UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC  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, 1999

                               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.

  1-8946                         CILCORP Inc.                37-1169387
                          (An Illinois Corporation)
                              300 Liberty Street
                            Peoria, Illinois  61602
                                (309) 675-8826

  1-2732               CENTRAL ILLINOIS LIGHT COMPANY        37-0211050
                          (An Illinois Corporation)
                              300 Liberty Street
                            Peoria, Illinois  61602
                                (309) 675-8826

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

                                                     Name of each exchange
Title of each class so registered                     on which registered

CILCORP Inc. 8.700% Senior Notes
   due 2009

CILCORP Inc. 9.375% Senior Bonds
   due 2029

CILCO Preferred Stock, Cumulative
   $100 par, 4 1/2% series                                  New York

Securities registered pursuant to Section 12(g) of the Act: None

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


                             1

At March 15, 2000, there was no voting stock of CILCORP Inc.
(CILCORP) held by nonaffiliates.  On that date, 1,000 common
shares (no par value) were outstanding and privately held,
beneficially and of record, by The AES Corporation.

At March 15, 2000, the aggregate market value of the voting stock
of Central Illinois Light Company (CILCO) held by nonaffiliates
was approximately $56 million.  The voting stock of CILCO
consists of its common and preferred stock.  On that date,
13,563,871 shares of CILCO's common stock, no par value, were
issued and outstanding and privately held, beneficially and of
record, by CILCORP Inc.

               DOCUMENT INCORPORATED BY REFERENCE

Central Illinois Light Company's Proxy Statement, to be filed not
later than April 17, 2000, in connection with its Annual Meeting
to be held on May 23, 2000, is incorporated by reference into
Part I and Part III hereof.












































                              2

                          CILCORP INC.
                               and
                 Central Illinois Light Company
                  1999 Form 10-K Annual Report

This combined Form 10-K is filed separately by CILCORP Inc. and
Central Illinois Light Company (CILCO).  Information herein relating to
each individual registrant is filed by such registrant on its own
behalf.  Accordingly, except for its subsidiaries, CILCO makes no
representation as to information relating to any other subsidiary
of CILCORP Inc.

                        Table of Contents


                                                              Page
                                                              ----
Glossary                                                       5-6
                             Part I

Item 1.  Business
         The Company and its Subsidiaries                      7-8
         Business of CILCO                                       9
           Electric Service                                      9
           Gas Service                                        9-10
           Regulation                                           10
           Electric Fuel and Purchased Gas
             Adjustment Clauses                                 10
           Fuel Supply - Coal                                10-11
           Natural Gas Supply                                   11
           Financing and Capital Expenditures Programs       11-12
           Environmental Matters                                12
           Significant Customer                                 12
           Franchises                                           12
           Competition                                          12
           People                                               12
           Union Contracts                                      12
         Business of QST                                        13
         Other Businesses                                       13
           CIM                                                  13
           CVI                                                  13
         Year 2000                                              14
Item 2.  Properties                                             14
Item 3.  Legal Proceedings                                      15
Item 4.  Submission of Matters to a Vote of Security Holders    15
         Executive Officers of the Registrant                16-18

















                             3

                             Part II

Item 5.  Market for the Registrant's Common Equity
            and Related Stockholder Matters                     19
Item 6.  Selected Financial Data                                20
Item 7.  Management's Discussion and Analysis of
            Financial Condition and Results of Operations    21-50
Item 8.  Financial Statements and Supplementary Data        51-114
Item 9.  Changes in and Disagreements with Accountants
            on Accounting and Financial Disclosure             114

                            Part III

Item 10. Directors and Executive Officers of the
            Registrants                                    115-116
Item 11. Executive Compensation                            117-125
Item 12. Security Ownership of Certain Beneficial
            Owners and Management                              125
Item 13. Certain Relationships and Related Transactions        126

                             Part IV

Item 14. Exhibits, Financial Statement Schedules, and
            Reports on Form 8-K                            127-130






































                             4

                        GLOSSARY OF TERMS

When used herein, the following terms have the meanings
indicated.

AES -- The AES Corporation, parent of CILCORP Inc. upon
       completion of acquisition on October 18, 1999.

AFUDC -- Allowance for Funds Used During Construction

BTU -- British Thermal Unit.  The quantity of heat required to
       raise the temperature of one pound of water one degree Fahrenheit.

Bcf -- Billion cubic feet

CAA -- Clean Air Act

Caterpillar -- Caterpillar Inc., CILCO's largest industrial customer

CECO -- CILCO Energy Corporation, a wholly-owned subsidiary of CILCO

CEDCO -- CILCO Exploration and Development Company, a wholly-owned
         subsidiary of CILCO

CESI -- CILCORP Energy Services Inc.

CILCO -- Central Illinois Light Company

CIM -- CILCORP Investment Management Inc.

CIPS -- AmerenCIPS, formerly Central Illinois Public Service Company

CLM -- CILCORP Lease Management Inc.

Company -- CILCORP Inc. and subsidiaries

Cooling Degree Day -- The measure of the extent to which the
                  average of high and low temperatures for a day
                  rises above 65 degrees Fahrenheit (annual
                  degree days above historic average indicate
                  warmer than average temperatures); the
                  historic average provided by The National
                  Weather Service for 30-year period.

CVI -- CILCORP Ventures Inc.

DSM -- Demand Side Management.  The process of helping customers
       control how they use energy resources.

FAC -- Fuel Adjustment Clause

FASB -- Financial Accounting Standards Board

FERC -- Federal Energy Regulatory Commission

Heating Degree Day -- The measure of the extent to which the
               average of high and low temperatures for
               a day falls below 65 degrees  Fahrenheit (annual
               degree days above historic average indicates
               cooler than average temperatures); the historic
               average provided by The National Weather
               Service for 30-year period.


                             5

ICC -- Illinois Commerce Commission

IEPA -- Illinois Environmental Protection Agency

KW -- Kilowatt, a thousand watts

kWh -- Kilowatt-hour, one thousand watts used for one hour
       (unit of work)

MAIN -- Mid-America Interconnected Network.  One of nine
      regions that make up the North American Electric
      Reliability Council.  Its purpose is to ensure the Midwest
      region of the United States will meet its load
      responsibility.

MCF -- One thousand cubic feet

MW -- Megawatt, a million watts

MWG -- Midwest Grain Products, Inc.

OSHA -- Occupational Safety and Health Act

PGA -- Purchased Gas Adjustment

Pre-merger Period -- January 1, 1999, through October 18, 1999

Post-merger Period -- October 19, 1999, through December 31, 1999

QST -- QST Enterprises Inc.

QST Communications -- QST Communications Inc.

QST Energy -- QST Energy Inc.

QST Environmental -- QST Environmental Inc.

QST Trading -- QST Energy Trading Inc.

SFAS -- Statement of Financial Accounting Standards

Therm --  Unit of measurement for natural gas; a therm is equal to one
          hundred cubic feet (volume); a therm is also equal to
          100,000 BTUs (energy).

USEPA -- U.S. Environmental Protection Agency

















                             6

                             PART I

Item 1.  Business

                THE COMPANY AND ITS SUBSIDIARIES

CILCORP Inc. (CILCORP or the Company) was incorporated as a
holding company in the state of Illinois in 1985.  The financial
condition and results from continuing operations of CILCORP
primarily reflect the operations of Central Illinois Light
Company (CILCO), the Company's principal business subsidiary.  In
the fourth quarter of 1998, the operations of CILCORP first-tier
subsidiary QST Enterprises Inc. (QST) and its subsidiaries
(excluding ESE Land Corporation and CILCORP Infraservices Inc.)
were discontinued (see Management's Discussion and Analysis) and,
therefore, are being reported as discontinued operations in the
financial statements.  The Company also has two other first-tier
subsidiaries,  CILCORP Investment Management Inc. (CIM) and
CILCORP Ventures Inc. (CVI), whose operations, combined with
those of ESE Land Corporation, CILCORP Infraservices Inc., and
the holding company itself (Holding Company), are collectively
referred to herein as Other Businesses.  CILCORP owns 100% of the
common stock of all of its subsidiaries.

On November 23, 1998, the Company announced that The AES
Corporation (AES) had offered to buy 100% of the Company's
outstanding common stock for $65 per share, subject to CILCORP
shareholder approval and various regulatory approvals.  AES
completed the acquisition of the Company on October 18, 1999.
Refer to Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations for discussion
regarding this transaction and its effect on the separation and
comparability of 1999 financial information presented in this
document.

CILCO is engaged in the generation, transmission, distribution
and sale of electric energy in an area of approximately 3,700
square miles in central and east-central Illinois, and the
purchase, distribution, transportation and sale of natural gas in
an area of approximately 4,500 square miles in central and east-
central Illinois.

CILCO has two wholly-owned subsidiaries, CILCO Exploration and
Development Company (CEDCO) and CILCO Energy Corporation (CECO).
CEDCO was formed to engage in the exploration and development of
gas, oil, coal and other mineral resources.  CECO was formed to
research and develop new sources of energy, including the
conversion of coal and other minerals into gas.  The operations
of these subsidiaries are not currently significant.

QST, formed in December 1995, provided energy and energy-related
services to a broad spectrum of retail and wholesale customers
through its subsidiary, QST Energy Inc. (QST Energy).  QST Energy
has one wholly-owned subsidiary - QST Energy Trading Inc. (QST
Trading), which purchased and sold energy in the wholesale
market.  QST provided fiber optic telecommunications services
through another wholly-owned subsidiary, QST Communications Inc.
(QST Communications), which it sold in August 1998.  QST provided
engineering and environmental consulting services through
wholly-owned subsidiary QST Environmental.  During the fourth
quarter of 1997, QST Environmental completed the sale of
substantially all of the assets of one of its subsidiaries, ESE
Land, for cash and non-controlling membership interests in the
acquiring companies.  In the fourth quarter of 1998, the Company
decided to sell its 100% ownership interest in QST Environmental,
and on May 7, 1999, QST agreed to sell all the outstanding common
stock of QST Environmental to MACTEC, Inc. for approximately
$18 million in cash.  The sale was effective on June 24, 1999.
In the fourth quarter of 1998, QST decided to discontinue its
energy operations and report their results as discontinued.
Refer to the caption "QST Enterprises Discontinued Operations" of
Item 7.  Management's Discussion

                             7

and Analysis of Financial Condition and Results of Operations and
to "Note 14 - QST Enterprises Discontinued Operations" of Item 8.
Financial Statements and Supplementary Data.

CIM manages the Company's investment portfolio.  CIM holds eight
leveraged lease investments through three wholly-owned
subsidiaries: CILCORP Lease Management Inc., which was formed in
1985, and CIM Leasing Inc. and CIM Air Leasing Inc., which were
both formed in 1993.  CIM's other wholly-owned subsidiary is CIM
Energy Investments Inc., which was formed in 1989 to invest in
non-regulated, independent power production facilities (see Other
Businesses).  CIM also directly owns limited partnership
interests in affordable housing portfolios.

CVI primarily invests in ventures in energy-related products and
services.  CVI has an 80% interest in the Agricultural Research
and Development Corporation and has one wholly-owned subsidiary,
CILCORP Energy Services Inc. (CESI).  CESI was formed to pursue
energy-related opportunities in the non-regulated market.  CESI's
primary business is gas management services (including commodity
purchasing for gas management customers).

The following table summarizes the relative contribution of each
business group to consolidated assets at December 31, 1999, and
to revenue and net income for the periods January 1, 1999,
through October 18, 1999, and October 19, 1999, through December
31, 1999.


<TABLE>
<CAPTION>

                  Assets        Revenue          Net Income (Loss)
                    at       Oct. 19   Jan. 1    Oct. 19   Jan. 1
                  Dec 31,    to Dec.   to Oct.   to Dec.   to Oct.
                   1999      31, 1999  18, 1999  31, 1999  18, 1999
                                 (In thousands)
<S>               <C>        <C>        <C>      <C>       <C>
CILCO             $1,056,280 $117,968 | $441,130 $ 7,364 | $ 8,677
Other Businesses     754,377    2,621 |   19,131  (7,896)|  (7,990)
                  ---------- -------- | -------- ------- | -------
Total Continuing                                         |
  Operations                                        (532)|     687
                                                         |
QST Discontinued                                         |
  Operations                                        (213)|    (407)
                                                  ------ | -------
Net Income                                        $ (745)| $   280
                                                  ====== | =======
</TABLE>

CILCORP is an intrastate exempt holding company under
Section 3(a)(1) of the Public Utility Holding Company Act of 1935
(PUHCA).  Federal legislation dealing with the restructuring of
the electric utility industry, including repeal of PUHCA, has
been introduced in both Houses of Congress.  Repeal of PUHCA
would, among other things, remove certain presently applicable
restrictions to the merger or combination of non-contiguous
electric and natural gas utility holding companies.  The Company
cannot predict whether or when any of these proposals might be
enacted at the federal level or the ultimate effect on the
Company.






                             8

                        BUSINESS OF CILCO

CILCO was incorporated under the laws of Illinois in 1913.
CILCO's principal business is the generation, transmission,
distribution and sale of electric energy in an area of
approximately 3,700 square miles in central and east-central
Illinois, and the purchase, distribution, transportation and sale
of natural gas in an area of approximately 4,500 square miles in
central and east-central Illinois.

CILCO is continuing to experience, in varying degrees, the impact
of developments common to the electric and gas industries.  These
include increased competition in wholesale markets and the
prospect of competition in retail markets, changes in regulation
and legislation affecting utilities, uncertainties as to the
future demand for electricity and natural gas, structural and
competitive changes in the markets for these commodities, the
high cost of compliance with environmental and safety laws and
regulations and uncertainties in regulatory and political
processes.  At the same time, CILCO has sought to provide
reliable service at reasonable rates for its customers and a fair
return for its investors.  Refer to the caption "Competition" of
Item 7.  Management's Discussion and Analysis of Financial
Condition and Results of Operations.

ELECTRIC SERVICE

CILCO furnishes electric service to retail customers in 136
Illinois communities (including Peoria, East Peoria, Pekin,
Lincoln and Morton).  At December 31, 1999, CILCO had
approximately 190,000 retail electric customers.

CILCO owns and operates two coal-fired base load generating
plants, a natural gas-fired cogeneration plant, and two natural
gas combustion turbine generators which are used for peaking
service.  The 1999 system peak demand was 1,235 MW on July 21,
1999.  This was a new all-time system peak demand.

The system peak demand for 2000 is estimated to be 1,243 MW with
a planned reserve margin of approximately 16%.  The planned
reserve margin takes into account 150 MW of firm purchased power
(see CILCORP Note 7 - Commitments and Contingencies) and 88 MW of
interruptible industrial load and other related Demand Side
Management (DSM) programs.  CILCO's planned reserve margin is
designed to comply with planning reserve margin requirements
established by the Mid-America Interconnected Network (MAIN), of
which CILCO is a member.

Studies conducted by CILCO indicate that it has sufficient base
load generating capacity and purchased capacity to provide an
adequate and reliable supply of electricity to satisfy base load
demand.

CILCO is interconnected with AmerenCIPS (CIPS), formerly Central
Illinois Public Service Company, Commonwealth Edison Company,
Illinois Power Company and the Springfield City Water, Light and
Power Department to provide for the interchange of electric
energy on an emergency and mutual help basis.

GAS SERVICE

CILCO provides gas service to customers in 128 Illinois
communities (including Peoria, East Peoria, Pekin, Lincoln and
Springfield).  At December 31, 1999, CILCO had approximately
196,000 gas customers, including 115 industrial, commercial and
residential gas transportation customers that purchase gas
directly from suppliers for transportation through CILCO's
system.  For further discussion of gas transportation, refer to
the caption "CILCO Gas Operations" of Item 7.  Management's
Discussion and Analysis of Financial Condition and Results of
Operations.

                             9

CILCO's all-time maximum daily send-out of 443,167 MCF occurred
on January 15, 1972.  The 1999 peak day send-out of 391,056 MCF
occurred on January 4, 1999.  CILCO has been able to meet all of
its existing customer requirements during the 1999-2000 heating
season.  CILCO believes that its present and planned supplies of
gas will continue to be sufficient to serve all of its existing
customer requirements during the 2000-2001 heating season.

REGULATION

CILCO is a public utility under the laws of the State of Illinois
and is subject to the jurisdiction of the ICC.  The ICC has
general power of supervision and regulation with respect to
services and facilities, rates and charges, classification of
accounts, valuations of property, determination of depreciation
rates, construction, contracts with any affiliated interest, the
issuance of stock and evidences of indebtedness and various other
matters.  In Illinois, the Electric Service Customer Choice and
Rate Relief Law of 1997 (Customer Choice Law) began a transition
process to a fully competitive market for electricity.  The ICC's
supervision and regulatory oversight of certain transactions by
electric utilities is reduced or suspended during the mandatory
transition period (which terminates on January 1, 2005) and, for
certain non-utility transactions, is permanently eliminated under
the Customer Choice Law.  Refer to the caption "Competition" of
Item 7.  Management's Discussion and Analysis of Financial
Condition and Results of Operations.   With respect to certain
electric matters, CILCO is subject to regulation by the FERC.
CILCO is exempt from the provisions of the Natural Gas Act, but
is affected by orders, rules and regulations issued by the FERC
with respect to certain gas matters.

ELECTRIC FUEL AND PURCHASED GAS ADJUSTMENT CLAUSES

CILCO's tariffs provide for adjustments to its electric rates
through the fuel adjustment clause (FAC) to recover the cost of
energy purchased from other suppliers and to reflect increases or
decreases in the cost of fuel used in its generating stations.
The transportation costs of coal are not included in the FAC, but
are collected through base rates.

CILCO's current tariffs also provide for adjustments to its gas
rates through the purchased gas adjustment clause (PGA) to
reflect increases or decreases in the cost of natural gas
purchased for sale to customers.

FUEL SUPPLY - COAL

Substantially all of CILCO's electric generation capacity is coal-
fired.  Approximately 2.7 million tons of coal were burned during
1999.  Existing coal contracts with suppliers in Illinois are
expected to supply 100% of the 2000 requirements.

During the years 1999, 1998, and 1997, the average cost per ton
of coal burned, including transportation, was $32.41, $33.56, and
$34.01, respectively.  The cost of coal burned per million BTU's
was $1.49, $1.54, and $1.56, respectively (see Electric Fuel and
Purchased Gas Adjustment Clauses).

CILCO has a long-term contract with Freeman United Coal Mining
Company (Freeman) for the purchase of high-sulfur, Illinois coal
used predominantly at the Duck Creek Station.  The contract gives
CILCO the flexibility to purchase between 500,000 and 1,000,000
tons annually.  Under the terms of the contract, CILCO's
obligation to purchase coal extends through 2010; however,
Freeman has the option of terminating the contract with two
years' notice.  The contract requires CILCO to pay all variable
coal production costs on tons purchased and certain fixed costs
not affected by the volume purchased.  On August 8, 1997, CILCO
filed a demand for arbitration with Freeman alleging that Freeman
has
                             10

failed to keep and perform its prudent mining obligations as
required by the parties' contract.  The relief sought by CILCO
through this arbitration includes damages and confirmation of
CILCO's termination rights under this contract.  CILCO and
Freemen have agreed to continue operating under the present
contract until a ruling on CILCO's claims is reached by the
arbitrators, which is expected early in the third quarter of
2000.  CILCO cannot at this time predict the ultimate outcome of
this dispute or whether its resolution will have a material
impact on CILCO's operating results.

NATURAL GAS SUPPLY

During 1999, CILCO continued to maintain a widely diversified and
flexible natural gas supply portfolio.  This portfolio is
structured around firm and interruptible gas transportation
service provided by five interstate pipeline suppliers and firm
and interruptible gas purchase arrangements of varying terms made
directly with approximately 30 gas suppliers.  Reliability is
enhanced through natural gas injections and withdrawals at
CILCO's two natural gas storage fields and contracted storage
facilities.  The supply and pipeline capacity portfolio continues
to provide reliable supplies at prevailing market prices.  CILCO
believes that its present and planned supply of gas will continue
to be sufficient to serve all of its present and projected firm
customer requirements.

During 1999, CILCO purchased and delivered approximately
38,318,400 MCF of natural gas at a cost of approximately
$106 million, or an average cost of $2.77 per MCF.  The average
cost per MCF of natural gas purchased and delivered was $2.67 in
1998 and $3.03 in 1997 (see Electric Fuel and Purchased Gas
Adjustment Clauses).

FINANCING AND CAPITAL EXPENDITURES PROGRAMS

CILCO's ongoing capital expenditures program is designed to
maintain reliable electric and gas service and to meet the
anticipated demands of its customers.  Capital expenditures for
2000 are estimated to be $53.6 million, including pollution
control expenditures of $1.3 million.  Expenditures include
$36.9 million for the electric business, $11.1 million for the
gas business and $5.6 million for general and miscellaneous
purposes.  Electric expenditures include $17.9 million for
additions and modifications to generating facilities and the
installation of diesel powered generation modules at two CILCO
substations.  Transmission and distribution system additions and
improvements are expected to total $18.9 million.  Gas
expenditures are primarily for additions, replacements and
improvements to existing facilities.  Anticipated gas and
electric capital expenditures for 2001-2004 are $230 million.
The estimates for 2000 capital expenditures include $2.7 million
for information technology projects.

CILCO's short-term debt increased to $46.9 million at December
31, 1999, from $40.6 million at December 31, 1998.  CILCO retired
$30.0 million of medium-term notes in February 2000 and
$10.65 million of medium-term notes in June 1998.  CILCO is
considering the redemption of $25 million of auction rate
preferred stock in June 2000.  In 1999, CILCO paid three regular
quarterly dividends and one prorated quarterly dividend to
CILCORP totaling $29.8 million.  As part of the acquisition of
CILCORP by AES, CILCO received $27 million of additional paid-in
capital from CILCORP in the fourth quarter of 1999.  CILCO used
the funds to retire commercial paper during the fourth quarter of
1999.  In 1998, CILCO paid $20 million of dividends to CILCORP in
addition to regular quarterly dividends.  At December 31, 1999,
CILCO had bank lines of credit aggregating $55 million, all of
which were unused, except in support of commercial paper
issuance.  In the third quarter of 1999, CILCO issued commercial
paper to cover purchases of additional electricity to meet
increased consumer demand due to abnormally warm weather
conditions.  (See
                             11

Results of Operations - Electric Operations.)  Refer to the
caption "Capital Resources and Liquidity - CILCO" of Item 7.
Management's Discussion and Analysis of Financial Condition and
Results of Operations.

CILCO expects to continue to support commercial paper issuance
with its bank lines during 2000.  It expects to finance its 2000
capital expenditures primarily with funds provided by operating
activities.  CILCO is currently considering various options to
refinance its medium-term notes, which matured in February 2000,
and the redemption of the auction rate preferred stock.  Future
funds provided by operations may be affected by the deregulation
of the electric and natural gas utility industries.

ENVIRONMENTAL MATTERS

Refer to the caption "Environmental Matters" of Item 7.
Management's Discussion and Analysis of Financial Condition and
Results of Operations.

SIGNIFICANT CUSTOMER

Caterpillar Inc. is CILCO's largest industrial customer.  Gas
revenues, electric revenues, and sales of other services to
Caterpillar were 7.2%, 7.6%, and 7.5% of CILCO's total revenue
for 1999, 1998 and 1997, respectively.  Sales to Caterpillar from
all continuing CILCORP subsidiaries represent 8.1%, 8.6%, and
7.6% of CILCORP consolidated operating revenue from continuing
operations for 1999, 1998, and 1997, respectively.  See CILCO's
Consolidated Statements of Segments of Business under Item 8.
Financial Statements and Supplementary Data.

FRANCHISES

CILCO negotiates franchise agreements which authorize it to
provide utility services to the communities in its service area.
The franchises are for various terms, usually 10 to 25 years.
Based on past experience, CILCO anticipates that, as franchises
expire, new franchises will be granted in the normal course of
business.

COMPETITION

Refer to the caption "Competition" of Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations.

PEOPLE

The number of full-time and part-time people at CILCO as of
December 31, 1999, was 1,013.  Of these, 374 gas and electric
field people were represented by Local 51 of the International
Brotherhood of Electrical Workers (IBEW), and 177 power plant
people were represented by Local 8 of the National Conference of
Firemen and Oilers (NCF&O).

UNION CONTRACTS

The IBEW ratified its current agreement on October 10, 1997.  Its
contract expires on July 1, 2000.  The NCF&O ratified its current
contract with the Company on October 23, 1998.  The NCF&O
contract expires on July 1, 2001.







                             12

                         BUSINESS OF QST

QST Enterprises Inc. (QST) was formed in December 1995.  Through
its wholly-owned subsidiary, QST Energy, QST provided a portfolio
of non-regulated, energy-related products and services including
wholesale and retail sales of electricity and natural gas in
markets that are open to competition.  QST and QST Energy ceased
operations during the fourth quarter of 1998, except for
fulfillment of contractual obligations for 1999 and beyond, and
recorded loss provisions for the discontinued energy operations.
The results of QST and its past and present subsidiaries are
shown as discontinued operations in the statements of income for
the periods January 1, 1999, through October 18, 1999, October
19, 1999, through December 31, 1999, and prior periods.  QST sold
its wholly-owned environmental services subsidiary, QST
Environmental, in June 1999, and its fiber optic-based
telecommunications subsidiary, QST Communications, in August
1998.

                        OTHER BUSINESSES
CIM

The investment portfolio of CIM at December 31, 1999, and
December 31, 1998, is shown in the following table:

<TABLE>
<CAPTION>
Type of Investment
At December 31                            1999        1998
                                           (In thousands)
<S>                                     <C>          <C>
Investment in leveraged leases          $143,697     $146,977
Cash and temporary cash investments          158           71
Investment in Energy Investors Fund        1,181        1,510
Investment in affordable housing funds    12,409       13,821
Other                                        125          120
                                        --------     --------
     Total                              $157,570     $162,499
                                        ========     ========
</TABLE>

At December 31, 1999, CIM held equity investments in eight
leveraged leases through its wholly-owned subsidiaries, CILCORP
Lease Management Inc. (CLM), CIM Air Leasing Inc. and CIM Leasing
Inc.  According to the terms of some of the lease agreements,
under certain circumstances, subsidiaries of CIM may be obligated
to incur additional non-recourse debt to finance the cost of
certain alterations, additions, or improvements required by the
lessees.

CIM, through its wholly-owned subsidiary, CIM Energy Investments
Inc., has a net investment of $1,181,000 in the Energy Investors
Fund, L.P.(Fund), representing a 2.5% interest in the Fund at
December 31, 1999.  The Fund invests in non-regulated, non-
utility facilities for the production of electricity or thermal
energy.  The equity method of accounting is used for this
investment.

CIM is a limited partner in eight affordable housing portfolios.
The ownership interests in these partnerships ranged from 3% to
10% at December 31, 1999.  The equity method of accounting is
used for these investments.

CVI

CVI's net investment in CESI, its wholly-owned subsidiary, is
approximately $836,000.  CESI's primary business is gas
management services (including commodity purchasing for gas
management customers).

                             13

                            YEAR 2000

Refer to the caption "Year 2000" of Item 7.  Management's
Discussion and Analysis of Financial Condition and Results of
Operations.

Item 2. Properties

                              CILCO

CILCO owns and operates two coal-fired generating plants, a
cogeneration plant and two combustion turbine-generators.  These
facilities had an available summer capability of 1,146 MW in
1999.  The two combustion turbine generators have a summer rating
of 30 MW (15 MW each) and are used during peak periods.  They
typically operate less than 100 hours per year.  The cogeneration
plant, which became operational during 1995, produces steam heat
for Midwest Grain Products, Inc. (MWG) and also generates
electricity for distribution to CILCO's customers.  This turbine-
generator has an available summer capability of 10 MW.  These
facilities will be supplemented by 26 MW of electric power
capacity provided by 16 diesel-fueled power modules to be placed
in service in 2000.

The major generating facilities of CILCO (representing 96.0% of
CILCO's available summer generating capability projected for
2000), all of which are fueled with coal, are as follows:

<TABLE>
<CAPTION>
                                                  Available Summer
                                                  Capability (MW)
Station & Unit                         Installed    Actual 1999
<S>                                       <C>            <C>
Duck Creek
    Unit 1                                1976           366
E. D. Edwards
    Unit 1                                1960           117
    Unit 2                                1968           262
    Unit 3                                1972           361
</TABLE>

CILCO's transmission system includes approximately 285 circuit
miles operating at 138,000 volts, 48 circuit miles operating at
345,000 volts and 16 principal substations with an installed
capacity of 2,150,000 kilovolt-amperes.

The electric distribution system includes approximately 6,223
miles of overhead pole and tower lines and 2,096 miles of
underground distribution cables.  The distribution system also
includes approximately 105 substations with an installed capacity
of 1,665,885 kilovolt-amperes.

The gas system includes approximately 3,581 miles of transmission
and distribution mains.

CILCO has an underground gas storage facility located about ten
miles southwest of Peoria near Glasford, Illinois.  The facility
has a present recoverable capacity of approximately 4.5 Bcf.  An
additional storage facility near Lincoln, Illinois, has a present
recoverable capacity of approximately 5.2 Bcf.





                             14

Item 3.  Legal Proceedings

Reference is made to the captions "Fuel Supply - Coal" of Item 1.
Business, "Environmental Matters" of Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations and to "Note 7 - Commitments and Contingencies" of
Item 8. Financial Statements and Supplementary Data for certain
pending legal proceedings and/or proceedings known to be
contemplated by governmental authorities.

In February 1999, QST Energy notified two of its California
commercial customers that they were in default of their
contracts with QST Energy as a result of not paying QST Energy
for energy delivered.  QST Energy filed two suits in the U.S.
District Court, Central District of Illinois, seeking payment.
In March, the customers filed a suit in California Superior
Court, Alameda County, California, alleging that QST Energy was
in breach of the contract.  This suit was subsequently removed
to U.S. District Court, Northern District of California.  QST
Energy has moved to dismiss this suit filed in California as
duplicative of the suits pending in Illinois, and the customers
similarly filed motions to dismiss the suits pending in
Illinois.  These motions are still pending.  The parties have
commenced discovery.  QST Energy cannot predict the ultimate
outcome of this matter, but intends to vigorously pursue its
claims to collect all amounts due from the customers.  The
accounts receivable reflected in CILCORP's consolidated balance
sheet at December 31, 1999, for these two customers, totaled
$15.4 million, excluding interest of approximately $1.3 million.
Under the terms of the contracts, QST Energy has terminated
delivery of electricity to the two customers.

The Company and its subsidiaries are subject to certain claims
and lawsuits in connection with work performed in the ordinary
course of their businesses.  Except as otherwise disclosed or
referred to in this section, in the opinion of management, all
such claims currently pending will not result in a material
adverse effect on the financial position and results of
operations of the Company.  Risk of loss is mitigated, in some
cases, by insurance or contractual or statutory indemnification.
The Company has established appropriate reserves for potential
losses.

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

                             CILCORP

There were no matters submitted to a vote of security holders
during the periods October 1, 1999, through October 18, 1999, and
October 19, 1999, through December 31, 1999.

                              CILCO

There were no matters submitted to a vote of security holders
during the fourth quarter of 1999.













                             15

<TABLE>
<CAPTION>
                  Executive Officers of CILCORP

                        Age as of Positions Held During    Initial
Name                     3/31/00    Past Five Years    Effective Date (1)
<S>                        <C>     <C>                 <C>
Paul D. Stinson (2)        43      President           October 18, 1999

Scott A. Cisel (3)         46      Vice President      October 18, 1999

James L. Luckey, III (4)   39      Vice President      December 17, 1999

Greg T. Russell (5)        35      Vice President      December 17, 1999

Robert J. Sprowls (6)      42      Vice President      October 18, 1999

Thomas D. Hutchinson (7)   45      Controller and Chief
                                   Financial Officer   October 18, 1999

Thomas S. Romanowski (8)   50      Treasurer           October 18, 1999

John G. Sahn (9)           53      Secretary           October 18, 1999
<FN>

Notes:

(1)The term of each executive officer extends until the next
   succeeding organizational meeting of Directors or until their
   successors are elected and shall qualify.

(2)Mr. Stinson is also a Vice President of the Company's parent,
   The AES Corporation, and President of Central Illinois Light
   Company (CILCO). Mr. Stinson is manager of the new AES Great
   Plains Group formed in the Central United States in 1999.
   From 1997 to 1999, he was manager of AES's Silk Road Group,
   where he was responsible for business development and
   operations for the countries which comprise the former Soviet
   Union.  In 1993, Mr. Stinson became Plant Manager of the 700
   megawatt Medway Power Station in the United Kingdom.  Mr.
   Stinson has been with AES since 1986.

(3)Mr. Cisel also serves as Vice President of CILCO. He was
   elected CILCO Vice President - Sales and Marketing on April
   1, 1995, and on November 9, 1995, he became responsible for
   federal and state government and regulatory activities.  He
   is currently Vice President and Leader of CILCO's Sales and
   Marketing Business Unit.

(4)Mr. Luckey also serves as a Vice President of CILCO.  Mr.
   Luckey was elected CILCO Vice President on December 17, 1999,
   and has been Plant Manager of CILCO's Duck Creek Power
   Generation Facility since January 2000.  Prior to coming to
   CILCO, Mr. Luckey worked with CILCO's parent company, The AES
   Corporation, at AES Thames generating plant.

(5)Mr. Russell also serves as a Vice President of CILCO.  Mr.
   Russell came to CILCO in June 1999 to become a Team Leader at
   CILCO's Edwards Power Plant.  On December 17, 1999, he was
   elected CILCO Vice President and in January, 2000, Mr. Russell
   became manager of CILCO's Indian Trails Cogeneration Facility.
   Prior to coming to CILCO, Mr. Russell worked with

                             16

   CILCO's parent company, The AES Corporation, at AES
   Southington, AES Barry Operations and AES Thames.

(6)Mr. Sprowls is also a Vice President of CILCO.  Mr. Sprowls
   is currently Vice President and Leader of CILCO's Energy Delivery
   Business Unit.  He was previously CILCO's Chief Financial Officer
   from August 17, 1998 to October 18, 1999.  He was Senior Vice
   President and Chief Financial Officer of QST Enterprises Inc.
   from April 22, 1997 to August 17, 1998, and Vice President from
   August 19, 1996 to April 22, 1997.  Mr. Sprowls was Vice
   President of CILCO from April 1, 1995 to January 29, 1996, and
   served from October 1, 1990, to October 25, 1995, as Treasurer of
   CILCORP.

(7)Mr. Hutchinson also served as Controller of the Company from
   February 1, 1988 until April 1, 1995.  He began serving as
   Controller again, effective January 20, 1997, and continues in
   that capacity along with serving as Chief Financial Officer.  He
   served as CILCO Director - Competitive Strategy from April 1,
   1995 to January 1, 1996.  From January 1, 1996 to January 20,
   1997, Mr. Hutchinson served as Director of Planning and
   Administration of QST Enterprises Inc.  Mr. Hutchinson also
   serves as CILCO's Controller and Chief Financial Officer.

(8)Mr. Romanowski also serves as Treasurer of CILCO.  He was
   Vice President of CILCO from October 1, 1986 until October 18,
   1999.

(9)Mr. Sahn served as Vice President, General Counsel and
   Secretary from March 1, 1994 until August 17, 1998, when he
   became Vice President, Secretary and Treasurer.


