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ELECTRIC LIGHTWAVE, INC.   FORM 10-Q


















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

                                FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000



<PAGE>





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


                                    FORM 10-Q


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

For the quarterly period ended March 31, 2000

                                       OR

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

For the transition period from        to         Commission file number 0-23393


                            ELECTRIC LIGHTWAVE, INC.
             (Exact name of registrant as specified in its charter)

                DELAWARE                                       93-1035711
    (State or other jurisdiction of                         (I.R.S. Employer
     incorporation or organization)                        Identification No.)


                                3 HIGH RIDGE PARK
                                 P. O. BOX 3801
                               STAMFORD, CT 06905
               (Address, zip code of principal executive offices)

        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (203) 614-5600

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

                                 YES |X| NO |_|

The number of shares outstanding of the registrant's class of common stock as of
April 25, 2000 were:

                         COMMON STOCK CLASS A  9,259,696
                         COMMON STOCK CLASS B 41,165,000


<PAGE>


<TABLE>
Electric Lightwave, Inc.

INDEX
<CAPTION>
                                                                        PAGE NO.
PART I.   FINANCIAL INFORMATION
<S>       <C>                                                           <C>
 ITEM 1.  FINANCIAL STATEMENTS
          Balance Sheets at March 31, 2000 and December 31, 1999 (unaudited)   2

          Statements of Operations for the Three Months ended March 31, 2000   3
               and 1999 (unaudited)

          Condensed Statements of Cash Flows for the Three Months ended        4
              March 31, 2000 and 1999 (unaudited)

          Notes to Financial Statements                                        5

 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION          9
          AND RESULTS OF OPERATIONS
                                                                              14
 ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

PART II.  OTHER INFORMATION                                                   15

SIGNATURE                                                                     16
</TABLE>


                                        -1-


<PAGE>



Electric Lightwave, Inc.
PART I. FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS


<TABLE>
                                 BALANCE SHEETS
                                 (IN THOUSANDS)
                                  (UNAUDITED)
<CAPTION>
                                                                March 31,   December 31,
Assets                                                            2000          1999
                                                               ---------    ---------
<S>                                                            <C>          <C>
Current assets:
     Cash ..................................................   $  25,990    $  21,378
     Trade receivables, net ................................      28,896       39,952
     Other receivables .....................................       6,248        6,239
     Other current assets ..................................       2,807        2,846
                                                               ---------    ---------
        Total current assets ...............................      63,941       70,415
                                                               ---------    ---------

Property, plant and equipment ..............................     824,671      771,947
Less accumulated depreciation and amortization .............     (88,614)     (76,288)
                                                               ---------    ---------
     Property, plant and equipment, net ....................     736,057      695,659
                                                               ---------    ---------

Other assets ...............................................       9,028        9,160
                                                               ---------    ---------

        Total assets .......................................   $ 809,026    $ 775,234
                                                               =========    =========

Liabilities and Shareholders' Equity (Deficit)

Current liabilities:
     Accounts payable and accrued liabilities ..............   $  57,556    $  61,066
     Current portion of long-term obligations ..............      28,158       25,105
     Due to Citizens Utilities Company .....................       5,148       14,650
     Other accrued taxes ...................................      14,240       11,153
     Interest payable ......................................      11,961        4,950
     Other current liabilities .............................       6,799        3,314
                                                               ---------    ---------
        Total current liabilities ..........................     123,862      120,238

Deferred revenue ...........................................      12,591        6,888
Other long-term liabilities ................................         972          952
Deferred income taxes payable ..............................       2,893        2,658
Capital lease obligations ..................................      57,243       39,997
Long-term debt .............................................     625,000      585,000
                                                               ---------    ---------
        Total liabilities ..................................     822,561      755,733
                                                               ---------    ---------

Shareholders' equity (deficit):
     Common stock issued, $.01 par value
        Class A ............................................          92           90
        Class B ............................................         412          412
     Additional paid-in-capital ............................     328,578      326,477
     Deficit ...............................................    (342,617)    (307,478)
                                                               ---------    ---------
        Total shareholders' equity (deficit) ...............     (13,535)      19,501
                                                               ---------    ---------

        Total liabilities and shareholders' equity (deficit)   $ 809,026    $ 775,234
                                                               =========    =========
</TABLE>



                                      -2-

<PAGE>


<TABLE>
                            STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)
                                  (UNAUDITED)



<CAPTION>
                                            For the three months ended March 31,
                                                          2000           1999
                                                        --------       --------

<S>                                                     <C>            <C>
Revenues .........................................      $ 56,778       $ 38,216
                                                        --------       --------

Operating expenses:
     Network access ..............................        20,696         25,224
     Operations ..................................        11,575          9,034
     Selling, general and administrative .........        31,172         26,767
     Depreciation and amortization ...............        12,755          6,994
                                                        --------       --------
        Total operating expenses .................        76,198         68,019
                                                        --------       --------

     Loss from operations ........................       (19,420)       (29,803)

