 1998, the Registrant  filed a residential rate reduction tariff with the
ICC to comply with the  requirements of the Law. Under  provisions of the Law, a
rate decrease of 5 percent became  effective for Illinois  residential  electric
customers beginning August 1, 1998.

See Note 5 under Notes to Financial  Statements  for further  discussion of Rate
Matters.

ENVIRONMENTAL ISSUES

In July 1997,  the United States  Environmental  Protection  Agency (EPA) issued
final regulations  revising the National Ambient Air Quality Standards for ozone
and particulate  matter. At that time,  specific  emission control  requirements
were still  being  developed.  In  September  1998,  the EPA issued a final rule
pertaining  to  nitrogen  oxide  emissions,   which  will  require   significant
additional reductions in emissions from coal-fired boilers.  Missouri (where all
of the  Registrant's  coal-fired power plant boilers are located) is included in
the area targeted for nitrogen oxide  emissions  reductions as part of the EPA's
regional  control  program.  Reduction  requirements in nitrogen oxide emissions
from the Registrant's coal-fired boilers will exceed 75 percent from 1990 levels
by the year 2003. Because of the magnitude of these additional  reductions,  the
Registrant will be required to incur significantly  higher capital costs to meet
future  compliance  obligations for its coal-fired  boilers or to purchase power
from other sources,  either of which could have  significantly  higher operating
expenses  associated with compliance.  The significant  nitrogen oxide emissions
reductions  already  achieved on several of the  Registrant's  coal-fired  power
plants will help to reduce the costs of compliance with this regulation.

It is not yet possible to determine  the exact  magnitude of the nitrogen  oxide
emission reductions required on the Registrant's power plants because each State
has up to one year to  develop  a plan to  comply  with the EPA  rule.  However,
preliminary  analysis  of the  regulations  indicate  that  selective  catalytic
reduction  technology  will be required for some of the  Registrant's  units, as
well as other additional controls.

The full  details  of these  requirements  are  under  study by the  Registrant.
Currently,  the Registrant estimates that its additional capital expenditures to
comply with these regulations could range from $125-$175 million over the period
from 1999 to 2002.  Associated  operations and  maintenance  expenditures  could
increase $5-$8 million annually,  beginning in 2003. The Registrant will explore
alternatives to comply with these new  regulations in order to minimize,  to the
extent  possible,  its capital costs and operating  expenses.  At this time, the
Registrant is unable to predict the ultimate impact of these revised air quality
standards on its future financial condition, results of operations or liquidity.

YEAR 2000 ISSUE

The Year  2000  Issue  relates  to how  dates are  stored  and used in  computer
systems,  applications, and embedded systems. As the century date change occurs,
certain date-sensitive systems need to be able to recognize the year as 2000 and
not as 1900.  This inability to recognize or properly treat the year as 2000 may
cause these systems to process  critical  financial and operational  information
incorrectly.   The  Registrant's  primary  concern  is  the  potential  for  any
interruption in providing electric and gas service to customers,  as well as the
potential to be unable to process critical financial and operational information
on a timely basis, including billing its customers, if appropriate steps are not
taken to address this issue.

Management has developed a  Year 2000  plan (Plan)  covering  Ameren,  including
AmerenUE, and Ameren's  Board of Directors has been briefed  about the Year 2000
Issue and how it may affect the Registrant.

Ameren's Plan to resolve the Year 2000 Issue involves three phases:  assessment,
planning,  and  implementation/testing.  Implementation  of the Plan is directly
supervised  by each  area's  responsible  Vice  President.  A Year 2000  Project
Director  coordinates the  implementation of the Plan among functional teams who
are  addressing  issues  specific  to a  particular  area,  such as nuclear  and
non-nuclear  generation  facilities,  energy management systems, etc. Ameren has
also  engaged  certain  outside  consultants,  technicians  and  other  external
resources to aid in formulating and implementing the Plan.