</TABLE>
<TABLE>
<CAPTION>
                   Executive Officers of CILCO

                        Age as of  Positions Held During     Initial
Name                     3/31/00      Past Five Years   Effective Date (1)
<S>                        <C>      <C>                 <C>
Paul D. Stinson (2)        43       President           October 18, 1999

Jerry Cagle                49       Vice President      October 18, 1999

Scott A. Cisel (3)         46       Vice President      April 1, 1995

James L. Luckey, III (4)   39       Vice President      December 17, 1999

Greg T. Russell (5)        35       Vice President      December 17, 1999

Robert J. Sprowls (6)      42       Vice President      October 18, 1999

Thomas D. Hutchinson (7)   45       Controller and Chief
                                    Financial Officer   October 18, 1999

Thomas S. Romanowski (8)   50       Treasurer           October 18, 1999

Craig W. Stensland (9)     40       Secretary           March 15, 2000






                             17

<FN>
Notes:

(1)The term of each executive officer extends until the next
   succeeding organizational meeting of Directors or until their
   successors are elected and shall qualify.

(2)Mr. Stinson is a Vice President of CILCORP Inc.'s parent, The
   AES Corporation, and President of CILCORP Inc.

(3)Mr. Cisel also serves as a Vice President of CILCORP.

(4)Mr. Luckey also serves as a Vice President of CILCORP.

(5)Mr. Russell also serves as a Vice President of CILCORP.

(6)Mr. Sprowls also serves as a Vice President of CILCORP.  Mr.
   Sprowls served as CILCO's Chief Financial Officer from August
   17, 1998, to October 18, 1999.  He was Senior Vice President
   and Chief Financial Officer of QST Enterprises Inc. from
   April 22, 1997, to August 17, 1998, and Vice President from
   August 19, 1996, to April 22, 1997.  Mr. Sprowls was Vice
   President of the Company from April 1, 1995, to January 29,
   1996, and served from October 1, 1990, to October 25, 1995,
   as Treasurer of CILCORP.

(7)Mr. Hutchinson served as Controller of CILCO from January 20,
   1997, until he began his current position as Controller and
   Chief Financial Officer on October 18, 1999.  He also serves
   as Controller and Chief Financial Officer  of CILCORP.  Mr.
   Hutchinson was CILCORP's Controller from February 1, 1988, to
   April 1, 1995, and again from January 20, 1997, until he
   became Controller and Chief Financial Officer.  He served as
   CILCO's Director - Competitive Strategy from April 1, 1995,
   to December 31, 1995, and as Director of Planning and
   Administration of QST Enterprises Inc. from January 1, 1996,
   to January 20, 1997.

(8)Mr. Romanowski also serves as Treasurer of CILCORP.  Mr.
   Romanowski was a Vice President of CILCO from October 1,
   1986, to October 18, 1999.

(9)Mr. Stensland served as a Principal Attorney for CILCORP and
   CILCO from May 22, 1991, to March 15, 2000.
</TABLE>




















                             18

                             PART II

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

                             CILCORP

The Company's common stock is not traded on any market.  At
December 31, 1999, there were 10,000 authorized, no par value,
shares of the Company's common stock.  One thousand of those
shares were issued, and outstanding and privately held,
beneficially and of record, by The AES Corporation.

                              CILCO

CILCO's common stock is not traded on any market.  As of
March 10, 2000, 13,563,871 shares of CILCO's Common Stock, no par
value, were issued, and outstanding and privately held,
beneficially and of record, by CILCORP Inc.

CILCO's requirement for retained earnings before common stock
dividends may be paid is described in Note 12 of CILCO's Notes to
the Consolidated Financial Statements contained in Item 8.
Financial Statements and Supplementary Data.








































                             19

Item 6. Selected Financial Data
<TABLE>
CILCORP INC.
Selected Financial Data
<CAPTION>
For the Periods Ended

                Oct. 19    Jan. 1
                 to         to
                Dec. 31,   Oct 18,                      December 31
                1999       1999          1998       1997       1996       1995
                                (In thousands except ratios)
<S>           <C>         <C>        <C>        <C>        <C>        <C>
Revenue       $  120,589 |$  460,261 $  559,168 $  558,259 $  527,060 $  482,642
                         |
Net income               |
  available              |
  for common             |
  stockholders      (745)|       280     16,310     16,395     27,943     38,582
Total assets   1,830,953 |            1,312,940  1,334,819  1,285,693  1,279,303
Long-term debt   730,434 |              285,552    298,528    320,666    344,113
Ratio of                 |
  earnings to            |
  fixed charges      0.9 |       1.0        2.4        2.7        2.5        2.5
</TABLE>

<TABLE>
Central Illinois Light Company
Selected Financial Data
<CAPTION>
For the Years Ended December 31
                       1999        1998      1997      1996       1995
                                  (In thousands except ratios)
<S>                <C>        <C>        <C>        <C>        <C>
Electric and
  Gas Revenue      $  553,474 $  532,336 $  546,854 $  518,555 $  477,744

Net income
  available for
  common
  stockholders         16,041     41,041     50,251     41,939     39,099
Total assets        1,056,280  1,024,428  1,022,655  1,036,169  1,063,223
Long-term debt        237,934    267,884    267,836    278,439    298,397
Ratio of
  earnings to
  fixed charges           1.9        3.4        3.5        3.4        3.3
</TABLE>














                             20

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

In 1999 and prior years, the financial condition and operating
results of CILCORP Inc. and its subsidiaries (the Company)
primarily reflected the operations of Central Illinois Light
Company (CILCO), QST Enterprises Inc. (QST), and their
subsidiaries.  On November 23, 1998, the Company announced that
The AES Corporation (AES) had offered to buy 100% of the
Company's outstanding common stock for $65 per share, subject to
CILCORP shareholder approval and various regulatory approvals.
The Federal Trade Commission granted approval of CILCORP's merger
with AES under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 on February 22, 1999.  On March 10, 1999, the Illinois
Commerce Commission issued its approval.  The merger was approved
by CILCORP shareholders at a special meeting on May 20, 1999.
The FERC issued an order to CILCO and AES approving the
transaction on June 16, 1999.  The SEC staff approved AES'
application for an exemption under Section 3(a)(5) of the Public
Utility Holding Company Act on August 20, 1999.  AES completed
the acquisition of the Company on October 18, 1999.

To complete the merger, approximately $886 million was raised
through a combination of additional paid-in capital contributed
by AES and the offering of senior notes and bonds assumed by
CILCORP.  The approximately $886 million was used to purchase
13,625,680 shares of CILCORP's common stock.  AES has 100%
ownership of the 1,000 CILCORP common shares currently issued
and outstanding.

Financial results reflect application of the purchase method of
accounting to the merger.  Under this method, the purchase price
is allocated to the fair market value of the assets acquired and
the liabilities assumed.  Any excess purchase price over the
fair value of the assets acquired and the liabilities assumed is
allocated to goodwill.  As a result, CILCORP recorded purchase
accounting fair value adjustments to 1) adjust plant to its net
fair value, 2) adjust pension and other post-retirement
liabilities, and 3) record goodwill.  Of these adjustments, the
primary effect of purchase accounting was to record
approximately $573 million of goodwill which will be amortized
over 40 years.  The adjustments are reflected on CILCORP's
financial statements as of the merger date, but were not "pushed
down" to CILCORP's subsidiaries.  Accordingly, CILCORP's post-
merger financial statements reflect a new basis of accounting,
and separate financial statements are presented for pre-merger
and post-merger periods, separated by a heavy black line.  For
discussion throughout this document, for categories and segments
substantially unaffected by the merger and with no pre-merger or
post-merger accounting events, the 1999 pre-merger and post-
merger periods have been combined for comparison in total to
1998.

In late 1998, in light of the pending acquisition and after
reviewing its business plans, the Company decided to sell its
100% ownership interest in QST Environmental Inc. (QST
Environmental), a first-tier subsidiary of QST that provided
environmental consulting and engineering services.  On May 7,
1999, QST agreed to sell all the outstanding common stock of QST
Environmental to MACTEC, Inc. for approximately $18 million in
cash.  The sale was completed on June 24, 1999.  QST previously
sold another of its subsidiaries, QST Communications Inc., in
August 1998.

In June 1998, QST Energy Inc. (QST Energy), another first-tier
subsidiary of QST, incurred a material loss related to wholesale
electricity contracts, triggered by an unprecedented increase in
short-term wholesale electricity prices.  QST Energy closed its
electric and gas non-retail positions and, in



                             21

the fourth quarter of 1998, closed its Houston energy trading
office and transferred its Pennsylvania retail electric and gas
customers to other marketers.  QST Energy has since discontinued
providing electricity to its remaining non-Illinois commercial
customers.

Due to uncertainties related to electric deregulation across the
country, the illiquidity of certain energy markets, and the
Company's acquisition by AES, the Company intends to focus on the
opportunities in the Illinois energy market resulting from the
deregulation of electricity under the Electric Service Customer
Choice and Rate Relief Law of 1997 (see Management's Discussion
and Analysis of Financial Condition and Results of Operations -
Competition).  This law will enable CILCO, the Company's
regulated public utility that generates and distributes
electricity and purchases, transports and distributes natural
gas, to serve Illinois customers outside its traditional Central
Illinois service territory.  As a result of these events, the
Company is reporting the results of QST Enterprises and its
subsidiaries (excluding ESE Land Corporation and CILCORP
Infraservices Inc.) as discontinued operations (see Management's
Discussion and Analysis of Financial Condition and Results of
Operations - QST Discontinued Operations).  During the fourth
quarter of 1997, QST Environmental sold substantially all of the
assets of ESE Land Corporation (ESE Land), its wholly-owned
subsidiary that acquired environmentally impaired property for
remediation and resale, for cash and non-controlling membership
interests in the acquiring companies.

The Other Businesses segment includes the operations of the
Holding Company itself (Holding Company), its investment
subsidiary, CILCORP Investment Management Inc. (CIM), CILCORP
Ventures Inc. (CVI), and CILCORP Infraservices Inc., which
provides utility infrastructure operation and maintenance
services.
































                             22

                            OVERVIEW

Contributions to the Company's earnings for the last three
calendar years are shown below.  (Following the Company's
acquisition by AES, presentation of earnings per share is no
longer meaningful, as no common shares are publicly held.)

<TABLE>
<CAPTION>
                               Oct. 19 to  Jan. 1 to
                                Dec. 31,    Oct. 18,
                                  1999       1999     1998      1997
<S>                             <C>        <C>      <C>       <C>
CILCO (excluding Extraordinary           |
  Item)                         $ 7,364  | $ 8,677  $ 41,041  $ 46,151
CILCO Extraordinary Item             --  |      --        --     4,100
Other Businesses                 (7,896) |  (7,990)   (2,823)   (2,442)
QST Enterprises Discontinued             |
  Operations                       (213) |    (407)  (21,908)  (31,414)
                                -------  | -------  --------  --------
Net Income                      $  (745) | $   280  $ 16,310  $ 16,395
                                =======  | =======  ========  ========
</TABLE>

CILCO's earnings decreased by 61% in 1999, primarily due to
approximately $22.7 million of after-tax costs associated with
Voluntary Early Retirement Programs offered in the second and
third quarters of 1999 (see Voluntary Early Retirement Programs).
Also contributing to the earnings decrease were the costs of non-
regulated service programs.  Electric gross margin remained
relatively constant in 1999.  Total cooling degree days were 15%
lower in 1999, despite the extremely warm weather in July which
resulted in greater demands for electricity.  Gas gross margin
increased 3% in 1999 due to a 7% increase in heating degree days.

CILCO's earnings, excluding the extraordinary item, decreased by
11% in 1998 primarily due to increased power plant maintenance
expense, repairs to the electric distribution system resulting
from a severe storm in June 1998, higher gas maintenance
expenses, and higher information technology costs.  Electric
gross margin increased by 5% as a result of warmer than normal
summer weather.  However, this increase was partially offset by a
9% decrease in gas gross margin due to warmer than normal weather
during the heating season.  CILCO's 1997 earnings included a
credit of $4.1 million for an after-tax extraordinary item
related to the write-off of regulatory assets and liabilities
associated with electric generating plant (see CILCO Note 1).

Other Businesses' results for the period October 19, 1999,
through December 31, 1999, were negatively impacted by increased
interest expense due to new debt issued by the Holding Company to
fund the AES acquisition of CILCORP and by increased goodwill
amortization.  Other Businesses' results for the period January
1, 1999, through October 18, 1999, were negatively impacted by
merger-related expenses incurred by CILCORP, including
transaction fees, legal fees, and expenses related to the
Shareholder Return Incentive Compensation Plan (see CILCORP
Note 15).

Other Businesses' results for 1998 were approximately the same as
1997.  CIM realized a gain from the refinancing of a leveraged
lease investment and also shared in the after-tax gain resulting
from the sale of facilities of the Energy Investors Fund, L.P.,
in which CIM has a 2.5% interest.  These items were offset by
reduced income from CIM's affordable housing investments and
costs incurred by the Holding Company related to the AES
transaction.

                             23

QST Enterprises' (excluding QST Environmental) financial results
for the period from January 1, 1999, through October 18, 1999,
were reflected in the discontinued operations liability which was
accrued at the end of 1998, resulting in no net income or loss.
Results from October 19, 1999, through December 31, 1999, are
shown as a loss for that period.  QST Environmental's operating
results (prior to its sale in June 1999) are included in the
January 1 through October 18 loss from operations of discontinued
businesses.

An unprecedented short-term increase in wholesale electricity
prices during June 1998 contributed to a $10.6 million reduction
in QST's electric gross margin in the second quarter of 1998.
QST Energy's electric gross margin for 1998 was $(14.3) million
compared to $(.8) million in 1997.  In addition, as a result of
discontinuing its operations at December 31, 1998, QST Energy
adjusted to market value its future contractual commitments to
sell electricity and natural gas, resulting in a $5.2 million pre-
tax charge against income.  Additional losses were recognized in
1998 related to the disposal of QST assets, termination of leases
and other agreements, severance costs, and estimated operating
expenses which were incurred as QST exited the non-Illinois
markets.

In August 1998, QST sold its 100% interest in QST Communications,
realizing an after-tax gain of $8.3 million, partially offset by
the $.7 million 1998 loss from discontinued operations prior to
the sale.

In 1997, $22.6 million of goodwill related to QST Environmental
was written off (see CILCORP Note 1).  The results of QST
Environmental were adversely affected in 1998 by continued losses
at its laboratory operations and by the estimated loss from the
discontinuance of the business.  The loss includes estimated
severance costs and other closing costs related to laboratory and
other operations which were being discontinued.  These amounts
were partially offset by approximately $.6 million earned at its
consulting business.

Return on average common equity for the period October 19, 1999,
through December 31, 1999, was (.2)% and for the period January
1, 1999, through October 18, 1999, was .1%, compared to 4.7% in
1998, and 4.5% in 1997.  Excluding discontinued operations and
extraordinary items, return on average common equity was .2% for
the period January 1, 1999, through October 18, 1999, and (.1)%
for the period October 19, 1999, through December 31, 1999,
compared to 9.8% in 1998, and 11.5% in 1997.  The ratio of common
equity to total capitalization, including short-term debt at
December 31, was 34% in 1999, 42% in 1998, and 44% in 1997.  The
fixed charge coverage ratio from continuing operations was .9 for
October 19, 1999 through December 31, 1999, 1.0 for January 1,
1999, through October 18, 1999, 2.4 in 1998, and 2.7 in 1997.

Inflation may have a significant impact on the Company's future
operations and its ability to contain costs.  To help protect
CILCO from the effects of inflation, substantially all electric
and gas sales rates include a fuel adjustment clause (FAC) or a
purchased gas adjustment (PGA) to provide for changes in electric
fuel costs, excluding coal transportation, and changes in the
cost of natural gas.  Over the past five years, the annual rate
of inflation, as measured by the Consumer Price Index, has ranged
from 1.6% to 2.9%.








                             24

                   Forward-Looking Information

Forward-looking information is included in Management's
Discussion and Analysis of Financial Condition and Results of
Operations (MD&A).  Certain material contingencies are also
described in Note 9 to the Consolidated Financial Statements.

Some important factors could cause actual results or outcomes to
differ materially from those expressed or implied in MD&A.  The
business and profitability of CILCORP and its subsidiaries are
influenced by economic and geographic factors, including ongoing
changes in environmental laws and weather conditions; the extent
and pace of development of competition for retail and wholesale
energy customers; changes in technology; changes in company-wide
operation and plant availability compared to our historical
performance and changes in our historical operating cost
structure, including changes in various costs and expenses;
pricing and transportation of commodities; market supply and
demand for energy and energy derivative financial instruments;
inflation; capital market conditions; and environmental
protection and compliance costs.  Prevailing governmental
policies, statutory changes, and regulatory actions with respect
to rates, tariffs, industry structure and recovery of various
costs incurred by CILCO in the course of its business and
increasing wholesale and retail competition in the electric and
gas business affect its earnings.  All such factors are difficult
to predict, contain uncertainties that may materially affect
actual results and, to a significant degree, are beyond the
control of CILCORP and its subsidiaries.  CILCORP and its
subsidiaries undertake no obligation to publicly update or revise
any forward-looking statements, whether as a result of changes in
actual results, assumptions or other factors.

































                             25

                 CAPITAL RESOURCES AND LIQUIDITY

The Company believes that internal and external sources of
capital which are or are expected to be available to the Holding
Company and its subsidiaries will be adequate to fund its capital
expenditures, pay its financial obligations, meet working capital
needs and retire or refinance debt as it matures.

THE COMPANY

CILCORP is currently authorized by its Board of Directors to
borrow up to $60 million on a short-term basis and had
$60 million of committed bank lines at the end of 1999 and 1998.
At December 31, 1999, $45 million of the lines were used,
compared to $55.6 million in use at December 31, 1998.

In October 1999, CILCORP issued $225 million of 8.7% senior notes
(due 2009) and $250 million of 9.375% senior notes (due 2029).
Along with equity funds provided by AES, the proceeds of the
notes were used by AES to acquire all outstanding shares of
CILCORP common stock for approximately $886 million, to pay
transaction costs related to the acquisition, and to retire short-
term debt.

The Company had $17.5 million of medium-term notes outstanding at
year-end.  With the issuance of the senior notes in October 1999,
the Company may no longer issue debt under its medium-term note
program.

CILCO

In 1999, CILCO spent $55.1 million for capital additions and
improvements, consisting primarily of replacements and
improvements to the existing electric transmission and
distribution and natural gas distribution systems and information
technology projects.  Estimated 2000 and 2001 capital
expenditures are $53.6 million and $55.9 million, respectively.
The 2000 expenditures include $18.8 million for electric energy
supply and transmission projects, $.7 million for gas supply and
transmission projects, $28.4 million for electric and gas
distribution systems improvements, and $2.7 million for
information technology projects.  Actual capital expenditures may
vary from these estimates due to a number of factors, including
changes in costs of labor, equipment, capital, environmental
regulations, and load growth estimates.

CILCO's short-term debt increased to $46.9 million at
December 31, 1999, from $40.6 million at December 31, 1998.
CILCO retired $30.0 million of medium-term notes in February 2000
and $10.65 million of medium-term notes in June 1998.  CILCO is
considering the redemption of $25 million of auction rate
preferred stock in June 2000.  In 1999, CILCO paid three regular
quarterly dividends and one prorated quarterly dividend to
CILCORP totaling $29.8 million.  As part of the acquisition of
CILCORP by AES, CILCO received $27 million of additional paid-in
capital from CILCORP in the fourth quarter of 1999.  CILCO used
the funds to retire commercial paper during the fourth quarter of
1999.  CILCO expects to issue commercial paper periodically
during 2000, and is currently authorized by its Board of
Directors to issue up to $100 million of short-term debt.  At
December 31, 1999, committed bank lines of credit totaled
$55 million, all of which were unused except in support of
commercial paper issuance.  During 2000, CILCO expects to
continue to support commercial paper issuance with its bank lines
of credit.  CILCO plans to finance its 2000 and 2001 capital
expenditures primarily with funds provided




                             26

by operations.  CILCO is currently considering various options to
refinance the matured medium-term notes and the redemption of the
auction rate preferred stock.  Future funds provided by
operations may be affected by the deregulation of the electric
and natural gas utility industries (see Competition).

CIM

CIM had outstanding debt of $31.4 million and $37.7 million (all
to the Holding Company) at the end of 1999 and 1998,
respectively.

During 1998 and prior years, CIM committed to invest
$16.6 million in affordable housing funds.  Through December 31,
1999, CIM has paid $15.3 million to fund these commitments,
$1.3 million of which was paid during 1999.  CIM expects to pay
approximately $.5 million of the remaining $1.3 million
commitment in 2000, and lesser amounts in each year thereafter
through 2006.  CIM funded these commitments with cash borrowed
from the Holding Company.  CIM expects to finance its capital
needs during 2000 with a combination of funds generated
internally and with funds provided by the Holding Company.

                            YEAR 2000

The Company completed its effort to make sure its computer
systems and operations function properly in the year 2000,
including the leap year period present in 2000.  The Company
experienced no significant Year 2000 (Y2K) problems during the
transition from December 31, 1999 to January 1, 2000, or at
February 29, 2000.

CILCO began evaluating its information technology systems in
1996.  Systems were reviewed and a schedule was developed for the
analysis of all computer application code and for the replacement
or modification of those systems that were identified as obsolete
and/or having potential Y2K issues.  Replacement of several
major computer systems with Y2K issues began in 1997.  A
Y2K team was established in March 1998, consisting of
personnel from each operating division of CILCO.  In conjunction
with the formation of the team, an outside firm specializing in
Y2K projects was retained to assist CILCO with its overall
Y2K project plans.  CILCO also worked with an independent
audit team to evaluate the status of the Y2K project.  The
project was divided into three phases, as follows:

Phase I tasks included an inventory of all present systems for
embedded chips having potential Y2K issues, contacting all
manufacturers of embedded chip devices for the Y2K status of
these devices, identifying and surveying all
critical suppliers, and conducting an inventory of all
information technology hardware and software for analysis of
Y2K problems.  Phase I was completed in August 1998.

Phase II included the Y2K compliance testing of all suspect
embedded chip devices identified in Phase I in the power plants,
service centers, and business offices.  In addition, two separate
groups of outside consultants evaluated all mainframe application
code to identify specific instances of date problems in each
application program for systems that were not replaced.  Phase II
was completed in December 1999.

Phase III included the upgrade/replacement and re-testing of
embedded chip devices found not to be Y2K compliant in Phase
II, the completion of mainframe computer operating software
upgrades to the current Y2K compliant versions, and defining
Y2K contingency plans for each business unit.  Computer
application code that was determined to have Y2K date
related problems during Phase II was corrected.  Testing of
all applications that had undergone Y2K

                             27

upgrades/modifications, testing of operating system software, and
development and testing of contingency plans were also included.
Systems identified as critical to the continued provision of
utility service were of particular focus during the testing
portion of Phase III.  These critical systems were generating
station equipment, electric transmission and distribution control
systems, gas delivery control systems, and telecommunications
systems.  Phase III included the final documentation effort and
the testing for the leap year period present in 2000.

Less than the previously estimated $2 million was spent for
embedded chip analysis, vendor management, application code
scanning, remediation, testing, and contingency planning at
CILCO.  Approximately $30.7 million was spent prior to the year
2000 for system replacements or hardware upgrades initiated for
business purposes other than solely Y2K compliance, in line
with 1999 projections.  The 2000 budget for completion of Y2K work is
approximately $165,000.

CILCO worked both internally and with utility industry groups,
including the Mid-America Interconnected Network (MAIN) and the
North American Electric Reliability Council (NERC), to identify
and plan for risks associated with the Y2K issue.  These
groups modeled potential worst case scenarios even though the
probability of extreme disruptions due to Y2K issues was
considered extremely low.  CILCO participated in the NERC
industry-wide drills during September 1999, without incident.
CILCO also followed the contingency planning process recognized
by MAIN and NERC.

The Company was able to adequately address Y2K issues,
as discussed above, through a combination of modifications to
certain existing programs and systems, the replacement of others
with new software that was Y2K compliant, and the development
of contingency plans.  The modifications and conversions were
made in a timely manner, resulting in no material Y2K impact on the
Company's operations.

                           COMPETITION

CILCO, as a regulated public utility, has an obligation to
provide service to retail customers within its defined service
territory; thus, CILCO had not generally been in competition with
other public utilities for retail electric or gas customers in
these areas.  However, the passage of the Electric Service
Customer Choice and Rate Relief Law of 1997 (Customer Choice Law)
began a transition process to a fully competitive market for
electricity in Illinois.  In addition, electricity and natural
gas compete with other forms of energy available to customers.
For example, within the City of Springfield, CILCO's natural gas
business competes with the City's municipal electric system to
provide customer energy needs.

Primarily as a result of the Customer Choice Law, the electric
industry in Illinois will change significantly during the coming
years at both the wholesale and retail levels.  Large industrial
customers and customers representing one-third of remaining
non-residential kWh sales had the ability to choose their
electric supplier beginning October 1, 1999, and all other non-
residential customers will have choice no later than December 31,
2000.  Residential electric customers will be able to choose
their electric supplier on May 1, 2002.

If a customer chooses to leave its present electricity supplier,
that utility will collect a fee for delivering power and may
assess an additional transition charge on the customer.  This
collection methodology must be filed and approved by the Illinois
Commerce Commission (ICC) and is designed to help utilities
recover a portion of the costs of past investments made under a
regulated system.  The transition charge will reduce a customer's
economic

                             28

incentive to switch suppliers.  Transition charges may be
collected through 2006 (2008 upon the ICC's finding that a
utility's financial condition is impaired and the utility meets
other requirements specified in the Customer Choice Law).

On March 9, 2000, CILCO filed with the ICC revised tariff sheets
eliminating the collection of the customer transition charge
effective March 17, 2000.  At a March 15, 2000 hearing, the ICC
approved CILCO's revised tariffs, thereby eliminating the
collection of any customer transition charge.  CILCO cannot re-
establish the collection of a transition charge until it files
and the ICC approves revised tariff sheets that reinstate a
transition charge.

The Customer Choice Law also requires electric base rate
reductions that vary by utility.  CILCO reduced its residential
base rates by 2% in August 1998 and must reduce base rates by an
additional 2% in October 2000 and 1% in October 2002. Also,
CILCO's return on common equity will, in general, be capped (the
Equity Cap) at an index (a 12-month average yield for 30 year
U.S. Treasury bonds plus 8% for calendar years 1998 and 1999 and
a 12 month-average yield for U.S. Treasury bonds plus 9% for
calendar years 2000 through 2004) plus 1.5 percentage points.  If
CILCO's two-year average return on common equity exceeds the
two-year average of the Equity Cap, fifty percent of the earnings
in excess of the average Equity Cap must be refunded to customers
in the following year.

On June 30, 1999, Senate Bill 24 (a clarification and technical
correction of the Customer Choice Law) was signed into law.  This
law allows certain utilities, including CILCO, to increase the
Equity Cap by an additional 2% over the Equity Cap provided under
the Customer Choice Law, for the period 2000 through 2004.  The
increase in the Equity Cap is allowed in exchange for these
utilities offering choice of electricity suppliers to selected
manufacturing customers on June 1, 2000, and to the remaining
manufacturing customers on October 1, 2000, earlier than
previously allowed under the Customer Choice Law.  Utilities
selecting this option also waive the right to seek a two-year
extension on the collection of transition charges.  CILCO intends
to notify customers that selected manufacturing operations will
be eligible for choice on June 1, 2000, in order to increase the
equity cap by 2%, as outlined in Senate Bill 24.

With the enactment of the Customer Choice Law, electric
generation in Illinois will become deregulated and competitive.
As a result, the accounting principles applicable to rate-
regulated enterprises will no longer apply to the electric
generation portion of CILCO's business (see CILCO Note 1).  Also,
the cost of any assets for which recovery is impaired by the
transition to a competitive marketplace must be written off.
CILCO does not believe its electric generating asset values to be
impaired.  Its ability to keep total production costs competitive
in a deregulated market will determine whether and to what extent
the value of these assets may be impaired in the future.

With electric choice beginning on October 1, 1999 for its
industrial customers and some of its commercial customers, CILCO
has entered into multi-year contracts with customers representing
approximately 50% of total 1999 electric kWh sales to
non-residential customers.  These contracts, which expire from
2001 to 2002, were designed to capture a significant portion of
the margin that the customers paid to CILCO in the most recent
twelve months.

The ultimate market price for electricity, the cost for a utility
to produce or buy electricity, and the number of customers that
may be gained or lost due to customer choice of supplier in
Illinois cannot be predicted.  As a result, management cannot
predict the ultimate impact that the Customer Choice Law will
have on CILCORP's financial position or results of operation, but
the effect could be significant.  However, CILCO is currently a
low-cost provider

                             29

of electricity, and management will continue to position CILCO
for competition by controlling costs, maintaining good customer
relations, and developing flexibility to meet individual customer
requirements.  As of December 31, 1999, all eligible electric
customers continue to purchase their electricity supply from
CILCO other than those who self-generate.  CILCO has acquired
approximately 750,000 megawatt hours of new retail load to be
served outside its service territory in 2000.  CILCO will supply
these new customers by using its owned generation and electricity
purchases from other suppliers.  CILCO has made the necessary
supply and transmission arrangements to meet customer
requirements.

ENVIRONMENTAL MATTERS

The acid rain provisions of the Clean Air Act Amendments of 1990
(Amendments) require additional sulfur dioxide (SO2) and nitrogen
oxide (NOx) emission reductions at CILCO's generating facilities.
CILCO's facilities were exempt from Phase I of the Amendments due
to previous emission reductions, but are subject to Phase II of
the Amendments, which require further emission reductions
beginning in the year 2000.

The U.S. Environmental Protection Agency (USEPA) has issued a
State Implementation Plan (SIP) Call to Illinois under Title I of
the Amendments requiring additional NOx emission reductions from
CILCO's coal-fired power plants beginning May 2003 to reduce the
long-range transport of emissions.  Each of CILCO's generating
units would be allowed a targeted amount of NOx emissions during
the peak ozone months of May through September.  This SIP Call is
currently being litigated.  The Illinois Environmental Protection
Agency (IEPA) must adopt rules implementing this new requirement
pending the outcome of the litigation.  Under a related state
initiative, IEPA is developing rules in 2000 which will require
NOx emission reductions comparable to the USEPA SIP Call.  This
rulemaking will meet state obligations for SIP compliance in
areas of the state that do not attain air quality standards.
CILCO's capital expenditures to meet the NOx emission
requirements could total $69 million by 2003.

CILCO's near-term compliance strategy is being implemented based
upon regulations issued under the Amendments.  CILCO continues to
monitor regulatory actions and develop compliance strategies to
minimize any financial impact.  Due to the deregulation of the
electric industry resulting from the Customer Choice Law,
recovery of compliance costs in the future will depend upon the
number of retail customers CILCO serves and the marketability of
the power it generates in a competitive environment.

CILCO's present environmental compliance strategy includes use of
an existing SO2 scrubber, fuel blending and SO2 allowance
purchases to meet Phase II SO2 emissions targets, and combustion
control modifications to meet Phase II NOx emissions targets.
The USEPA established SO2 emission allowance reserves for power
plants in Phase II.  Allowances are transferable to third parties
at market prices.  The cost of purchased SO2 allowances may be
recovered from customers through the fuel adjustment clause and
has been incorporated into the fuel purchase program.  CILCO is
purchasing additional allowances to meet its annual SO2 tonnage
cap.  Under this strategy, CILCO's generating units will not
require additional SO2 scrubbers, but will require some fuel
blending.







                             30

CILCO is currently in the process of investigating and
implementing potential beneficial re-use for ash (a coal
combustion by-product) generated at both its coal-fired
generating stations.  Providing alternate uses for the ash will
allow CILCO to avoid potential costs associated with the
construction of additional facilities to store and manage this by-
product.

Various initiatives are being discussed both in the United States
and worldwide to reduce so-called "greenhouse gases" such as
carbon dioxide and other by-products of burning fossil fuels.
Reductions of emissions below historical levels could require
significant capital outlays or material increases in annual
operating expenses.

Neither CILCORP, CILCO, nor any of their affiliates has been
identified as a potentially responsible party under federal or
state environmental laws governing waste storage or disposal.

CILCO continues to investigate and/or monitor four former gas
manufacturing plant sites located within its present gas service
territory.  The purpose of these studies is to determine if waste
materials, principally coal tar, are present, whether such waste
materials constitute an environmental or health risk and if CILCO
is responsible for the remediation of any remaining waste
materials at those sites.  Remediation work at one of the four
sites was substantially completed in 1991.  Based on the
operation of a groundwater collection system and other controls,
CILCO received a "No Further Remediation" letter for this site in
1999.  A remedial action plan for the second site was determined
during 1997 and site remediation was completed in 1998.  CILCO
also received a "No Further Remediation" letter for the second
site.  An environmental site assessment and an investigative
sampling plan of the third site were completed in 1999.  Further
work on the third site is planned for 2000.  CILCO has not
determined the ultimate extent of its liability for, or the
ultimate cost of any remediation of, the remaining two sites,
pending further studies.

In 1999, CILCO spent approximately $1.5 million for former gas
manufacturing plant site monitoring, legal fees and feasibility
studies and has received some recovery from insurance
settlements.  A $1.2 million liability is recorded on the Balance
Sheet, representing its minimum obligation expected for coal tar
investigation and remediation.  Coal tar remediation costs
incurred through December 1999, less amounts recovered from
customers, have been deferred as a regulatory asset of $174,000
on the Balance Sheet.

Through December 31, 1999, CILCO has recovered approximately
$6.9 million in coal tar remediation costs from its customers
through a gas rate rider approved by the ICC.  Currently, that
rider allows recovery of prudently incurred coal tar remediation
costs in the year that the expenditures occur.  Under these
circumstances, management believes that the cost of coal tar
remediation will not have a material adverse effect on CILCO's
financial position or results of operations.

                MARKET RISK SENSITIVE INSTRUMENTS

CILCORP is exposed to non-trading risks through its daily
business activities.  These non-trading activities may include
the market or commodity price risk related to CILCO's retail
tariff activity and CILCORP's non-regulated commodity marketing
activities.

The majority of CILCORP's energy sales at the end of 1999 were to
CILCO retail customers in Illinois under tariffs regulated by the
ICC.  Although the Illinois retail electric market is becoming
deregulated (see Item 1.  Business of CILCO - Regulation and Item
7. Management's Discussion and Analysis of

                             31

Financial Condition and Results of Operations - Competition),
prudently incurred costs of fuel used to generate electricity,
purchased power costs and gas purchased for resale may be
recovered from retail customers that purchase energy through
regulated tariffs.  Thus, there is very limited commodity price
risk associated with CILCO's traditional regulated sales.
However, as more customers in Illinois purchase energy on a
competitive basis pursuant to the current Illinois deregulation
timetable, CILCO's exposure to commodity price risk will
increase.  At December 31, 1999, QST's non-Illinois electric
operations and gas trading activities have been accounted for as
discontinued operations (see Management's Discussion and Analysis
of Financial Condition and Results of Operations - QST
Enterprises Discontinued Operations).

The market risk inherent in the activities of CILCORP (exclusive
of regulated Illinois tariff customers) is the potential loss
arising from adverse changes in natural gas and electric
commodity prices relative to the physical and financial positions
that the Company maintains.  The prices of natural gas and
electricity are subject to fluctuations resulting from changes in
supply and demand.  At December 31, 1999, CILCORP engaged in
deregulated electric retail and natural gas sales in Illinois,
including wholesale power purchases and sales to utilize its
electric generating capability.  These deregulated activities had
net open market price risk positions of approximately 52,256 MWh
of electricity and .17 Bcf of natural gas.  A market price
sensitivity of 10% applied to these positions is not material to
the Company.  At December 31, 1999, QST's discontinued operations
had no net open market price risk in electricity.  See CILCORP
Note 9 for a discussion of CILCORP's use of financial derivatives
for hedging purposes.  Due to the high correlation between the
changes in the value of the financial instrument positions held
by CILCORP to the change in price of the underlying commodity,
the net effect on CILCORP's net income resulting from the change
in value of these financial instruments is not expected to be
material.