Interest expense .................................        15,196          5,101
Loss on disposal of assets .......................           567           --
Interest income and other ........................          (279)          (322)
                                                        --------       --------

     Net loss before income taxes ................       (34,904)       (34,582)

Income tax expense ...............................           235            370
                                                        --------       --------

     Net loss ....................................      $(35,139)      $(34,952)
                                                        ========       ========

Net loss per common share:
     Basic .......................................      $  (0.70)      $  (0.70)
     Diluted .....................................      $  (0.70)      $  (0.70)

Weighted average shares outstanding ..............        50,183         49,801
</TABLE>






                                      -3-

<PAGE>


<TABLE>
                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)



<CAPTION>
                                            For the three months ended March 31,
                                                             2000        1999
                                                           --------    --------

<S>                                                        <C>         <C>
Net cash used for operating activities .................   $(11,514)   $(26,577)
                                                           --------    --------

Cash flows used for investing activities:
     Capital expenditures ..............................    (25,371)    (48,537)
                                                           --------    --------

Cash flows from financing activities:
     Net revolving bank credit facility proceeds .......     40,000      70,000
     Other .............................................      1,497         (86)
                                                           --------    --------
        Net cash provided by financing activities ......     41,497      69,914
                                                           --------    --------

Net increase (decrease) in cash ........................      4,612      (5,200)

Cash at January 1, .....................................     21,378      13,120
                                                           --------    --------
Cash at March 31, ......................................   $ 25,990    $  7,920
                                                           ========    ========





Supplemental cash flow information:
     Cash paid for interest, net of capitalized portion    $  8,184    $  4,712
     Non-cash increase in capital lease asset ..........   $ 23,412    $   --

</TABLE>
                                      -4-

<PAGE>






                          NOTES TO FINANCIAL STATEMENTS


1.       SUMMARY OF  SIGNIFICANT ACCOUNTING POLICIES

A.       BASIS OF PRESENTATION AND USE OF ESTIMATES

Electric  Lightwave,  Inc. is referred to as "we", "us" or "our" in this report.
We have  prepared  these  unaudited  financial  statements  in  accordance  with
generally   accepted   accounting   principles   (GAAP)  for  interim  financial
information and with the  instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly,  we have condensed or omitted certain information and footnote
disclosures.  In our opinion, these financial statements include all adjustments
and recurring  accruals  necessary to present fairly the results for the interim
periods shown.

Preparing  financial  statements  in  conformity  with GAAP  requires us to make
estimates  and  assumptions  which  affect the  amounts of assets,  liabilities,
revenues and expenses we have reported and our  disclosure of contingent  assets
and  liabilities  at the date of the  financial  statements.  The results of the
interim periods are not necessarily indicative of the results for the full year.
We have made  certain  reclassifications  of  balances  previously  reported  to
conform to the current financial statement  presentation.  You should read these
financial  statements in conjunction with the audited  financial  statements and
the related notes  included in our Annual Report on Form 10-K for the year ended
December 31, 1999.

B.       CAPITALIZED INTEREST

Property,  plant and equipment  includes interest costs  capitalized  during the
installation  and  expansion  of  our  communications  networks.   Approximately
$2,033,000  and  $3,218,000  of  interest  costs were  capitalized  in the first
quarter 2000 and 1999, respectively.

C.       REVENUE  RECOGNITION

We  recognize  revenues  from  communications  services  when the  services  are
provided.  Amounts  received  from  long-term  leases of fiber  optic  cable are
included in deferred revenue and are amortized on a straight-line basis over the
terms of the related leases, as the services are provided.

D.       RECIPROCAL COMPENSATION

We have various interconnection agreements with U S WEST Communications, Inc. (U
S WEST),  GTE  Corporation  (GTE) and  PacBell,  the  Incumbent  Local  Exchange
Carriers  (ILECs) in the states in which we  operate.  These  agreements  govern
reciprocal  compensation  relating to the transport and  termination  of traffic
between  the  ILEC's   networks  and  our  network.   We  recognize   reciprocal
compensation  revenues  as  earned,  based on the  terms of the  interconnection
agreements.

We recognized reciprocal  compensation revenues of $9.6 million and $6.6 million
for the three  months  ended  March 31, 2000 and 1999,  respectively.  Net trade
accounts receivable relating to reciprocal compensation totaled $5.6 million and
$14.9 million at March 31, 2000 and December 31, 1999, respectively.

We have a process in place to monitor  regulatory  matters related to reciprocal
compensation  specifically  for us as well as others in the industry.  Using the
information  available,  we  continuously  review  our  reciprocal  compensation
revenue recognition.