Ameren is  approximately 95 percent  complete with its assessment  phase,  which
included analyzing date-sensitive electronic hardware, software applications and
embedded systems and has developed a compliance plan to address issues that were
identified.  Many  of  the  major  corporate  computer  systems  at  Ameren  are
relatively  new and  therefore  are either Year 2000  compliant  or only require
minor  modifications.  Also,  several of the  operating  hardware  and  embedded
systems (i.e. microprocessor chips) use analog technology instead of digital and
thus are unaffected by the two-digit date  issue. In
                                      -5-
<PAGE>

addition,  Ameren has  contacted  hundreds  of vendors and  suppliers to  verify
compliance. The assessment phase is expected to  be completed  by the end of the
first quarter 1999.

Ameren is also  approximately 95 percent complete with its planning phase. Items
which have been identified for  remediation  have been  prioritized  into groups
based on their significance to company  operations.  The  implementation/testing
phase for all components/applications is approximately 40 percent complete as of
September 30, 1998.  Ameren expects to complete  remediation of its  significant
components/applications by the end of the third quarter 1999.

With  respect  to  third  parties,   for  areas  that  interface  directly  with
significant  vendors,  Ameren has inventoried vendors and major suppliers and is
currently  assessing  their Year 2000 readiness  through  surveys,  websites and
personal contact. Ameren plans to follow up with major suppliers and verify Year
2000 compliance where  appropriate.  Ameren has queried its important  suppliers
and health  insurance  providers.  To date,  Ameren is not aware of any problems
that would  materially  impact  financial  condition,  results of  operations or
liquidity. Neither Ameren or the Registrant has the means of ensuring that these
parties will be Year 2000 compliant.  The inability of those parties to complete
their  Year 2000  resolution  process  could  materially  impact  Ameren and the
Registrant.

Ameren is also  addressing  the impact of electric  power grid problems that may
occur outside of its own electric system.  Ameren has started year 2000 electric
power grid impact planning through the system's various electric interconnection
affiliations, and is working with the Mid-American Interchange Network (MAIN) to
begin planning year 2000 operational  preparedness and restoration scenarios. In
addition,  Ameren provides monthly status reports to the North American Electric
Reliability  Council  (NERC) to assist them in assessing  year 2000 readiness of
the regional  electric  grid.  Through the  Electric  Power  Research  Institute
(EPRI),  an  industry-wide  effort has been  established  to deal with year 2000
problems  affecting  digital systems and equipment used by the nation's electric
power companies. Under this effort, participating utilities are working together
to assess specific  vendors' system problems and test plans. The assessment will
be shared by the industry as a whole to facilitate year 2000 problem solving.

In addressing  the Year 2000 Issue,  Ameren will incur  internal  labor costs as
well as  external  consulting  and  other  expenses  related  to  infrastructure
enhancements necessary to prepare for the new century. Ameren estimates that its
external costs  (consulting fees and related costs) for addressing the Year 2000
Issue will range from $10 million to $15  million.  As of  September  30,  1998,
Ameren has expended  approximately  $2 million.  Ameren's plans to complete Year
2000  modifications are based on management's best estimates,  which are derived
utilizing  numerous   assumptions  of  future  events  including  the  continued
availability of certain resources,  and other factors.  However, there can be no
guarantee that these  estimates will be achieved and actual results could differ
materially  from those plans.  Specific  factors that might cause such  material
differences  include,  but are not  limited  to,  the  availability  and cost of
personnel  trained in this area,  the ability to locate and correct all relevant
computer codes, and similar uncertainties.