               VOLUNTARY EARLY RETIREMENT PROGRAMS

In April 1999, CILCO offered Voluntary Early Retirement Programs
to employees in its electric power generation area, including
employees represented by the National Conference of Firemen and
Oilers Local 8.  A total of 86 of the 117 eligible employees
accepted the offer to retire under the programs, effective as
early as June 1, 1999.  These programs resulted in an after-tax
charge to earnings of approximately $6.1 million in the second
quarter of 1999.

In June 1999, the Company offered a similar Voluntary Early
Retirement Program to the management and office and technical
employees not previously included in the program offered in
April.  A total of 141 of the 156 eligible employees accepted the
offer to retire under this program, effective as early as
October 1, 1999.

These programs resulted in an after-tax charge to earnings of
approximately $16.6 million in the third quarter of 1999.

                 IMPACT OF ACCOUNTING STANDARDS

In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" (SFAS 133).  In June 1999, the FASB issued
Statement of Financial Accounting Standards No. 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133" (SFAS 137).
SFAS 137 amends SFAS 133 to require implementation of SFAS 133
for all fiscal quarters of fiscal years beginning after June 15,
2000.  The statement establishes accounting and reporting
standards for derivative instruments and for hedging activities.
It requires that an entity recognize all derivatives (including
certain derivative instruments embedded in other

                             32

contracts) as either assets or liabilities on the balance sheet
and measure those instruments at fair value.  Changes in the
derivative's fair value are to be recognized currently in
earnings, unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's
gains or losses to offset related results of the hedged item in
the income statement and requires that a company must formally
document, designate, and assess the effectiveness of
transactions that receive hedge accounting.

SFAS 133 cannot be applied retroactively.  SFAS 133 must be
applied to (a) derivative instruments and (b) certain derivative
instruments embedded in hybrid contracts.  With respect to
hybrid instruments, a company may elect to apply SFAS 133, as
amended, to (1) all hybrid contracts, (2) only those hybrid
instruments that were issued, acquired, or substantively
modified after December 31, 1997, or (3) only those hybrid
instruments that were issued, acquired, or substantively
modified after December 31, 1998.

The fair value of these derivatives would be recognized as
assets or liabilities on the balance sheet, consistent with the
current accounting treatment for certain freestanding
derivatives.  The Company has not yet quantified the other
effects on the financial statements of adopting SFAS 133.  The
final adoption could increase volatility in earnings and other
comprehensive income.  CILCORP continues to analyze the effects
of adoption of the rules promulgated by SFAS 133.  The Company
is in the process of preparing a comprehensive inventory of all
derivatives that will be subject to disclosure under SFAS 133
and developing procedures for the determination and valuation of
hedge relationships that may exist, and their effectiveness.


































                             33

RESULTS OF OPERATIONS - CILCORP INC. AND SUBSIDIARIES

CILCO ELECTRIC OPERATIONS

The following table summarizes electric operating revenue and
expenses by component.

<TABLE>
<CAPTION>
Components of Electric Income
                          Oct. 19 to  Jan. 1 to
                           Dec. 31,    Oct. 18,
                              1999      1999       1998      1997
                                          (In thousands)
<S>                          <C>       <C>       <C>       <C>
Revenue:
Electric retail              $63,740  |$287,768  $341,143  $318,130
Sales for resale               1,866  |  19,340    18,866    19,966
                             -------  |--------  --------  --------
  Total revenue               65,606  | 307,108   360,009   338,096
                             -------  |--------  --------  --------
Cost of sales:                        |
Cost of fuel                  20,798  |  56,950    94,490    92,230
Purchased power expense        3,012  |  57,239    29,568    22,851
Revenue taxes                  3,324  |  15,406    18,581    15,388
                             -------  |--------  --------  --------
  Total cost of sales         27,134  | 129,595   142,639   130,469
                             -------  |--------  --------  --------
    Gross margin              38,472  | 177,513   217,370   207,627
                             -------  |--------  --------  --------
Operating expenses:                   |
Operation and maintenance             |
  expenses                    17,146  |  94,395    84,502    78,648
Depreciation and amortization  9,202  |  37,868    46,017    43,858
Other taxes                    2,164  |   8,063     8,660     8,583
                             -------  |--------  --------  --------
  Total operating expenses    28,512  | 140,326   139,179   131,089
                             -------  |--------  --------  --------
Fixed charges and other:              |
Cost of equity funds                  |
  capitalized                     --  |      --        --       (35)
Interest on long-term debt     2,777  |  10,995    13,921    14,317
Cost of borrowed funds                |
  capitalized                    (71) |     (86)      (34)      (99)
Other interest                   685  |   2,286     2,340     1,875
                             -------  |--------  --------  --------
  Total                        3,391  |  13,195    16,227    16,058
                             -------  |--------  --------  --------
Income before taxes            6,569  |  23,992    61,964    60,480
  Income taxes                 2,071  |   8,369    21,645    21,901
                             -------  |--------  --------  --------
  Electric income            $ 4,498  |$ 15,623  $ 40,319  $ 38,579
                             =======  |========  ========  ========
</TABLE>
Electric gross margin declined slightly while retail kilowatt-
hour (kWh) sales increased 2% in 1999.  Residential sales
remained relatively constant while commercial sales increased 2%.
Cooling degree days were 15% lower in 1999 than in 1998.
Although total cooling degree days were lower in 1999, extremely
warm weather in July 1999 resulted in greater demands for
electricity.  Industrial sales volumes increased 5% compared to
1998.

                             34

Industrial sales were favorably impacted by customers returning
to retail supply due to the completion of CILCO's Power Quest
pilot program.

Electric gross margin increased 5% in 1998 and retail kWh sales
increased 6%.  Residential sales volumes increased 4% while
commercial sales volumes increased 6%.  Cooling degree days were
28% higher in 1998 than in 1997.  Industrial sales volumes
increased 8% compared to 1997.

Sales for resale increased 12% in 1999 due to increased sales
volumes resulting from higher available capacity and increased
prices per kWh due to industry-wide demand in July.  Sales for
resale decreased 6% in 1998 as a result of lower available
capacity for bulk sales due to unscheduled generating station
outages.  Sales for resale vary based on the energy requirements
of native load customers, neighboring utilities and power
marketers, CILCO's available capacity for bulk power sales, and
the price of power available for sale.  CILCO's activity in the
sales for resale and purchased power markets will continue to
increase as a result of retail deregulation in the Illinois
market.

In 1999, 67% of CILCO's total operating revenue was derived from
the sale of electricity.  Approximately 36% of electric revenue
resulted from residential sales, 31% from commercial sales, 25%
from industrial sales, 6% from sales for resale and 2% from other
sales.  Electric sales, particularly residential and commercial
sales during the summer months, fluctuate based on weather
conditions.

The electric operating revenues of CILCO were derived from the
following sources:

<TABLE>
<CAPTION>
                     Oct. 19 to  Jan. 1 to
                      Dec. 31,    Oct. 18,
                        1999        1999      1998     1997
                                    (In thousands)
<S>                    <C>       <C>       <C>       <C>
Residential            $22,909  |$110,396  $133,687  $125,071
Commercial              22,708  |  94,336   111,830   103,747
Industrial              17,018  |  78,114    87,895    82,318
Sales for resale         1,866  |  19,340    18,866    19,966
Street lighting            305  |   1,111     1,385     1,343
Other revenue              800  |   3,811     6,346     5,651
                       -------  |--------  --------  --------
Total electric revenue $65,606  |$307,108  $360,009  $338,096
                       =======  |========  ========  ========
</TABLE>

The overall level of business activity in CILCO's service
territory and weather conditions are expected to continue to be
the primary factors affecting electric sales in the near term.
CILCO's electric sales will also be affected in the long term by
deregulation and increased competition in the electric utility
industry.

Purchased power increased 104% in 1999.  As a result of
abnormally warm weather during July 1999, CILCO incurred
$33 million of generation and purchased power costs which are
subject to recovery from customers through the fuel adjustment
clause (FAC).  Of this amount, $10 million was recovered in July
and $23 million remained unrecovered at the end of July.  CILCO's
FAC allows it to pass on to customers the cost of unrecovered
fuel and purchased power costs in the next calculated month's FAC
factor.  In this instance, on September 1, 1999, the Illinois
Commerce Commission (ICC) approved a request

                             35

by CILCO to charge certain customers over a 12-month period
(without interest), beginning in September 1999.  In addition, to
avoid the potential loss of purchased power cost recovery from
customers eligible to choose their electricity supplier on
October 1, 1999, CILCO requested and received ICC permission to
charge the larger industrial and commercial customers their share
of this underrecovery in a single month.  These customers may
elect to pay over a period of up to 12 months after making
appropriate arrangements with CILCO.  Also, under the FAC, the
underrecovered costs of fuel and purchased power for a particular
month are both treated as adjustments to cost of fuel expense;
thus, the cost of fuel decreased in 1999 compared to 1998.  At
December 31, 1999, underrecovered fuel and purchased power costs,
including the unbilled portion of the July purchased power,
totaled $12 million.

The ICC will conduct its routine review of the FAC in early 2000
and will determine the prudency of CILCO's electricity purchases.
Any amount of the additional $23 million of electricity purchases
ultimately determined to be imprudent by the ICC would not be
recoverable from CILCO's customers, and therefore would be
expensed by CILCO on its income statement.  CILCO currently
believes these costs to be recoverable through the FAC.  A
significant disallowance of these costs by the ICC would be
material to CILCO's results of operations.

Electric operations and maintenance expenses increased 32% in
1999 compared to 1998.  The increases were mainly due to a
$10.1 million second quarter charge and an $18.4 million third
quarter charge to pension and benefits expense as a result of the
Voluntary Early Retirement Programs offered to Management, Office
and Technical (MOT) employees and to employees in CILCO's
electric power generation area (see Item 7:  Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Voluntary Early Retirement Programs).  Electric
operations and maintenance expenses increased 7% in 1998
primarily due to increases in generation expenses arising from
outages at CILCO's E. D. Edwards facility, and increased electric
distribution overhead line maintenance expense due to a severe
storm in June, which, at its peak, affected power delivery to
approximately half of CILCO's electric customers.  Also
contributing to the increases were higher information technology
costs.  The increases were partially offset by lower outside
service costs and decreases in the actuarially-determined costs
for pensions and post-employment benefits.

The increase in depreciation and amortization expense in 1999 and
1998 reflects additions and replacements of utility plant at
costs in excess of the original cost of the property retired and
increased amortization associated with the implementation of new
computer systems.

Fixed charges and other expenses increased 2% in 1999 compared
to 1998.

The decrease in taxes in 1999 was primarily due to lower pre-tax
income as a result of pension and benefit expenses relating to
the Voluntary Early Retirement Programs.












                             36

CILCO GAS OPERATIONS

The following table summarizes gas operating revenue and
expenses by component.
<TABLE>
<CAPTION>
Components of Gas Income
                         Oct. 19 to   Jan. 1 to
                          Dec. 31,     Oct. 18,
                             1999       1999       1998     1997
                                       (In thousands)
<S>                         <C>        <C>       <C>       <C>
Revenue:
Sale of gas                 $48,750   |$126,845  $166,416  $202,274
Transportation services       1,110   |   4,055     5,911     6,484
                            -------   |--------  --------  --------
  Total revenue              49,860   | 130,900   172,327   208,758
                            -------   |--------  --------  --------
Cost of sales:                        |
Cost of gas                  30,237   |  69,056    93,586   123,531
Revenue taxes                 1,608   |   6,592     7,921     7,079
                            -------   |--------  --------  --------
  Total cost of sales        31,845   |  75,648   101,507   130,610
                            -------   |--------  --------  --------
    Gross margin             18,015   |  55,252    70,820    78,148
                            -------   |--------  --------  --------
Operating expenses:                   |
Operation and maintenance             |
  expenses                    6,259   |  36,085    34,205    31,185
Depreciation and amortization 3,745   |  15,871    19,256    17,647
Other taxes                     666   |   2,442     2,747     3,225
                            -------   |--------  --------  --------
  Total operating expenses   10,670   |  54,398    56,208    52,057
                            -------   |--------  --------  --------
Fixed charges and other:              |
Cost of equity funds                  |
  capitalized                    --   |      --        --        --
Interest on long-term debt    1,101   |   4,361     5,577     5,707
Cost of borrowed funds                |
  capitalized                    --   |      (1)       --        --
Other interest                  272   |     907       937       747
                            -------   |--------  --------  --------
  Total                       1,373   |   5,267     6,514     6,454
                            -------   |--------  --------  --------
Income before taxes           5,972   |  (4,413)    8,098    19,637
  Income taxes                2,402   |  (1,566)    3,443     7,416
                            -------   |--------  --------  --------
  Gas income                $ 3,570   |$ (2,847) $  4,655  $ 12,221
                            =======   |========  ========  ========
</TABLE>


Gas gross margin increased 3% in 1999 compared to 1998.
Residential sales volumes increased 10%.  Commercial sales
volumes remained relatively constant.  Heating degree days were
7% higher in 1999 than in 1998.

Gas gross margin decreased 9% in 1998 compared to 1997.
Residential and commercial sales volumes decreased 17% and 12%,
respectively, primarily due to warmer weather during the heating
season.  Heating degree days were 19% lower in 1998 than in
1997.


                             37

Revenue from gas transportation services decreased 13% in 1999
and 9% in 1998, while the volume of gas transported decreased 8%
in 1999 and 2% in 1998.  The decreases were primarily due to
reduced industrial and residential gas transportation sales in
1999, and reduced commercial gas transportation sales in 1998.

In 1999, 33% of CILCO's total operating revenue was derived from
the sale or transportation of natural gas.  Approximately 60% of
gas revenue resulted from residential sales, 25% from commercial
sales, 5% from industrial sales, 3% from transportation and 7%
from other sales.  Gas sales, particularly residential and
commercial sales during the winter months, fluctuate based on
weather conditions.

The gas operating revenues of CILCO were derived from the
following sources:

<TABLE>
<CAPTION>
                      Oct. 19 to   Jan. 1 to
                       Dec. 31,     Oct. 18,
                         1999         1999     1998     1997
                                   (In thousands)
<S>                     <C>         <C>      <C>      <C>
Residential             $31,553   | $ 77,823 $100,010 $124,440
Commercial               12,071   |   32,461   42,713   51,204
Industrial                2,330   |    6,489    6,627    8,276
Transportation of gas     1,110   |    4,055    5,911    6,484
Other revenue             2,796   |   10,072   17,066   18,354
                        -------   | -------- -------- --------
     Total gas revenue  $49,860   | $130,900 $172,327 $208,758
                        =======   | ======== ======== ========
</TABLE>

The overall level of business activity in CILCO's service
territory and weather conditions are expected to be the primary
factors affecting gas sales in the near term.  CILCO's gas sales
may also be affected by further deregulation at the retail level
in the natural gas industry.

The cost of gas increased 6% in 1999 primarily due to increased
gas sales and higher natural gas prices.  The cost of gas
decreased 24% in 1998, primarily due to decreased gas sales and
lower natural gas prices.  These changes were passed through to
customers via the PGA.

Gas operations and maintenance expenses increased 24% in 1999
and 10% in 1998.  The 1999 increase was mainly due to a
$9.1 million charge to pension and benefits expense in the third
quarter as a result of the Voluntary Early Retirement Program
offered to MOT employees (see Item 7:  Management's Discussion
and Analysis of Financial Condition and Results of Operations -
Voluntary Early Retirement Programs).  The increase for 1998 was
due to higher maintenance and information technology costs,
partially offset by lower outside service costs and decreases in
the actuarially-determined costs for pension and post-employment
benefits.

The increase in depreciation and amortization expenses in 1999
and 1998 reflect additions and replacements of utility plant at
costs in excess of the original cost of the property retired.

Fixed charges and other expenses increased 2% in 1999, compared
to 1998.

The decrease in income taxes in 1999 was due to lower pre-tax
operating income as a result of pension and benefit expenses
relating to the Voluntary Early Retirement Program.

                             38


CILCO OTHER

The following table summarizes other income and deductions:

<TABLE>
<CAPTION>
Components of Other
Income and Deductions
                          Oct. 19 to  Jan. 1 to
                           Dec. 31,    Oct. 18,
                             1999        1999     1998      1997
                                      (In thousands)
<S>                         <C>        <C>       <C>       <C>
Revenue                     $ 2,430   |$ 2,969   $ 1,864   $   272
Expense                      (2,185)  | (4,807)   (1,711)     (619)
                            -------   |-------   -------   -------
  Gross margin                  245   | (1,838)      153      (347)
                            -------   |-------   -------   -------
                                      |
Other income and deductions:          |
Interest income                  72   |    153       251       266
Amortization                     --   |   (505)     (713)     (713)
Operating expenses             (654)  |   (928)   (2,025)   (2,497)
Other taxes                      (1)  |     (3)       (8)      (14)
Preferred stock dividends      (558)  | (2,650)   (3,194)   (3,216)
Other                          (274)  |   (763)   (1,013)   (1,177)
                            -------   |-------   -------   -------
  Total other income                  |
     and deductions          (1,415)  | (4,696)   (6,702)   (7,351)
                            -------   |-------   -------   -------
Income (loss) before taxes   (1,170)  | (6,534)   (6,549)   (7,698)
                            -------   |-------   -------   -------
                                      |
  Income taxes (benefit)       (466)  | (2,435)   (2,616)   (3,049)
                            -------   |-------   -------   -------
                                      |
  Other income (loss)       $  (704)  |$(4,099)  $(3,933)  $(4,649)
                            =======   |=======   =======   =======
</TABLE>

Gross margin decreased in 1999 due to costs of non-regulated
service programs. These include start-up costs for the energy
consulting and performance audit programs as well as on-going
costs for the outdoor lighting program.  The margin on non-
regulated electricity sales in Illinois, outside of CILCO's
service territory, remained relatively constant.  These sales of
electricity are to eligible customers of other utilities' pilot
programs formerly served by CILCO affiliate QST and to other
customers eligible under the Customer Choice Law.












                             39

OTHER BUSINESSES

The following table summarizes Other Businesses' revenue and
expenses.  Other Businesses' results include income earned and
expenses incurred at the Holding Company, CIM, and CVI.

<TABLE>
<CAPTION>
Components of Other Businesses
Net Loss
                          Oct. 19 to  Jan. 1 to
                            Dec. 31    Oct. 18
                             1999        1999      1998      1997
                                     (In thousands)
<S>                         <C>        <C>        <C>       <C>
Revenue:
Leveraged lease revenue     $  1,258  |$  5,504   $11,002   $ 6,539
Interest income                   21  |      99        75        58
Other revenue                  1,342  |  13,528    13,640     4,270
                            --------  |--------   -------   -------
  Total revenue                2,621  |  19,131    24,717    10,867
                            --------  |--------   -------   -------
Expenses:                             |
Gas purchased for resale       2,310  |  10,712    12,502     2,446
Operating expenses               738  |  15,413    11,071    10,146
Depreciation and amortization  2,916  |     139       202       207
Interest expense               9,504  |   4,080     6,482     4,403
Other taxes                        7  |      32        56        26
                            --------  |--------   -------   -------
  Total expenses              15,475  |  30,376    30,313    17,228
                            --------  |--------   -------   -------
Loss before income taxes     (12,854) | (11,245)   (5,596)   (6,361)
  Income taxes                (4,958) |  (3,255)   (2,773)   (3,919)
                            --------  |--------   -------   -------
  Other businesses net loss $ (7,896) |$ (7,990)  $(2,823)  $(2,442)
                            ========  |========   =======   =======
</TABLE>

Leveraged lease revenue decreased in 1999, compared to 1998, due
to a $3.9 million pre-tax gain in 1998 resulting from CIM's
refinancing of a leveraged lease investment.  The income tax
expense related to leveraged lease income was $2.5 million, $4.4
million, and $2.4 million for 1999, 1998, and 1997,
respectively.

Other revenue was favorably affected by revenue from CILCORP
Infraservices Inc. partially offset by lower earnings from CIM
Energy Investments Inc.'s (CEII) investments in the Energy
Investors Fund, L.P., and decreased gas marketing revenue.
CEII, a subsidiary of CIM, holds a 2.5% limited partnership
interest in this fund, which invests in non-regulated,
non-utility, facilities for the production of electricity or
thermal energy.  CIM's total initial investment in this fund was
$5 million.

Interest expense was adversely affected during the October 19
through December 31, 1999, period by the senior notes and bonds
issued to acquire CILCORP.  Depreciation and amortization
expense was higher during this period due to $2.9 million
amortization of goodwill resulting from AES' acquisition price
in excess of the fair value of CILCORP's assets and liabilities.




                             40

Operating expenses increased in 1999 during the period of
January 1 through October 18, compared to 1998, primarily due to
$5.1 million of merger transaction expenses and $4.9 million of
CILCORP Shareholder Return Incentive Compensation Plan expenses
at the Holding Company (see CILCORP Note 15).

The income tax benefit was impacted during the October 19
through December 31 period due to lower net income resulting
from acquisition debt interest expense.  The income tax benefit
increased in 1999 during the January 1 through October 18
period, compared to 1998, due to lower net income related to the
merger transaction costs.



















































                             41

QST ENTERPRISES DISCONTINUED OPERATIONS

Due to uncertainties related to energy deregulation across the
country, the illiquidity of certain energy markets and the
Company's acquisition by AES, the Company is now focusing on the
opportunities in the Illinois energy market resulting from the
deregulation of electricity under the Electric Service Customer
Choice and Rate Relief Law of 1997 (see Management's Discussion
and Analysis - Illinois Electric Deregulation).  As a result of
this decision, QST Enterprises Inc. and QST Energy ceased
operations during the fourth quarter of 1998, except for
fulfillment of contractual commitments for 1999 and beyond, and
recorded loss provisions for the discontinued energy operations.

The results of QST and its past and present subsidiaries - QST
Communications, QST Environmental and QST Energy - are reported
in 1999 and prior periods as discontinued operations.  The tables
below show the components of the discontinued operations.

Loss from operations of discontinued businesses, net of tax:
<TABLE>
<CAPTION>
                                  Oct. 19 to    Jan. 1 to
                                   Dec. 31,      Oct. 18,
                                     1999          1999      1998    1997
<S>                                  <C>        <C>      <C>       <C>
QST Communications, net of tax of             |
  $(463) and $(576)                  $  --    | $  --    $   (704) $   (876)
QST Enterprises (excluding QST                |
  Environmental and QST                       |
  Communications), net of tax of              |
  $(140), $(15,331) and $(5,893)      (213)   |    --     (23,369)   (8,967)
QST Environmental, net of tax of              |
  $(221), $(484) and $(829)             --    |  (407)       (952)  (24,283)
                                     -----    | -----    --------  --------
                                     $(213)   | $(407)   $(25,025) $(34,126)
                                     =====    | =====    ========  ========
</TABLE>

Estimated (loss) realized gain on sale/disposal of assets of
discontinued businesses, net of tax:

<TABLE>
<CAPTION>
                                  Oct. 19 to    Jan. 1 to
                                   Dec. 31,      Oct. 18,
                                     1999          1999     1998     1997
<S>                                 <C>          <C>      <C>       <C>
QST Enterprises (excluding QST              |
  Environmental), net of tax of             |
  $4,640                            $ --    |    $ --     $ 7,057   $    --
QST Environmental, net of tax               |
  of $(2,626) and $1,889              --    |      --      (3,940)    2,712
                                    ----    |    ----     -------   -------
                                    $ --    |    $ --     $ 3,117   $ 2,712
                                    ====    |    ====     =======   =======
</TABLE>






                             42

QST Enterprises' (excluding QST Environmental) financial results
for the period from January 1, 1999, through October 18, 1999,
were reflected in the discontinued operations liability which was
accrued at the end of 1998, resulting in no net income or loss.
Results from October 19, 1999, through December 31, 1999, were in
excess of the liability and are shown as a loss for that period.

In August 1998, QST Enterprises sold its wholly-owned fiber optic-
based telecommunications subsidiary, QST Communications, to
McLeod USA for $20 million cash and McLeod stock options then
valued at $5.5 million, resulting in an after-tax gain of
approximately $8.3 million which is included in the second table
above.  Operating losses incurred by QST Communications prior to
the sale are shown in the first table.  The gain from the sale of
QST Communications is partially offset by the estimated loss on
discontinuance of QST Energy.

In June 1999, QST Enterprises sold the outstanding common stock
of QST Environmental to MACTEC, Inc. for approximately
$18 million in cash.  ESE Land and its subsidiaries were not
included in this sale and, therefore, QST Environmental's
investment in ESE Land was transferred to QST Enterprises Inc.
prior to the sale.  No after-tax gain or loss was realized from
the sale.  QST Environmental's operating results through May 30,
1999, are included in the January 1 through October 18 loss from
operations of discontinued businesses.

In February 1999, QST Energy notified two of its California
commercial customers that they were in default of their
contracts with QST Energy as a result of not paying QST Energy
for energy delivered.  QST Energy filed two suits in the U.S.
District Court, Central District of Illinois, seeking payment.
In March, the customers filed a suit in California Superior
Court, Alameda County, California, alleging that QST Energy was
in breach of the contract.  This suit was subsequently removed
to U.S. District Court, Northern District of California.  QST
Energy has moved to dismiss this suit filed in California as
duplicative of the suits pending in Illinois, and the customers
similarly filed motions to dismiss the suits pending in
Illinois.  QST Energy cannot predict the ultimate outcome of
this matter, but intends to vigorously pursue its claims to
collect all amounts due from the customers.  The accounts
receivable reflected in CILCORP's consolidated balance sheet at
December 31, 1999, for these two customers, totaled
$15.4 million, excluding interest of approximately $1.3 million.
Under the terms of the contracts, QST Energy has terminated
delivery of electricity to the two customers.

In June 1999, QST Energy agreed to pay $3 million to the
remaining California commercial customers to discontinue
electricity service.  These payments, as well as losses on
energy sales during 1999 (primarily electricity to the
California commercial customers) were included in QST's estimate
for loss related to discontinued operations recorded in December
1998.

The 1998 loss from operations of QST Enterprises (excluding QST
Environmental and QST Communications) shown in the first table
primarily results from energy trading operations, negative
electric margin generated by QST Energy's commercial customers,
and the marking to market at December 31, 1998, of QST's
contractual commitments to supply electricity or natural gas to
customers after 1998.  Other factors affecting the 1998 loss were
an unprecedented sudden increase in wholesale electricity prices
during June 1998 and increased administrative and general costs.

As shown in the second table above, QST Environmental recorded an
after-tax charge to income of $3.9 million in 1998 to record
estimated losses related to the sale or discontinuance of its
business, including estimated losses related to assets and
obligations, such as the laboratories, not integral to the
environmental consulting business activities sold in 1999.  QST

                             43

Environmental's 1998 loss from operations of discontinued
businesses, as shown in the first table, resulted primarily from
losses at its analytical laboratory operations, partially offset
by approximately $.6 million earned by its consulting business.

An after-tax gain of $2.7 million from the sale of the
discontinued operations of QST Environmental's subsidiary, ESE
Land, is shown for 1997 in the second table above.





















































                             44

RESULTS OF OPERATIONS - CENTRAL ILLINOIS LIGHT COMPANY

CILCO ELECTRIC OPERATIONS

The following table summarizes electric operating revenue and
expenses by component.

<TABLE>
<CAPTION>
Components of Electric Income
                                  1999           1998         1997
                                           (In thousands)
<S>                             <C>            <C>          <C>
Revenue:
Electric retail                 $351,508       $341,143     $318,130
Sales for resale                  21,206         18,866       19,966
                                --------       --------     --------
  Total revenue                  372,714        360,009      338,096
                                --------       --------     --------
Cost of sales:
Cost of fuel                      77,748         94,490       92,230
Purchased power expense           60,251         29,568       22,851
Revenue taxes                     18,730         18,581       15,388
                                --------       --------     --------
  Total cost of sales            156,729        142,639      130,469
                                --------       --------     --------
    Gross margin                 215,985        217,370      207,627
                                --------       --------     --------
Operating expenses:
Operation & maintenance expenses 111,541         84,502       78,648
Depreciation and amortization     47,070         46,017       43,858
Other taxes                       10,227          8,660        8,583
                                --------       --------     --------
  Total operating expenses       168,838        139,179      131,089
                                --------       --------     --------
Fixed charges and other:
Cost of equity funds capitalized      --             --          (35)
Interest on long-term debt        13,772         13,921       14,317
Cost of borrowed funds
  capitalized                       (157)           (34)         (99)
Other interest                     2,971          2,340        1,875
                                --------       --------     --------
  Total                           16,586         16,227       16,058
                                --------       --------     --------
Income before taxes               30,561         61,964       60,480
  Income taxes                    10,440         21,645       21,901
                                --------       --------     --------
  Electric income               $ 20,121       $ 40,319     $ 38,579
                                ========       ========     ========
</TABLE>
Electric gross margin declined slightly while retail kilowatt
hour (kWh) sales increased 2% in 1999 compared to 1998.
Residential sales remained relatively constant while commercial
sales increased 2%.  Cooling degree days were 15% lower in 1999
than in 1998.  Although total cooling degree days were lower in
1999, extremely warm weather in July 1999 resulted in greater
demand for electricity.  Industrial sales volumes increased 5%
compared to 1998.  Industrial sales were favorably impacted by
customers returning to retail supply due to the completion of
CILCO's Power Quest pilot program.

Electric gross margin increased 5% in 1998 and retail kWh sales
increased 6%.  Residential sales volumes increased 4% while
commercial sales volumes

                             45

increased 6%.  Cooling degree days were 28% higher in 1998 than
in 1997.  Industrial sales volumes increased 8% compared to 1997.

Sales for resale increased 12% in 1999 due to increased sales
volumes resulting from higher available capacity and increased
prices per kWh due to higher industry-wide demand in July.  Sales
for resale decreased 6% in 1998 as a result of lower available
capacity for bulk sales due to unscheduled generating station
outages.  Sales for resale vary based on the energy requirements
of native load customers, neighboring utilities and power
marketers, CILCO's available capacity for bulk power sales, and
the price of power available for sale.  CILCO's activity in the
sales for resale and purchased power markets will continue to
increase as a result of retail deregulation in the Illinois
market.

The overall level of business activity in CILCO's service
territory and weather conditions are expected to continue to be
the primary factors affecting electric sales in the near term.
CILCO's electric sales will also be affected in the long term by
deregulation and increased competition in the electric utility
industry.

Purchased power increased 104% in 1999.  As a result of
abnormally warm weather during July 1999, CILCO incurred
$33 million of generation and purchased power costs which are
subject to recovery from customers through the fuel adjustment
clause (FAC).  Of this amount, $10 million was recovered in July
and $23 million remained unrecovered at the end of July.  CILCO's
FAC allows it to pass on to customers the cost of unrecovered
fuel and purchased power costs in the next calculated month's FAC
factor.  In this instance, on September 1, 1999, the ICC approved
a request by CILCO to charge certain customers over a 12-month
period (without interest), beginning in September 1999.  In
addition, to avoid the potential loss of purchased power cost
recovery from customers eligible to choose their electricity
supplier on October 1, 1999, CILCO requested and received ICC
permission to charge the larger industrial and commercial
customers their share of this underrecovery in a single month.
These customers may elect to pay over a period of up to 12 months
after making appropriate arrangements with CILCO.  Also, under
the FAC, the underrecovered costs of fuel and purchased power for
a particular month are both treated as adjustments to cost of
fuel expense; thus, the cost of fuel decreased in 1999 compared
to 1998.  At December 31, 1999, underrecovered fuel and purchased
power costs, including the unbilled portion of the July purchased
power, totaled $12 million.

The ICC will conduct its routine review of the FAC in 2000 and
will determine the prudency of CILCO's electricity purchases.
Any amount of the additional $23 million of electricity purchases
ultimately determined to be imprudent by the ICC would not be
recoverable from CILCO's customers, and therefore would be
expensed by CILCO on its income statement.  CILCO currently
believes these costs to be recoverable through the FAC.  A
significant disallowance of these costs by the ICC would be
material to CILCO's results of operations.

Electric operations and maintenance expenses increased 32% in
1999 compared to 1998.  The increases were mainly due to a
$10.1 million second quarter charge and an $18.4 million third
quarter charge to pension and benefits expense as a result of the
Voluntary Early Retirement Programs offered to Management, Office
and Technical (MOT) employees and to employees in CILCO's
electric power generation area (see Item 7:  Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Voluntary Early Retirement Programs).  Electric
operations and maintenance expenses increased 7% in 1998
primarily due to increases in generation expenses arising from
outages at CILCO's E. D. Edwards facility, and increased electric
distribution overhead line maintenance expense due to a severe
storm in June, which, at its peak, affected power delivery to
approximately half of CILCO's electric customers.

                             46

Also contributing to the increases were higher information
technology costs.  The increases were partially offset by lower
outside service costs and decreases in the actuarially-determined
costs for pensions and post-employment benefits.

The increase in depreciation and amortization expense in 1999 and
1998 reflects additions and replacements of utility plant at
costs in excess of the original cost of the property retired and
increased amortization associated with the implementation of new
computer systems.

Fixed charges and other expenses increased 2% in 1999 compared to
1998.

The decrease in income taxes in 1999 was primarily due to lower
pre-tax income as a result of pension and benefit expenses
relating to the Voluntary Early Retirement Programs.














































                             47

CILCO GAS OPERATIONS

The following table summarizes gas operating revenue and
expenses by component.
<TABLE>
<CAPTION>
Components of Gas Income
                                  1999           1998        1997
                                           (In thousands)
<S>                             <C>             <C>         <C>
Revenue:
Sale of gas                     $175,595        $166,416    $202,274
Transportation services            5,165           5,911       6,484
                                --------        --------    --------
  Total revenue                  180,760         172,327     208,758
                                --------        --------    --------
Cost of sales:
Cost of gas                       99,293          93,586     123,531
Revenue taxes                      8,200           7,921       7,079
                                --------        --------    --------
  Total cost of sales            107,493         101,507     130,610
                                --------        --------    --------
    Gross margin                  73,267          70,820      78,148
                                --------        --------    --------
Operating expenses:
Operation & maintenance expenses  42,344          34,205      31,185
Depreciation and amortization     19,616          19,256      17,647
Other taxes                        3,108           2,747       3,225
                                --------        --------    --------
  Total operating expenses        65,068          56,208      52,057
                                --------        --------    --------
Fixed charges and other:
Interest on long-term debt         5,462           5,577       5,707
Cost of borrowed funds
  capitalized                         (1)             --          --
Other interest                     1,179             937         747
                                --------        --------    --------
  Total                            6,640           6,514       6,454
                                --------        --------    --------
Income before taxes                1,559           8,098      19,637
  Income taxes                       836           3,443       7,416
                                --------        --------    --------
  Gas income                    $    723        $  4,655    $ 12,221
                                ========        ========    ========
</TABLE>

Gas gross margin increased 3% in 1999 compared to 1998.
Residential sales volumes increased 10%.  Commercial sales
volumes remained relatively constant.  Heating degree days were
7% higher in 1999 than in 1998.