                                      -5-

<PAGE>




E.       NET LOSS PER SHARE

We follow the provisions of Statement of Financial  Accounting  Standards (SFAS)
128, "Earnings Per Share" which requires  presentation of both basic and diluted
earnings per share (EPS) on the face of the Statement of  Operations.  Basic EPS
excludes  dilution and is computed  using the weighted  average number of common
shares outstanding  during the period. The diluted EPS calculation  assumes that
all stock options or contracts to issue common stock were exercised or converted
into common  stock at the  beginning  of the period.  We have  excluded  certain
common stock  equivalents  from our diluted EPS calculation  during the quarters
ended March 31, 2000 and 1999 as their  effect  would have  reduced our net loss
per share.

2.       EXIT COSTS

In the third quarter 1999, we announced two strategic decisions that led to $1.5
million in employee  severance and facility  shutdown  costs that we recorded in
selling,  general and administrative expense in our Statements of Operations for
the year ended  December 31, 1999. On August 24, 1999, we announced that we were
eliminating our prepaid calling card and videoconferencing  products,  effective
November 1, 1999. On September 1, 1999, we announced that we were  consolidating
our national retail sales efforts in Dallas and closing six retail sales offices
in the eastern  United States by October 8, 1999. We have  maintained all of our
data  points-of-presence and wholesale sales offices. In the first quarter 2000,
we incurred  additional  exit costs of $0.3 million  related to these  decisions
that we recorded in selling, general and administrative expense in our Statement
of Operations.

As a result of both of these decisions, we eliminated 63 sales and sales support
positions,  and incurred  charges  relating to employee  severance  and facility
shutdown  costs of $0.8 million and $1.0 million,  respectively.  The balance of
the exit cost  accrual at March 31, 2000 of $0.2 million is included in Accounts
Payable and Accrued  Liabilities on our balance sheet. A summary of the activity
in the exit costs accrual since December 31, 1999 is as follows:

<TABLE>
<CAPTION>
                                   Balance                                                 Balance
                                December 31,            New                               March 31,
($ In thousands)                    1999              Charges            Payments           2000
                               --------------      ------------       -------------     ------------
<S>                            <C>                 <C>                <C>               <C>
Severance related costs            $   -              $   71              $  71            $   -
Network and facilities costs         134                 226                124              236
                               --------------      ------------       -------------     ------------
     Total                         $ 134              $  297              $ 195            $ 236
                               ==============      ============       =============     ============
</TABLE>



3.       COMMITMENTS AND CONTINGENCIES

We have entered into various capital and operating  leases for fiber optic cable
to interconnect our local networks with long-haul fiber optic routes.  The terms
of the  various  agreements  range from 20 to 25 years,  with  varying  optional
renewal periods.  For a certain  contract, we have an exclusive right to use the
facilities  as long as  certain  minimum  usage is  satisfied.  We have  entered
arbitration  to resolve a dispute  regarding  the  minimum  usage  required  for
exclusive  use of our  long-haul  facilities  connecting  Portland,  Seattle and
Spokane,  as  well  as a  portion  of  our  long-haul  route  from  Portland  to
Sacramento.

In addition to the long-haul agreements above, we have also entered into certain
operating and capital leases in order to develop our local  networks.  The terms
of the  various  agreements  range from 15 to 30 years,  with  varying  optional
renewal periods.  For certain  contracts,  we have an exclusive right to use the
facilities  as long as certain  minimum  usage is  satisfied.  We have met those
requirements as of March 31, 2000.

We are  involved in various  claims and legal  actions  arising in the  ordinary
course of business.  In the opinion of management,  the ultimate  disposition of
these  matters  will  not have a  material  adverse  effect  on our  results  of
operations, financial position or liquidity.

                                      -6-

<PAGE>


4.       RELATED PARTY TRANSACTIONS

Citizens  Utilities  Company  (Citizens)  owns  approximately  82% of our common
stock. On December 1, 1997, we entered into an Administrative Services Agreement
(Agreement)  under  which  Citizens  provides  us  with  certain  administrative
services  including,   but  not  limited  to,  financial   management  services,
information  services,  legal  and  contract  services  and  planning  and human
resources  services.  Under the terms of the  Agreement,  Citizens  bills us for
direct costs and an allocation of indirect costs, plus an administrative charge.
The current  practice of  allocating  indirect  costs is based on four  factors:
plant assets,  operating expenses,  number of customers and payroll expenses. We
believe that this allocation  method and the resultant amounts are reasonable as
contemplated  by the  Agreement.  In addition,  we  reimburse  third party costs
incurred  by  Citizens on our  behalf.  We believe  that the amounts  charged by
Citizens  do  not  exceed  comparable  amounts  that  would  be  charged  by  an
unaffiliated  third  party.  Also,  we believe that the  accompanying  financial
statements include all of our costs of doing business.