Ameren  believes  that,  with  appropriate  modifications  to existing  computer
systems/components,  updates by vendors and trading partners,  and conversion to
new  software and  hardware in the  ordinary  course of business,  the Year 2000
Issue  will  not  pose  significant  operational  problems  for the  Registrant.
However,  if such conversions are not completed in a proper and timely manner by
all  affected  parties,  the Year 2000 Issue could  result in  material  adverse
operational and financial  consequences  to the Registrant,  and there can be no
assurance  that  Ameren's  efforts,  or those of vendors and  trading  partners,
interconnection affiliates, NERC or EPRI, to address the Year 2000 Issue will be
successful.  Ameren is in the process of developing contingency plans to address
potential risks, including risks of vendor/trading  partners  noncompliance,  as
well as noncompliance of any of the Registrant's material operations.  The first
operational  contingency  plan is expected to be completed by year-end.  At this
time, the  Registrant is unable to predict the ultimate  impact of the Year 2000
Issue  on  the  Registrant's  financial  condition,  results  of  operations  or
liquidity; however, the impact could be material.

ACCOUNTING MATTERS

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
Instruments  and  Hedging  Activities."  SFAS  133  establishes  accounting  and
reporting  standards for derivative  instruments and for hedging  activities and
requires  recognition  of all  derivatives on the balance sheet measured at fair
value.  SFAS 133 is effective  for fiscal years  beginning  after June 15, 1999.
Earlier application is encouraged, but permitted only as of the beginning of any
fiscal  quarter that begins after  issuance of the standard.  At this time,  the
Registrant  is  unable to  determine  the  impact  of SFAS 133 on its  financial
position or results of operations upon adoption.

                                      -6-
<PAGE>

In February 1998, the Financial  Accounting Standards Board issued SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement  Benefits." SFAS
132  revises  employers'  disclosures  about  pension  and other  postretirement
benefit plans.  SFAS 132 is effective for fiscal years  beginning after December
15, 1998, although earlier  application is encouraged.  SFAS 132 is not expected
to have a material impact on the Registrant's  financial  position or results of
operations upon adoption.

In March 1998,  the  Accounting  Standards  Executive  Committee of the American
Institute of Certified  Public  Accountants  issued  Statement of Position (SOP)
98-1,  "Accounting for the Costs of Computer Software  Developed or Obtained for
Internal  Use."  SOP 98-1  provides  guidance  on  accounting  for the  costs of
computer  software  developed  or obtained  for  internal  use.  Under SOP 98-1,
certain  costs,  which  are  currently  expensed  by  the  Registrant,   may  be
capitalized  and amortized  over some future  period.  SOP 98-1 is effective for
fiscal years beginning after December 15, 1998,  although earlier application is
encouraged.  SOP  98-1  is  not  expected  to  have  a  material  impact  on the
Registrant's financial position or results of operations upon adoption.

SAFE HARBOR STATEMENT

Statements made in this Form 10-Q 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.  Although such
forward-looking  statements  have  been  made in good  faith  and are  based  on
reasonable assumptions,  there is no assurance that the expected results will be
achieved.  These statements include (without limitation) statements as to future
expectations,   beliefs,  plans,  strategies,  objectives,  events,  conditions,
financial  performance,  and "Year 2000" issues.  In  connection  with the "Safe
Harbor" provisions of the Private Securities  Litigation Reform Act of 1995, the
Registrant is providing this cautionary  statement to identify important factors
that could cause actual  results to differ  materially  from those  anticipated.
Factors  include,  but are not limited to, the  effects of  regulatory  actions;
changes  in laws and other  governmental  actions;  competition;  future  market
prices for electricity;  average rates for electricity in the Midwest;  business
and  economic  conditions;  weather  conditions;  fuel prices and  availability;
generation  plant  performance;  monetary  and  fiscal  policies;  and legal and
administrative proceedings.