Gas gross margin decreased 9% in 1998 compared to 1997.
Residential and commercial sales volumes decreased 17% and 12%,
respectively, primarily due to warmer weather during the heating
season.  Heating degree days were 19% lower in 1998 than in
1997.

Revenue from gas transportation services decreased 13% in 1999
and 9% in 1998, while the volume of gas transported decreased 8%
in 1999 and 2% in 1998.  The decreases were primarily due to
reduced industrial and residential gas transportation sales in
1999, and reduced commercial gas transportation sales in 1998.


                             48

The overall level of business activity in CILCO's service
territory and weather conditions are expected to be the primary
factors affecting gas sales in the near term.  CILCO's gas sales
may also be affected by further deregulation at the retail level
in the natural gas industry.

The cost of gas increased 6% in 1999 primarily due to increased
gas sales and higher natural gas prices.  The cost of gas
decreased 24% in 1998, primarily due to decreased gas sales and
lower natural gas prices.  These changes were passed through to
customers via the PGA.

Gas operations and maintenance expenses increased 24% in 1999
and 10% in 1998.  The 1999 increase was mainly due to a
$9.1 million charge to pension and benefits expense in the third
quarter as a result of the Voluntary Early Retirement Program
offered to MOT employees (see Item 7:  Management's Discussion
and Analysis of Financial Condition and Results of Operations -
Voluntary Early Retirement Programs).  The increase for 1998 was
due to higher maintenance and information technology costs,
partially offset by lower outside service costs and decreases in
the actuarially-determined costs for pension and post-employment
benefits.

The increase in depreciation and amortization expenses in 1999
and 1998 reflect additions and replacements of utility plant at
costs in excess of the original cost of the property retired.

Fixed charges and other expenses increased 2% in 1999, compared
to 1998.

The decrease in income taxes in 1999 was due to lower pre-tax
operating income as a result of pension and benefit expenses
relating to the Voluntary Early Retirement Program.
































                             49

CILCO OTHER

The following table summarizes other income and deductions:

<TABLE>
<CAPTION>
Components of Other
Income and Deductions
                                  1999           1998         1997
                                           (In thousands)
<S>                             <C>             <C>         <C>
Revenue                         $ 5,399         $ 1,864     $   272
Expense                          (6,992)         (1,711)       (619)
                                -------         -------     -------
  Gross margin                   (1,593)            153        (347)
                                -------         -------     -------
Other income and deductions:
Interest income                     225             251         266
Amortization                       (505)           (713)       (713)
Operating expenses               (1,582)         (2,025)     (2,497)
Other taxes                          (4)             (8)        (14)
Preferred stock dividends        (3,208)         (3,194)     (3,216)
Other                            (1,037)         (1,013)     (1,177)
                                -------         -------     -------
 Total other income & deductions (6,111)         (6,702)     (7,351)
                                -------         -------     -------

Income (loss) before taxes       (7,704)         (6,549)     (7,698)
                                -------         -------     -------

  Income taxes (benefit)         (2,901)         (2,616)     (3,049)
                                -------         -------     -------
    Other income (loss)         $(4,803)        $(3,933)    $(4,649)
                                =======         =======     =======
</TABLE>

Gross margin decreased in 1999 due to costs of non-regulated
service programs.  Theses include start-up costs for the energy
consulting and performance audit programs as well as on-going
costs for the outdoor lighting program.  The margin on non-
regulated electricity sales in Illinois, outside of CILCO's
service territory, remained relatively constant.  These sales of
electricity are to eligible customers of other utilities' pilot
programs formerly served by CILCO affiliate QST and to other
customers eligible under the Customer Choice Law.

















                             50

Item 8.  Financial Statements and Supplementary Data

Index to Financial Statements:
                                                 Page
                                                 ----
                             CILCORP

Management's Report                                52

Report of Independent Public Accountants           53

Consolidated Statements of Income               54-55

Consolidated Balance Sheets                     56-57

Consolidated Statements of Cash Flows           58-59

Statements of Segments of Business              60-63

Consolidated Statements of Stockholders' Equity 64-65

Notes to Consolidated Financial Statements      66-87


                                 CILCO

Management's Report                                88

Report of Independent Public Accountants           89

Consolidated Statements of Income                  90

Consolidated Balance Sheets                     91-92

Consolidated Statements of Cash Flows           93-94

Statements of Segments of Business              95-97

Consolidated Statements of Retained Earnings       98

Notes to Consolidated Financial Statements     99-114




















                             51

                       MANAGEMENT'S REPORT

Management has prepared the accompanying financial statements and
notes for CILCORP Inc. and its consolidated subsidiaries in
accordance with generally accepted accounting principles.
Estimates and judgments used in developing these statements are
the responsibility of management.  Financial data presented
throughout this report is consistent with these statements.

CILCORP Inc. maintains a system of internal accounting controls
which management believes is adequate to provide reasonable
assurance as to the integrity of accounting records and the
protection of assets.  Such controls include established policies
and procedures and the selection and training of qualified
personnel.

The financial statements have been audited by CILCORP's
independent public accountants, Arthur Andersen LLP.  Their audit
was conducted in accordance with generally accepted auditing
standards and included an assessment of selected internal
accounting controls only to determine the scope of their audit
procedures.  The report of the independent public accountants is
contained in this Form 10-K annual report.



                                             P. D. Stinson
                                             President




                                             T. D. Hutchinson
                                             Controller and Chief
                                             Financial Officer




























                             52

            REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Board of Directors of CILCORP Inc.:

We have audited the accompanying consolidated balance sheets of
CILCORP Inc. (an Illinois corporation) and subsidiaries as of
December 31, 1999, and 1998, and the related consolidated
statements of income, cash flows, stockholders' equity and
segments of business for the periods October 19, 1999, through
December 31, 1999, and January 1, 1999, through October 18, 1999,
and the years ended December 31, 1998 and 1997.  These financial
statements and the schedules referred to below are the
responsibility of the Company's management.  Our responsibility
is to express an opinion on these financial statements and
schedules based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States.  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 CILCORP Inc. and subsidiaries as of December 31, 1999, and
1998, and the results of their operations and their cash flows
for the periods October 19, 1999, through December 31, 1999, and
January 1, 1999, through October 18, 1999, and the years ended
December 31, 1998 and 1997, in conformity with accounting
principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole.  The financial
statement schedules listed in Item 14(a)2 are presented for
purposes of complying with the Securities and Exchange
Commission's rules and are not a required part of the basic
financial statements.  These schedules have been subjected to the
auditing procedures applied in our audits of the basic financial
statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.



                                             Arthur Andersen LLP
Chicago, Illinois
January 28, 2000














                             53

<TABLE>
                  CILCORP Inc. and Subsidiaries
                Consolidated Statements of Income
<CAPTION>
                                 Oct. 19 to  Jan. 1 to
                                  Dec. 31,    Oct. 18,
                                    1999       1999      1998    1997
                                            (In thousands)
<S>                               <C>         <C>      <C>      <C>
Revenue:
CILCO Electric                    $ 65,606   |$307,108 $360,009 $338,096
CILCO Gas                           49,860   | 130,900  172,327  208,758
CILCO Other                          2,502   |   3,122    2,115      538
Other Businesses                     2,621   |  19,131   24,717   10,867
                                  --------   |-------- -------- --------
  Total                            120,589   | 460,261  559,168  558,259
                                  --------   |-------- -------- --------
Operating Expenses:                          |
Fuel for Generation and                      |
  Purchased Power                   23,810   | 114,189  124,058  115,081
Gas Purchased for Resale            32,547   |  79,768  106,088  125,977
Other Operations and Maintenance    26,982   | 151,628  133,514  123,095
Depreciation and Amortization       15,863   |  54,383   66,188   62,425
State and Local Revenue Taxes        4,932   |  21,998   26,502   22,467
Other Taxes                          2,838   |  10,540   11,471   11,848
                                  --------   |-------- --------  -------
  Total                            106,972   | 432,506  467,821  460,893
                                  --------   |-------- --------  -------
Fixed Charges and Other:                     |
Interest Expense                    14,339   |  22,629   29,257   27,049
Preferred Stock Dividends                    |
  of Subsidiary                        558   |   2,650    3,194    3,216
Allowance for Funds Used During              |
  Construction                         (71)  |     (87)     (34)    (134)
Other                                  274   |     763    1,013    1,177
                                  --------   |-------- -------- --------
Total                               15,100   |  25,955   33,430   31,308
                                  --------   |-------- -------- --------
Income from Continuing Operations            |
  Before Income Taxes               (1,483)  |   1,800   57,917   66,058
Income Taxes                          (951)  |   1,113   19,699   22,349
                                  --------   |-------- -------- --------
  Net Income from Continuing                 |
    Operations Before                        |
    Extraordinary Item                (532)  |     687   38,218   43,709
Loss from Operations of                      |
  Discontinued Businesses, Net of            |
  Tax of $(140), $(221), $(16,278)           |
  and $(7,298)                        (213)  |    (407) (25,025) (34,126)
Gain on Sale/Disposal of Assets              |
  of Discontinued Businesses, Net            |
  of Tax of $2,014 and $1,889           --   |      --    3,117    2,712
Extraordinary Item                      --   |      --       --    4,100
                                  --------   |-------- -------- --------
Net Income                        $   (745)  |$    280 $ 16,310 $ 16,395
                                             |
Other Comprehensive Income              --   |     --      (169)    (317)
                                  --------   |-------- -------- --------
Comprehensive Income              $   (745)  |$    280 $ 16,141 $ 16,078
                                  ========   |======== ======== ========

                             54

<FN>
The accompanying Notes to Financial Statements are an integral part of these
statements.
</TABLE>

























































                             55

<TABLE>
                  CILCORP Inc. and Subsidiaries
                   Consolidated Balance Sheets
<CAPTION>
Assets (As of December 31)                 1999           1998
                                            (In thousands)
<S>                                    <C>            <C>
Current Assets:
Cash and Temporary Cash Investments    $   11,220   | $    1,669
Receivables, Less Reserves                          |
  of $1,296 and $3,411                     60,072   |    134,548
Accrued Unbilled Revenue                   35,526   |     39,339
Fuel, at Average Cost                      14,392   |     13,431
Materials and Supplies, at Average Cost    16,165   |     15,435
Gas in Underground Storage, at Avg. Cost   21,196   |     20,494
FAC Underrecoveries                        12,024   |         --
Prepayments and Other                       8,946   |      7,646
                                       ----------   | ----------
  Total Current Assets                    179,541   |    232,562
                                       ----------   | ----------
Investments and Other Property:                     |
Investment in Leveraged Leases            143,697   |    146,977
Other Investments                          27,219   |     25,037
                                       ----------   | ----------
  Total Investments and Other Property    170,916   |    172,014
                                       ----------   | ----------
Property, Plant and Equipment:                      |
Utility Plant, at Original Cost                     |
  Electric                                624,889   |  1,237,885
  Gas                                     208,520   |    417,585
                                       ----------   | ----------
                                          833,409   |  1,655,470
Less-Accumulated Provision for Depr.        8,898   |    812,630
                                       ----------   | ----------
                                          824,511   |    842,840
Construction Work in Progress              38,068   |     30,075
Other, Net of Depreciation                    298   |      7,755
                                       ----------   | ----------
  Total Property, Plant and Equipment     862,877   |    880,670
                                       ----------   | ----------
Other Assets:                                       |
Goodwill, Net of Accumulated                        |
  Amortization of $2,881                  569,983   |         --
Other                                      47,636   |     27,694
                                       ----------   | ----------
  Total Other Assets                      617,619   |     27,694
                                       ----------   | ----------
                                                    |
  Total Assets                         $1,830,953   | $1,312,940
                                       ==========   | ==========
<FN>
The accompanying Notes to Financial Statements are an integral
part of these balance sheets.
</TABLE>







                             56

<TABLE>
                  CILCORP Inc. and Subsidiaries
                   Consolidated Balance Sheets
<CAPTION>
Liabilities and Stockholders' Equity (As of December 31)
                                            1999           1998
                                             (In thousands)
<S>                                    <C>            <C>
Current Liabilities:
Current Portion of Long-Term Debt      $   30,000    |$   13,027
Notes Payable                              91,900    |    96,200
Accounts Payable                           41,429    |   128,845
Accrued Taxes                              14,670    |     8,262
Accrued Interest                           18,296    |     9,994
FAC/PGA Overrecoveries                        127    |       304
Other                                       5,742    |    14,316
                                       ----------    |----------
  Total Current Liabilities               202,164    |   270,948
                                       ----------    |----------
Long-Term Debt                            730,434    |   285,552
                                       ----------    |----------
Deferred Credits and Other Liabilities:              |
Deferred Income Taxes                     237,557    |   239,305
Regulatory Liab. of Regulated Sub.         31,367    |    46,346
Deferred Investment Tax Credit             17,791    |    19,450
Other                                      77,432    |    49,681
                                       ----------    |----------
  Total Deferred Credits                  364,147    |   354,782
                                       ----------    |----------
Preferred Stock of Subsidiary              66,120    |    66,120
                                       ----------    |----------
Stockholders' Equity:                                |
Common Stock, no par value;                          |
  Authorized 10,000 and                              |
  50,000,000 shares - Outstanding 1,000              |
  and 13,610,680 shares                        --    |   192,853
Additional Paid-in Capital                468,833    |        --
Retained Earnings                            (745)   |   143,530
Accumulated Other Comprehensive Income         --    |      (845)
                                       ----------    |----------
  Total Stockholders' Equity              468,088    |   335,538
                                       ----------    |----------
  Total Liabilities and                              |
    Stockholders' Equity               $1,830,953    |$1,312,940
                                       ==========    |==========
<FN>
The accompanying Notes to Financial Statements are an integral
part of these balance sheets.
</TABLE>













                             57

<TABLE>
                  CILCORP Inc. and Subsidiaries
              Consolidated Statements of Cash Flows
<CAPTION>
                                   Oct. 19 to  Jan. 1 to
                                     Dec. 31,   Oct. 18,
                                       1999      1999      1998     1997
                                           (In thousands)
<S>                                <C>          <C>       <C>       <C>
Cash Flows from Operating
  Activities:
Net Income from Continuing                    |
  Operations Before Preferred                 |
  Dividends                        $      26  | $  3,337  $ 41,412  $ 46,925
                                   ---------  | --------  --------  --------
                                              |
Adjustments to Reconcile Net Income           |
  to Net Cash Provided by Operating           |
  Activities:                                 |
    Non-Cash Income                     (996) |   (4,830)   (6,150)   (4,102)
    Cash Receipts in Excess of Debt           |
      Service on Leases                1,099  |    8,943     5,518        --
    Depreciation and Amortization     15,863  |   54,383    66,188    62,416
    Deferred Income Taxes,                    |
      Investment Tax Credit and               |
      Regulatory Liability of                 |
      Subsidiary, Net                 (1,445) |  (20,419)   (7,742)   (3,342)
Changes in Operating Assets and               |
  Liabilities:                                |
    Decrease (Increase) in Accounts           |
      Receivable and Accrued                  |
      Unbilled Revenue               (16,488) |   10,527     5,418       (74)
  (Increase) Decrease in                      |
    Inventories                        2,379  |   (4,873)   (5,093)    3,294
  Increase (Decrease) in Accounts             |
    Payable                          (13,300) |   (6,276)   12,938    (1,961)
  Increase in Accrued Taxes            2,749  |    8,372        46     3,893
  (Increase) Decrease in Other                |
    Assets                           (10,619) |  (29,807)    2,019   (17,027)
  Increase (Decrease)in Other                 |
    Liabilities                            3  |   36,076      (197)   (9,039)
                                   ---------  | --------  --------  --------
Total Adjustments                    (20,755) |   52,096    72,945    34,058
                                   ---------  | --------  --------  --------
Net Cash Provided by Operating                |
  Activities                         (20,729) |   55,433   114,357    80,983
Net Cash Provided by (Used in)                |
  Operating Activities of                     |
  Discontinued Operations               (447) |   10,187   (30,123)   10,031
                                   ---------  | --------  --------  --------
Cash Flow from Operations            (21,176) |   65,620    84,234    91,014
                                   ---------  | --------  --------  --------








                            58

Cash Flows from Investing                     |
  Activities:                                 |
Additions to Plant                    (9,662) |  (45,473)  (67,112)  (55,055)
Purchase of Long-Term Investments         --  |       --        --    (6,933)
Other                                 (1,120) |   (2,454)   (6,703)   (1,242)
                                   ---------  | --------  --------  --------
Net Cash Used in Investing                    |
  Activities                         (10,782) |  (47,927)  (73,815)  (63,230)
Net Cash Provided by (Used in)                |
  Investing Activities of                     |
  Discontinued Operations                 --  |   17,376     9,107     3,310
                                   ---------  | --------  --------  --------
Cash Flow from Investing                      |
  Activities                         (10,782) |  (30,551)  (64,708)  (59,920)
                                   ---------  | --------  --------  --------
Cash Flows from Financing                     |
  Activities:                                 |
Net Increase (Decrease) in                    |
  Short-Term Debt                    (10,177) |    5,877    34,050    34,250
Net Increase (Decrease) in                    |
  Long-Term Debt                     461,577  |     (980)  (25,807)  (22,954)
Common Dividends Paid                     --  |  (29,813)  (33,482)  (33,482)
Preferred Dividends Paid                (836) |   (2,372)   (3,194)   (3,216)
Common Stock Issued (Redeemed)      (885,669) |       --        --        --
Additional Paid-in Capital           468,833  |       --        --        --
                                   ---------  | --------  --------  --------
Net Cash Provided by (Used in)                |
  Financing Activities of                     |
  Continuing Operations               33,728  |  (27,288)  (28,433)  (25,402)
Net Cash Provided by (Used in)                |
  Financing Activities of                     |
  Discontinued Operations                 --  |       --        --       (57)
                                   ---------  | --------  --------  --------
Net Cash Used in Financing                    |
  Activities                          33,728  |  (27,288)  (28,433)  (25,459)
                                   ---------  | --------  --------  --------
Net Increase (Decrease) in Cash               |
  and Temporary Cash Investments       1,770  |    7,781    (8,907)    5,635
Cash and Temp. Cash Investments               |
  at Beginning of Period               9,450  |    1,669    10,576     4,941
                                   ---------  | --------  --------  --------
Cash and Temporary Cash                       |
  Investments at End of Period     $  11,220  | $  9,450  $  1,669  $ 10,576
                                   =========  | ========  ========  ========
<FN>
The accompanying Notes to Financial Statements are an integral
part of these statements.
</TABLE>













                             59

<TABLE>
                  CILCORP Inc. and Subsidiaries
               Statements of Segments of Business
<CAPTION>
October 19 to December 31, 1999
                  CILCO      CILCO      CILCO    Other    Discont.
                 Electric     Gas       Other  Businesses Operatns.   Total
                                           (In thousands)
<S>               <C>      <C>      <C>       <C>         <C>       <C>
Revenues          $ 65,606 $ 49,860 $  2,430  $    2,600  $     --  $  120,496
Interest income         --       --       72          21        --          93
                  -------- -------- --------  ----------  --------  ----------
  Total             65,606   49,860    2,502       2,621        --     120,589
                  -------- -------- --------  ----------  --------  ----------
Operating
  Expenses          46,444   38,770    2,840       3,055        --      91,109
Depreciation and
  Amortization       9,202    3,745       --       2,916        --      15,863
                  -------- -------- --------  ----------  --------  ----------
  Total             55,646   42,515    2,840       5,971        --     106,972
                  -------- -------- --------  ----------  --------  ----------
Interest expense     3,462    1,373       --       9,504        --      14,339
Preferred stock
  Dividends             --       --      558          --        --         558
Fixed charges and
  other expenses       (71)      --      274          --        --         203
                  -------- -------- --------  ----------  --------  ----------
Total                3,391    1,373      832       9,504        --      15,100
                  -------- -------- --------  ----------  --------  ----------
Income from
  continuing
  oper. before
  income taxes       6,569    5,972   (1,170)    (12,854)       --      (1,483)
Income taxes         2,071    2,402     (466)     (4,958)       --        (951)
                  -------- -------- --------  ----------  --------  ----------
Net income from
  continuing
  operations         4,498    3,570     (704)     (7,896)       --        (532)
Effect of
  discontinued
  operations            --       --       --          --      (213)       (213)
                  -------- -------- --------  ----------  --------  ----------
Segment net
  income          $  4,498 $  3,570 $   (704) $   (7,896) $   (213) $     (745)
                  ======== ======== ========  ==========  ========  ==========
Capital
  expenditures    $  7,071 $  2,591 $     --  $       --  $     --  $    9,662
Revenue from
  major customer
  Caterpillar
  Inc.            $  7,423 $    251 $    231  $      649  $     --  $    8,554

Segment assets    $754,961 $290,107 $  5,048  $1,177,144  $ 29,542  $2,256,802
Consolidation
  adjustments       (2,121)    (825)      --    (422,767)     (136)   (425,849)
                  -------- -------- --------  ----------  --------  ----------
  Total assets    $752,840 $289,282 $  5,048  $  754,377  $ 29,406  $1,830,953
                  ======== ======== ========  ==========  ========  ==========
</TABLE>


                             60

<TABLE>
<CAPTION>
January 1 to October 18, 1999
                  CILCO      CILCO      CILCO     Other    Discont.
                 Electric     Gas       Other   Businesses Operatns.   Total
                                           (In thousands)
<S>              <C>       <C>      <C>       <C>         <C>       <C>
Revenues         $307,108  $130,900 $  2,969  $   19,032  $     --  $  460,009
Interest income        --        --      153          99        --         252
                 --------  -------- --------  ----------  --------  ----------
  Total           307,108   130,900    3,122      19,131        --     460,261
                 --------  -------- --------  ----------  --------  ----------
Operating
  Expenses        232,053   114,175    5,738      26,157        --     378,123
Depreciation and
  Amortization     37,868    15,871      505         139        --      54,383
                 --------  --------  -------   ---------  --------  ----------
  Total           269,921   130,046    6,243      26,296        --     432,506
                 --------  --------  -------   ---------  --------  ----------
Interest expense   13,281     5,268       --       4,080        --      22,629
Preferred stock
  Dividends            --        --    2,650          --        --       2,650
Fixed charges and
  other expenses      (86)       (1)     763          --        --         676
                 --------  --------  -------   ---------  --------  ----------
Total              13,195     5,267    3,413       4,080        --      25,955
                 --------  --------  -------   ---------  --------  ----------
Income from
  continuing
  oper. before
  income taxes     23,992    (4,413)  (6,534)    (11,245)       --       1,800
Income taxes        8,369    (1,566)  (2,435)     (3,255)       --       1,113
                 --------  --------  -------   ---------  --------  ----------
Net income from
  continuing
  operations       15,623    (2,847)  (4,099)     (7,990)       --         687
Effect of
  discontinued
  operations           --        --       --          --      (407)       (407)
                 --------  --------  -------   ---------  --------  ----------
Segment net
  income         $ 15,623  $ (2,847) $(4,099) $   (7,990) $   (407) $      280
                 ========  ========  =======  ==========  ========  ==========
Capital
  expenditures   $ 31,914  $ 13,559  $    --  $       --  $     --  $   45,473
Revenue from
  major customer
  Caterpillar
  Inc.           $ 31,335  $    868  $   282  $    6,284  $     --  $   38,769

Segment assets   $743,441  $281,241  $ 4,512  $  572,250  $ 32,666  $1,634,110
Consolidation
  adjustments       2,678     1,042       --    (403,852)     (136)   (400,268)
                 --------  --------  -------  ----------  --------  ----------
  Total assets   $746,119  $282,283  $ 4,512  $  168,398  $ 32,530  $1,233,842
                 ========  ========  =======  ==========  ========  ==========
</TABLE>




                             61

<TABLE>
<CAPTION>
1998
                  CILCO      CILCO     CILCO     Other      Discont.
                 Electric     Gas      Other   Businesses   Operatns.  Total
                                           (In thousands)
<S>              <C>       <C>       <C>      <C>        <C>         <C>
Revenues         $360,009  $172,327  $ 1,864  $  24,642  $       --  $  558,842
Interest income        --        --      251         75          --         326
                 --------  --------  -------  ---------  ----------  ----------
  Total           360,009   172,327    2,115     24,717          --     559,168
                 --------  --------  -------  ---------  ----------  ----------
Operating
  expenses        235,801   138,459    3,744     23,629          --     401,633
Depreciation and
  amortization     46,017    19,256      713        202          --      66,188
                 --------  --------  -------  ---------  ----------  ----------
  Total           281,818   157,715    4,457     23,831          --     467,821
                 --------  --------  -------  ---------  ----------  ----------
Interest expense   16,261     6,514       --      6,482          --      29,257
Preferred stock
  dividends            --        --    3,194         --          --       3,194
Fixed charges and
  other expenses      (34)       --    1,013         --          --         979
                 --------  --------  -------  ---------  ----------  ----------
  Total            16,227     6,514    4,207      6,482          --      33,430
                 --------  --------  -------  ---------  ----------  ----------
Income from
  continuing
  oper. before
  income taxes     61,964     8,098   (6,549)    (5,596)         --      57,917
Income taxes       21,645     3,443   (2,616)    (2,773)         --      19,699
                 --------  --------  -------  ---------  ----------  ----------
Net income from
  continuing
  operations       40,319     4,655   (3,933)    (2,823)         --      38,218
Effect of
  discontinued
  operations           --        --       --         --     (21,908)    (21,908)
                 --------  --------  -------  ---------  ----------  ----------
Segment net
  income         $ 40,319  $  4,655  $(3,933) $  (2,823) $  (21,908) $   16,310
                 ========  ========  =======  =========  ==========  ==========

Capital
  expenditures   $ 44,213  $ 22,889  $    --  $      10  $    8,916  $   76,028

Revenue from
  major customer
  Caterpillar
  Inc.           $ 39,354  $    948  $    88  $   7,669  $       --  $   48,059

Segment assets   $733,805  $283,286  $ 5,072  $ 594,734  $  121,647  $1,738,544
Consolidation
  adjustments      (1,304)     (507)      --   (423,789)         (4)   (425,604)
                 --------  --------  -------  ---------  ----------  ----------
  Total assets   $732,501  $282,779  $ 5,072  $ 170,945  $  121,643  $1,312,940
                 ========  ========  =======  =========  ==========  ==========
</TABLE>


                             62

<TABLE>
<CAPTION>
1997
                  CILCO     CILCO    CILCO      Other      Discont.
                 Electric    Gas     Other    Businesses   Operatns.   Total
                                         (In thousands)
<S>              <C>       <C>      <C>      <C>         <C>        <C>
Revenues         $338,096  $208,758 $   272  $  10,809   $     --   $   557,935
Interest income        --        --     266         58         --           324
                 --------  -------- -------  ---------   --------   -----------
  Total           338,096   208,758     538     10,867         --       558,259
                 --------  -------- -------  ---------   --------   -----------
Operating
  expenses        217,700   165,020   3,130     12,618         --       398,468
Depreciation and
  amortization     43,858    17,647     713        207         --        62,425
                 --------  -------- -------  ---------   --------   -----------
  Total           261,558   182,667   3,843     12,825         --       460,893
                 --------  -------- -------  ---------   --------   -----------
Interest expense   16,192     6,454      --      4,403         --        27,049
Preferred stock
  dividends            --        --   3,216         --         --         3,216
Fixed charges and
  other expenses     (134)       --   1,177         --         --         1,043
                 --------  -------- -------  ---------   --------   -----------
  Total            16,058     6,454   4,393      4,403         --        31,308
                 --------  -------- -------  ---------   --------   -----------
Income from
  continuing
  oper. before
  income taxes     60,480    19,637  (7,698)    (6,361)        --        66,058
Income taxes       21,901     7,416  (3,049)    (3,919)        --        22,349
                 --------  -------- -------  ---------   --------   -----------
Net income from
  cont. oper.
  before
  extraord. item   38,579    12,221  (4,649)    (2,442)        --        43,709
Effect of
  discontinued
  operations and
  extraord. item    4,100        --      --         --    (31,414)      (27,314)
                 --------  -------- -------  ---------   --------   -----------
Segment net
  income         $ 42,679  $ 12,221 $(4,649) $  (2,442)  $(31,414)  $    16,395
                 ========  ======== =======  =========   ========   ===========

Capital
  expenditures   $ 35,196  $ 19,830 $    --  $      29   $  6,188   $    61,243

Revenue from
  major customer
  Caterpillar
  Inc.           $ 40,106  $    934 $    --  $   1,208   $     --   $    42,248

Segment assets   $724,869  $290,958 $ 5,639  $ 606,786   $144,412   $ 1,772,664
Consolidation
  adjustments      (1,070)     (416)     --   (436,345)       (14)     (437,845)
                 --------  -------- -------  ---------   --------   -----------
  Total assets   $723,799  $290,542 $ 5,639  $ 170,441   $144,398   $ 1,334,819
                 ========  ======== =======  =========   ========   ===========
</TABLE>
                             63


<TABLE>
                  CILCORP Inc. and Subsidiaries
         Consolidated Statements of Stockholders' Equity
<CAPTION>
                                                                Other
                                            Add'l              Compre-
                        Common Stock       Paid in   Retained  hensive
                     Shares      Amount    Capital   Earnings  Income   Total
                               (In thousands except share amounts)
<S>                  <C>        <C>       <C>       <C>       <C>      <C>
Balance 12/31/96     13,610,680 $ 190,760 $      0  $ 177,804 $(359)   $368,205
CILCORP Shareholder
  Return Incentive
  Compensatio                       1,807                                 1,807
Cash Dividend
  Declared on Common
  Stock ($2.46/share)                                 (33,482)          (33,482)
Additional Minimum
  Liability of
  Non-Qualified
  Pension Plan
  12/31/97, net of
  $(208) taxes                                                  (317)      (317)
Other                                                     (15)              (15)
Net Income                                             16,395            16,395
                     ---------- --------- ---------- --------  -----   --------

Balance 12/31/97     13,610,680 $ 192,567 $        0 $160,702  $(676)  $352,593
Cash Dividend
  Declared on Common
  Stock ($2.46/share)                                 (33,482)          (33,482)
Additional Minimum
  Liability of
  Non-Qualified
  Pension Plan
  12/31/98, net of
  $(111) taxes                                                  (169)      (169)
Other                                 286                                   286
Net Income                                             16,310            16,310
                     ---------- --------- ---------- --------  -----   --------

Balance 12/31/98     13,610,680 $ 192,853 $        0 $143,530  $(845)  $335,538
CILCORP Shareholder
  Return Incentive
  Compensation           15,000        --                                    --
Shares Forfeited                   (1,842)                               (1,842)
Cash Dividend
  Declared on Common
  Stock ($2.46/share)                                 (29,813)          (29,813)
Other                                                     662               662
Net Income                                                280               280
                     ---------- --------- ---------- --------  -----   --------
Balance 10/18/99     13,625,680 $ 191,011 $        0 $114,659  $(845)  $304,825
                     ========== ========= ========== ========  =====   ========



                            64

--------------------------------------------------------------------------------
Balance 10/18/99     13,625,680 $ 191,011 $        0 $114,659  $(845)  $304,825
AES Acquisition     (13,625,680) (191,011)   463,000 (114,659)   845    158,175
AES Equity
  Contribution                                 5,833                      5,833
Net Income                                               (745)             (745)
                     ---------- --------- ---------- --------  -----   --------

Balance 12/31/99              0 $       0 $  468,833 $   (745) $   0   $468,088
                     ========== ========= ========== ========  =====   ========
<FN>
The accompanying Notes to Financial Statements are an integral
part of these statements.
</TABLE>
















































                             65

                          CILCORP INC.
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of
CILCORP Inc. (CILCORP or the Holding Company), Central Illinois
Light Company (CILCO), QST Enterprises Inc. (QST) and its
subsidiaries QST Environmental Inc. (QST Environmental), QST
Energy Inc. (QST Energy) and CILCORP Infraservices Inc. (CILCORP
Infraservices), and CILCORP's other subsidiaries (collectively,
the Company) after elimination of significant intercompany
transactions.  In the fourth quarter of 1998, the operations of
QST and its subsidiaries (excluding ESE Land Corporation and
CILCORP Infraservices - see Management's Discussion and
Analysis) were discontinued and, therefore, are being reported
as discontinued operations in the financial statements.  QST
completed the sale of subsidiary QST Environmental in the second
quarter of 1999 (see Results of Operations - QST Enterprises
Discontinued Operations).  Prior year amounts have been
reclassified on a basis consistent with the 1999 presentation.

CILCORP, a public utility holding company, is a wholly-owned
subsidiary of The AES Corporation.  CILCO, the Company's
principal business subsidiary, is engaged in the generation,
transmission, distribution and sale of electric energy in an
area of approximately 3,700 square miles in central and east-
central Illinois, and the purchase, distribution, transportation
and sale of natural gas in an area of approximately 4,500 square
miles in central and east-central Illinois.  Other CILCORP first-
tier subsidiaries are CILCORP Investment Management Inc. (CIM),
which manages the Company's investment portfolio and CILCORP
Ventures Inc. (CVI), which pursues investment opportunities in
energy-related products and services.

On November 23, 1998, the Company announced that the AES
Corporation (AES) had offered to buy 100% of the Company's
outstanding common stock for $65 per share, subject to CILCORP
shareholder approval and various regulatory approvals.  AES
completed the acquisition of the Company on October 18, 1999.

Approximately $886 million was required to complete the merger,
which involved the purchase of 13,625,680 shares of CILCORP's
common stock.  Currently, there are 10,000 authorized shares of
CILCORP common stock, 1,000 of which are issued.  AES owns 100%
of the 1,000 issued shares.

The merger was accounted for using the purchase method of
accounting.  Under this method, the purchase price was allocated
to the fair market value of the assets acquired and the
liabilities assumed.  The excess purchase price over the fair
value of the assets acquired and the liabilities assumed was
allocated to goodwill at CILCORP.

Following the acquisition, results of operations for CILCORP
Inc. are presented for the period January 1, 1999, through
October 18, 1999, and for the period after the acquisition of
October 19, 1999, through December 31, 1999, separated by a
heavy black line.

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

                             66

See Management's Discussion and Analysis of Financial Condition
and Results of Operations - Impact of Accounting Standards for a
discussion of accounting pronouncements issued by the Financial
Accounting Standards Board which are effective in 2000 or
thereafter.

REGULATION

CILCO is a public utility subject to regulation by the Illinois
Commerce Commission (ICC) and the Federal Energy Regulatory
Commission (FERC) with respect to accounting matters, and
maintains its accounts in accordance with the Uniform System of
Accounts prescribed by these agencies.

CILCO is subject to the provisions of Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of
Certain Types of Regulation" (SFAS 71) for certain of its
regulated public utility operations.  Under SFAS 71, assets and
liabilities are recorded to represent probable future increases
and decreases, respectively, of revenues to CILCO resulting from
the ratemaking action of regulatory agencies.

The Electric Service Customer Choice and Rate Relief Law of 1997
(Customer Choice Law) became effective in Illinois in December
1997.  Among other provisions, this law begins a nine-year
transition process to a fully competitive market for electricity
in Illinois.  Electric transmission and distribution activities
are expected to continue to be regulated, but a customer may
choose to purchase electricity from another supplier (see Item
1.  Business - Competition).