This table summarizes the activity in the liability  account Due to Citizens for
the three months ended March 31,

<TABLE>
<CAPTION>
($ In thousands)                                   2000                1999
                                              --------------      --------------
<S>                                           <C>                 <C>
Balance beginning of period                     $ 14,650             $ 5,254
Guarantee fees                                     6,356               3,452
Administrative services:
     Services provided by Citizens                 1,154               1,880
     ELI expenses paid by Citizens                 2,313               1,589
Payments to Citizens                             (19,325)             (6,500)
                                              --------------      --------------
Balance end of period                           $  5,148             $ 5,675
                                              ==============      ==============
</TABLE>


5.       SIGNIFICANT CUSTOMER

U S WEST  accounted for 19% of our total revenues for each of the quarters ended
March 31,  2000 and 1999.  Most of the U S WEST  revenues  were  generated  from
reciprocal  compensation  as  discussed  above in Note 1(d).  No other  customer
accounted for 10% or more of our total revenues for either of the quarters ended
March 31, 2000 and 1999.

6.       INCOME TAXES

Citizens includes us in their consolidated  federal income tax return which uses
a  calendar  year  reporting  period.  We  record  income  taxes as if we were a
stand-alone company. We recorded income tax expense of $235,000 and $370,000 for
the three  months  ended March 31,  2000 and 1999,  respectively.  This  expense
represents  the deferred  tax effect of the  increase in  temporary  differences
between our GAAP  financial  statements and our tax return that may not be fully
offset with the use of tax loss  carryforwards  when the  temporary  differences
reverse in future periods.

The income taxes payable by Citizens'  consolidated group have been reduced as a
consequence  of our losses for tax  purposes in past  years.  We would have been
able to carry-forward  our tax losses to future periods to offset taxable income
in these future periods had we been a stand-alone  company.  In accordance  with
the tax sharing agreement,  Citizens has agreed to reimburse us for the taxes we
would be required to pay in the future, if we have taxable income, to the extent
that these loss carryforwards  would otherwise remain available on a stand-alone
basis.

                                      -7-

<PAGE>

7.       SEGMENT DISCLOSURES

We operate in a single industry segment, communications services. Our operations
involve  developing  an  integrated  advanced  fiber network to provide the full
range of our  products  and  services  in the western  United  States as well as
enhanced broadband data services in selected cities nationwide.  While our chief
operating  decision-maker  monitors the revenue streams of the various  products
and  geographic   locations,   we  manage  operations  and  evaluate   financial
performance  based on the  delivery of multiple  services  to  customers  over a
single  fiber-optic  network.  This  practice  allows us to leverage our network
costs  to  maximize  profitability.  As a  result,  there  are many  shared  and
indistinguishable   expenses  generated  by  the  various  revenue  streams  and
geographical  locations.  Our  management  believes  that any  allocation of the
expenses  incurred on a single network to multiple revenue streams or geographic
locations  would be  impractical,  arbitrary and  inconsistent  with the way the
business is currently evaluated by management.  As a result, management does not
currently make such allocations internally.


     PRODUCTS AND SERVICES

We group our products  and  services  into  Network  Services,  Local  Telephone
Services,  Long Distance Services and Data Services.  The revenues  generated by
these products and services for the three months ended March 31 were:

<TABLE>
<CAPTION>
($ In thousands)                                2000               1999
                                          --------------      --------------
<S>                                       <C>                 <C>
Network services                              $ 16,004            $ 10,424
Local telephone services                        24,274              14,308
Long distance services                           4,596               8,530
Data services                                   11,904               4,954
                                          --------------      --------------
     Total                                    $ 56,778            $ 38,216
                                          ==============      ==============
</TABLE>

We do not currently provide products or services outside the United States.

                                      -8-


<PAGE>



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

We caution you that this quarterly report on Form 10-Q contains  forward-looking
statements  within  the  meaning of the  Securities  and  Exchange  Act of 1934.
Forward-looking statements (including oral representations) are only predictions
or statements of our current plans,  which we review on a continual  basis,  and
are  based on our  beliefs,  expectations  and  assumptions  and on  information
currently available to us. The words "may",  "should",  "expect",  "anticipate",
"intend", "plan", "continue",  "believe", "estimate" or similar expressions used
in this report are intended to identify forward-looking statements.

The  forward-looking  statements in this  quarterly  report on Form 10-Q involve
certain risks, uncertainties and assumptions.  They are not guarantees of future
performance.  Factors that may cause actual  results to differ  materially  from
those expressed or implied in any forward-looking  statements  include,  but are
not limited to, any of the following possibilities:

     *  if the local and  overall  economic  conditions  of our markets are less
        favorable than we expected;

     *  if there are changes in the nature and pace of technological advances in
        our industry;

     *  if competitive pressure in the telecommunications  industry increases in
        any of our  markets  because of the  entrance  of new  competitors,  the
        combination of existing  competitors and/or the more effective provision
        of products and services from our competitors, including ILECs, or other
        public utilities;

     *  if  our  business  strategy  or  its  execution,   including   financial
        performance goals, is not as successful as we anticipate;

     *  if state or federal  regulatory  changes are implemented that assist our
        competitors,  impair our  competitive  position,  threaten  our costs or
        impact our rate  structures,  including  the ability to bill  reciprocal
        compensation for calls terminated to Internet Service Providers (ISPs);

     *  if we do not receive the services and support  which we require from the
        regional ILECs or cannot maintain our current relationships with ILECs;

     *  if we are  not  able  to  effectively  manage  rapid  growth,  including
        integrating any businesses acquired;

     *  if we are not able to correctly  identify future  markets,  successfully
        expand existing ones, or successfully expand through acquisitions;

     *  if the mix of products  and  services we are able to offer in our target
        markets is not appropriate to the demands of our customers;

     *  if we are not able to obtain additional financing; or

     *  if our stock price is volatile.