                                      -7-

<PAGE>

<TABLE>
<CAPTION>


                             UNION ELECTRIC COMPANY
                                  BALANCE SHEET
                                    UNAUDITED
                      (Thousands of Dollars, Except Shares)



                                                               September 30,  December 31,
ASSETS                                                             1998         1997
------                                                             ----         ----       
<S>                                                             <C>          <C>
Property and plant, at original cost:
   Electric                                                      $8,952,272   $8,832,039
   Gas                                                              206,217      197,959
   Other                                                             36,023       36,023
                                                                  9,194,512    9,066,021
   Less accumulated depreciation and amortization                 4,052,035    3,866,925
                                                                 ----------   ----------
                                                                  5,142,477    5,199,096
Construction work in progress:
   Nuclear fuel in process                                           95,330      134,804
   Other                                                            100,915       68,074
                                                                 ----------   ----------
         Total property and plant, net                            5,338,722    5,401,974
                                                                 ----------   ----------
Investments and other assets:
   Nuclear decommissioning trust fund                               141,084      122,438
   Other                                                             43,216       33,315
                                                                 ----------   ----------
         Total investments and other assets                         184,300      155,753
                                                                 ----------   ----------
Current assets:
   Cash and cash equivalents                                         26,949        3,232
   Accounts receivable - trade (less allowance for doubtful
         accounts of $6,641 and $3,645, respectively)               273,465      179,708
   Unbilled revenue                                                  74,193       71,156
   Other accounts and notes receivable                               62,631       41,028
   Materials and supplies, at average cost -
      Fossil fuel                                                    53,325       49,574
      Other                                                          96,168       97,375
   Environmental bond redemption fund                               160,000           --
   Other                                                             72,204       11,040
                                                                 ----------   ----------
         Total current assets                                       818,935      453,113
                                                                 ----------   ----------
Regulatory assets:
   Deferred income taxes                                            609,201      611,740
   Other                                                            167,467      179,705
                                                                 ----------   ----------
         Total regulatory assets                                    776,668      791,445
                                                                 ----------   ----------
Total Assets                                                     $7,118,625   $6,802,285
                                                                 ==========   ==========

CAPITAL AND LIABILITIES
-----------------------
Capitalization:
   Common stock, $5 par value, authorized 150,000,000 shares -
      Outstanding  102,123,834 shares                            $  510,619   $  510,619
   Other paid-in capital, principally premium on
     common stock                                                   701,896      716,879
   Retained earnings                                              1,265,067    1,159,956
                                                                 ----------   ----------
         Total common stockholders' equity                        2,477,582    2,387,454
   Preferred stock not subject to mandatory redemption              155,197      155,197
   Long-term debt                                                 1,782,873    1,846,482
                                                                 ----------   ----------
         Total capitalization                                     4,415,652    4,389,133
                                                                 ----------   ----------
Current liabilities:
   Current maturity of long-term debt                               174,102       28,797
   Short-term debt                                                     --         21,300
   Accounts and wages payable                                       176,529      188,014
   Accumulated deferred income taxes                                 44,288       35,809
   Taxes accrued                                                    245,240       94,167
   Other                                                            155,858      142,859
                                                                 ----------   ----------
         Total current liabilities                                  796,017      510,946
                                                                 ----------   ----------
Accumulated deferred income taxes                                 1,259,980    1,264,800
Accumulated deferred investment tax credits                         145,605      149,891
Regulatory liability                                                162,715      175,638
Other deferred credits and liabilities                              338,656      311,877
                                                                 ----------   ----------
Total Capital and Liabilities                                    $7,118,625   $6,802,285
                                                                 ==========   ==========
</TABLE>

   
                                   -8-

<PAGE>


<TABLE>
<CAPTION>


                             UNION ELECTRIC COMPANY
                               STATEMENT OF INCOME
                                    UNAUDITED
                             (Thousands of Dollars)




                                                   Three Months Ended          Nine Months Ended           Twelve Months Ended
                                                     September 30,               September 30,                 September 30,       
                                            --------------------------    --------------------------   ---------------------------
                                                  1998          1997           1998          1997           1998           1997
                                                  ----          ----           ----          ----           ----           ----