Due to the Customer Choice Law, CILCO's electric generation
activities are no longer subject to the provisions of SFAS 71.
Accordingly, regulatory assets of $1.5 million and liabilities
of $5.6 million associated with electric generating plant were
written-off or credited, respectively, to income in 1997 as a
net $4.1 million after-tax extraordinary item.  Regulatory
assets included on the Consolidated Balance Sheets at December
31, 1999, and 1998, are as follows:

<TABLE>
<CAPTION>
                                                       1999        1998
                                                        (In thousands)
<S>                                                    <C>       <C>
Included in prepayments and other:                             |
  Fuel and gas cost adjustments                        $15,614 | $ 4,740
  Coal tar remediation cost - estimated current            720 |     609
                                                       ------- | -------
    Current costs included in prepayments and                  |
      other                                             16,334 |   5,349
                                                       ------- | -------
Included in other assets:                                      |
  Coal tar remediation cost, net of recoveries             674 |   1,281
  Regulatory tax asset                                   7,334 |   5,723
  Deferred gas costs                                     4,368 |   4,039
  Unamortized loss on reacquired debt                    2,941 |   3,261
                                                       ------- | -------
    Future costs included in other assets               15,317 |  14,304
                                                       ------- | -------
      Total regulatory assets                          $31,651 | $19,653
                                                       ======= | =======
</TABLE>



                             67

Regulatory assets at December 31, 1999, are related to CILCO's
regulated electric and gas distribution activities.  Regulatory
liabilities, consisting of deferred tax items of approximately
$31.4 million and $46.3 million at December 31, 1999, and 1998,
respectively, and investment tax credits of approximately $11.2
million and $12.8 million at December 31, 1999 and 1998,
respectively, primarily related to CILCO's electric and gas
tramsmission and distribution operations.

CILCO's electric generation-related identifiable assets included
in the balance sheet at December 31, 1999 were:


<TABLE>
<CAPTION>                                                  1999
                                                      (In  thousands)
<S>                                                     <C>
Property, Plant and Equipment                           $ 257,449
Less:  Accumulated Depreciation                            (3,334)
                                                        ---------
                                                          254,115
Construction Work in Progress                               9,215
                                                        ---------
  Net Property, Plant and Equipment                       263,330
Fuel, at Average Cost                                      14,392
Materials and Supplies, at Average Cost                     9,901
                                                        ---------
Total Identifiable Electric Generation Assets           $ 287,623
                                                        =========
</TABLE>

Accumulated deferred income taxes and investment tax credits
associated with electric generation property at December 31,
1999, were approximately $61 million and $6.8 million,
respectively.

OPERATING REVENUES, FUEL COSTS AND COST OF GAS

Electric, gas, and non-regulated energy and energy services
revenues include service provided but unbilled at year end.
Substantially all electric energy rates and gas system sales
rates of CILCO include a fuel adjustment clause and a purchased
gas adjustment clause, respectively.  These clauses provide for
the recovery of changes in electric fuel costs, excluding coal
transportation, and changes in the cost of gas on a current
basis in billings to customers.  CILCO adjusts the cost of fuel
and cost of gas to recognize over or under recoveries of
allowable costs.  The cumulative effects are deferred on the
Balance Sheets as a current asset or current liability (see
Regulation, above) and adjusted by refunds or collections
through future billings to customers.

CONCENTRATION OF CREDIT RISK

CILCO, as a public utility, must provide service to customers
within its defined service territory and may not discontinue
service to residential customers when certain weather conditions
exist.  CILCO continually reviews customers' creditworthiness
and requests deposits or refunds deposits based on that review.
At December 31, 1999, CILCO had net receivables of
$42.4 million, of which approximately $1.2 million was due from
its major customer.

See CILCORP Note 13 for a discussion of receivables related to
CILCORP Investment Management Inc.'s leveraged lease portfolio.

                             68

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of Cash and Temporary Cash Investments,
Other Investments, and Notes Payable approximates fair value.
The estimated fair value of CILCO's Preferred Stock with
Mandatory Redemption was $19.9 million at December 31, 1999, and
$23 million at December 31, 1998, based on current market
interest rates for other companies with comparable credit
ratings, capital structure, and size.  The estimated fair value
of Long-Term Debt, including current maturities, was
$755 million at December 31, 1999, and $339 million at
December 31, 1998.  The fair market value of these instruments
was based on current market interest rates for other companies
with comparable credit ratings, capital structures, and size,
but does not reflect effects of regulatory treatment accorded
the instruments related to the regulated portions of CILCO's
business.  See CILCORP Note 9 for fair value of derivative
financial instruments.

DEPRECIATION AND MAINTENANCE

Provisions for depreciation of utility property for financial
reporting purposes are based on straight-line composite rates.
The annual provisions for utility plant depreciation, expressed
as a percentage of average depreciable utility property, were
3.8% and 4.6% for electric and gas, respectively, for each of
the last three years.  Utility maintenance and repair costs are
charged directly to expense.  Renewals of units of property are
charged to the utility plant account, and the original cost of
depreciable property replaced or retired, together with the
removal cost less salvage, is charged to the accumulated
provision for depreciation.

Non-utility property is depreciated over estimated lives ranging
from 3 to 15 years.

GOODWILL

Utilizing purchase accounting, the excess purchase price over
the fair value of the assets acquired and the liabilities
assumed by AES in its acquisition of CILCORP and its
subsidiaries was allocated to CILCORP goodwill.  Goodwill is
being amortized using the straight-line method over a 40-year
period.  The continuing monopoly status for electric and gas
distribution and the favorable regulatory climate in Illinois
resulting from the Customer Choice Law warrants the use of the
maximum period for goodwill amortization.

As a result of significant downsizing of QST Environmental
during 1996 and 1997 and continuing overcapacity and competition
in the environmental segment in the fourth quarter of 1997, the
Company determined that an impairment to goodwill associated
with QST Environmental existed.  As a result, the Company wrote
off the $22.6 million unamortized goodwill balance.  In late
1998, the Company decided to sell its 100% ownership interest in
QST Environmental and has classified its results as discontinued
(see Results of Operations - QST Enterprises Discontinued
Operations).

INCOME TAXES

The Company follows a policy of comprehensive interperiod income
tax allocation.  Investment tax credits related to utility
property have been deferred and are being amortized over the
estimated useful lives of the related property.  CILCORP and its
subsidiaries will file a consolidated federal income tax return
with AES.  Income taxes are allocated to the individual
companies based on their respective taxable income or loss.



                             69

CONSOLIDATED STATEMENTS OF CASH FLOWS

The Company considers all highly liquid debt instruments
purchased with a remaining maturity of three months or less to
be cash equivalents for purposes of the Consolidated Statements
of Cash Flows.  Cash paid for interest and income taxes was as
follows:

<TABLE>
<CAPTION>
                          Oct. 19 to        Jan. 1 to
                            Dec. 31,         Oct. 18,
                             1999             1999         1998      1997
                                                  (In thousands)
<S>                          <C>             <C>           <C>       <C>
Interest                     $5,032      |   $21,412       $26,067   $28,710
Income taxes                 $   --      |   $10,828       $19,611   $28,537
</TABLE>

COMPANY-OWNED LIFE INSURANCE POLICIES

The following amounts related to Company-owned life insurance
contracts, issued by one major insurance company, are included
in Other Investments:

<TABLE>
<CAPTION>
                                             1999            1998
                                                (In thousands)
<S>                                          <C>             <C>
Cash surrender value of contracts            $ 56,664   |    $ 50,786
Borrowings against contracts                  (53,558)  |     (48,132)
                                             --------   |    --------
  Net investment                             $  3,106   |    $  2,654
                                             ========   |    ========
</TABLE>

Interest expense related to borrowings against Company-owned
life insurance, included in "Other" on the Consolidated
Statements of Income, was $4 million, $3.6 million, and $3.5
million for 1999, 1998, and 1997, respectively.

NOTE 2 - INCOME TAXES

The Company uses the liability method to account for income
taxes.  Under the liability method, deferred income taxes are
recognized at currently enacted income tax rates to reflect the
tax effect of temporary differences between the financial
reporting basis and the tax basis of assets and liabilities.
Temporary differences occur because the income tax law either
requires or permits certain items to be reported on the
Company's income tax return in a different year than they are
reported in the financial statements.  CILCO has recorded a
regulatory asset and liability to account for the effect of
expected future regulatory actions related to unamortized
investment tax credits, income tax liabilities initially
recorded at tax rates in excess of current rates, the equity
component of Allowance for Funds Used during Construction and
other items for which deferred taxes had not previously been
provided.  The temporary differences related to the consolidated
deferred income tax asset and liability at December 31, 1999,
1998, and 1997, were as follows:





                             70

<TABLE>
<CAPTION>
December 31                                    1999         1998      1997
                                                    (In thousands)
<S>                                            <C>          <C>       <C>
Deferred tax assets:
  Deferred tax asset                           $28,085   |  $20,742   $18,347
  Adjustment to reflect regulatory asset        (7,334)  |   (5,723)   (7,578)
                                               -------   |  -------   -------
  Net deferred tax asset                       $20,751   |  $15,019   $10,769
                                               =======   |  =======   =======
</TABLE>


<TABLE>
<CAPTION>
December 31                                      1999       1998      1997
                                                     (In thousands)
<S>                                           <C>           <C>       <C>
Deferred tax liabilities:
  Deferred tax liability-property             $188,404  |   $196,300  $207,460
  Adjustment to reflect regulatory liability   (31,367) |    (46,346)  (56,807)
                                              --------  |   --------  --------
  Net deferred tax liability-property          157,037  |    149,954   150,653
  Deferred tax liability-leases                105,625  |    103,566   101,005
  Deferred tax liability-other                  (4,354) |        804       124
                                              --------  |   --------  --------
  Accumulated deferred income tax liability   $258,308  |   $254,324  $251,782
                                              ========  |   ========  ========
  Accumulated deferred income tax liability,            |
    net of deferred tax assets                $237,557  |   $239,305  $241,013
                                              ========  |   ========  ========
</TABLE>

The following table reconciles the change in the accumulated
deferred income tax liability to the deferred income tax expense
included in the income statement:

<TABLE>
<CAPTION>
                                               Oct. 19 to  Jan. 1 to
                                                 Dec. 31,   Oct. 18,   Dec. 31,
                                                   1999       1999       1998
                                                         (Inthousands)
<S>                                              <C>        <C>       <C>
Net change in deferred income tax liability              |
  per above table                                $ 5,731 |  $ (7,479) $ (1,707)
Change in tax effects of income tax related              |
  regulatory assets and liabilities               (9,024)|    (7,567)   (8,606)
Other                                              1,384 |    (5,171)     (106)
                                                 ------- |  --------  --------
Deferred income tax benefit for the period        (1,909)|   (20,217)  (10,419)
Less:  Deferred income tax benefit for the               |
       period from discontinued operations            -- |      (830)   (6,115)
                                                 ------- |  --------  --------
Deferred income tax benefit for the period               |
  from continuing operations                     $(1,909)|  $(19,387) $ (4,304)
                                                 ======= |  ========  ========
</TABLE>


                             71

Income tax expenses were as follows:

<TABLE>
<CAPTION>
                                   Oct. 19 to   Jan. 1 to
                                    Dec. 31,     Oct. 18,
                                      1999         1999        1998    1997
                                                   (In thousands)
<S>                                 <C>          <C>         <C>       <C>
Current income taxes                         |
Federal                             $ 1,481  |   $ 18,073    $ 13,731  $17,814
State                                  (329) |      4,360       3,791    3,836
                                    -------  |   --------    --------  -------
  Total current taxes                 1,152  |     22,433      17,522   21,650
                                    -------  |   --------    --------  -------
Deferred income taxes, net                   |
Property-related deferred income             |
  taxes                              (3,653) |     (4,150)    (11,262)    (841)
Leveraged leases                      1,271  |        500       2,602    3,040
Unbilled revenue                         --  |        (94)       (287)    (885)
Gas take-or-pay settlements              40  |         --         522     (339)
Environmental remediation costs         196  |          8         (58)      46
Pension expenses                        132  |    (10,057)        869   (1,798)
Other post-employment benefits               |
  expenses                               61  |     (5,144)       (847)    (617)
Customer advances                      (170) |         26         478     (438)
Gas in underground storage            1,194  |        801      (1,681)    (191)
Amortization of debt discounts,              |
  premiums and expenses                 504  |       (631)       (790)    (179)
CILCO Executive Deferred                     |
  Compensation Plan                    (429) |       (338)       (671)    (191)
CILCORP Shareholder Return                   |
  Incentive Comp. Plan                 (694) |         --        (717)      --
QST gas derivatives mark to market       --  |         --         948       --
Pension shortfall & VEBA               (174) |       (534)       (252)      44
Other                                  (187) |       (604)        727     (677)
                                    -------  |   --------    --------  -------
  Total deferred income taxes, net   (1,909) |    (20,217)    (10,419)  (3,026)
                                    -------  |   --------    --------  -------
Investment tax credit amortization     (334) |     (1,324)     (1,668)  (1,684)
                                    -------  |   --------    --------  -------
  Total income tax provisions                |
  Before extraordinary item          (1,091) |        892       5,435   16,940
Deferred taxes related to                    |
  extraordinary item                     --  |         --          --   (5,634)
                                    -------  |   --------    --------  -------
Total income tax provisions         $(1,091) |   $    892    $  5,435  $11,306
                                    =======  |   ========    ========  =======
</TABLE>












                             72

Total income tax provisions are presented within the Income
Statement as follows:

<TABLE>
<CAPTION>
                                Oct. 19 to      Jan. 1 to
                                 Dec. 31,        Oct. 18,
                                   1999            1999      1998       1997
                                               (In thousands)
<S>                              <C>             <C>         <C>        <C>
Income taxes from continuing               |
  operations                     $  (951)  |     $1,113      $ 19,699   $22,349
Tax on income (loss) from                  |
  operations of discontinued               |
  businesses                        (140)  |       (221)      (16,278)   (7,298)
Tax on gain (loss) on                      |
  sale/disposal of discontinued            |
  businesses                          --   |         --         2,014     1,889
Deferred taxes related to                  |
  extraordinary item                  --   |         --            --    (5,634)
                                 -------   |     ------      --------   -------
Total income tax provisions      $(1,091)  |     $  892      $  5,435   $11,306
                                 =======   |     ======      ========   =======
</TABLE>

The 1997 income tax provision has been reduced to reflect the
crediting to income as an extraordinary item the regulatory
liability related to electric generation property deferred taxes
which were recorded at tax rates in excess of the current rate.

Total deferred income taxes, net, includes deferred state income
taxes of $324,000, $(3,395,000), $(1,635,000), and $(229,000)
for the periods October 19, 1999, through December 31, 1999, and
January 1, 1999, through  October 18, 1999, and the years 1998
and 1997, respectively.



























                             73

The following table represents a reconciliation of the effective
tax rate with the statutory federal income tax rate.

<TABLE>
<CAPTION>
                                   Oct. 19 to    Jan. 1 to
                                    Dec. 31,      Oct. 18,
                                      1999          1999        1998     1997
<S>                                  <C>          <C>          <C>      <C>
Statutory federal income tax          35.0%  |      35.0%       35.0%    35.0%
                                     -----   |    ------       -----    -----
Amortization of property related             |
  deferred taxes provided at tax             |
  rates in excess of current rate     (4.1)  |      45.1        (8.3)    (3.9)
Amortization of investment tax               |
  credit                              18.2   |    (113.1)       (7.6)    (6.1)
State income taxes                     6.0   |     (37.4)        5.5      9.0
Goodwill amortization and write-off  (55.3)  |        --          --     29.2
Amortization of Lincoln acquisition          |
  adjustment                            --   |      15.1         1.1      0.9
Preferred dividends of subsidiary and        |
   other permanent differences        (9.5)  |      73.0         4.7      2.7
Tax provision adjustment              37.9   |      79.2          --     (1.6)
Affordable housing tax credits        21.4   |    (139.8)       (6.1)    (3.4)
Corporate-owned life insurance        11.0   |     (74.4)       (4.2)    (2.9)
AES transaction costs                 (2.3)  |     140.5         3.3       --
Lobbying expenses and nondeductible          |
   meals                              (6.9)  |      24.6         2.5      1.8
Taxable salvage                        1.7   |       7.8        (0.6)     0.7
Other differences                      6.3   |      20.6          -      (0.2)
                                     -----   |     -----       -----    -----
  Total                               24.4   |      41.2        (9.7)    26.2
                                     -----   |     -----       -----    -----
Effective income tax rate before             |
  effect of extraordinary item        59.4   |      76.2        25.3     61.2
Tax effect of extraordinary item        --   |        --          -     (20.4)
                                     -----   |     -----       -----    -----
Effective income tax rate             59.4%  |      76.2%       25.3%    40.8%
                                     =====   |     =====       =====    =====
</TABLE>

NOTE 3 - POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS

In accordance with the purchase of CILCORP by AES on October 18,
1999, and as described in Management's Discussion and Analysis,
CILCORP's Balance Sheet amounts were adjusted to reflect market
values of the assets and liabilities, with corresponding
adjustments to goodwill.   Adjustments were made to the balance
sheet amounts recognized for pension and postretirement health
care benefit costs, resulting in a reduction of the net liability
of those balance sheet amounts of $26.2 million.  Following the
market value adjustments, the net periodic benefit costs were
actuarially calculated for the time period October 19 through
December 31, 1999, and appropriately included only the components
of service cost, interest cost and expected return on plan
assets.

POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS AND HEALTH CARE

CILCO has recorded a liability of approximately $1.3 million and
$1.5 million at December 31, 1999, and 1998, respectively, for
benefits other than pensions or health care provided to former
or inactive employees.  The liability for these benefits
(primarily long-term and short-term disability payments under
plans self-insured by CILCO) is actuarially determined.

                             74

PENSION BENEFITS

Substantially all of CILCO's full-time employees are covered by
trusteed, non-contributory defined benefit pension plans.
Benefits under these qualified plans reflect the employee's
years of service, age at retirement and maximum total
compensation for any consecutive sixty-month period prior to
retirement.  CILCO also has an unfunded nonqualified plan for
certain employees.

Pension costs for the past three years were charged as follows:

<TABLE>
<CAPTION>                  Oct. 19 to  Jan. 1 to
                            Dec. 31,    Oct. 18,
                              1999        1999    1998        1997
                                      (In thousands)
<S>                           <C>       <C>      <C>        <C>
Operating expenses            $ (499) | $26,464  $  (893)   $   493
Utility plant and other           --  |      --        6        125
                              ------  | -------  -------    -------
  Net pension costs (income)  $ (499) | $26,464  $  (887)   $   618
                              ======  | =======  =======    =======
</TABLE>

The components of net periodic benefit costs follow:

<TABLE>
<CAPTION>
                                       Oct. 19 to  Jan. 1 to
                                        Dec. 31,    Oct. 18,
                                          1999       1999       1998
                                                (In thousands)
<S>                                     <C>        <C>      <C>
Service cost                            $   900   |$  3,821 $  5,410
Interest cost                             5,260   |  14,537   19,024
Expected return on plan assets           (6,659)  | (20,323) (25,304)
Amortization of transition asset             --   |    (666)    (888)
Amortization of past service cost            --   |     785    1,068
Recognized actuarial gain                    --   |    (328)    (197)
Loss recognized due to curtailment and            |
  special termination benefits               --   |  28,638       --
                                        -------   |-------- --------
Net benefit cost (income)               $  (499)  |$ 26,464 $   (887)
                                        =======   |======== ========
</TABLE>

During 1999, CILCO recognized $28.6 million of net pension costs
associated with additional benefits extended in connection with
voluntary early retirement programs.












                             75

Information on the plans' funded status follows:

<TABLE>
<CAPTION>
                                     Oct. 19 to    Jan. 1 to
                                      Dec. 31,      Oct. 18,
                                        1999         1999     1998
                                             (In thousands)
<S>                                    <C>         <C>      <C>
Change in Benefit Obligations                     |
Benefit obligation at begin. of period $     --   |$285,646 $254,929
Service cost                                900   |   3,821    5,410
Interest cost                             5,260   |  14,537   19,024
Acquisition                             291,506   |      --       --
Amendments                                   --   |  31,774       --
Actuarial (gain) loss                    (9,473)  | (29,792)  22,521
Benefits paid                            (7,040)  | (14,098) (16,238)
                                       --------   |-------- --------
Benefit obligation at end of period    $281,153   |$291,888 $285,646
                                       ========   |======== ========
Change in Plan Assets                             |
Fair value of assets at                           |
  beginning of period                  $     --   |$309,483 $289,091
Actual return on assets                  46,713   |  11,230   36,467
Company contributions                        93   |     134      163
Acquisition                             306,749   |      --       --
Benefits paid                            (7,040)  | (14,098) (16,238)
                                       --------   |-------- --------
Fair value of assets at end of period  $346,515   |$306,749 $309,483
                                       ========   |======== ========
                                                  |
Funded status at end of period         $ 65,362   |$ 14,861 $ 23,837
Unrecognized net transition asset            --   |  (3,345)  (4,011)
Unrecognized actuarial gain             (49,528)  | (57,546) (35,875)
Unrecognized prior service cost              --   |   6,560    6,365
                                       --------   |-------- --------
Net amount recognized                  $ 15,834   |$(39,470)$ (9,684)
                                       ========   |======== ========

Amounts recognized in the statement of financial position
consist of:

Prepaid benefit cost/(Accrued
  benefit liability)                   $ 15,834   |$(39,959)$(11,500)
Intangible asset                             --   |     264      415
Accumulated other comprehensive income       --   |     225    1,401
                                       --------   |-------- --------
Net amount recognized                  $ 15,834   |$(39,470)$ (9,684)
                                       ========   |======== ========
Assumptions as of end of period                   |
Discount rate                             7.75%   |   7.50%    6.75%
Expected return on plan assets            9.00%   |   9.00%    9.00%
Rate of compensation increase             3.50%   |   3.50%    3.50%
</TABLE>

At October 18, 1999, and December 31, 1998, CILCO recognized an
additional minimum liability on the Balance Sheets for a plan in
which the accumulated benefit obligation exceeds the fair value
of plan assets.  The projected benefit obligation, accumulated
benefit obligation, and fair value of plan assets for the
pension plan with accumulated benefit obligations in excess of
plan assets were $4,481, $3,797, and $0, respectively, as of
December 31, 1999; $4,615, $3,911, and $0, respectively, as of
October 18, 1999; and $4,191, $3,582, and $0, respectively, as
of December 31, 1998.

                             76

POSTRETIREMENT HEALTH CARE BENEFITS

Substantially all of CILCO's full-time employees are currently
covered by a trusteed, defined benefit postretirement health
care plan.  The plan pays stated percentages of most necessary
medical expenses incurred by retirees, after subtracting
payments by Medicare or other providers and after a stated
deductible has been met.  Participants become eligible for the
benefits if they retire from CILCO after reaching age 55 with 10
or more years of service.

Postretirement health care benefit costs were charged as
follows:

<TABLE>
<CAPTION>
                              Oct. 19 to    Jan. 1 to
                               Dec. 31,      Oct. 18,
                                 1999          1999    1998     1997
                                           (In thousands)
<S>                              <C>       <C>        <C>       <C>
Operating expenses               $1,038  | $12,904    $3,904    $3,989
Utility plant and other              63  |     897     1,260     1,825
                                 ------  | -------    ------    ------
  Net postretirement health care         |
    Benefit costs                $1,101  | $13,801    $5,164    $5,814
                                 ======  | =======    ======    ======
</TABLE>

The components of net periodic benefit costs follow:

<TABLE>
<CAPTION>
                                      Oct. 19 to  Jan. 1 to
                                       Dec. 31,    Oct. 18,
                                         1999       1999       1998
                                              (In thousands)
<S>                                     <C>        <C>       <C>
Service cost                            $   382   |$ 1,515   $ 1,417
Interest cost                             1,799   |  4,635     5,371
Expected return on plan assets           (1,080)  | (3,409)   (4,388)
Amortization of transition liability         --   |  2,144     2,858
Amortization of past service cost            --   |     --        --
Recognized actuarial gain                    --   |     --       (94)
Loss recognized due to curtailment and            |
  special termination benefits               --   |  8,916        --
                                        -------   |-------   -------
Net benefit cost                        $ 1,101   |$13,801   $ 5,164
                                        =======   |=======   =======
</TABLE>

During 1999, CILCO recognized $8.9 million of net postretirement
health care benefit costs associated with additional benefits
extended in connection with voluntary early retirement programs.









                             77

Information on the plans' funded status follows:

<TABLE>
<CAPTION>
                                        Oct. 19 to   Jan. 1 to
                                          Dec. 31,    Oct. 18,
                                            1999       1999      1998
                                              (In thousands)
<S>                                       <C>       <C>      <C>
Change in Benefit Obligations                      |
Benefit obligation at beginning of period $     -- |$ 82,316 $ 72,542
Service cost                                   382 |   1,515    1,417
Interest cost                                1,799 |   4,635    5,371
Acquisition                                 98,654 |      --       --
Amendments                                      -- |  11,027       --
Actuarial (gain) loss                       (2,686)|   3,287    7,500
Benefits paid                               (1,670)|  (4,032)  (4,514)
                                          -------- |-------- --------
Benefit obligation at end of period       $ 96,479 |$ 98,748 $ 82,316
                                          ======== |======== ========
Change in Plan Assets                              |
Fair value of assets at begin. of period  $     -- |$ 54,393 $ 52,263
Actual return on assets                      5,242 |     291    5,781
Company contributions                        1,121 |      30      863
Acquisition                                 50,682 |      --       --
Benefits paid                               (1,670)|  (4,032)  (4,514)
                                          -------- |-------- --------
Fair value of assets at end of period     $ 55,375 |$ 50,682 $ 54,393
                                          ======== |======== ========
                                                   |
Funded Status at end of period            $(41,104)|$(48,066)$(27,923)
Unrecognized net transition liability           -- |  28,153   30,297
Unrecognized actuarial (gain) loss          (6,848)|   1,739   (6,777)
Unrecognized prior service cost               --   |      --       --
                                          -------- |-------- --------
Accrued benefit cost                      $(47,952)|$(18,174)$ (4,403)
                                          ======== |======== ========
Assumptions as of end of period                    |
Discount rate                                7.75% |   7.50%    6.75%
Expected return on plan assets               9.00% |   9.00%    8.50%
</TABLE>

For measurement purposes, a 7.2 percent annual rate of increase
in the per capita cost of covered health care benefits was
assumed for 2000.  The rate was assumed to decrease gradually to
5.0 percent for 2006 and remain level thereafter.















                             78

Assumed health care cost trend rates have a significant effect on
the amounts reported for health care plans.  A one-percentage-
point change in assumed health care cost trend rates would have
the following effects (in thousands):
<TABLE>
<CAPTION>
                                 1-Percentage-Point        1-Percentage-Point
                                     Increase                  Decrease
                               -----------------------    ---------------------
                               Oct. 19 to    Jan. 1 to   Oct. 19 to  Jan. 1 to
                                Dec. 31,      Oct. 18,     Dec.31,    Oct. 18,
                                  1999          1999         1999       1999
<S>                              <C>          <C>         <C>         <C>
Effect on total of service and             |                       |
  interest cost components       $   81    |  $  228      $   (98) |  $  (217)
Effect on postretirement benefit           |                       |
  obligation                     $3,406    |  $4,473      $(3,830) |  $(3,920)
</TABLE>

NOTE 4 - SHORT-TERM DEBT

Short-term debt at December 31, 1999, consisted of $45.0 million
of Holding Company bank borrowings and $46.9 million of CILCO
commercial paper.  Short-term debt at December 31, 1998,
included $55.6 million of Holding Company bank borrowings and
$40.6 million of CILCO commercial paper.

The Holding Company had arrangements for bank lines of credit
totaling $60 million at December 31, 1999, of which
$45.0 million was used.  These lines were maintained by
commitment fees of 1/8 of 1% per annum in lieu of balances.

CILCO had arrangements for bank lines of credit totaling
$55 million, all of which were unused at December 31, 1999.
These lines of credit were maintained by commitment fees of .05
of 1% per annum for $35 million and .07 of 1% per annum for
$20 million in lieu of balances.  These bank lines of credit
support CILCO's issuance of commercial paper.


























                             79

NOTE 5 - LONG-TERM DEBT

<TABLE>
<CAPTION>
At December 31                              1999            1998
                                               (In thousands)
<S>                                      <C>              <C>
CILCO first mortgage bonds                            |
   7 1/2% series due 2007                $ 50,000     |   $ 50,000
   8 1/5% series due 2022                  65,000     |     65,000
Medium-term notes                                     |
   6.4% series due 2000                        --     |     30,000
   6.82% series due 2003                   25,350     |     25,350
   6.13% series due 2005                   16,000     |     16,000
   7.8% series due 2023                    10,000     |     10,000
   7.73% series due 2025                   20,000     |     20,000
Pollution control refunding bonds                     |
   6.5% series F due 2010                   5,000     |      5,000
   6.2% series G due 2012                   1,000     |      1,000
   6.5% series E due 2018                  14,200     |     14,200
   5.9% series H due 2023                  32,000     |     32,000
                                         --------     |   --------
                                          238,550     |    268,550
Unamortized premium and discount on                   |
  long-term debt, net                        (616)    |       (666)
                                         --------     |   --------
     Total CILCO                         $237,934     |   $267,884
                                         --------     |   --------
                                                      |
CILCORP Senior Notes 8.7% due 2009        225,000     |         --
CILCORP Senior Bonds 9.375% due 2029      250,000     |         --
CILCORP Inc. Unsecured medium-term                    |
  notes; various maturities in 2001;                  |
  interest rates ranging from 8.52%                   |
  to 9.10%                                 17,500     |     17,500
Other                                          --     |        168
                                         --------     |   --------
    Total long-term debt                 $730,434     |   $285,552
                                         ========     |   ========
</TABLE>

CILCO's first mortgage bonds are secured by a lien on
substantially all of its property and franchises.  Unamortized
borrowing expense, premium and discount on outstanding regulated
utility long-term debt are being amortized over the lives of the
respective issues.

Total consolidated maturities of long-term debt (exclusive of
"Other") for 2001-2003 are as follows:  $17.5 million in 2001,
no debt due in 2002, and $25.4 million in 2003.  The remaining
maturities of long-term debt of $688.2 million, occur in 2004
and beyond.

The 2000 and 1999 maturities of long-term borrowings have been
classified as current liabilities.








                             80

NOTE 6 - PREFERRED STOCK

PREFERRED STOCK OF SUBSIDIARY
<TABLE>
<CAPTION>
At December 31                              1999             1998
                                               (In thousands)
<S>                                        <C>              <C>
Preferred stock, cumulative                            |
$100 par value, authorized 1,500,000 shares            |
   Without mandatory redemption                        |
   4.50% series - 111,264 shares           $11,126     |    $11,126
   4.64% series - 79,940 shares              7,994     |      7,994
Class A, no par value, authorized                      |
  3,500,000 shares                                     |
   Flexible auction rate - 250,000                     |
    shares (*)                              25,000     |     25,000
   With mandatory redemption                           |
   5.85% series - 220,000 shares            22,000     |     22,000
                                           -------     |    -------
        Total preferred stock              $66,120     |    $66,120
                                           =======     |    =======
<FN>
(*) Dividend rates at December 31, 1999, and 1998, were 4.75%
    and 4.04%, respectively.
</TABLE>

All classes of preferred stock are entitled to receive
cumulative dividends and rank equally as to dividends and
assets, according to their respective terms.

The total annual dividend requirement for preferred stock
outstanding at December 31, 1999, is $3.3 million, assuming a
continuation of the auction dividend rate at December 31, 1999,
for the flexible auction rate series.

PREFERRED STOCK WITHOUT MANDATORY REDEMPTION

The call provisions of preferred stock redeemable at CILCO's
option outstanding at December 31, 1999, are as follows:

<TABLE>
<CAPTION>
Series    Callable Price Per Share (plus accrued dividends)
<S>                          <C>
4.50%                        $110
4.64%                        $102
Flexible Auction Rate        $100
</TABLE>

PREFERRED STOCK WITH MANDATORY REDEMPTION

CILCO's 5.85% Class A preferred stock may be redeemed in 2003 at
$100 per share.  A mandatory redemption fund must be established
on July 1, 2003.  The fund will provide for the redemption of
11,000 shares for $1.1 million on July 1 of each year through
July 1, 2007.  On July 1, 2008, the remaining 165,000 shares
will be retired for $16.5 million.

PREFERENCE STOCK OF SUBSIDIARY, CUMULATIVE

No Par Value, Authorized 2,000,000 shares, of which none have
been issued.

                             81

PREFERRED STOCK OF HOLDING COMPANY

Per the Articles of Amendment to the Articles of Incorporation
of CILCORP Inc., CILCORP Inc. no longer has preferred stock
authorized at the Holding Company.  None of the previously
authorized 4,000,000, no par value, shares had been outstanding.

NOTE 7 - COMMITMENTS & CONTINGENCIES

CILCO's 2000 capital expenditures are estimated to be
$53.6 million in connection with which CILCO has normal and
customary purchase commitments at December 31, 1999.

CILCO acts as a self-insurer for certain insurable risks
resulting from employee health and life insurance programs.

The International Brotherhood of Electrical Workers Local 51
(IBEW) ratified its current agreement on October 10, 1997.  The
contract expires on July 1, 2000.  The IBEW represents
approximately 374 CILCO gas and electric department people.  The
National Conference of Firemen and Oilers Local 8 (NCF&O)
ratified its current contract with the Company on October 23,
1998.  The current contract expires on July 1, 2001.  The NCF&O
represents approximately 177 CILCO power plant people.

In August 1990, CILCO entered into a firm, wholesale power
purchase agreement with Central Illinois Public Service Company,
now AmerenCIPS (CIPS).  This agreement provided for a minimum
contract delivery rate from CIPS of 90 MW until the contract
expired in May 1998.

In March 1995, CILCO and CIPS amended a limited-term power
agreement reached in November 1992.  This agreement provided for
CILCO to purchase 150 MW of CIPS' capacity from June 1998
through May 2002, and 50 MW from June 2002 through May 2009.

In May 1999, a settlement was reached between CILCO and CIPS
regarding disputed issues pertaining to these capacity and
energy agreements.  The settlement amended the previous
agreements to provide for 100 MW of capacity and firm energy for
the months of June through September for the years 2000 through
2003 and additionally provides for 100 MW of firm energy for the
month of January in each of those years.  There are no
commitments to purchase capacity or energy beyond those dates.
The agreements provide specific prices for on-peak and off-peak
energy, which eliminates the ambiguity that arose under the old
agreements due to the use of pricing queues.  Under the
settlement, CILCO had no capacity payment obligations to CIPS
for February through December 1999, resulting in 1999 capacity
reservation savings of approximately $6 million, compared to the
previous agreement.  The settlement also obligates both parties
to withdraw from regulatory action pertaining to related
contract issues.  On November 12, 1999, the settlement document
was filed with the FERC.  FERC approval of the settlement was
received on February 10, 2000, and CILCO is receiving power from
CIPS in accordance with the terms of the agreement.

Reference is made to Management's Discussion and Analysis of
Financial Condition and Results of Operations - Environmental
Matters (regarding former gas manufacturing sites) for a
discussion of that item.






                             82

NOTE 8 - LEASES

The Company and its subsidiaries lease certain equipment,
buildings and other facilities under capital and operating
leases.  Several of the operating leases provide that the
Company pay taxes, maintenance, and other occupancy costs
applicable to these premises.

Minimum future rental payments under non-cancellable capital and
operating leases having remaining terms in excess of one year as
of December 31, 1999, are $12.3 million in total.  Payments due
during the years ending December 31, 2000, through December 31,
2004, are $4.8 million, $3.1 million, $2.1 million, $1.1 million
and $.7 million, respectively.