You  should  consider  these  important  factors  in  evaluating  any  statement
contained  in  this  report  and/or  made  by us or on our  behalf.  We  have no
obligation to update or revise forward-looking statements.

--------------------------------------------------------------------------------

The following information has not been audited. You should read this information
in  conjunction  with the condensed  financial  statements  and related notes to
financial  statements  included  in this  report.  In  addition,  please see our
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  audited  financial  statements  and related  notes  included in our
Annual  Report on Form  10-K for the year  ended  December  31,  1999.  Electric
Lightwave, Inc., is referred to as "we", "us", or "our" in this report.


                                      -9-


<PAGE>



OVERVIEW
We have built an extensive  fiber-optic  network in the western  United  States,
which we use to provide products and services to customers in seven major cities
and their  surrounding  areas. In addition,  we provide data services in certain
strategic markets across the nation. Our product offerings include:

     *  Network services - includes  dedicated  service between two points for a
        customer's  exclusive  use.  We offer this in both  local and  long-haul
        applications and collocation facilities to meet us directly in our hub.

     *  Local  telephone  services - consists of the delivery of local dial tone
        and related services, and related carrier and local access revenue.

     *  Long distance  services - includes  retail and  wholesale  long distance
        phone services.

     *  Data  services  - includes a wide  range of  products  to deliver  large
        quantities  of data from one  location to another  through  Asynchronous
        Transfer  Mode  (ATM),   Frame  Relay  and  Internet   Protocol   packet
        technologies.  These technologies group data (voice,  video,  images and
        character-based data) into small packets of information and transmit the
        packets over a network.

We are  investing  in our  network  in the  west  and are  developing  long-haul
networks  that will  connect  all of our seven  major  cities and several of our
data-only cities with high-capacity  fiber-optic cable and electronics.  Certain
segments of our long-haul networks are currently  operational,  and we expect to
complete the  remainder of this network in the second  quarter 2000. In addition
to our long-haul agreements,  we have agreements providing a fiber-optic network
in Phoenix, Arizona and San Francisco, California. During March 1999, we entered
into a fiber-swap,  which exchanges unused fiber on our network for unused fiber
on another carrier's  network.  This exchange will provide us with direct access
from Salt Lake City, Utah to Denver,  Colorado and continue on to Dallas, Texas.
We anticipate  incorporating  the other  carrier's fiber into our network during
2000.

Refer to Note 4 in Part I, Item 1, for a discussion  concerning our relationship
with Citizens, which owns approximately 82% of our common stock.

A.       LIQUIDITY AND CAPITAL RESOURCES

We drew $40 million from our revolving bank credit facility (Credit Facility) to
fund operating and capital  expenditures during the first quarter 2000. At March
31, 2000, we have  approximately  $100 million  available under our $400 million
Credit Facility to fund future operating and capital expenditures.  No principal
payment is due until the  expiration  date of the Credit  Facility  in  November
2002.  Additionally,  we have $325 million of five-year  senior  unsecured notes
outstanding  with maturity on May 14, 2004. The current portion of our long-term
obligations is $28.2 million and consists  solely of capital lease  obligations.
Citizens has guaranteed both the Credit Facility and our 6.05% five-year  senior
unsecured  notes  for  fees  of  3.25%  and  4.0%,  respectively,  based  on the
respective outstanding balances.

We anticipate that the remaining funds available for draw on our Credit Facility
will be inadequate  to fund  operating  leases,  working  capital  deficiencies,
capital  expenditures  and debt  service for 2000.  Citizens  has  committed  to
provide the necessary  bridge  financing,  at then market terms and  conditions,
until third party financing is complete.

In order to continue the growth of our customer base and revenue stream, we must
continue  to  invest  in the  installation,  development  and  expansion  of our
existing communications networks. A significant portion of these expenditures is
incurred  before  any  revenues  are  realized.   Our  capital   additions  were
approximately  $53.7 million in the first quarter 2000,  including $23.4 million
in non-cash  capital  lease  additions.  These  expenditures,  combined with our
operating  expenses,  have resulted in operating losses and negative cash flows.
We expect to continue  incurring  operating losses and negative cash flows until
we can  establish  an adequate  customer  base  necessary  to generate a revenue
stream  sufficient  to support our  operations,  capital  requirements  and debt
service.   We  cannot  provide  assurances  that  we  will  achieve  or  sustain
profitability or generate  sufficient  positive cash flow to fund our operating,
capital expenditures and debt service requirements.