<S>                                        <C>            <C>            <C>           <C>             <C>            <C>
 OPERATING REVENUES:
    Electric                                $   836,898    $   766,027    $ 1,848,177    $ 1,744,488    $ 2,292,260    $ 2,189,241
    Gas                                           9,464          8,256         65,179         66,725         96,713         97,512
    Other                                            75             71            342            353            492            498 
                                            -----------    -----------    -----------    -----------    -----------    -----------
       Total operating revenues                 846,437        774,354      1,913,698      1,811,566      2,389,465      2,287,251

 OPERATING EXPENSES:
    Operations
       Fuel and purchased power                 174,610        151,752        422,234        382,272        539,957        508,066
       Gas                                        6,476          7,006         34,911         43,968         54,396         66,061
       Other                                    125,321        104,835        345,618        299,278        451,296        398,670
                                            -----------    -----------    -----------    -----------    -----------     ----------
                                                306,407        263,593        802,763        725,518      1,045,649        972,797
    Maintenance                                  44,685         47,957        159,560        158,877        218,109        222,521
    Depreciation and amortization                65,338         62,487        194,113        185,151        256,923        246,348
    Income taxes                                131,454        117,395        201,717        187,023        207,460        194,846
    Other taxes                                  64,815         64,276        166,860        166,680        212,129        213,483
                                            -----------    -----------    -----------    -----------    -----------     ---------- 
       Total operating expenses                 612,699        555,708      1,525,013      1,423,249      1,940,270      1,849,995

 OPERATING INCOME                               233,738        218,646        388,685        388,317        449,195        437,256

 OTHER INCOME AND DEDUCTIONS:
    Allowance for equity funds used
       during construction                        1,152          1,184          3,370          3,014          4,817          4,546
    Miscellaneous, net                            3,152         (3,109)         4,042         (5,950)        17,326         (9,882)
                                            -----------    -----------    -----------    -----------    -----------    -----------
       Total other income and deductions          4,304         (1,925)         7,412         (2,936)        22,143         (5,336)

 INCOME BEFORE
    INTEREST CHARGES                            238,042        216,721        396,097        385,381        471,338        431,920

 INTEREST CHARGES:
    Interest                                     32,739         34,656         97,559        105,289        130,946        137,345
    Allowance for borrowed funds
       used during construction                  (1,248)        (1,714)        (4,566)        (4,959)        (6,283)        (6,298)
                                            -----------    -----------    -----------    -----------    -----------    -----------
    Net interest charges                         31,491         32,942         92,993        100,330        124,663        131,047

 INCOME BEFORE
    EXTRAORDINARY CHARGE                        206,551        183,779        303,104        285,051        346,675        300,873
                                            -----------    -----------    -----------    -----------    -----------    -----------

 EXTRAORDINARY CHARGE
    (NET OF INCOME TAXES)                          --             --             --             --          (26,967)          --
                                            -----------    -----------    -----------    -----------    -----------    -----------

 NET INCOME                                     206,551        183,779        303,104        285,051        319,708        300,873
                                            -----------    -----------    -----------    -----------    -----------    -----------
 PREFERRED STOCK DIVIDENDS                        2,204          2,204          6,613          6,613          8,817          9,925
                                            -----------    -----------    -----------    -----------    -----------    -----------

NET INCOME AFTER PREFERRED
    STOCK DIVIDENDS                         $   204,347    $   181,575    $   296,491    $   278,438    $   310,891    $   290,948
                                            ===========    ===========    ===========    ===========    ===========    ===========

</TABLE>

                                      -9-


<PAGE>

<TABLE>
<CAPTION>

                             UNION ELECTRIC COMPANY
                             STATEMENT OF CASH FLOWS
                                    UNAUDITED
                             (Thousands of Dollars)