NOTE 9 - ACCOUNTING FOR PRICE RISK MANAGEMENT ACTIVITIES

CILCORP utilizes commodity futures contracts, options and swaps
in the normal course of its natural gas and electric business
activities to reduce market or price risk.  Gains and losses
arising from derivative financial instrument transactions which
hedge the impact of fluctuations in energy prices are recognized
in income concurrent with the related purchases and sales of the
commodity.  If a derivative financial instrument contract is
terminated because it is probable that a transaction or
forecasted transaction will not occur, any gain or loss as of
such date is immediately recognized.  If a derivative financial
instrument contract is terminated early for other economic
reasons, any gain or loss as of the termination date is deferred
and recorded concurrently with the related purchase and sale of
natural gas and electricity.  CILCORP is subject to commodity
price risk for deregulated sales to the extent that energy is
sold under firm price commitments.  Due to market conditions, at
times CILCORP may have unmatched commitments to purchase and sell
energy on a price and quantity basis.  Physical and derivative
financial instruments give rise to market risk, which represents
the potential loss that can be caused by a change in the market
value of a particular commitment.  Market risks are actively
monitored to ensure compliance with the Company's risk management
policies, including limits to the Company's total net exposure at
any time.

The net gain reflected in operating results from derivative
financial instruments for the period January 1, 1999, through
October 18, 1999, was $577,600 for natural gas and $287,100 for
electricity.  The net loss reflected in operating results from
derivative financial instruments for the period October 19, 1999,
through  December 31, 1999, was approximately $8,000 for natural
gas and $0 for electricity.

As of December 31, 1999, CILCORP had fixed-price derivative
financial instruments representing hedges of natural gas
purchases of .5 Bcf and natural gas sales of 1.0 Bcf for
commitments through February 2000.  The net deferred loss and
carrying amount on these fixed-price derivatives at December 31,
1999, was approximately $134,000.  At December 31, 1999, CILCORP
had open positions in derivative financial instruments used to
hedge natural gas basis of .4 Bcf for commitments through March
2000.  The net deferred gain on these basis derivatives at
December 31, 1999, was approximately $4,000.

As of December 31, 1999, CILCORP had fixed-price derivative
financial instruments representing hedges of electricity
purchases of 31,648 megawatts and electricity sales of
83,904 megawatts for commitments through August 2000.  The net
deferred loss and carrying amount on these fixed-price
derivatives at December 31, 1999, was approximately $1.2 million.




                             83

NOTE 10 - IMPACT OF ACCOUNTING STANDARDS

In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" (SFAS 133).  In June 1999, the FASB issued
Statement of Financial Accounting Standards No. 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133" (SFAS 137).
SFAS 137 amends SFAS 133 to require implementation of SFAS 133
for all fiscal quarters of fiscal years beginning after June 15,
2000.  The statement establishes accounting and reporting
standards for derivative instruments and for hedging activities.
It requires that an entity recognize all derivatives (including
certain derivative instruments embedded in other contracts) as
either assets or liabilities on the balance sheet and measure
those instruments at fair value.  Changes in the derivative's
fair value are to be recognized currently in earnings, unless
specific hedge accounting criteria are met.  Special accounting
for qualifying hedges allows a derivative's gains or losses to
offset related results of the hedged item in the income
statement and requires that a company must formally document,
designate, and assess the effectiveness of transactions that
receive hedge accounting.

SFAS 133 cannot be applied retroactively.  SFAS 133 must be
applied to (a) derivative instruments and (b) certain derivative
instruments embedded in hybrid contracts.  With respect to
hybrid instruments, a company may elect to apply SFAS 133, as
amended, to (1) all hybrid contracts, (2) only those hybrid
instruments that were issued, acquired, or substantively
modified after December 31, 1997, or (3) only those hybrid
instruments that were issued, acquired, or substantively
modified after December 31, 1998.

The fair value of these derivatives would be recognized as
assets or liabilities on the balance sheet, consistent with the
current accounting treatment for certain freestanding
derivatives.  The Company has not yet quantified the other
effects on the financial statements of adopting SFAS 133.  The
final adoption could increase volatility in earnings and other
comprehensive income.  CILCORP continues to analyze the effects
of adoption of the rules promulgated by SFAS 133.  The Company
is in the process of preparing a comprehensive inventory of all
derivatives that will be subject to disclosure under SFAS 133
and developing procedures for the determination and valuation of
hedge relationships that may exist, and their effectiveness.





















                             84

NOTE 11 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following quarterly operating results are unaudited, but, in
the opinion of management, include all adjustments (consisting
of normal recurring accruals) necessary for a fair presentation
of the Company's operating results for the periods indicated.
The results of operations for each of the fiscal quarters are
not necessarily comparable to, or indicative of, the results of
an entire year due to the seasonal nature of the Company's
business and other factors.
<TABLE>
<CAPTION>
1999                            Jan. 1     April 1    July 1    Oct. 1  Oct. 19
For the Periods                   to         to         to        to      to
                                March 31   June 30    Sept. 30  Oct.18  Dec. 31
                                             (In thousands)
<S>                            <C>        <C>        <C>      <C>      <C>
Revenue                        $168,238   $120,267   $155,531 $ 16,225 $120,589
Income (loss) from continuing
  operations before income
  taxes                          18,656      2,150     (4,604) (14,402)  (1,483)
Income taxes                      6,049      1,066     (2,247)  (3,755)    (951)
Net income (loss) from
  continuing operations          12,607      1,084     (2,357) (10,647)    (532)
Gain (loss) from operations of
  discontinued business,
  net of tax of $45, $(266),
  $(140)                             28       (435)        --       --     (213)

      Net income (loss)        $ 12,635   $    649   $ (2,357)$(10,647)$   (745)

1998
For the Three Months Ended     March 31    June 30  Sept. 30   Dec. 31

Revenue                        $154,314   $121,762   $140,896 $142,196
Income from continuing
  operations before income
  taxes                          17,566     10,254     29,019    1,078
Income taxes                      6,250      2,519     10,982      (52)
Net income (loss) from
  continuing operations          11,316      7,735     18,037    1,130
Loss from operations of
  discontinued business,
  net of tax of $(2,355),
  $(5,512), $(2,354), $(6,057)   (3,622)    (8,423)    (3,620)  (9,360)

Gain (loss) on sale/disposal
  of assets of discontinued
  business, net of tax of
  $5,425, $(3,411)                   --         --      8,252   (5,135)

      Net income (loss)         $ 7,694    $  (688)  $ 22,669 $(13,365)
</TABLE>









                             85

NOTE 12 - RETAINED EARNINGS

The Bond Indenture for CILCORP's 8.7% (due 2009) and 9.375% (due
2029) senior notes provides that CILCORP may pay dividends or
make other distributions on its capital stock only if it has an
assigned rating on its long-term secured debt of at least BB+
from Standard & Poor's, at least Baa2 from Moody's and at least
BBB from Duff & Phelps.  If the assigned ratings are lower,
CILCORP must satisfy a leverage ratio and an interest coverage
ratio test of .67 to 1 and 2.0 to 1, respectively.

NOTE 13 - LEVERAGED LEASE INVESTMENTS

The Company, through subsidiaries of CILCORP Investment
Management Inc. (CIM), is a lessor in eight leveraged lease
arrangements under which mining equipment, electric production
facilities, warehouses, office buildings, passenger railway
equipment and an aircraft are leased to third parties.  The
economic lives and lease terms vary with the leases.  CIM's
share of total equipment and facilities cost was approximately
$350 million at December 31, 1999, and 1998.

The cost of the equipment and facilities owned by CIM is
partially financed by non-recourse debt provided by lenders who
have been granted, as their sole remedy in the event of a lessee
default, an assignment of rents due under the leases and a
security interest in the leased property.  Such debt amounted to
$227 million at December 31, 1999, and $232 million at
December 31, 1998.  Leveraged lease residual value assumptions,
which are conservative in relation to independently appraised
residual values of the lease portfolio, are tested on a periodic
basis.  (In 1998, CIM decreased the estimated residual value of
one of its leases by approximately $6.8 million to reflect
current conditions in the secondary market for the asset.)

CIM's net investment in leveraged leases at December 31, 1999,
and 1998, is shown below:

<TABLE>
<CAPTION>
                                            1999             1998
                                               (In thousands)
<S>                                       <C>              <C>
Minimum lease payments receivable         $132,255     |   $142,094
Estimated residual value                    87,557     |     87,557
Less:  Unearned income                      76,115     |     82,674
                                          --------     |   --------
Investment in lease financing receivables  143,697     |    146,977
Less:  Deferred taxes arising from                     |
  leveraged leases                         105,625     |    103,566
                                          --------     |   --------
  Net investment in leveraged leases      $ 38,072     |   $ 43,411
                                          ========     |   ========
</TABLE>

NOTE 14 - QST ENTERPRISES DISCONTINUED OPERATIONS

(See Management's Discussion and Analysis of Financial Condition
and Results of Operations - QST Enterprises Discontinued
Operations.)






                             86

NOTE 15 - CILCORP SHAREHOLDER RETURN INCENTIVE COMPENSATION PLAN

Under the Company's Shareholder Return Incentive Compensation
Plan (the Plan), eligible key employees of the Company and its
subsidiaries were entitled to receive shares of the Company's
common stock based on a performance methodology established and
periodically amended by the Compensation Committee of the
Company's Board of Directors.  During 1997, 350,000 fully-vested
performance shares were distributed.  Such shares were
convertible into common stock with the number of shares received
based upon the number of performance shares exercised multiplied
by the difference between the average market price of the
Company's common stock for the fifteen days prior to exercise
and $36, divided by the market price of common stock at the
exercise date.

The compensation expense recognized under this Plan, based on
the provisions of Statement of Financial Accounting Standards
No. 123, (SFAS 123) was $1.8 million in 1997 when the
performance shares were distributed.  These shares were
convertible into common stock at any time until December 31,
1998, (the Performance Period).  The fair value of each
performance share granted under the Plan was $5.98 - estimated
using the Black-Scholes option-pricing model assuming a risk-
free interest rate of 5.7%, dividend yield of 5.9%, expected
life of one year and volatility of 16.1%.

In 1998, the Performance Period for the originally granted
performance shares was extended to December 31, 1999.  No
additional expense was recorded following this extension, as a
revaluation of the fair value of the performance shares per the
provisions of SFAS 123 yielded no material valuation difference
due to the one-year extension.

To the extent that the market price exceeded $56, the Plan
participants were entitled to receive cash in lieu of common
stock.  Consequently, the Company recognized expense of $1.75
million in the fourth quarter 1998 to reflect a share price
approximating $61.

In August 1999, one of the Plan's participants exercised his
right to convert his performance shares to common stock and
received 15,000 shares of CILCORP common stock representing the
difference between $56 and $36 multiplied by 42,000 performance
shares divided by $56 per share, and $232,000 in cash,
representing the difference between $56 and the market price at
the time of exercise.

Pursuant to the terms of the merger agreement, the acquisition of
CILCORP Inc. by AES triggered the Company's obligation to
compensate the remaining three individuals included under the
Plan who had not converted their performance shares into common
stock.  Consequently, the Company recognized additional
compensation expense of $4.9 million in 1999, prior to the
acquisition date.  These three individuals received or otherwise
deferred compensation of $8.9 million in the fourth quarter of
1999 (including amounts expensed by the Company prior to 1999),
representing the difference between $65 and $36 multiplied by the
remaining 308,000 performance shares.

NOTE 16 - EARNINGS PER SHARE

The AES Corporation (AES) completed the acquisition of CILCORP
Inc. and its subsidiaries (the Company) on October 18, 1999.  As
a wholly-owned subsidiary of AES, the Company will no longer
present earnings per share information as part of its financial
statement disclosures.




                             87

                       MANAGEMENT'S REPORT

The accompanying financial statements and notes for CILCO and its
consolidated subsidiaries have been prepared by management in
accordance with generally accepted accounting principles.
Estimates and judgments used in developing these statements are
the responsibility of management.  Financial data presented
throughout this report is consistent with these statements.

CILCO maintains a system of internal accounting controls which
management believes is adequate to provide reasonable assurance
as to the integrity of accounting records and the protection of
assets.  Such controls include established policies and
procedures, a program of internal audit and the careful selection
and training of qualified personnel.

The financial statements have been audited by CILCO's independent
public accountants, Arthur Andersen LLP.  Their audit was
conducted in accordance with generally accepted auditing
standards and included an assessment of selected internal
accounting controls only to determine the scope of their audit
procedures.  The report of the independent public accountants is
contained in this Form 10-K annual report.




                                    P. D. Stinson
                                    President




                                    T. D. Hutchinson
                                    Controller and Chief
                                    Financial Officer



























                             88

        REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Board of Directors of Central Illinois Light Company:

We have audited the accompanying consolidated balance sheets of
Central Illinois Light Company (an Illinois corporation) and
subsidiaries as of December 31, 1999, and 1998, and the related
consolidated statements of income, cash flows, segments of
business, and retained earnings for each of the three years in
the period ended December 31, 1999.  These financial statements
and the schedule referred to below are the responsibility of the
Company's management.  Our responsibility is to express an
opinion on these financial statements and schedule based on our
audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States.  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 Light Company and subsidiaries as of
December 31, 1999, and 1998, and the results of their operations
and their cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole.  The financial
statement schedule  listed in Item 14(a)2 is presented for
purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic
financial statements.  This financial statement schedule has been
subjected to the auditing procedures applied in our audits of the
basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a
whole.



                                     ARTHUR ANDERSEN LLP
Chicago, Illinois
January 28, 2000















                             89

                 Central Illinois Light Company
                Consolidated Statements of Income
<TABLE>
<CAPTION>
For the Years Ended December 31     1999      1998      1997
                                          (In thousands)
<S>                               <C>       <C>       <C>
Operating Revenues:
Electric                          $372,714  $360,009  $338,096
Gas                                180,760   172,327   208,758
                                  --------  --------  --------
     Total Operating Revenues      553,474   532,336   546,854
                                  --------  --------  --------
Operating Expenses:
Cost of Fuel                        77,748    94,490    92,230
Cost of Gas                         99,293    93,586   123,531
Purchased Power                     60,251    29,568    22,851
Other Operations and Maintenance   153,885   118,707   109,833
Depreciation and Amortization       66,686    65,273    61,505
Income Taxes                        11,276    25,088    29,317
State and Local Taxes on Revenue    26,930    26,502    22,467
Other Taxes                         13,335    11,407    11,808
                                  --------  --------  --------
     Total Operating Expenses      509,404   464,621   473,542
                                  --------  --------  --------
Operating Income                    44,070    67,715    73,312
                                  --------  --------  --------
Other Income and Deductions:
Cost of Equity Funds Capitalized        --        --        35
CILCO-owned Life Insurance, Net     (1,037)   (1,013)   (1,177)
Other, Net                            (558)      274      (256)
                                  --------  --------  --------
     Total Other Income & (Deds.)   (1,595)     (739)   (1,398)
                                  --------  --------  --------
Income Before Interest Expenses     42,475    66,976    71,914
                                  --------  --------  --------
Interest Expenses:
Interest on Long-term Debt          19,234    19,498    20,024
Cost of Borrowed Funds Capitalized    (158)      (34)      (99)
Other                                4,150     3,277     2,622
                                  --------  --------  --------
     Total Interest Expenses        23,226    22,741    22,547
                                  --------  --------  --------
Net Income Before Extraordinary
  Item & Preferred Dividends        19,249    44,235    49,367
Extraordinary Item                      --        --     4,100
                                  --------  --------  --------
Net Income Before Pref. Dividends   19,249    44,235    53,467

Dividends on Preferred Stock         3,208     3,194     3,216
                                  --------  --------  --------
Net Inc. Available for Common Stk.$ 16,041  $ 41,041  $ 50,251
                                  --------  --------  --------
Other Comprehensive Income             785      (169)     (317)
Comprehensive Income              $ 16,826  $ 40,872  $ 49,934
                                  ========  ========  ========
<FN>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these statements.
</TABLE>

                             90

<TABLE>
                 Central Illinois Light Company
                   Consolidated Balance Sheets
                             Assets
<CAPTION>
As of December 31                        1999         1998
                                         (In thousands)
<S>                                   <C>          <C>
Utility Plant, At Original Cost:
  Electric                            $1,263,190   $1,237,885
  Gas                                    431,887      417,585
                                      ----------   ----------
                                       1,695,077    1,655,470
  Less-Accum. Provision for Depr.        870,566      812,630
                                      ----------   ----------
                                         824,511      842,840
Construction Work in Progress             38,068       30,075
Plant Acquisition Adjustments, Net of
  Amortization                                --          505
                                      ----------   ----------
    Total Utility Plant                  862,579      873,420
                                      ----------   ----------
Other Property and Investments:
Cash Surrender Value of Company-owned
  Life Insurance (Net of Related
  Policy Loans of
  $53,558 in 1999 and $48,132 in 1998)     3,106        2,655
Other                                      1,179        1,176
                                      ----------   ----------
    Total Other Property and Invest.       4,285        3,831
                                      ----------   ----------
Current Assets:
Cash and Temporary Cash Investments        8,548        1,362
Receivables, Less Reserves
  of $1,296 and $1,106                    42,410       35,767
Accrued Unbilled Revenue                  35,071       31,315
Fuel, at Average Cost                     14,392       13,431
Materials and Supplies, at Avg. Cost      15,967       15,062
Gas in Underground Storage, at
  Average Cost                            21,196       20,494
Prepaid Taxes                              6,165        2,265
FAC Underrecoveries                       12,024           --
Other                                      8,854        6,626
                                      ----------   ----------
    Total Current Assets                 164,627      126,322
                                      ----------   ----------
Deferred Debits:
Unamortized Loss on Reacquired Debt        2,941        3,261
Unamortized Debt Expense                   1,552        1,852
Prepaid Pension Cost                         259          417
Other                                     20,037       15,325
                                      ----------   ----------
    Total Deferred Debits                 24,789       20,855
                                      ----------   ----------
Total Assets                          $1,056,280   $1,024,428
                                      ==========   ==========
<FN>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these balance sheets.
</TABLE>




                             91

<TABLE>
                 Central Illinois Light Company
                   Consolidated Balance Sheets
                 Capitalization and Liabilities
<CAPTION>
As of December 31                          1999         1998
                                             (In thousands)
<S>                                       <C>          <C>
Capitalization:
Common Shareholder's Equity:
  Common Stock, No Par Value; Authorized
    20,000,000 Shares; Outstanding
    13,563,871 Shares                     $  185,661   $  185,661
  Additional Paid in Capital                  27,000           --
  Retained Earnings                          121,564      135,315
  Accumulated Other Comprehensive Income         (60)        (845)
                                          ----------   ----------
    Total Common Shareholder's Equity        334,165      320,131

Preferred Stock Without Mandatory
  Redemption                                  44,120       44,120
Preferred Stock With Mandatory Redemption     22,000       22,000
Long-term Debt                               237,934      267,884
                                          ----------   ----------
    Total Capitalization                     638,219      654,135
                                          ----------   ----------
Current Liabilities:
Current Maturities of Long-Term Debt          30,000           --
Notes Payable                                 46,900       40,600
Accounts Payable                              35,859       53,260
Accrued Taxes                                 25,520        7,303
Accrued Interest                               9,485        9,394
PGA Over-Recoveries                              127          304
Level Payment Plan                               956        1,519
Other                                          4,714        5,261
                                          ----------   ----------
    Total Current Liabilities                153,561      117,641
                                          ----------   ----------
Deferred Liabilities and Credits:
Accumulated Deferred Income Taxes            136,077      141,746
Regulatory Liability                          31,367       46,346
Investment Tax Credits                        17,792       19,450
Capital Lease Obligation                       1,183        1,703
Other                                         78,081       43,407
                                          ----------   ----------
    Total Deferred Liabilities and Credits   264,500      252,652
                                          ----------   ----------
Total Capitalization and Liabilities      $1,056,280   $1,024,428
                                          ==========   ==========
<FN>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these balance sheets.
</TABLE>









                             92

<TABLE>
                 Central Illinois Light Company
              Consolidated Statements of Cash Flows
<CAPTION>
For the Years Ended December 31              1999       1998      1997
                                                  (In thousands)
<S>                                        <C>       <C>       <C>
Cash Flows from Operating Activities:
Net Income Before Extraordinary Item
  And Preferred Dividends                  $ 19,249  $ 44,235  $ 49,367
Adjustments to Reconcile Net Income to
  Net Cash Provided by Operating
  Activities:
    Depreciation and Amortization            67,191    65,986    62,217
    Deferred Taxes, Investment Tax
      Credits and Regulatory Liability,
      Net                                   (22,307)   (7,690)   (6,585)
    Decrease(Increase) in Accounts
      Receivable                             (6,643)    8,328      (946)
    (Increase)Decrease in Fuel,
      Materials and Supplies, and Gas
      in Underground Storage                 (2,569)   (5,368)    3,372
    Increase in Unbilled Revenue             (3,756)      (67)     (369)
    Increase(Decrease) in Accounts
      Payable                               (17,400)    8,416    (1,282)
    Increase(Decrease) in Accrued Taxes
      and Interest                           18,308     4,870    (4,947)
    Capital Lease Payments                      645       645       645
    (Increase)Decrease in Other Current
      Assets                                (18,152)   (1,372)    3,331
    Decrease in Other Current Liabilities    (1,288)   (1,627)     (458)
    (Increase)Decrease in Other
      Non-Current Assets                     (1,913)    2,328     6,372
    Increase in Other Non-Current
      Liabilities                            34,403     3,571     1,273
                                           --------  --------  --------
      Net Cash Provided by Operating
        Activities                           65,768   122,255   111,990
                                           --------  --------  --------
Cash Flows from Investing Activities:
  Capital Expenditures                      (55,135)  (67,102)  (55,026)
  Cost of Equity Funds Capitalized               --        --       (35)
  Other                                      (3,081)   (5,817)   (5,950)
                                           --------  --------  --------
      Net Cash Used in Investing
        Activities                          (58,216)  (72,919)  (61,011)
                                           --------  --------  --------
Cash Flows from Financing Activities:
  Common Dividends Paid                     (29,813)  (53,483)  (39,482)
  Preferred Dividends Paid                   (3,208)   (3,194)   (3,216)
  Long-Term Debt Retired                         --   (10,650)  (20,000)
  Payments on Capital Lease Obligation         (645)     (645)     (645)
  Increase(Decrease) in Short-Term
    Borrowing                                 6,300    19,300    11,400
  Additional Paid in Capital                 27,000        --        --
                                           --------  --------  --------
      Net Cash Provided from (Used in)
        Financing Activities                   (366)  (48,672)  (51,943)
                                           --------  --------  --------


                            93

Net Increase(Decrease) in Cash and
  Temporary Cash Investments                  7,186       664      (964)
Cash and Temporary Cash Investments at
  Beginning of Year                           1,362       698     1,662
                                           --------  --------  --------
Cash and Temporary Cash Investments at
  December 31                              $  8,548  $  1,362  $    698
                                           ========  ========  ========

Supplemental Disclosures of Cash Flow
  Information:
Cash Paid During the Period for:
  Interest (Net of Cost of Borrowed
    Funds Capitalized)                     $ 23,870  $ 23,200  $ 24,148

  Income Taxes                             $ 19,308  $ 30,421  $ 37,907
<FN>
The accompanying Notes to the Consolidated Financial Statements are
an integral part of these statements.
</TABLE>









































                             94

<TABLE>
                 Central Illinois Light Company
               Statements of Segments of Business
<CAPTION>
                                         1999
                       CILCO       CILCO      CILCO     Total
                      Electric      Gas       Other     CILCO
                                  (In thousands)
<S>                    <C>        <C>        <C>     <C>
Revenues               $372,714   $180,760   $ 5,399 $  558,873
Interest Income              --         --       225        225
                       --------   --------   ------- ----------
     Total              372,714    180,760     5,624    559,098
                       --------   --------   ------- ----------
Operating Expenses      278,497    152,945     8,578    440,020
Depreciation and
  Amortization           47,070     19,616       505     67,191
                       --------   --------   ------- ----------
     Total              325,567    172,561     9,083    507,211
                       --------   --------   ------- ----------
Interest Expense         16,743      6,641        --     23,384
Preferred Stock Div.         --         --     3,208      3,208
Fixed Charges and Other
  Expenses                 (157)        (1)    1,037        879
                       --------   --------   ------- ----------
     Total               16,586      6,640     4,245     27,471
                       --------   --------   ------- ----------
Income from Continuing
  Operations Before
  Income Taxes           30,561      1,559    (7,704)    24,416

Income Taxes             10,440        836    (2,901)     8,375
                       --------   --------   ------- ----------
Segment Net Income     $ 20,121   $    723   $(4,803)$   16,041
                       ========   ========   ======= ==========

Capital Expenditures   $ 38,985   $ 16,150   $    -- $   55,135

Revenue from major
  customer
  Caterpillar Inc.     $ 38,758   $  1,119   $   513 $   40,390

Segment Assets         $759,399   $291,833   $ 5,048 $1,056,280
</TABLE>


















                             95

<TABLE>
<CAPTION>
                                        1998
                        CILCO      CILCO     CILCO      Total
                       Electric     Gas      Other      CILCO
                                    (In thousands)
<S>                    <C>        <C>       <C>      <C>
Revenues               $360,009   $172,327  $  1,864 $  534,200
Interest Income              --         --       251        251
                       --------   --------  -------- ----------
     Total              360,009    172,327     2,115    534,451
                       --------   --------  -------- ----------
Operating Expenses      235,801    138,459     3,744    378,004
Depreciation and
  Amortization           46,017     19,256       713     65,986
                       --------   --------  -------- ----------
     Total              281,818    157,715     4,457    443,990
                       --------   --------  -------- ----------
Interest Expense         16,261      6,514        --     22,775
Preferred Stock Div.         --         --     3,194      3,194
Fixed Charges and Other
  Expenses                  (34)        --     1,013        979
                       --------   --------  -------- ----------
     Total               16,227      6,514     4,207     26,948
                       --------   --------  -------- ----------
Income from Continuing
  Operations Before
  Income Taxes           61,964      8,098    (6,549)    63,513

Income Taxes             21,645      3,443    (2,616)    22,472
                       --------   --------  -------- ----------
Segment Net Income     $ 40,319   $  4,655  $ (3,933)$   41,041
                       ========   ========  ======== ==========

Capital Expenditures   $ 44,213   $ 22,889  $     -- $   67,102

Revenue from major
  customer
  Caterpillar Inc.     $ 39,354   $    948  $     88 $   40,390

Segment Assets         $735,436   $283,920  $  5,072 $1,024,428
</TABLE>




















                             96

<TABLE>
<CAPTION>
                                       1997
                        CILCO      CILCO     CILCO     Total
                       Electric     Gas      Other     CILCO
                                    (In thousands)
<S>                    <C>        <C>       <C>      <C>
Revenues               $338,096   $208,758  $    272 $  547,126
Interest Income              --         --       266        266
                       --------   --------  -------- ----------
     Total              338,096    208,758       538    547,392
                       --------   --------  -------- ----------
Operating Expenses      217,700    165,020     3,130    385,850
Depreciation and
  Amortization           43,858     17,647       713     62,218
                       --------   --------  -------- ----------
     Total              261,558    182,667     3,843    448,068
                       --------   --------  -------- ----------
Interest Expense         16,192      6,454        --     22,646
Preferred Stock Div.         --         --     3,216      3,216
Fixed Charges and Other
  Expenses                 (134)        --     1,177      1,043
                       --------   --------  -------- ----------
     Total               16,058      6,454     4,393     26,905
                       --------   --------  -------- ----------
Income from Continuing
  Operations Before
  Income Taxes           60,480     19,637    (7,698)    72,419

Income Taxes             21,901      7,416    (3,049)    26,268
                       --------   --------  -------- ----------
Income from Continuing
  Operations before
  Extraordinary Item     38,579     12,221    (4,649)    46,151
Extraordinary Item        4,100         --        --      4,100
                       --------   --------  -------- ----------
Segment Net Income     $ 42,679   $ 12,221  $ (4,649)$   50,251
                       ========   ========  ======== ==========

Capital Expenditures   $ 35,196   $ 19,830  $     -- $   55,026

Revenue from major
  customer
  Caterpillar Inc.     $ 40,106   $    934  $     -- $   41,040

Segment Assets         $725,725   $291,291  $  5,639 $1,022,655
</TABLE>















                             97

<TABLE>
                 Central Illinois Light Company
          Consolidated Statements of Retained Earnings

<CAPTION>
For the Years Ended December 31         1999      1998      1997
                                            (In thousands)
<S>                                    <C>       <C>       <C>
Balance Beginning of Year              $134,470  $147,081  $136,629
Add:
Other                                        20        --        --
Net Income Before Preferred Dividends    19,249    44,235    53,467
                                       --------  --------  --------
          Total                         153,739   191,316   190,096
                                       --------  --------  --------
Deduct:
Cash Dividends Declared
  Preferred Stock
    $100 Par Value
      4 1/2% Series                         501       501       501
      4.64% Series                          371       371       371
      5.85% Series                        1,287     1,287     1,287
    Auction Rate Series (rate at
      December 31, 1999 was 4.75%)        1,049     1,035     1,057
  Common Stock, No Par Value             29,812    53,483    39,482
                                       --------  --------  --------
          Total Dividends Declared       33,020    56,677    42,698
                                       --------  --------  --------
  Additional Minimum Liability for
    Non-Qualified Pension Plan at
    December 31, 1999, 1998, and 1997
    net of taxes of $516, $(111) and
    $(208), respectively                   (785)      169       317
                                       --------  --------  --------
                                         32,235    56,846    43,015
                                       --------  --------  --------
Balance End of Year                    $121,504  $134,470  $147,081
                                       ========  ========  ========
<FN>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these statements.
</TABLE>



















                             98

                 CENTRAL ILLINOIS LIGHT COMPANY
         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements of CILCO include the
accounts of CILCO and its subsidiaries, CILCO Exploration and
Development Company and CILCO Energy Corporation.  CILCO is a
subsidiary of CILCORP Inc.  Prior year amounts have been
reclassified on a basis consistent with the 1999 presentation.

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

REGULATION

CILCO is a public utility subject to regulation by the Illinois
Commerce Commission (ICC) and the Federal Energy Regulatory
Commission (FERC) with respect to accounting matters, and
maintains its accounts in accordance with the Uniform System of
Accounts prescribed by these agencies.

CILCO is subject to the provisions of Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of
Certain Types of Regulation" (SFAS 71) for certain of its
regulated public utility operations.  Under SFAS 71, assets and
liabilities are recorded to represent probable future increases
and decreases, respectively, of revenues to CILCO resulting from
the ratemaking action of regulatory agencies.

The Electric Service Customer Choice and Rate Relief Law of 1997
(Customer Choice Law) became effective in Illinois in December
1997.  Among other provisions, this law begins a nine-year
transition process to a fully competitive market for electricity
in Illinois.  Electric transmission and distribution activities
are expected to continue to be regulated, but a customer may
choose to purchase electricity from another supplier (see Item 1.
Business - Competition).

The Customer Choice Law contains many other provisions affecting
how CILCO will or may conduct its business in the future.  The
Customer Choice Law also requires the ICC to promulgate rules
pertaining to various matters, including accounting and
recordkeeping requirements, electric reliability standards, and
affiliated interest rules.  CILCO will adapt its business plans
to take advantage of the competitive opportunities afforded by
the new law.













                             99

Due to the Customer Choice Law, CILCO's electric generation
activities are no longer subject to the provisions of SFAS 71.
Accordingly, regulatory assets of $1.5 million and liabilities of
$5.6 million associated with electric generating plant were
written-off or credited, respectively, to income in 1997 as a net
$4.1 million after-tax extraordinary item.  Regulatory assets
included on the Consolidated Balance Sheets at December 31, 1999,
and 1998 are as follows:

<TABLE>
<CAPTION>
                                               1999         1998
                                                (In thousands)
<S>                                           <C>          <C>
Included in prepayments and other:
  Fuel and gas cost adjustments               $15,614      $ 4,740
  Coal tar remediation cost-estimated current     720          609
                                              -------      -------
     Current costs included in prepayments and
       other                                   16,334        5,349
                                              -------      -------
Included in other assets:
  Coal tar remediation cost, net of recoveries    674        1,281
  Regulatory tax asset                          7,334        5,723
  Deferred gas costs                            4,368        4,039
  Unamortized loss on reacquired debt           2,941        3,261
                                              -------      -------
     Future costs included in other assets     15,317       14,304
                                              -------      -------
          Total regulatory assets             $31,651      $19,653
                                              =======      =======
</TABLE>

Regulatory assets at December 31, 1999, are related to CILCO's
regulated electric and gas distribution activities.  Regulatory
liabilities, consisting of deferred tax items primarily related
to CILCO's electric and gas transmission and distribution
operations, are approximately $31.4 million and $46.3 million at
December 31, 1999, and 1998, respectively.
























                            100

CILCO's electric generation-related identifiable assets included
in the balance sheet at December 31, 1999, and 1998 were:

<TABLE>
<CAPTION>
                                         1999         1998
                                           (In thousands)
<S>                                    <C>          <C>
Property, Plant and Equipment          $ 538,316    $ 537,358
Less:  Accumulated Depreciation         (284,201)    (266,461)
                                       ---------    ---------
                                         254,115      270,897
Construction Work in Progress              9,215        3,268
                                       ---------    ---------
  Net Property, Plant and Equipment      263,330      274,165
Fuel, at Average Cost                     14,392       13,431
Materials and Supplies, at Average Cost    9,901        9,189
                                       ---------    ---------
Total Identifiable Electric Generation
  Assets                               $ 287,623    $ 296,785
                                       =========    =========
</TABLE>

Accumulated deferred income taxes associated with electric
generation property  at December 31, 1999, and 1998 were
approximately $61 million and $72 million, respectively.

UTILITY OPERATING REVENUES, FUEL COSTS AND COST OF GAS

Electric and gas revenues include service provided but unbilled
at year end.  Substantially all electric energy rates and gas
system sales rates of CILCO include a fuel adjustment clause and
a purchased gas adjustment clause, respectively.  These clauses
provide for the recovery of changes in electric fuel costs,
excluding coal transportation, and changes in the cost of gas on
a current basis in billings to customers.  CILCO adjusts the cost
of fuel and cost of gas to recognize over or under recoveries of
allowable costs.  The cumulative effects are deferred on the
Balance Sheets as a current asset or current liability (see
Regulation, above) and adjusted by refunds or collections through
future billings to customers.  For further discussion, refer to
the caption, "Electric Fuel and Purchased Gas Adjustment Clauses"
of Item 1. Business.

CONCENTRATION OF CREDIT RISK

CILCO, as a public utility, must provide service to customers
within its defined service territory and may not discontinue
service to residential customers when certain weather conditions
exist.  CILCO continually reviews customers' creditworthiness and
requests deposits or refunds deposits based on that review.  At
December 31, 1999, CILCO had net receivables of $42.4 million, of
which approximately $1.2 million was due from its major customer.