We continue to evaluate  opportunities to generate revenue growth through making
substantial  investments in the continued  development of our existing networks,
new long-haul routes and entry into new markets. These opportunities may include
acquisitions and/or joint ventures that are consistent with our business plan of
generating  revenue growth  through  expansion of our network and customer base.
Any such acquisitions,  investments and/or strategic arrangements, if available,
could  require  additional   financial  resources  and/or  reallocation  of  our
financial resources.

                                      -10-

<PAGE>
OTHER MATTERS

RECIPROCAL COMPENSATION

On February 25, 1999, the FCC issued a Declaratory Ruling and Notice of Proposed
Rulemaking that categorized calls terminated to ISPs as "largely"  interstate in
nature,  which  could  have  had the  effect  of  precluding  these  calls  from
reciprocal compensation charges. However, the ruling stated that ILECs are bound
by the existing  interconnection  agreements  and the state  decisions that have
defined  them.  The  FCC  gave  the  states  authority  to  interpret   existing
interconnection agreements. Since the FCC order, Oregon, Washington, California,
Utah and Arizona have ruled that calls  terminated to ISPs should be included in
the calculation to determine reciprocal compensation.

We have various  interconnection  agreements with U S WEST, GTE and PacBell, the
ILECs in the states in which we  operate.  These  agreements  govern  reciprocal
compensation  relating to the transport and  termination of traffic  between the
ILEC's networks and our network. We recognize reciprocal  compensation  revenues
as earned, based on the terms of the interconnection agreements.

Our  interconnection  agreements  with U S WEST  in  Washington,  Utah,  Oregon,
Arizona and Idaho are in effect and have  generated  both  revenue and  payments
from U S WEST. These agreements are scheduled to expire on December 31, 2001.

Our Washington and Oregon interconnection  agreements with GTE are in effect and
have  generated  both  revenue  and  payments  from GTE.  These  agreements  are
scheduled to expire on June 30, 2001.

Our  interconnection  agreement  with PacBell in California is in effect and has
generated both revenue and payments from PacBell.  The agreement is scheduled to
expire on December 31, 2001.

We recognized reciprocal  compensation revenues of $9.6 million and $6.6 million
for the three  months  ended  March 31, 2000 and 1999,  respectively.  Net trade
accounts receivable relating to reciprocal compensation totaled $5.6 million and
$14.9 million at March 31, 2000 and December 31, 1999, respectively.

We have a process in place to monitor  regulatory  matters related to reciprocal
compensation  specifically  for us as well as others in the industry.  Using the
information  available,  we  continuously  review  our  reciprocal  compensation
revenue recognition.


EXIT COSTS

In the third  quarter 1999, we announced  that we were  eliminating  our prepaid
calling card and  videoconferencing  products,  effective  November 1, 1999, and
that we were  consolidating  our  national  retail  sales  efforts in Dallas and
closing  six retail  sales  offices in the eastern  United  States by October 8,
1999. As a result of both of these  decisions,  we eliminated 63 sales and sales
support  positions,  and incurred  charges  relating to employee  severance  and
facility  shutdown costs of $0.7 million and $0.8 million,  respectively for the
year ended  December 31,  1999.  In the first  quarter  2000,  we have  incurred
additional  costs of $0.3 million related to these decisions due to sublease and
lease  termination  costs and  additional  medical  benefit  costs to terminated
employees.  The  balance  of the exit cost  accrual  at March  31,  2000 of $0.2
million is included in Accounts  Payable and Accrued  Liabilities on our balance
sheet.

                                      -11-

<PAGE>


B.       RESULTS OF OPERATIONS



REVENUES

Revenues  increased  $18.6  million,  or 49%, in the first quarter 2000 over the
first quarter 1999.

<TABLE>

<CAPTION>
                                    For the three months ended March 31,
                           -----------------------------------------------------
($ In thousands)                2000                1999            % Change
                           ----------------    ----------------   --------------
<S>                        <C>                 <C>                <C>
Network services             $ 16,004            $ 10,424                54%
Local telephone services       24,274              14,308                70%
Long distance services          4,596               8,530               (46%)
Data services                  11,904               4,954               140%
                           ----------------    ----------------
     Total                   $ 56,778            $ 38,216                49%
                           ================    ================
</TABLE>


NETWORK SERVICES
Network Services revenues  increased $5.6 million,  or 54%, in the first quarter
2000 over the first quarter 1999. The increase is due to continued growth in our
network and sales of additional circuits to new and existing customers.

LOCAL TELEPHONE SERVICES
Local telephone services revenues increased $10.0 million,  or 70%, in the first
quarter  2000  over the first  quarter  1999.  Dial  tone and ISDN PRI  revenues
increased  $1.2 million or 36%, and $4.1 million,  or 109%,  respectively,  as a
result of an increase in access line  equivalents  installed of 81,929,  or 83%.
Carrier Access  Billings  revenues  increased  $1.7 million,  or 283%, due to an
increase in usage.