                                                           Nine Months Ended
                                                             September 30,  
                                                          -------------------     
                                                          1998         1997
                                                          ----         ----
<S>                                                   <C>          <C>
Cash Flows From Operating:
   Net income                                          $ 303,104    $ 285,051
   Adjustments to reconcile net income to net cash
      provided by operating activities:
        Depreciation and amortization                    186,984      178,315
        Amortization of nuclear fuel                      26,837       28,737
        Allowance for funds used during construction      (7,936)      (7,973)
        Deferred income taxes, net                        (6,804)      (6,336)
        Deferred investment tax credits, net              (4,286)      (4,627)
        Changes in assets and liabilities:
           Receivables, net                             (118,397)     (36,180)
           Materials and supplies                         (2,544)       8,081
           Accounts and wages payable                    (11,485)     (98,149)
           Taxes accrued                                 151,073      175,664
Other, net                                               (39,670)      15,793
                                                       ---------    ---------
Net cash provided by operating activities                476,876      538,376

Cash Flows From Investing:
   Construction expenditures                            (155,526)    (204,028)
   Allowance for funds used during construction            7,936        7,973
   Nuclear fuel expenditures                              (7,523)     (12,594)
                                                       ---------    ---------
Net cash used in investing activities                   (155,113)    (208,649)

Cash Flows From Financing:
   Dividends on common stock                            (191,380)    (194,546)
   Dividends on preferred stock                           (6,613)      (6,613)
   Environmental bond redemption fund                   (160,000)        --
   Redemptions -
      Nuclear fuel lease                                 (53,670)     (21,011)
      Short-term debt                                    (21,300)      (4,300)
      Long-term debt                                     (35,000)     (45,000)
      Preferred stock                                       --        (63,924)
   Issuances -
      Nuclear fuel lease                                   9,917       28,427
      Long-term debt                                     160,000         --   
                                                       ---------    ---------
Net cash used in financing activities                   (298,046)    (306,967)

Net increase in cash and cash equivalents                 23,717       22,760
Cash and cash equivalents at beginning of year             3,232        4,897
                                                       ---------    ---------
Cash and cash equivalents at end of period             $  26,949    $  27,657
                                                       =========    =========

Cash paid during the periods:
   Interest (net of amount capitalized)                $  83,606    $  79,047
   Income taxes, net                                   $ 122,738    $  91,115

</TABLE>

                                      -10-

<PAGE>


UNION ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1998

Note 1 - Effective  December  31,  1997,  following  the receipt of all required
state and federal regulatory approvals,  Union Electric Company (AmerenUE or the
Registrant) and CIPSCO Incorporated (CIPSCO) combined to form Ameren Corporation
(Ameren)(the Merger).

Note 2 - Financial  statement note  disclosures,  normally included in financial
statements prepared in conformity with generally accepted accounting principles,
have been omitted in this Form 10-Q pursuant to the Rules and Regulations of the
Securities and Exchange  Commission.  However, in the opinion of the Registrant,
the disclosures contained in this Form 10-Q are adequate to make the information
presented not misleading. See Notes to Financial Statements included in the 1997
Form 10-K for information relevant to the financial statements contained in this
Form 10-Q,  including  information as to the significant  accounting policies of
the Registrant.

Note 3 - In the opinion of the Registrant the interim financial statements filed
as part of this Form 10-Q  reflect all  adjustments,  consisting  only of normal
recurring  adjustments,  necessary  for a fair  statement of the results for the
periods presented. Registrant's financial statements were prepared to permit the
information  required in the Financial  Data Schedule  (FDS),  Exhibit 27, to be
directly  extracted from the filed statements.  The FDS amounts correspond to or
are calculable  from the amounts  reported in the financial  statements or notes
thereto.

Note 4 - Due to the  effect of  weather  on sales and  other  factors  which are
characteristic of public utility  operations,  financial results for the periods
ended September 30, 1998 and 1997, are not necessarily  indicative of trends for
any three-month, nine-month, or twelve-month period.