TRANSACTIONS WITH AFFILIATES

CILCO, which is a subsidiary of CILCORP, incurs certain corporate
expenses such as legal, shareholder and accounting fees on behalf
of CILCORP and its other subsidiaries.  Also, beginning in 1997,
CILCO sold natural gas to its affiliate CESI, in conjunction with
CESI's gas marketing program.  These expenses are billed monthly
to CILCORP and its other subsidiaries based on specific
identification of costs, except for shareholder-related costs
which are based on the relative equity percentages of CILCORP and
its subsidiary

                            101

corporations.  A return on CILCO assets used by CILCORP and its
other subsidiaries is also calculated and billed monthly.   Total
billings to CILCORP and its other subsidiaries amounted to
$14.0 million, $11.6 million, and $7.5 million in 1999, 1998, and
1997, respectively.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)

The allowance, representing the cost of equity and borrowed funds
used to finance construction, is capitalized as a component of
the cost of utility plant.  The amount of the allowance varies
depending on the rate used and the size and length of the
construction program.  The Uniform System of Accounts defines
AFUDC, a non-cash item, as the net cost for the period of
construction of borrowed funds used for construction purposes and
a reasonable rate upon other funds when so used.  On the income
statement, the cost of borrowed funds capitalized is reported as
a reduction of total interest expense and the cost of equity
funds capitalized is reported as other income.  In accordance
with the FERC formula, the composite AFUDC rates used in 1999,
1998, and 1997 were 5.9%, 5.9%, and 7.2%, respectively.

DEPRECIATION AND MAINTENANCE

Provisions for depreciation of utility property for financial
reporting purposes are based on straight-line composite rates.
The annual provisions for utility plant depreciation, expressed
as a percentage of average depreciable utility property, were
3.8% and 4.6% for electric and gas, respectively, for each of the
last three years.  Utility maintenance and repair costs are
charged directly to expense.  Renewals of units of property are
charged to the utility plant account, and the original cost of
depreciable property replaced or retired, together with the
removal cost less salvage, is charged to the accumulated
provision for depreciation.

INCOME TAXES

CILCO follows a policy of comprehensive interperiod income tax
allocation.  Investment tax credits related to utility property
have been deferred and are being amortized over the estimated
useful lives of the related property.  CILCORP and its
subsidiaries will file a consolidated federal income tax return
with AES.  Income taxes are allocated to the individual companies
based on their respective taxable income or loss.

CONSOLIDATED STATEMENTS OF CASH FLOWS

CILCO considers all highly liquid debt instruments purchased with
a remaining maturity of three months or less to be cash
equivalents for purposes of the Consolidated Statements of Cash
Flows.
















                            102

CILCO-OWNED LIFE INSURANCE POLICIES

The following amounts related to CILCO-owned life insurance
contracts, issued by one major insurance company, are recorded on
the Consolidated Balance Sheets:

<TABLE>
<CAPTION>
                                         1999        1998
                                          (In thousands)
<S>                                    <C>          <C>
Cash surrender value of contracts      $ 56,664     $ 50,786
Borrowings against contracts            (53,558)     (48,132)
                                       --------     --------
  Net investment                       $  3,106     $  2,654
                                       ========     ========
</TABLE>

Interest expense related to borrowings against CILCO-owned life
insurance, included in CILCO-owned Life Insurance, Net on the
Consolidated Statements of Income, was $4 million, $3.6 million,
and $3.5 million for 1999, 1998, and 1997, respectively.







































                            103

NOTE 2 - INCOME TAXES

CILCO uses the liability method to account for income taxes.
Under the liability method, deferred income taxes are recognized
at currently enacted income tax rates to reflect the tax effect
of temporary differences between the financial reporting basis
and the tax basis of assets and liabilities.  Temporary
differences occur because the income tax law either requires or
permits certain items to be reported on CILCO's income tax return
in a different year than they are reported in the financial
statements. CILCO has recorded a regulatory asset and liability
to account for the effect of expected future regulatory actions
related to unamortized investment tax credits, income tax
liabilities initially recorded at tax rates in excess of current
rates, the equity component of AFUDC and other items for which
deferred taxes had not previously been provided.  The temporary
differences related to the consolidated deferred income tax asset
and liability at December 31, 1999, 1998, and 1997 were as
follows:

<TABLE>
<CAPTION>
December 31                              1999      1998     1997
                                             (In thousands)
<S>                                    <C>       <C>       <C>
Deferred Tax Assets:
Deferred Tax Asset                     $ 26,036  $ 20,307  $ 16,752
Adjustment to reflect regulatory asset   (7,334)   (5,723)   (7,578)
                                       --------  --------  --------
Net deferred tax asset                 $ 18,702  $ 14,584  $  9,174
                                       ========  ========  ========

Deferred Tax Liabilities:
Deferred Tax Liability-property        $194,267  $201,872  $205,777
Adjustment to reflect regulatory
  liability                             (31,367)  (46,346)  (56,807)
                                       --------  --------  --------
Net Deferred Tax Liability-property     162,900   155,526   148,970
Deferred Tax Liability-other             (8,121)      804      (522)
                                       --------  --------  --------
Accumulated Deferred Income Tax
  Liability                            $154,779  $156,330  $148,448
                                       ========  ========  ========
Accumulated Deferred Income Tax
  Liab., net of deferred tax assets    $136,077  $141,746  $139,274
                                       ========  ========  ========
</TABLE>

The following table reconciles the change in the accumulated
deferred income tax liability to the deferred income tax expense
included in the income statement for the period:













                            104

<TABLE>
<CAPTION>
December 31                                        1999          1998
                                                     (In thousands)
<S>                                             <C>           <C>
Net change in deferred income tax liability
  per above table                               $ (5,669)     $  2,472
Change in tax effects of income tax related
  regulatory assets and liabilities              (16,590)       (8,606)
Deferred taxes related to extraordinary item          --            --
Other                                               (516)          111
                                                --------      --------
Deferred income tax expense (benefit) for
  the period                                    $(22,775)     $ (6,023)
                                                ========      ========
</TABLE>

Income tax expenses were as follows:

<TABLE>
<CAPTION>
Years Ended December 31              1999      1998      1997
                                         (In thousands)
<S>                               <C>        <C>       <C>
Current income taxes
Federal                           $ 29,615   $26,278   $29,244
State                                5,805     6,260     6,350
                                  --------   -------   -------
  Total operating current taxes     35,420    32,538    35,594
                                  --------   -------   -------
Deferred oper. income taxes, net
Depreciation and amortization       (1,089)     (955)   (6,080)
Repair allowance                    (1,121)      158     1,384
Borrowed component of AFUDC             (3)       37        80
Capitalized overhead costs            (789)     (783)     (807)
Removal costs                       (6,444)   (3,189)    2,515
Gas take-or-pay settlements             40       522      (339)
Gas storage field                    1,996    (1,681)     (191)
Taxable salvage                        394       599       220
Environmental remediation costs        317        55        46
Pension expense                     (9,925)      869    (1,798)
Other                               (5,862)   (1,415)      377
                                  --------   -------   -------
  Total operating deferred income
  taxes, net                       (22,486)   (5,783)   (4,593)
Investment tax credit amortization  (1,658)   (1,667)   (1,684)
                                  --------   -------   -------
Total operating income taxes        11,276    25,088    29,317
Income tax reduction for
  disallowed plant costs               123       133       144
Other, net                          (3,023)   (2,749)   (3,192)
                                  --------   -------   -------
Total income taxes before
  extraordinary item                 8,376    22,472    26,269
Deferred taxes related to
  extraordinary item                    --        --    (5,634)
                                  --------   -------   -------
Total income taxes                $  8,376   $22,472   $20,635
                                  ========   =======   =======
</TABLE>

                            105

The 1997 income tax provision has been reduced to reflect the
crediting to income as an extraordinary item the regulatory
liability related to electric generation property deferred taxes
which were recorded at tax rates in excess of the current rate
(see Note 1).

Total operating deferred income taxes, net, includes deferred
state income taxes of $(3,162,000), $(848,000), and $(65,000) for
1999, 1998, and 1997, respectively.  Other, net, includes
deferred state income taxes of $(52,000), $(43,000), and
$(18,000) for 1999, 1998, and 1997, respectively.

The following table represents a reconciliation of the effective
tax rate with the statutory federal income tax rate:

<TABLE>
<CAPTION>
                                           1999      1998      1997
<S>                                        <C>       <C>       <C>
Statutory federal income tax rate          35.0%     35.0%     35.0%
                                           ====      ====      ====
Equity component of AFUDC not subject to
  taxation                                   --        --        --
Amortization of property-related deferred
  taxes provided at tax rates in excess of
  the current rate                          2.8      (2.7)     (1.4)
Amortization of investment tax credit      (6.8)     (2.6)     (2.4)
CILCO-owned life insurance                 (4.4)     (1.4)     (1.1)
State income taxes                          0.7       5.2       5.0
Preferred dividends and other permanent
  differences                               6.0       2.1       2.1
Other differences                           1.0      (0.1)     (0.2)
                                           ----      ----      ----
  Total                                    (0.7)      0.5       2.0
                                           ----      ----      ----
Effective income tax rate before effect of
  extraordinary item                       34.3      35.5      37.0
Tax effect of extraordinary item             --        --      (7.9)
                                           ----      ----      ----
Effective income tax rate                  34.3%     35.5%     29.1%
                                           ====      ====      ====
</TABLE>





















                            106

NOTE 3 - POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS

POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS AND HEALTH CARE

CILCO has recorded a liability of approximately $1.3 million and
$1.5 million at December 31, 1999, and 1998, respectively, for
benefits other than pensions or health care provided to former
or inactive employees.  The liability for these benefits
(primarily long-term and short-term disability payments under
plans self-insured by CILCO) is actuarially determined.

PENSION BENEFITS

Substantially all of CILCO's full-time employees are covered by
trusteed, non-contributory defined benefit pension plans.
Benefits under these qualified plans reflect the employee's
years of service, age at retirement and maximum total
compensation for any consecutive sixty-month period prior to
retirement.  CILCO also has an unfunded nonqualified plan for
certain employees.

Pension costs for the past three years were charged as follows:

<TABLE>
<CAPTION>
                                     1999     1998        1997
                                          (In thousands)
<S>                                <C>        <C>         <C>
Operating expenses                 $25,544    $(893)      $493
Utility plant and other                 --        6        125
                                   -------    -----       ----
  Net pension costs (income)       $25,544    $(887)      $618
                                   =======    =====       ====
</TABLE>

The components of net periodic benefit costs follow:

<TABLE>
<CAPTION>
                                          1999         1998
                                           (In thousands)
<S>                                     <C>          <C>
Service cost                            $  4,721     $  5,410
Interest cost                             19,797       19,024
Expected return on plan assets           (26,982)     (25,304)
Amortization of transition asset            (888)        (888)
Amortization of past service cost          1,049        1,068
Recognized actuarial gain                   (791)        (197)
Loss recognized due to curtailment and
  special termination benefits            28,638           --
                                        --------     --------
Net benefit cost (income)               $ 25,544     $   (887)
                                        ========     ========
</TABLE>

During 1999, CILCO recognized $28.6 million of net pension costs
associated with additional benefits extended in connection with
voluntary early retirement programs.





                            107

Information on the plans' funded status follows:

<TABLE>
<CAPTION>
                                         1999         1998
                                           (In thousands)
<S>                                    <C>           <C>
Change in Benefit Obligations
Benefit obligation at January 1,       $ 285,646     $254,929
Service cost                               4,721        5,410
Interest cost                             19,797       19,024
Amendments                                31,774           --
Actuarial (gain) loss                    (39,647)      22,521
Benefits paid                            (21,138)     (16,238)
                                       ---------     --------
Benefit obligation at December 31,     $ 281,153     $285,646
                                       =========     ========
Change in Plan Assets
Fair value of assets at January 1,     $ 309,483     $289,091
Actual return on assets                   57,943       36,467
Company contributions                        227          163
Benefits paid                            (21,138)     (16,238)
                                       ---------     --------
Fair value of assets at December 31,   $ 346,515     $309,483
                                       =========     ========

Funded Status at December 31,          $  65,362     $ 23,837
Unrecognized net transition asset         (3,123)      (4,011)
Unrecognized actuarial gain             (106,991)     (35,875)
Unrecognized prior service cost            6,295        6,365
                                       ---------     --------
Net amount recognized                  $ (38,457)    $ (9,684)
                                       =========     ========

Amounts recognized in the statement of financial position
consist of:

Accrued benefit liability              $ (38,813)    $(11,500)
Intangible asset                             257          415
Accumulated other comprehensive income        99        1,401
                                       ---------     --------
Net amount recognized                  $ (38,457)    $ (9,684)
                                       =========     ========
Assumptions as of December 31,
Discount rate                              7.75%        6.75%
Expected return on plan assets             9.00%        9.00%
Rate of compensation increase              3.50%        3.50%
</TABLE>

At December 31, 1999, and 1998, CILCO recognized an additional
minimum liability on the Balance Sheets for a plan in which the
accumulated benefit obligation exceeds the fair value of plan
assets.  The projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for the pension plan
with accumulated benefit obligations in excess of plan assets
were $4,481, $3,797, and $0, respectively, as of December 31,
1999, and $4,191, $3,582, and $0, respectively, as of
December 31, 1998.






                            108

POSTRETIREMENT HEALTH CARE BENEFITS

Substantially all of CILCO's full-time employees are currently
covered by a trusteed, defined benefit postretirement health
care plan.  The plan pays stated percentages of most necessary
medical expenses incurred by retirees, after subtracting
payments by Medicare or other providers and after a stated
deductible has been met.  Participants become eligible for the
benefits if they retire from CILCO after reaching age 55 with 10
or more years of service.

Postretirement health care benefit costs were charged as
follows:

<TABLE>
<CAPTION>
                                    1999       1998      1997
                                        (In thousands)
<S>                                <C>        <C>       <C>
Operating expenses                 $14,656    $3,904    $3,989
Utility plant and other                960     1,260     1,825
                                   -------    ------    ------
  Net postretirement health care
    benefit costs                  $15,616    $5,164    $5,814
                                   =======    ======    ======
</TABLE>

The components of net periodic benefit costs follow:

<TABLE>
<CAPTION>
                                           1999        1998
                                            (In thousands)
<S>                                      <C>          <C>
Service cost                             $ 1,896      $ 1,417
Interest cost                              6,434        5,371
Expected return on plan assets            (4,488)      (4,388)
Amortization of transition liability       2,858        2,858
Amortization of past service cost             --           --
Recognized actuarial gain                     --          (94)
Loss recognized due to curtailment and
  special termination benefits             8,916           --
                                         -------      -------
Net benefit cost                         $15,616      $ 5,164
                                         =======      =======
</TABLE>

During 1999, CILCO recognized $8.9 million of net postretirement
health care benefit costs associated with additional benefits
extended in connection with voluntary early retirement programs.













                            109

Information on the plans' funded status follows:

<TABLE>
<CAPTION>
                                           1999        1998
                                            (In thousands)
<S>                                     <C>          <C>
Change in Benefit Obligations
Benefit obligation at January 1,        $ 82,316     $ 72,542
Service cost                               1,896        1,417
Interest cost                              6,434        5,371
Amendments                                11,027           --
Actuarial loss                               508        7,500
Benefits paid                             (5,702)      (4,514)
                                        --------     --------
Benefit obligation at December 31,      $ 96,479     $ 82,316
                                        ========     ========
Change in Plan Assets
Fair value of assets at January 1,      $ 54,393     $ 52,263
Actual return on assets                    5,533        5,781
Company contributions                      1,151          863
Benefits paid                             (5,702)      (4,514)
                                        --------     --------
Fair value of assets at December 31,    $ 55,375     $ 54,393
                                        ========     ========

Funded Status at December 31,           $(41,104)    $(27,923)
Unrecognized net transition liability     27,439       30,297
Unrecognized actuarial gain               (5,203)      (6,777)
Unrecognized prior service cost               --           --
                                        --------     --------
Accrued benefit cost                    $(18,868)    $ (4,403)
                                        ========     ========
Assumptions as of December 31,
Discount rate                              7.75%        6.75%
Expected return on plan assets             9.00%        8.50%
</TABLE>

For measurement purposes, a 7.2 percent annual rate of increase
in the per capita cost of covered health care benefits was
assumed for 2000.  The rate was assumed to decrease gradually to
5.0 percent for 2006 and remain level thereafter.

Assumed health care cost trend rates have a significant effect on
the amounts reported for health care plans.  A one-percentage-
point change in assumed health care cost trend rates would have
the following effects (in thousands):

<TABLE>
<CAPTION>
                              1-Percentage-       1-Percentage-
                              Point Increase      Point Decrease
                              --------------      --------------
<S>                               <C>                <C>
Effect on total of service and
  interest cost components        $  309             $  (377)
Effect on postretirement benefit
  obligation                      $3,406             $(3,830)
</TABLE>



                            110

NOTE 4 - SHORT-TERM DEBT

CILCO had arrangements for bank lines of credit totaling
$55 million at December 31, 1999, all of which were unused.
These lines of credit were maintained by commitment fees of .05
of 1% per annum for $35 million and .07 of 1% per annum for
$20 million in lieu of balances.  These bank lines of credit
support CILCO's issuance of commercial paper.  Short-term
borrowings consisted of commercial paper totaling $46.9 million
and $40.6 million at December 31, 1999, and 1998, respectively.

NOTE 5 - LONG-TERM DEBT

<TABLE>
<CAPTION>
At December 31                            1999         1998
                                            (In thousands)
<S>                                    <C>          <C>
First Mortgage Bonds
  7 1/2% series due 2007               $ 50,000     $ 50,000
  8 1/5% series due 2022                 65,000       65,000
Medium-Term Notes
  6.4% series due 2000                       --       30,000
  6.82% series due 2003                  25,350       25,350
  6.13% series due 2005                  16,000       16,000
  7.8% series due 2023                   10,000       10,000
  7.73% series due 2025                  20,000       20,000
Pollution Control Refunding Bonds
  6.5% series F due 2010                  5,000        5,000
  6.2% series G due 2012                  1,000        1,000
  6.5% series E due 2018                 14,200       14,200
  5.9% series H due 2023                 32,000       32,000
                                       --------     --------
                                        238,550      268,550
Unamortized premium and discount on
  long-term debt, net                      (616)        (666)
                                       --------     --------
     Total CILCO long-term debt        $237,934     $267,884
                                       ========     ========
</TABLE>

CILCO's first mortgage bonds are secured by a lien on
substantially all of its property and franchises.  Unamortized
borrowing expense, premium and discount on outstanding long-term
debt are being amortized over the lives of the respective issues.

Scheduled maturities of long-term debt are $25.4 million for 2003
and $16 million for 2005.  There are no scheduled maturities of
long-term debt for 2001 or 2002.  The remaining maturities of
long-term debt of $197.2 million occur in 2007 and beyond.












                            111

NOTE 6 - PREFERRED STOCK

<TABLE>
<CAPTION>
At December 31                                 1999         1998
                                                 (In thousands)
<S>                                           <C>          <C>
Preferred stock, cumulative
$100 par value, authorized 1,500,000 shares
  Without mandatory redemption 4.50% series
    - 111,264 shares                          $11,126      $11,126
  4.64% series - 79,940 shares                  7,994        7,994
Class A, no par value, authorized 3,500,000
  shares
  Flexible auction rate - 250,000 shares (*)   25,000       25,000
  With mandatory redemption 5.85% series
    - 220,000 shares                           22,000       22,000
                                              -------      -------
        Total preferred stock                 $66,120      $66,120
                                              =======      =======
<FN>
(*)  Dividend rates at December 31, 1999, and 1998, were 4.75% and 4.04%,
      respectively.
</TABLE>
All classes of preferred stock are entitled to receive cumulative
dividends and rank equally as to dividends and assets, according
to their respective terms.

The total annual dividend requirement for preferred stock
outstanding at December 31, 1999, is $3.3 million, assuming a
continuation of the auction dividend rate at December 31, 1999,
for the flexible auction rate series.

PREFERRED STOCK WITHOUT MANDATORY REDEMPTION

The call provisions of preferred stock redeemable at CILCO's
option outstanding at December 31, 1999, are as follows:

<TABLE>
<CAPTION>
Series                       Callable Price Per Share (plus accrued dividends)
<S>                                        <C>
4.50%                                      $110
4.64%                                      $102
Flexible auction rate                      $100
</TABLE>

PREFERRED STOCK WITH MANDATORY REDEMPTION

CILCO's 5.85% Class A preferred stock may be redeemed in 2003 at
$100 per share.  A mandatory redemption fund must be established
on July 1, 2003.  The fund will provide for the redemption of
11,000 shares for $1.1 million on July 1 of each year through
July 1, 2007.  On July 1, 2008, the remaining 165,000 shares will
be retired for $16.5 million.

PREFERENCE STOCK, CUMULATIVE

No Par Value, Authorized 2,000,000 shares, of which none have
been issued.




                            112

NOTE 7 - COMMITMENTS & CONTINGENCIES

For a discussion of CILCO commitments and contingencies, refer to
Note 7 of the CILCORP Inc. Notes to the Consolidated Financial
Statements contained herein.

NOTE 8 - LEASES

CILCO leases certain equipment, buildings and other facilities
under capital and operating leases.  Minimum future rental
payments under non-cancellable capital and operating leases
having remaining terms in excess of one year as of December 31,
1999, are $11.5 million in total.  Payments due during the years
ending December 31, 2000, through December 31, 2004, are $4.4
million, $2.7 million, $2.1 million, $1.1 million and $.7
million, respectively.

NOTE 9 - ACCOUNTING FOR PRICE RISK MANAGEMENT ACTIVITIES

CILCO utilizes commodity futures contracts, options and swaps in
the normal course of its natural gas and electric business
activities to reduce market or price risk.  Gains and losses
arising from derivative financial instrument transactions which
hedge the impact of fluctuations in energy prices are recognized
in income concurrent with the related purchases and sales of the
commodity.  If a derivative financial instrument contract is
terminated because it is probable that a transaction or
forecasted transaction will not occur, any gain or loss as of
such date is immediately recognized.  If a derivative financial
instrument contract is terminated early for other economic
reasons, any gain or loss as of the termination date is deferred
and recorded concurrently with the related purchase and sale of
natural gas and electricity.  CILCO is subject to commodity price
risk for deregulated sales to the extent that energy is sold
under firm price commitments.  Due to market conditions, at times
CILCO may have unmatched commitments to purchase and sell energy
on a price and quantity basis.  Physical and derivative financial
instruments give rise to market risk, which represents the
potential loss that can be caused by a change in the market value
of a particular commitment.  Market risks are actively monitored
to ensure compliance with the Company's risk management policies,
including limits to the Company's total net exposure at any time.

The net loss reflected in operating results from derivative
financial instruments was $264,800 for gas and a gain of $287,100
for electric for the year 1999.  As of December 31, 1999, CILCO
had fixed-price derivative financial instruments representing
hedges of natural gas purchases of .5 Bcf and natural gas sales
of .3 Bcf for commitments through February 2000.  The net
deferred loss and carrying amount on these fixed-price
derivatives at December 31, 1999, was $160,400.  At December 31,
1999, CILCO had open positions in derivative financial
instruments used to hedge natural gas basis of .2 Bcf for
commitments through February 2000.  The net deferred gain on
these basis derivatives at December 31, 1999, was approximately
$4,000.

As of December 31, 1999, CILCO had fixed-price derivative
financial instruments representing hedges of electricity
purchases of 31,648 megawatts and electricity sales of 83,904
megawatts for commitments through August 2000.  The net deferred
loss and carrying amount on these fixed-price derivatives at
December 31, 1999, was approximately $1.2 million.

NOTE 10 - IMPACT OF ACCOUNTING STANDARDS

For a discussion of New Accounting Pronouncements which may
impact CILCO, refer to Note 10 of the CILCORP Inc. Notes to the
Consolidated Financial Statements contained herein.

                            113

NOTE 11 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following quarterly operating results are unaudited, but, in
the opinion of management, include all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of
CILCO's operating results for the periods indicated.  The results
of operations for each of the fiscal quarters are not necessarily
comparable to, or indicative of, the results of an entire year
due to the seasonal nature of CILCO's business.

<TABLE>
<CAPTION>
For the Three Months Ended
                       March 31   June 30   Sept. 30   Dec. 31
                                   (In thousands)
<S>                    <C>        <C>       <C>       <C>
1999
Operating revenue      $157,759   $113,613  $151,545  $130,557
Operating income         18,784      9,768     6,063     9,455
Net income               12,507      3,683      (339)    3,398

1998
Operating revenue      $149,080   $116,614  $136,506  $130,136
Operating income         18,324     14,593    24,815     9,983
Net income               12,316      8,929    19,064     3,926
</TABLE>


NOTE 12 - RETAINED EARNINGS

CILCO's Articles of Incorporation provide that no dividends shall
be paid on the common stock if, at the time of declaration, the
balance of retained earnings does not equal at least two times
the annual dividend requirement on all outstanding shares of
preferred stock.  The amount of retained earnings so required at
December 31, 1999, was $6.7 million.


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

                             CILCORP
Not applicable.
                              CILCO

Not applicable.


















                            114

                            PART III

Item 10.  Directors and Executive Officers of the Registrant

                             CILCORP

CILCORP Directors

Mark A. Ferrucci
Director of CILCORP since 1999

Mr. Ferrucci is 47 years old and graduated from Delaware
Technical and Community College in 1973 with a major in
Accounting.  He is employed by The Corporation Trust Company in
Wilmington, Delaware, where he prepares and files charter
documents for corporations in the State of Delaware and
throughout the United States.  Mr. Ferrucci is also responsible
for maintaining the good standing of corporations, including
preparing and filing their annual reports and franchise tax
returns as well as other corporate functions.  Mr. Ferrucci has
been with the Corporation Trust Company since 1977.  CILCORP's
bylaws require that one of its directors be independent and not
be affiliated with The AES Corporation.  The AES Corporation has
an agreement with The Corporation Trust Company to provide such
an independent director, and Mr. Ferrucci provides CILCORP its
independent director.  Mr. Ferrucci also is a director of other
publicly traded companies, including public utilities.


Paul D. Stinson
Director of CILCORP since 1999

Mr. Stinson is 43 years old and received a B.S. degree in
Chemical Engineering from Texas A&M University in 1979.  He
joined The AES Corporation in 1986.  In 1993, Mr. Stinson became
plant manager of the 700 megawatt Medway Power Station in
England.  In 1997, he became manager of AES's Silk Road Group
where he was responsible for business development and operations
in the countries of the former Soviet Union.  In April 1999, Mr.
Stinson became manager of the new AES Great Plains Group formed
in the Central United States.  Also in 1999, Mr. Stinson assumed
the responsibilities of president and director of both CILCORP
and CILCO.


Thomas A. Tribone
Director of CILCORP since 1999

Mr. Tribone is 47 years old and is currently executive vice
president of The AES Corporation, which is CILCORP's parent
company.  Prior to his election as executive vice president in
1998, he had been senior vice president of AES since 1990.  Mr.
Tribone leads AES Americas, a group responsible for power
marketing, project development, construction and plant operations
in the northern portions of South America including much of
Brazil.  From 1987 to 1990 he served as vice president for
project development, and from 1985 to 1987 he served as project
director of AES Shady Point.

CILCORP Officers

The information required by Item 10 relating to CILCORP officers
is set forth in Item 4, Executive Officers of CILCORP, in this 10-K.





                            115

                              CILCO

The information required by Item 10 relating to directors is set
forth in CILCO's definitive proxy statement for its 2000 Annual
Meeting of Stockholders, to be filed soon with the Commission
pursuant to Regulation 14A.  Such information is incorporated
herein by reference to the material appearing under the caption
"Election of Directors" of such proxy statement.  Information
required by Item 10 relating to executive officers of CILCO is
set forth under a separate caption in Part I hereof.




















































                            116

Item 11.  Executive Compensation

                             CILCORP
                     Executive Compensation

The following table sets forth the annual and long-term
compensation earned for the years 1999, 1998 and 1997 for the
former Chairman and Chief Executive Officer, the current
President, two highly compensated executive officers and two
former executive officers of the Company:

                   SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                         Annual Compensation       Long Term Compensation

                                               Other  Securities          All
                                              Annual  Underlying  LTIP   Other
Name and                                       Comp.   Options   Payouts  Comp.
Principal Position  Year  Salary($)  Bonus($)   ($)     (#)(1)   ($)(2)  ($)(3)
------------------  ----  ---------  --------   ---     -----    ------  ------
<S>                 <C>    <C>       <C>      <C>       <C>    <C>     <C>
Paul D. Stinson (4) 1999   185,000   175,000  71,892    7,369       --    15,966
President           1998        --        --      --       --       --        --
                    1997        --        --      --       --       --        --

Scott A. Cisel (5)  1999   135,954    53,394      --    1,318       --    55,736
Vice President      1998   133,000    65,208      --       --       --     5,749
                    1997   131,375        --      --       --   92,513     5,491

Robert J. Sprowls   1999   150,997    57,661      --    1,867       --    57,625
Vice President (6)  1998   150,177   100,000      --       --       --     8,985
                    1997   135,916    65,000      --       --   61,428     8,369

Robert O. Viets (7) 1999   491,460    84,795      --       --       -- 6,097,871
Former Chairman,    1998   432,292        --      --       --  251,345    42,334
President and Chief 1997   406,423        --      --       --   61,272    37,817
Executive Officer

William M. Shay (8) 1999   215,867    42,488      --       --       -- 1,745,957
Former Senior Vice  1998   217,458        --      --       --  203,651    29,856
President           1997   207,737        --      --       --   66,497    26,844

James F. Vergon (9) 1999   212,387    42,488      --       --       -- 1,731,456
Former Senior Vice  1998   210,002        --      --       --  197,664    18,506
President           1997   207,738        --      --       --   65,616    16,831
</TABLE>


(1)  The number of options shown as compensation as of December
   31, 1999, were for services rendered for 1999.  Stock options
   were awarded in November of 1999 to Mr. Cisel and Mr. Sprowls,
   and stock options were awarded to Messrs. Stinson, Cisel and
   Sprowls by the Compensation Committee of the AES Board of
   Directors in February of 2000.

(2)  LTIP payments reported previously include payments made to
   Messrs. Cisel, Sprowls, Viets, Shay and Vergon pursuant to
   CILCORP Inc.'s EVAr-Based Incentive Compensation Plan.  For
   Messrs. Cisel and Sprowls, the Plan was terminated in 1997.  For
   Messrs. Viets, Shay and Vergon, the Plan was terminated in 1998.

                            117

(3)  For Mr. Stinson, this column reports contributions to The AES
   Corporation's Profit-Sharing and Stock Ownership Plan and the
   Employee Stock Ownership Plan of AES and allocations to AES's
   Supplemental Retirement Plan.  Specifically, for Mr. Stinson
   in 1999, the amount contributed to the AES Profit-Sharing and
   Stock Ownership Plan and Employee Stock Ownership Plan was
   $8,782, and the amount allocated to the Supplemental
   Retirement Plan was $7,184.  For Messrs. Viets, Cisel,
   Sprowls, Shay and Vergon, amounts shown in this column
   represent employer contributions to the CILCO Employees'
   Savings Plan and earnings on deferred compensation.  For the
   CILCO Employees' Savings Plan, the amounts contributed in
   1999 were as follows:  Mr. Viets $4,800; Mr. Shay $4,800; Mr.
   Vergon $4,800; Mr. Sprowls $4,321; and Mr. Cisel $4,300.  For
   Messrs. Viets, Shay and Vergon, this column also includes
   compensation paid or entitled to be received in 1999 from the
   CILCORP Shareholder Return Incentive Compensation Plan.  The
   Plan was terminated in 1999 and all compensation from the
   Plan was paid pursuant to the merger agreement among The AES
   Corporation, CILCORP and Midwest Energy Inc. as follows:  Mr.
   Viets $5,510,000; Mr. Shay $1,711,000; and Mr. Vergon
   $1,711,000.  For Mr. Viets, this column also includes
   $536,250 paid in 1999 upon liquidation of his account under
   the Company's deferred compensation stock plans.  For Messrs.
   Cisel and Sprowls, this column also includes a $50,000
   payment in 1999 which was made pursuant to the merger among
   AES, CILCORP and Midwest Energy Inc.

(4)  Mr. Stinson is a vice president of The AES Corporation,
   which owns all the outstanding common stock of CILCORP Inc.
   CILCORP owns all the common stock of Central Illinois Light
   Company.  Mr. Stinson is president of both CILCO and CILCORP.  In
   that Mr. Stinson also provides services to The AES Corporation,
   his salary is allocated among CILCO, CILCORP and AES.  Mr.
   Stinson's salary is determined by The AES Corporation.

(5)  Mr. Cisel is a vice president of CILCORP and a vice
   president of CILCO.  Mr. Cisel's compensation is determined by
   CILCO except for Securities Underlying the Options, which is
   determined by The AES Corporation.

(6)  Mr. Sprowls is a vice president of CILCORP and is also a
   vice president of CILCO.  Mr. Sprowls' compensation is determined
   by CILCO except for Securities Underlying the Options, which is
   determined by The AES Corporation.

(7)  Mr. Viets' compensation related to his position as president
   and chief executive officer of CILCORP.  He was also chairman,
   president and chief executive officer of CILCO until his
   resignation on October 18, 1999, the effective date of the merger
   among The AES Corporation, CILCORP Inc. and Midwest Energy Inc.
   Mr. Viets retired from CILCO on November 30, 1999.

(8)  Mr. Shay served as senior vice president of CILCO until his
   resignation on October 18, 1999, the effective date of the merger
   among The AES Corporation, CILCORP Inc. and Midwest Energy Inc.
   Mr. Shay left the employment of CILCO on October 31, 1999.

(9)  Mr. Vergon served as senior vice president of CILCO until
   his resignation on October 18, 1999, the effective date of the
   merger among The AES Corporation, CILCORP Inc. and Midwest Energy
   Inc.  Mr. Vergon retired from CILCO on October 31, 1999.






                            118

Option Grants in Last Fiscal Year

The following table provides information on options granted for
1999 to the named executive officers.
<TABLE>
<CAPTION>
                             % of Total
                   Number of   Options
                  Securities  Granted
                  Underlying  to all AES  Exercise
                   Options     People     or Base            Grant Date
Name and           Granted    for Fiscal  Price  Expiration Present Value
Principal Position (#) (1)      Year      ($/Sh)   Date      ($) (2)
------------------ -------      ----       ----    ----      -------
<S>                  <C>         <C>      <C>     <C>        <C>
Paul D. Stinson      7,369       .29%     72.63   02/04/10   350,027

Scott A. Cisel         560       .03%     57.94   11/30/09    21,706
                       758       .03%     72.63   02/04/10    36,005

Robert J. Sprowls      642       .03%     57.94   11/30/09    24,884
                     1,225       .05%     72.63   02/04/10    58,188
</TABLE>

(1)   All  options are for shares of Common Stock of The AES
  Corporation.  Options granted for services performed in 1999 were
  granted at the fair market value on the date of grant, and vest
  at the rate of 50% per year through December 2001.

(2)  The Black-Scholes stock option pricing model was used to
  value the stock options on the grant dates (February 4, 2000 and
  November 30, 1999).  AES's assumptions under this model include
  an expected volatility of 46.76%, a 6.63% risk free rate of
  return, no dividends, and a vesting adjustment of 4.5%.  The
  options have 10 year terms and vest at 50% per year.  No
  adjustments were made for non-transferability or risk of
  forfeiture.

  The use of such amounts and assumptions are not intended to
  forecast any possible future appreciation of AES's stock price
  or dividend policy.




















                             119

Aggregated Option Exercises in Last Fiscal Year, and Fiscal
  Year-End Option Value

The following table provides information on option exercises in
1999 by the named executive officers and the value of such
officers' unexercised options at December 31, 1999.
<TABLE>
<CAPTION>

                                          Number of      Dollar
                                          Securities     Value of
                                          Underlying     Unexercised
                                          Unexercised    In-the-Money
                   Number of              Options at     Options at
                    Shares     Dollar     FY-End         FY-End
                  Acquired on  Value      Exercisable/   Exercisable/
                   Exercise  Realized (1) Unexercisable  Unexercisable (2)
                   --------  ------------ -------------  -----------------
<S>                 <C>        <C>         <C>            <C>
Paul D. Stinson     13,814     763,454     93,695/        5,277,382/
                                            11,111           449,996

Scott A. Cisel          --          --          0/                0/
                                               560             9,415

Robert J. Sprowls       --          --          0/                0/
                                               642            10,793
</TABLE>

(1)  The amounts in this column have been calculated based upon
  the difference between the fair market value of the securities
  underlying each stock option on the date of exercise and its
  exercise price.