Reciprocal  compensation revenue, which increased $3.0 million, or 45%, over the
first  quarter  1999,  is  included  in this  category.  The  increase is due to
recording reciprocal compensation revenues subsequent to March 31, 1999 from GTE
in  Washington  and Oregon,  PacBell in  California  and U S West in Idaho.  The
increase  was  offset by  decreased  revenues  from U S West due to lower  rates
applicable to new  interconnection  agreements  effective  January 1, 2000.  See
"Part I.,  Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of  Operations  -  Liquidity  and Capital  Resources  - Other  Matters -
Reciprocal Compensation" for further discussion of reciprocal compensation.

LONG DISTANCE SERVICES
Long distance  services  revenues  decreased $3.9 million,  or 46%, in the first
quarter 2000 from the first quarter 1999.  Prepaid  services  revenue  decreased
$6.0 million, or 97%, due to our decision to exit the prepaid services market in
the third quarter of 1999.  Retail and wholesale long distance revenue increased
$1.0 million, or 85%, and $1.1 million, or 92%, respectively. The increases were
due to  increases in the minutes  processed as a result of adding new  customers
and  expanding  the services we provide to existing  customers.  Retail  minutes
processed  increased  from 5.3  million  to 9.1  million,  or 73% and  wholesale
minutes processed  increased from 9.9 million to 19.6 million,  or 98%, over the
first quarter 1999.

DATA SERVICES
Data services  revenues  increased  $7.0 million,  or 140%, in the first quarter
2000 from the first quarter 1999.  Revenues from our Internet  services  product
increased $1.6 million,  or 79%, as a result of an increase in Internet  routers
installed from 36 to 62, or 72%. Data services  revenues include $5.0 million in
revenue from an 18 month take-or-pay  contract with a significant  customer that
expires on February 28, 2001. The take-or-pay  contract  provides $20 million in
revenue  for 2000.  There is no  assurance  this  take-or-pay  contract  will be
renewed in 2001.

                                      -12-

<PAGE>


OPERATING EXPENSES

Operating  expenses  increased  $8.1 million,  or 12%, in the first quarter 2000
over the first quarter 1999.  This was due to our growth in network and customer
base,   as  well  as  the   expansion   of  our  sales   force   and   increased
plant-in-service.  However,  the increase was  partially  offset by lower access
costs.

<TABLE>
<CAPTION>
                                                     For the three months ended March 31,
                                         -------------------------------------------------------
($ In thousands)                              2000                1999             % Change
                                         --------------      --------------      --------------
<S>                                      <C>                 <C>                 <C>
Network access                             $ 20,696            $ 25,224               (18%)
Operations                                   11,575               9,034                28%
Selling, general and administrative          31,172              26,767                16%
Depreciation and amortization                12,755               6,994                82%
                                         --------------      --------------
     Total                                 $ 76,198            $ 68,019                12%
                                         ==============      ==============
</TABLE>

NETWORK ACCESS
Network access expenses include resold product expenses.  The primary components
are  usage-based  charges  for  carrying  and  terminating  traffic  on  another
carrier's network.

Network access  expenses for the first quarter 2000  decreased $4.5 million,  or
18%,  compared to the first quarter 1999. The reduction is the result of an $8.4
million  reduction  in  costs  from  the  elimination  of the  prepaid  services
business.  This was  partially  offset by an increase in costs  associated  with
services relating to our increase in revenues.

OPERATIONS
Operations  expenses  consist of costs  related to  providing  facilities  based
network and enhanced  communications  services  other than network access costs.
The primary components of these expenses are right-of-way and telecommunications
equipment leases as well as operations and engineering personnel costs.

Operations  expenses for the first quarter 2000 increased $2.5 million,  or 28%,
over the first  quarter  1999.  This was  primarily due to increases in payroll,
operating  rents and  related  expenses  to support  the  expanded  delivery  of
services.

SELLING, GENERAL AND ADMINISTRATIVE
Selling,  general and  administrative  expenses  include all direct and indirect
sales   channel   expenses  and   commissions,   as  well  as  all  general  and
administrative expenses.

Selling,  general  and  administrative  expenses  for  the  first  quarter  2000
increased $4.4 million,  or 16%, over the first quarter 1999. This was primarily
due to increases in payroll,  property taxes and related expenses to support the
delivery of services in existing and new markets.

DEPRECIATION AND AMORTIZATION
Depreciation and amortization  expenses include  depreciation of  communications
network  assets  including  fiber-optic  cable,  network  electronics,   network
switching and network data equipment.

Depreciation and amortization  expense for the first quarter 2000 increased $5.8
million,  or 82%, over the first quarter 1999.  This was primarily due to higher
plant in service balances for newly completed  communications network facilities
and electronics.