Note 5 - On July 21,  1995,  the  Missouri  Public  Service  Commission  (MoPSC)
approved an agreement  involving the Registrant's  Missouri  electric rates. The
Agreement included a three-year  experimental  alternative  regulation plan that
provides that earnings in excess of a 12.61 percent  regulatory return on equity
(ROE) be shared equally  between  customers and shareholders  and earnings above
14 percent ROE be credited to  customers.  The formula for  computing the credit
uses  twelve-month  results ending June 30, rather than calendar year  earnings.
During the nine months ended  September  30,  1998,  the Registrant recorded  an
estimated  $43  million  credit  for the  final  year of this plan compared to a
$20 million credit recorded for 1997.  This credit, which the Registrant expects
to pay to Missouri  customers later this year, was reflected  as a reduction  in
electric revenues.

A new three-year  experimental  alternative  regulation plan was included in the
joint  agreement  approved by the MoPSC in its February 1997 order approving the
Merger. Like the original plan, the new plan requires that earnings over a 12.61
percent ROE up to a 14 percent ROE will be shared equally between  customers and
stockholders.  The new three-year  plan will also return to customers 90 percent
of all earnings above a 14 percent ROE up to a 16 percent ROE. Earnings above 16
percent ROE will be credited  entirely to customers.  The joint  agreement  also
provides for a Missouri  electric rate  decrease,  effective  September 1, 1998,
based on the  weather-adjusted  average  annual  credits to customers  under the
original experimental  alternative regulation plan. The final rate reduction has
not been  determined at this time pending the outcome of regulatory proceedings.

Note 6 - In July 1998,  Ameren  offered  separation  plan  packages to employees
whose positions were eliminated  through a targeted  separation plan. During the
third  quarter of 1998, a one-time,  pretax  charge of $18 million was recorded,
which reduced earnings $11 million, representing the Registrant's share of costs
incurred to implement the targeted separation plan.

Note 7 - Statement of Financial  Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive  Income"  became  effective on January 1, 1998.  SFAS 130 requires
that all items that are required to be recognized under accounting  standards as
components of comprehensive  income be reported in the financial statements with
the same prominence as other financial  statement  components.  Adoption of SFAS
130 did not  have a  material  effect  on the  financial  position,  results  of
operations,   liquidity  or  presentation   of  financial   information  of  the
Registrant.

                                      -11-


<PAGE>


                           PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)   Exhibits.

               Exhibit 3(ii)-By-Laws of Union Electric Company, as amended as of
               June 11, 1998.

               Exhibit 4.28 - Series 1998A Loan Agreement  dated as of September
               1, 1998 between The State  Environmental  Improvement  and Energy
               Resources Authority of the State of Missouri and the Registrant.

               Exhibit 4.29 - Series 1998B Loan Agreement  dated as of September
               1, 1998 between The State  Environmental  Improvement  and Energy
               Resources Authority of the State of Missouri and the Registrant.

               Exhibit 4.30 - Series 1998C Loan Agreement  dated as of September
               1, 1998 between The State  Environmental  Improvement  and Energy
               Resources Authority of the State of Missouri and the Registrant.

               Exhibit 12 -  Computation  of Ratio of Earnings to Fixed  Charges
               and  Preferred  Stock  Dividend  Requirements,  12  Months  Ended
               September 30, 1998.

               Exhibit 27 - Financial Data Schedule.

         (b)  Reports  on Form 8-K.  The  Registrant  filed a report on Form 8-K
dated September 24, 1998 reporting on the impact of Ameren Corporation's (parent
company of the  Registrant)  employee  separation  plan and on the effect of the
final  rule  issued  in  September  1998  by  the  United  States  Environmental
Protection Agency pertaining to nitrogen oxide emissions.


                                   SIGNATURES

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

                                                UNION ELECTRIC COMPANY
                                                    (Registrant)


                                             By     /s/ Donald E. Brandt
                                                 ----------------------------- 
                                                        Donald E. Brandt
                                                     Senior Vice President
                                                Finance and Corporate Services


Date: November 13, 1998






                                     - 12 -