(2)  The amounts in this column have been calculated based on the
  difference between the fair market value on December 31, 1999, of
  $74.75 per share for each security underlying such stock option
  and the per share exercise price.
























                            120

Management Continuity Agreements

The Company, with the approval of the Board of Directors, entered
into management continuity agreements with Mr. Sprowls and Mr.
Cisel.  The agreements provide that, in the event of a change in
control of CILCORP Inc. (as defined in the agreement) and a
subsequent termination of employment within two years of the
change in control, CILCORP Inc., or its successor, is obligated
to pay termination benefits for a period of up to two years. As a
result of the change in control of CILCORP Inc. pertaining to its
merger with The AES Corporation on October 18, 1999, the two-year
period following said change in control will expire on October
17, 2001.  Termination benefits include the continuation of
salary, incentive compensation and certain employee benefits.
Under the agreement, compensation and benefits are payable for a
period not to exceed two years and termination must be
involuntary or due to material changes in the terms of
employment.

Certain Plans

Benefit Replacement Plan.  The Board of Directors has established
a Benefit Replacement Plan (the "Benefit Replacement Plan").  The
Benefit Replacement Plan provides for payments to participants
from the Company's general funds to restore the retirement
benefit under the Company's non-contributory Pension Plan for
Management, Office and Technical Employees (the "Pension Plan")
when such benefit is restricted by (1) the maximum defined
benefit limitation of Section 415(b) of the Internal Revenue Code
of 1986, as amended (the "Code"), (2) the indexed compensation
limitation of Code Section 401(a)(17), and (3) participation in
certain of the Company's deferred compensation plans.  The
Benefit Replacement Plan generally covers all Pension Plan
participants affected by these restrictions and provides for
payment at the times and in the forms of the Pension Plan.

Pension Plan.  Pension benefits are provided through the Pension
Plan.  Pension benefits are determined using a formula based on
years of service and highest average rate of monthly earnings for
any sixty consecutive month period.  The normal retirement age
specified in the Pension Plan is age 65.  Retirement between the
ages of 55 and 62 results in an appropriate reduction in pension
benefits.






















                             121

The following table shows the aggregate annual benefits payable
on a straight life annuity basis upon retirement at normal
retirement age under the Pension Plan and under the Benefit
Replacement Plan discussed above. The amounts shown are not
subject to any deduction for Social Security benefits or other
offset amounts other than that for an optional survivorship
provision.

                       Pension Plan Table
                        Years of Service
<TABLE>
<CAPTION>
    Remuneration    15 years    20 years     25 years    30 years    35 years
    ------------    --------    --------     --------    --------    --------
      <C>           <C>         <C>          <C>         <C>         <C>
      $200,000       42,750      57,000       71,250      85,500      99,750
       225,000       48,096      64,128       80,160      96,192     112,224
       250,000       53,442      71,250       89,064     106,878     124,692
       275,000       58,781      78,375       97,969     117,563     137,156
       300,000       64,128      85,500      106,878     128,250     149,628
       400,000       85,500     114,000      142,500     171,000     199,500
       500,000      106,878     142,500      178,128     213,715     249,378
</TABLE>

The sum of annual and long-term compensation shown for the
individuals listed in the above Summary Compensation Table is
substantially compensation as covered by the Pension Plan and the
Benefit Replacement Plan.  At January 2000, the credited years of
service under the Pension Plan for such individuals are as
follows: R. O. Viets - 26  years, R. J. Sprowls - 18 years, S.A.
Cisel - 25 years, W.M. Shay - 17 years,  J. F. Vergon - 28 years.
Mr. Stinson does not participate in the Pension Plan.

Report on Executive Compensation

Compensation Prior to the Merger.  Prior to the closure of the
merger, the compensation of the Company's chief executive officer
was determined by the Board of Directors of CILCORP Inc.  The
compensation of all other executive officers of the Company was
determined by CILCO's Board of Directors.  The compensation
policies with respect to the executive officers were as follows:

    1.  Compensation levels should be established which are
        internally fair and equitable, bearing in mind (a) past
        practices, patterns and relationships, and (b) the
        relationship between officer level compensation and the
        compensation provided for top level managers throughout
        the Company.

    2.  Compensation should be comparable and reasonable in
        relation to similar positions in other utility companies
        of like size, structure and characteristics.

    3.  Compensation of the executive officers should be
        directly related to the economic value created for
        shareholders.

    4.  A compensation program should be designed to attract and
        retain superior management.

Pre-Merger Compensation. Robert O. Viets served as president and
chief executive officer of CILCORP Inc. in addition to serving
as chairman and chief executive officer of CILCO until the
effective date of the Merger on October 18, 1999.  His
compensation in his capacities as an officer of both companies
was determined by the Board of Directors of CILCORP upon
recommendation of its Compensation Committee.  The Board of
Directors of CILCO endorsed and adopted the recommendation and
determination for 1999 of

                             122

the CILCORP Board of Directors and its Compensation Committee
whereby Mr. Viets was awarded a salary of $453,200 commencing
April 1, 1999, representing an increase of 3.0% over his prior
salary level.  The increase was determined on the basis of the
corporate-wide payroll increase authorized by the Merger
Agreement among AES, CILCORP and Midwest Energy, Inc. dated as
of November 22, 1998.  The Agreement limited the aggregate
annual increase in the payroll of CILCORP and its subsidiaries
to 3%.

Post-Merger Compensation.  The Company's current executive
officer compensation program is modeled after The AES
Corporation compensation program.

The guidelines for compensation of executive officers are
designed by The AES Corporation (AES) to provide fair and
competitive levels of total compensation while integrating pay
with performance.  Executive officers are evaluated annually on
the basis of both individual responsibilities and contributions,
as well as AES company-wide results in two related areas:  (i)
corporate culture (or principles) and (ii) business or functional
area performance.

There are three elements in AES's executive officer compensation
program, which is consistent with how most people who work for
AES are compensated.  These elements are base salary, annual
incentive compensation and stock option program.

Base salary is adjusted annually to account for general economic
and cost of living changes.  Adjustments are also made
periodically to recognize significant new or additional
responsibilities of individual executive officers.  The
guidelines provide base salary compensation generally consistent
with AES's interpretation of industry averages for individuals
with similar responsibility levels.

Annual incentive compensation is based upon both objective and
subjective measures in the areas of corporate culture and
business or functional area performance, and generally takes the
form of bonuses payable after year-end.  With respect to
corporate culture, AES's shared principles of fairness,
integrity, fun and social responsibility are integral to its
operations and serve as its founding principles.  These
principles apply equally to the internal activities of AES as
well as its external relationships.  Each executive officer's
individual contribution to demonstrating and nurturing these
shared values is reviewed and considered as a factor in
determining annual incentive compensation.  Evaluations in this
area are inherently subjective.

The second area considered in the determination of annual
incentive compensation is the individual executive officer's
performance with respect to his or her related business
responsibilities and/or functional area.  Although all aspects
of an individual's responsibilities are considered in
determining annual incentive compensation, several quantitative
measures of annual performance are considered significant,
including operating margin improvements, operating reliability,
earnings per share contributions, environmental performance, and
plant and AES company-wide safety.  The qualitative factors
considered significant include business and project development
progress, effective strategic planning and implementation, AES
company-wide support, understanding of and adherence to AES's
values, and community relations and people development.






                            123

Important strategic successes or failures can take several years
to translate into objectively measurable results.  Annual
incentive compensation is not computed using a mathematical
formula of pre-determined performance goals and objective
criteria.  As a result, the ultimate determination of the amount,
if any, of annual incentive compensation is made at the end of
each year based on a subjective evaluation of several
quantitative and qualitative factors, with primary emphasis given
this year to those factors listed in the preceding paragraph.
There are no targeted, minimum or maximum levels of annual
incentive compensation, and such compensation does not
necessarily bear any consistent relationship to salary amounts or
total compensation.

The AES stock option program is used to reward people for the
corporate responsibilities they undertake, their performance of
those duties and to help them to think and act like owners.  All
executive officers and approximately 51% of the total people in
the AES company located in the United States participate in this
program.  Historically, because of differing legal environments
in many countries, options had been primarily granted to U.S.
people.  However, AES has taken steps to incorporate those
people who reside outside of the United States into this program
by qualifying its stock option plan in each country where AES
people currently reside or work, and AES expects the total
participation to increase in the future.  Stock options are
usually granted annually at the fair market value on the date of
grant and provide vesting periods to reward people for continued
service to AES.  The determination of the number of options to
be granted to executive officers is based upon the same factors
as such officer's annual incentive compensation discussed above,
with additional consideration given to the number of options
previously granted.

Since 1994, AES has participated in an annual survey conducted by
an outside consulting firm which encompasses over 400 public
companies.  Based in part on the survey results, guidelines were
established for suggested ranges of option grants to executive
officers as well as the rest of the people at AES.  Based on the
survey, the guidelines were established at ranges for eligible
participants between the 50th and 90th percentile of similar
companies.  As with annual incentive compensation, the
determination of an individual's grant is subjective and,
although AES has established suggested guidelines, the grants are
not formula-based.

Total compensation is reviewed to determine whether amounts are
competitive with other companies whose operations are similar in
type, size and complexity with those of AES, as well as a broad
range of similarly sized companies.  Comparisons are made with
published amounts, where available, and, from time to time, AES
also participates in various industry-sponsored compensation
surveys in addition to the public-company survey described above.
AES also has, in the past, engaged an independent compensation
consultant to specifically review the level and appropriateness
of executive  officer compensation.  Other than as described
above, AES uses the results of surveys, when available, for
informational purposes only and does not target individual
elements of or total compensation to any specific range of survey
results (i.e., high, low or median) other than the suggested
guidelines for stock option grants as discussed in the previous
paragraph.  Because each individual's compensation is determined,
in part, by experience and performance, actual compensation
generally varies from industry averages.

Executive officers also participate in AES's profit sharing plan
(or deferred compensation plan for executive officers) on the
same terms as all other people at AES, subject to any legal
limitations on amounts that may be contributed or benefits that
may be payable under the plan.  Matching contributions and
annual profit sharing contributions are made with the common
stock of AES to further encourage long-term performance.  In
addition, certain individuals at AES participate in AES's
supplemental retirement plan,

                            124

which provides supplemental retirement benefits to "highly
compensated employees" (as defined in the Internal Revenue Code)
of any amount which would be contributed on such individual's
behalf under the profit sharing plan (or the deferred
compensation plan for executive officers) but is not so
contributed because of the limitations contained in the Internal
Revenue Code.

In most cases, AES has taken steps to qualify income paid to any
officer as a deductible business expense pursuant to regulations
issued by the Internal Revenue Service pursuant to Section 162(m)
of the Internal Revenue Code with respect to qualifying
compensation paid to executive officers in excess of $1 million.
Compensation earned pursuant to the exercise of options granted
under AES's former stock option plan (which was discontinued in
1991) is not considered for  purposes of the $1 million aggregate
limit, and exercises under the 1991 Plan are similarly excluded.
AES will continue to consider the implications of qualifying all
compensation as a deductible expense under Section 162 (m), but
retains the discretion to pay bonuses commensurate with an
executive officer's contributions to the success to AES,
irrespective of whether such amounts are entirely deductible.

                              CILCO

CILCO will soon file with the Commission a definitive proxy
statement pursuant to Regulation 14A.  The information required
by Item 11 is incorporated herein by reference to the material
appearing under the caption "Executive Compensation" of such
proxy statement.

Item 12.  Security Ownership of Certain Beneficial Owners and
Management

                             CILCORP
(1)Title of class  (2)Name and           (3)Amount and     (4)Percent of class
                      address of            nature of
                      beneficial owner      beneficial
                                            ownership

   Common             The AES Corporation   1,000 shares*     100%
                      1001 North 19th St.
                      Arlington, VA  22209

*The AES Corporation acquired all of the common stock of CILCORP
in 1999.

                              CILCO

CILCO will soon file with the Commission a definitive proxy
statement pursuant to Regulation 14A.  The information required
by Item 12 is incorporated herein by reference to the material
appearing under the caption "Voting Securities and Principal
Holders" of such proxy statement.














                            125

Item 13.  Certain Relationships and Related Transactions

                             CILCORP

CILCORP Inc. (CILCORP or Company), a holding company, is the
parent of its direct subsidiaries, Central Illinois Light Company
(CILCO), CILCORP Investment Management Inc. (CIM), CILCORP
Ventures Inc. (CVI), and QST Enterprises Inc. (QST).  In the
course of business, the Company carries on certain relations with
affiliated companies such as shared facilities, utilization of
employees and other business transactions.  Central Illinois
Light Company is reimbursed at cost by the Company and the other
subsidiaries for any services it provides.

CILCORP has been authorized by the Board of Directors to
guarantee up to $30 million of obligations incurred by QST
(excluding QST Environmental).  Through December 31, 1999,
CILCORP guaranteed $12.5 million of the obligations of QST
(excluding QST Environmental).  CILCORP received a fee for
providing these guarantees.  This guarantee expired in January
2000.

CIM had outstanding debt of $31.4 million (all to the Holding
Company) at the end of 1999.

Through December 31, 1999, CIM has paid $15.3 million to fund
affordable housing commitments, $1.3 million of which was paid
during 1999.  CIM funded these commitments with cash borrowed
from the Holding Company.

CIM has guaranteed the performance of CIM Leasing Inc., CIM Air
Leasing Inc. and CLM Inc. VI (a second tier subsidiary) with
respect to certain obligations arising from the leveraged lease
investments held by these subsidiaries.

                              CILCO

One member of the Board of Directors of CILCORP Inc. is also a
member of the Board of Directors of CILCO.  The President, four
of the Vice Presidents, the Controller and Chief Financial
Officer, and Treasurer of CILCORP serve in the same positions as
officers of CILCO.

























                            126

                             PART IV

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

                                                           Page No.
                                                           Form 10-K
                                                           ---------
(a) 1. Financial Statements

       The following statements are included herein:

       Management's Report                                      52

       Report of Independent Public Accountants                 53

       Consolidated Statements of Income for the periods
         October 19, 1999, through December 31, 1999, and
         January 1, 1999, through October 18, 1999, and the
         years ended December 31, 1998 and 1997              54-55

       Consolidated Balance Sheets as of
         December 31, 1999, and December 31, 1998            56-57

       Consolidated Statements of Cash Flows for the periods
         October 19, 1999, through December 31, 1999, and
         January 1, 1999, through October 18, 1999, and the
         years ended December 31, 1998 and 1997              58-59

       Consolidated Statements of Segments of Business for
         the periods October 19, 1999, through December 31,
         1999, and January 1, 1999, through October 18, 1999,
         and the years ended December 31, 1998 and 1997      60-63

       Consolidated Statements of Common Stockholders' Equity
         for the periods October 19, 1999, through December
         31, 1999, and January 1, 1999, through October 18,
         1999, and the years ended December 31, 1998
         and 1997                                            64-65

       Notes to the Consolidated Financial Statements        66-87

(a) 2. Financial Statement Schedules

       The following schedules are included herein:

       Schedule II - Valuation and Qualifying Accounts
                       and Reserves                            131

       Schedule XIII -Investment in Leveraged Leases at
                       December 31, 1999                       133

       Other schedules are omitted because of the absence of
conditions under which they are required or because the
required information is given in the financial statements or
notes thereto.



                            127

(a) 3.  Exhibits

   (3)  Articles of Incorporation as amended effective
        November 15, 1999.

   (3)a By-laws as amended and restated effective October 18, 1999.

 * (4)  Indenture, dated as of October 18, 1999, between Midwest Energy, Inc.
        and The Bank of New York, as Trustee; First Supplemental Indenture,
        dated as of October 18, 1999, between CILCORP Inc. and The Bank of
        New York.  (Designated in registration statement Form S-4 filed
        by CILCORP on November 4, 1999, as exhibits 4.1 and 4.2.)

 **(4)a Instruments defining the rights of security holders.

  (10)  CILCO Executive Deferral Plan.  As amended effective
        August 15, 1999.

  (10)a CILCO Executive Deferral Plan II.  As amended effective
        April 1, 1999.

  (10)b CILCO Benefit Replacement Plan (as amended effective
        August 15, 1999).

 *(10)c Management Continuity Agreement between CILCORP and
        various subsidiary officers [Designated in Form 10-K for
        the year ended December 31, 1998, File No. 1-8946, as
        Exhibit 10(h)].

 *(10)d CILCO Compensation Protection Plan [Designated in Form 10-K
        for the year ended December 31, 1998, File No. 1-8946,
        as Exhibit 10(i)].

  (10)e CILCO Restructured Executive Deferral Plan (approved
        August 15, 1999).
                                                         Page No.
                                                         Form 10-K
                                                         ----------
  (12)  Computation of Ratio of Earnings to Combined Fixed
        Charges and Preferred Stock Dividends                136

  (23)  Consent of Arthur Andersen LLP                       139

  (24)  Power of Attorney                                    140

  (27)  CILCORP Inc. Consolidated Financial Data Schedule

(b) 3.  Reports on Form 8-K

          A Form 8-K was filed on November 2, 1999, regarding
       the completion on October 18, 1999, of the merger
       transaction pursuant to the Agreement and Plan of Merger
       between CILCORP Inc. and The AES Corporation.

 * These exhibits have been previously filed with the Securities and
   Exchange Commission (SEC) as exhibits to registration
   statements or to other filings of CILCORP or CILCO with the SEC
   and are incorporated herein as exhibits by reference.  The file
   number and exhibit number of each such  exhibit (where
   applicable) are stated in the description of such exhibit.

** Pursuant to Paragraph (b)(4)(iii)(A) of Item 601 of Regulation
   S-K, the Company has not filed as an exhibit to this Form 10-K
   any instrument with respect to long-term debt as the total amount
   of securities authorized thereunder does not exceed 10 percent of
   the total assets of the Company and its subsidiaries on a
   consolidated basis, but hereby agrees to furnish to the SEC
   on request any such instruments.

                            128

                              CILCO

                                                             Page No.
                                                            Form 10-K
                                                            ----------
(a)  1.   Financial Statements

          The following are included herein:

          Management's Report                                    88

          Report of Independent Public Accountants               89

          Consolidated Statements of Income for the three years
            ended December 31, 1999                              90

          Consolidated Balance Sheets as of December 31, 1999,
            and December 31, 1998                             91-92

          Consolidated Statements of Cash Flows for the three
            years ended December 31, 1999                     93-94

          Consolidated Statements of Segments of Business for
            the three years ended December 31, 1999           95-97

          Consolidated Statements of Retained Earnings for the
            three years ended December 31, 1999                  98

          Notes to the Consolidated Financial Statements     99-114

(a)  2.   Financial Statement Schedules

          The following schedule is included herein:

          Schedule II - Valuation and Qualifying Accounts and
                          Reserves for the three years ended
                          December 31, 1999                     132

Other schedules are omitted because of the absence of conditions
under which they are required or because the required information
is given in the financial statements or notes thereto.

(a) 3.         Exhibits

  *(3)       Articles of Incorporation. As amended April 28, 1998.

   (3)  a    Bylaws.  As amended effective April 1, 1999.

  *(4)       Indenture of Mortgage and Deed of Trust between
        Illinois Power Company and Bankers Trust Company, as
        Trustee, dated as of April 1, 1933, Supplemental
        Indenture between the same parties dated as of June 30,
        1933, Supplemental Indenture between the Company and
        Bankers Trust Company, as Trustee, dated as of July 1,
        1933 and Supplemental Indenture between the same parties
        dated as of January 1, 1935, securing First Mortgage
        Bonds, and indentures supplemental to the foregoing
        through November 1, 1994.  (Designated in Registration
        No. 2-1937 as Exhibit B-1, in Registration No. 2-2093 as
        Exhibit B-1(a), in Form 8-K for April 1940, File No. 1-
        2732-2, as Exhibit A, in Form 8-K for December 1949,
        File No. 1-2732-2, as Exhibit A, in Form 8-K for
        December 1951, File No. 1-

                                129

        2732, as Exhibit A, in Form 8-K for July 1957, File No. 1-2732,
        as Exhibit A, in Form 8-K for July 1958, File No. 1-
        2732, as Exhibit A, in Form 8-K for March 1960, File No.
        1-2732, as Exhibit A, in Form 8-K for September 1961,
        File No. 1-2732, as Exhibit B, in Form 8-K for March
        1963, File No. 1-2732, as Exhibit A, in Form 8-K for
        February 1966, File No. 1-2732, as Exhibit A, in Form 8-
        K for March 1967, File No. 1-2732, as Exhibit A, in Form
        8-K for August 1970, File No. 1-2732, as Exhibit A, in
        Form 8-K for September 1971, File No. 1-2732, as Exhibit
        A, in Form 8-K for September 1972, File No. 1-2732, as
        Exhibit A, in Form 8-K for April 1974, File No. 1-2732,
        as Exhibit 2(b), in Form 8-K for June 1974, File No. 1-
        2732, as Exhibit A, in Form 8-K for March 1975, File No.
        1-2732, as Exhibit A, in Form 8-K for May 1976, File No.
        1-2732, as Exhibit A, in Form 10-Q for the quarter ended
        June 30, 1978, File No. 1-2732, as Exhibit 2, in Form 10-
        K for the year ended December 31, 1982, File No. 1-2732,
        as Exhibit (4)(b), in Form 8-K dated January 30, 1992,
        File No. 1-2732, as Exhibit (4) in Form 8-K dated
        January 29, 1993, File No. 1-2732, as Exhibit (4) and in
        Form 8-K dated December 2, 1994, File No. 1-2732, as
        Exhibit (4).)

 (10)          CILCO Executive Deferral Plan.  As amended
          effective August 15, 1999.

 (10)a         CILCO Executive Deferral Plan II.  As amended
          effective April 1, 1999.

 (10)b       Benefit Replacement Plan (as amended effective
        April 1, 1999).

*(10)c    Management Continuity Agreement between CILCORP and various
          subsidiary officers.  [Designated in Form 10-K for the year ended
          December 31, 1998, File No. 1-2732, as Exhibit 10(g).]

*(10)d    CILCO Compensation Protection Plan.  [Designated in Form 10-K for
          the year ended December 31, 1998, File No. 1-2732, as Exhibit 10(h).]

 (10)e    CILCO Restructured Executive Deferral Plan (approved August 15, 1999).


                                                               Page No.
                                                              Form 10-K
                                                              ---------

 (12)    Computation of Ratio of Earnings to Fixed Charges        137

 (24)    Power of Attorney                                        141

 (27)    Central Illinois Light Company Financial Data
          Schedule

(b)  3.     Reports on Form 8-K

                                                  None

  * These exhibits have been previously filed with the Securities
   and Exchange Commission (SEC) as exhibits to registration
   statements or to other filings of CILCO with the SEC and are
   incorporated herein as exhibits by reference.  The file
   number and exhibit number of each such exhibit (where
   applicable) are stated in the description of such exhibit.



                            130

<TABLE>

SCHEDULE II

              CILCORP INC. AND SUBSIDIARY COMPANIES
         Valuation and Qualifying Accounts and Reserves
   Periods October 19 through December 31, 1999, and January 1 through
    October 18, 1999, and the Years Ended December 31, 1998, and 1997
                       (Thousands of dollars)
<CAPTION>
Column A                    Column B        Column C      Column D  Column E
                                            Additions
                           Balance at   Charged   Charged          Balance at
                            Beginning     to     to Other            End of
      Description           of Period   Income   Accounts Deductions Period
<S>                           <C>       <C>       <C>       <C>      <C>
Period from October 19, 1999
 through December 31, 1999
  Accumulated Provisions
    Deducted from Assets-
    Doubtful Accounts         $1,810    $ (449)   $   --    $   65   $1,296

Accumulated Provisions
    Not Deducted from Assets-
    Injuries and Damages       1,926        27        --       555    1,398
    Discontinued Operations
      Reserve                     --       500        --        --      500

Period from January 1, 1999
  through October 18, 1999
  Accumulated Provisions
    Deducted from Assets-
    Doubtful Accounts         $3,411    $1,916    $   --    $3,517   $1,810

  Accumulated Provisions
    Not Deducted from Assets-
    Injuries and Damages       1,602       482        --       158    1,926
    Discontinued Operations
      Reserve                  8,581        --        --     8,581       --

Year ended December 31, 1998
  Accumulated Provisions
    Deducted from Assets-
    Doubtful Accounts         $2,518    $3,356    $   --    $2,463   $3,411

  Accumulated Provisions
    Not Deducted from Assets-
    Injuries and Damages       1,210       768        --       376    1,602
    Discontinued Operations
      Reserve                     --     8,581        --        --    8,581

Year ended December 31, 1997
  Accumulated Provisions
    Deducted from Assets-
    Doubtful Accounts         $2,600    $2,867    $   --    $2,949   $2,518

  Accumulated Provisions
    Not Deducted from Assets-
    Injuries and Damages       1,381       814        --       985    1,210
</TABLE>

                            131

<TABLE>

SCHEDULE II
                 CENTRAL ILLINOIS LIGHT COMPANY
         Valuation and Qualifying Accounts and Reserves
          Years Ended December 31, 1999, 1998, and 1997
                     (Thousands of dollars)

<CAPTION>
Column A                     Column B       Column C     Column D   Column E
                                            Additions
                            Balance at  Charged  Charged           Balance at
                            Beginning     to     to Other            End of
      Description           of Period   Income   Accounts Deductions Period

<S>                           <C>       <C>      <C>      <C>       <C>
Year ended December 31, 1999
  Accumulated Provisions
    Deducted from Assets-
    Doubtful Accounts         $1,106    $1,467   $   --   $1,277    $1,296

  Accumulated Provisions
    Not Deducted from Assets-
    Injuries and Damages       1,602       509       --      713     1,398

Year ended December 31, 1998
  Accumulated Provisions
    Deducted from Assets-
    Doubtful Accounts         $  703    $2,500   $   --   $2,097    $1,106

  Accumulated Provisions
    Not Deducted from Assets-
    Injuries and Damages       1,210       768       --      376     1,602

Year ended December 31, 1997
  Accumulated Provisions
    Deducted from Assets-
    Doubtful Accounts         $1,000    $2,438   $   --   $2,735    $  703

  Accumulated Provisions
    Not Deducted from Assets-
    Injuries and Damages       1,381       814       --      985     1,210
</TABLE>


















                            132

<TABLE>
SCHEDULE XIII
CILCORP INC. AND SUBSIDIARY COMPANIES
Investment in Leveraged Leases
<CAPTION>
Year Ended December 31, 1999
(Thousands of dollars)

                                                     Amount
                                      Cost of each  carried on
                                        lease(A)  Balance Sheet(B)
<S>                                      <C>         <C>
Office buildings                         $23,130     $ 63,458
Warehouses                                11,746       19,855
Mining equipment                          10,244        7,503
Generating stations                       21,890       31,398
Passenger railway equipment                3,805        6,441
Cargo aircraft                             9,583       15,042
                                         -------     --------
    Totals                               $80,398     $143,697
                                         =======     ========
<FN>
(A) This value is the original cost of the leveraged lease net of
    original nonrecourse debt.

(B) The amount carried on the balance sheet includes current
    rents receivable and estimated residual value, net of
    unearned and deferred income and nonrecourse debt.  The
    investment in leveraged leases balance does not include
    deferred taxes of $(105,625).
</TABLE>































                            133

                           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.

                                   CILCORP INC.

March 29, 2000                 By
                                   P. D. Stinson
                                   President

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 and in the capacities and on the
dates indicated.

          Signature                Title            Date

(i) Principal Executive Officer and Director:



  P. D. Stinson               President and    March 29, 2000
                                Director

(ii) and (iii) Principal Financial Officer and Controller:



  T. D. Hutchinson         Controller and      March 29, 2000
                             Chief Financial
                             Officer

 (iv)  A majority of the Directors
     (including the Director named above):

T. A. Tribone*                Director         March 29, 2000
M. A. Ferrucci*               Director         March 29, 2000


  P. D. Stinson               Director         March 29, 2000

 *By

        P. D. Stinson
      Attorney-in-fact















                            134

                           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 LIGHT COMPANY


March 29, 2000                     By
                                       P. D. Stinson
                                       President

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 and in the capacities and on the dates indicated.

          Signature                Title                  Date

(i) Principal Executive Officer and Director:


P. D. Stinson               President and            March 29, 2000
                              Director





(ii) and (iii) Principal Financial Officer and Controller:



T. D. Hutchinson             Controller and          March 29, 2000
                               Chief Financial
                               Officer


 (iv)  A majority of the Directors
        (including the Director named above):


J. Cagle                      Director               March 29, 2000


S. A. Cisel                   Director               March 29, 2000


J. L. Luckey, III             Director               March 29, 2000


G. T. Russell                 Director               March 29, 2000


R. J. Sprowls                 Director               March 29, 2000


P. D. Stinson                 Director               March 29, 2000


                            135

<TABLE>
EXHIBIT (12)
                  CILCORP INC. AND SUBSIDIARIES
       Computation of Ratio of Earnings to Combined Fixed
              Charges and Preferred Stock Dividends
<CAPTION>
                       Oct. 19  Jan. 1
                         to       to
                       Dec. 31, Oct. 18,         Twelve Months Ended
                        1999     1999     1998     1997     1996    1995
                                         (Thousands of Dollars)
<S>                    <C>      <C>      <C>      <C>      <C>     <C>
Earnings, as Defined:
  Net Income from
    Continuing
    Operations         $  (532) $   687  $38,218  $ 43,709 $37,940 $38,469
  Income Taxes            (951)   1,113   19,699    22,349  20,702  22,427
  Interest              14,339   22,629   29,257    27,049  28,964  29,861
  COLI Interest Expense    850    3,181    3,624     3,491   2,731   2,349
  Interest Portion of
    Rentals                116    1,808    1,903     1,877   1,726   2,020
  Preferred Dividends      558    2,650    3,194     3,216   3,188   3,299
                       -------  -------  -------  -------- ------- -------
      Total Earnings,
        As Defined     $14,380  $32,068  $95,895  $101,691 $95,251 $98,425
                       =======  =======  =======  ======== ======= =======
Fixed Charges, as
  Defined:
  Interest Expense     $14,339  $22,629  $29,257  $ 27,049 $28,964 $29,861
  Interest Expense
    on COLI                850    3,181    3,624     3,491   2,731   2,349
  Interest Portion of
    Rentals                116    1,808    1,903     1,877   1,726   2,020
  Tax Effected
    Preferred
    Dividends              925    4,393    5,294     5,331   5,284   5,468
                       -------  -------  -------  -------- ------- -------
      Total Fixed
        Charges, as
        Defined        $16,230  $32,011  $40,078  $ 37,748 $38,705 $39,698
                       =======  =======  =======  ======== ======= =======
Ratio of Earnings to
  Fixed Charges            0.9      1.0      2.4       2.7     2.5     2.5
                           ===      ===      ===       ===     ===     ===
</TABLE>















                            136

<TABLE>
EXHIBIT (12)
                 CENTRAL ILLINOIS LIGHT COMPANY
                Computation of Ratio of Earnings
                        to Fixed Charges
<CAPTION>
Twelve Months Ended          1999    1998    1997      1996   1995
                                           (Thousands of Dollars)
<S>                        <C>     <C>     <C>       <C>     <C>
Earnings, as Defined:
  Net Income               $19,249 $44,235 $ 53,467  $45,127 $42,398
  Income Taxes               8,376  22,472   20,633   24,082  22,534
  Fixed Charges, as Below   29,224  28,187   29,434   28,504  27,876
                           ------- ------- --------  ------- -------
    Total Earnings, as
      Defined              $56,849 $94,894 $103,534  $97,713 $92,808
                           ======= ======= ========  ======= =======
Fixed Charges, as Defined:
  Interest on COLI         $ 4,031 $ 3,624 $  3,491  $ 2,731 $ 2,349
  Interest on Short-term
    Debt                     2,015     962      281      149     744
  Interest on Long-term
    Debt                    19,234  19,498   20,024   21,012  20,242
  Amortization of Debt
    Discount & Expense,
    Premium and Reacquired
    Loss                       668     535    2,218      681     669
  Miscellaneous Interest
    Expense                  1,467   1,780    1,658    2,320   1,967
  Interest Portion of
    Rentals                  1,809   1,788    1,762    1,611   1,905
                           ------- ------- --------  ------- -------
    Total Fixed Charges,
      as Defined           $29,224 $28,187 $ 29,434  $28,504 $27,876
                           ======= ======= ========  ======= =======
Ratio of Earnings to
  Fixed Charges                1.9     3.4      3.5      3.4     3.3
                               ===     ===      ===      ===     ===
</TABLE>





















                            137

                             NOTICE



Telephone:
 In Peoria 675-8826
 Elsewhere in Illinois 1-800-322-3569
 Outside Illinois 1-800-622-5514
 TDD 1-309-675-8892

Or you can write to us at:
 CILCORP Inc.
 Attn:  Craig Stensland
 300 Liberty Street
 Peoria, IL  61602














































                            138

EXHIBIT 23

            CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the
incorporation by reference of our reports, dated January 28,
2000, included in this Form 10-K, into CILCORP Inc.'s previously
filed Registration Statements File No. 33-45318, 33-51241, and 33-
62105.





                       ARTHUR ANDERSEN LLP



Chicago, Illinois
March 29, 2000









































                            139

EXHIBIT 24
                          CILCORP Inc.
                        Power of Attorney
                    -------------------------

We hereby make, constitute and appoint Paul D. Stinson, Robert J.
Sprowls, John G. Sahn and Craig W. Stensland and any one of you
our true and lawful attorney for each of us and in each of our
names, places or steads, both in our individual capacities as
directors and/or that of officers of CILCORP Inc., to sign and
cause to be filed with the Securities and Exchange Commission
CILCORP Inc.'s annual report on Form 10-K for the fiscal year
ended December 31, 1999, and any appropriate amendment or
amendments to said report and any necessary exhibits.

The undersigned also authorize you and any one of you to sign
said annual report and any amendment or amendments thereto on its
behalf as attorney-in-fact for its respective officers, and to
file the same as aforesaid together with any exhibits.



Mark A. Ferrucci



Paul D. Stinson



Thomas A. Tribone































                            140

EXHIBIT 24
                              CILCO
                        Power of Attorney
                    -------------------------

We hereby make, constitute and appoint Paul D. Stinson, Robert J.
Sprowls, John G. Sahn and Craig W. Stensland and any one of you
our true and lawful attorney for each of us and in each of our
names, places or steads, both in our individual capacities as
directors and/or that of officers of Central Illinois Light
Company (CILCO), to sign and cause to be filed with the
Securities and Exchange Commission CILCO's annual report on Form
10-K for the fiscal year ended December 31, 1999, and any
appropriate amendment or amendments to said report and any
necessary exhibits.

The undersigned, CILCO, also authorizes you and any one of you to
sign said annual report and any amendment or amendments thereto
on its behalf as attorney-in-fact for its respective officers,
and to file the same as aforesaid together with any exhibits.




Jerry D. Cagle



Scott A. Cisel



James L. Luckey, III



Greg T. Russell



Robert J. Sprowls



Paul D. Stinson


















                            141