                                      -13-

<PAGE>




INTEREST EXPENSE AND INTEREST INCOME AND OTHER

<TABLE>

<CAPTION>
                                       For the three months ended March 31,
                              --------------------------------------------------
($ In thousands)                   2000                1999           % Change
                              ----------------    ----------------   -----------
<S>                           <C>                 <C>                <C>
Interest expense                $ 15,196             $ 5,101             198%
Loss on disposal of assets           567                   -              N/A
Interest income and other           (279)               (322)            (13%)
</TABLE>

Interest  expense  increased  $10.1 million,  or 198%, in the first quarter 2000
over the first  quarter  1999,  primarily  due to higher  levels of  outstanding
long-term debt. As of March 31, 2000, we had long-term debt  outstanding of $625
million  compared to $354 million at March 31, 1999.  The higher  balance led to
increased  interest and  guarantee  fees.  Loss on disposal of assets was due to
equipment  turnover  and  technical  upgrades.  Interest  income  and  other  is
primarily comprised of interest earned on cash balances.


INCOME TAX EXPENSE

<TABLE>

<CAPTION>
                                 For the three months ended March 31,
                        -------------------------------------------------------
($ In thousands)             2000                1999             % Change
                        ----------------    ----------------   ----------------
<S>                     <C>                 <C>                <C>
Income tax expense          $ 235               $ 370               (36%)
</TABLE>

Income tax expense  decreased  $0.1  million,  or 36%, in the first quarter 2000
over the first quarter 1999. In both 2000 and 1999,  the benefit of our tax loss
carryforwards  is not able to fully offset the  deferred tax expense  associated
with current year temporary differences.

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to minimal market risks.  Sensitivity of results of operations to
these risks is managed by maintaining a conservative investment portfolio, which
is comprised  solely of money market  funds,  and entering into  long-term  debt
obligations with appropriate price and term  characteristics.  We do not hold or
issue  derivative   instruments,   derivative  commodity  instruments  or  other
financial instruments for trading purposes. Financial instruments held for other
than trading purposes do not impose a material market risk.

We are exposed to interest rate risk, as  additional  financing is  periodically
needed due to the large  operating  losses and capital  expenditures  associated
with establishing and expanding our communications  networks.  The interest rate
that we will  be  able to  obtain  on  debt  financing  will  depend  on  market
conditions  at that time,  and may differ from the rates we have  secured on our
current  debt.  Additionally,  we are exposed to  interest  rate risk on amounts
borrowed  against our credit facility and  construction  agency  agreement as of
March 31, 2000.  The  construction  agency  agreement  and advances  against the
credit facility periodically renew, at which point the borrowings are subject to
the then current market interest  rates,  which may differ from the rates we are
currently paying on our borrowings.

We reduced our interest  rate risk by issuing  $325  million,  five-year  senior
unsecured notes in April 1999 that are guaranteed by Citizens.  The notes have a
fixed  interest  rate of 6.05%,  and we pay Citizens an annual  guarantee fee of
4.0%. We used the net proceeds from the issuance to repay outstanding borrowings
under our floating rate bank credit facility.

                                      -14-


<PAGE>



                           PART II: OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS
In   accordance   with  the  terms  of  our  contract  with   Bonneville   Power
Administration,  we requested  arbitration  to resolve a dispute  regarding  the
exclusive  use of our  long-haul  facilities  connecting  Portland,  Seattle and
Spokane,  as  well  as a  portion  of  our  long-haul  route  from  Portland  to
Sacramento.  We filed our Notice of Claim or Demand for Arbitration on April 19,
1999.  It  is  pending   before  an  arbitrator  of  the  American   Arbitration
Association.

We are party to routine litigation arising in the normal course of business.  We
do not  expect  these  matters,  individually  or in the  aggregate,  to  have a
material adverse effect on our financial position, results of operations or cash
flows. We are also party to various  proceedings  before state Public  Utilities
Commissions. These proceedings typically relate to authority to operate in state
and  regulatory   arbitration   proceedings   concerning   our   interconnection
agreements.  See "Part I.,  Management's  Discussion  and  Analysis of Financial
Condition and Results of  Operations - Liquidity  and Capital  Resources - Other
Matters - Reciprocal Compensation".

ITEM 2.       CHANGES IN SECURITIES AND USE OF PROCEEDS
              None.

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES
              None.

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              None.

ITEM 5.       OTHER INFORMATION
              None.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

  a)          The exhibits below are filed as part of this report:

EXHIBIT NO.  DESCRIPTION
  10.13.1    Second   Amendment   to  the  Equity  Incentive  Plan  of  Electric
             Lightwave, Inc.
  27.1       Financial  Data Schedule for the three months ended March 31, 2000.

  b)         Reports on Form 8-K

* On March 3, 2000, we filed a current  report on Form 8-K, under Item 5, "Other
Events",  to make  available a press release dated March 1, 2000,  regarding our
calendar year 1999 financial results.

                                      -15-


<PAGE>



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


ELECTRIC LIGHTWAVE, INC.
(Registrant)

By:               /S/ KERRY D. REA
                  _____________________________
                  Kerry D. Rea
                  Vice President and Controller



May 12, 2000