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

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended JUNE 30, 2000
                                                 -------------

Commission     Registrant's Name, State of Incorporation,     IRS Employer
File Number           Address and Telephone Number          Identification No.
-----------    ------------------------------------------   ------------------

1-11505                    MIDAMERICAN ENERGY COMPANY           42-1425214
                              (AN IOWA CORPORATION)
                            666 GRAND AVE. PO BOX 657
                             DES MOINES, IOWA 50303
                                  515-242-4300

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

                                                       Name of each Exchange
       Title of Each Class                              On which Registered
       -------------------                             -----------------------

7.98% MidAmerican Energy Company - Obligated
   Preferred Securities of Subsidiary Trust            New York Stock Exchange

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

                   Preferred Stock, $3.30 Series, no par value
                   Preferred Stock, $3.75 Series, no par value
                   Preferred Stock, $3.90 Series, no par value
                   Preferred Stock, $4.20 Series, no par value
                   Preferred Stock, $4.35 Series, no par value
                   Preferred Stock, $4.40 Series, no par value
                   Preferred Stock, $4.80 Series, no par value
                   Preferred Stock, $5.25 Series, no par value
                   Preferred Stock, $7.80 Series, no par value
_______________________________________________________________________________
                               Title of each Class

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter  period that the  registrants  were
required  to file  such  reports),  and (2) have  been  subject  to such  filing
requirements for the past 90 days. Yes X   No
                                      ---    ---

As of July 31, 2000, all  70,980,203  outstanding  shares of MidAmerican  Energy
Company's voting stock were held by its parent company, MHC Inc.


<PAGE>


                           MIDAMERICAN ENERGY COMPANY

                                    FORM 10-Q

                                TABLE OF CONTENTS



                         PART I.  FINANCIAL INFORMATION             PAGE NO.

ITEM 1.   Financial Statements

          Independent Accountants' Report..............................  3
          Consolidated Statements of Income............................  4
          Consolidated Balance Sheets..................................  5
          Consolidated Statements of Cash Flows........................  6
          Notes to Consolidated Financial Statements...................  7

ITEM 2.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations.............. 12

                           PART II. OTHER INFORMATION

ITEM 1.   Legal Proceedings............................................ 23

ITEM 6.   Exhibits and Reports on Form 8-K............................. 24

Signatures............................................................. 25

Exhibit Index.......................................................... 26


                                      -2-
<PAGE>


INDEPENDENT ACCOUNTANTS' REPORT


Board of Directors and Shareholder
MidAmerican Energy Company
Des Moines, Iowa

We have reviewed the  accompanying  consolidated  balance  sheet of  MidAmerican
Energy  Company and  subsidiaries  (the  Company) as of June 30,  2000,  and the
related  consolidated  statements  of income for the  three-month  and six-month
periods ended June 30, 2000 and 1999 and the related consolidated  statements of
cash  flows for the  six-month  periods  ended  June 30,  2000 and  1999.  These
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America,  the
objective  of which is the  expression  of an opinion  regarding  the  financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to such consolidated  financial  statements for them to be in conformity
with accounting principles generally accepted in the United States of America.

We have  previously  audited,  in accordance with auditing  standards  generally
accepted in the United  States of America,  the  consolidated  balance  sheet of
MidAmerican  Energy  Company and  subsidiaries  as of December 31, 1999, and the
related consolidated  statements of income, retained earnings and cash flows for
the year then ended (not presented herein); and in our report dated January 25,
2000,  we  expressed  an  unqualified  opinion on those  consolidated  financial
statements.  In our  opinion,  the  information  set  forth in the  accompanying
consolidated  balance  sheet as of December  31, 1999 is fairly  stated,  in all
material respects,  in relation to the consolidated  balance sheet from which it
has been derived.




DELOITTE & TOUCHE LLP

Des Moines, Iowa
July 21, 2000

                                      -3-
<PAGE>


                           MIDAMERICAN ENERGY COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                 THREE MONTHS               SIX MONTHS
                                                ENDED JUNE 30,            ENDED JUNE 30,
                                            ----------------------    ----------------------
                                               2000         1999         2000         1999
                                            ---------    ---------    ---------    ---------
<S>                                         <C>          <C>          <C>          <C>
OPERATING REVENUES
Regulated electric ......................   $ 281,973    $ 279,350    $ 560,436    $ 541,478
Regulated gas ...........................      98,153       71,282      278,055      242,060
Nonregulated ............................      88,936       27,709      145,423       63,051
                                            ---------    ---------    ---------    ---------
                                              469,062      378,341      983,914      846,589
                                            ---------    ---------    ---------    ---------
OPERATING EXPENSES
Regulated:
  Cost of fuel, energy and capacity .....      57,172       50,681      115,489      101,667
  Cost of gas sold ......................      61,054       38,596      172,552      135,454
  Other operating expenses ..............     102,863      104,387      204,754      221,026
  Maintenance ...........................      29,938       31,934       54,677       58,471
  Depreciation and amortization .........      49,140       47,687       97,534       97,378
  Property and other taxes ..............      19,110       20,662       38,409       40,813
                                            ---------    ---------    ---------    ---------
                                              319,277      293,947      683,415      654,809
                                            ---------    ---------    ---------    ---------
Nonregulated:
  Cost of sales .........................      83,447       24,305      134,585       58,404
  Other .................................       5,271        4,185        8,870        8,122
                                            ---------    ---------    ---------    ---------
                                               88,718       28,490      143,455       66,526
                                            ---------    ---------    ---------    ---------
Total operating expenses ................     407,995      322,437      826,870      721,335
                                            ---------    ---------    ---------    ---------

OPERATING INCOME ........................      61,067       55,904      157,044      125,254
                                            ---------    ---------    ---------    ---------

NON-OPERATING INCOME
Interest and dividend income ............       1,212          588        2,585        1,687
Other, net ..............................      (1,941)      (3,338)      (4,060)      (5,379)
                                            ---------    ---------    ---------    ---------
                                                 (729)      (2,750)      (1,475)      (3,692)
                                            ---------    ---------    ---------    ---------

FIXED CHARGES
Interest on long-term debt ..............      13,804       16,618       28,387       33,107
Other interest expense ..................       4,101        2,674        7,001        8,086
Preferred dividends of subsidiary trust .       2,057        1,995        4,052        3,990
Allowance for borrowed funds ............        (374)        (300)        (753)        (606)
                                            ---------    ---------    ---------    ---------
                                               19,588       20,987       38,687       44,577
                                            ---------    ---------    ---------    ---------

INCOME BEFORE INCOME TAXES ..............      40,750       32,167      116,882       76,985
INCOME TAXES ............................      16,875       11,815       48,208       30,449
                                            ---------    ---------    ---------    ---------
NET INCOME ..............................      23,875       20,352       68,674       46,536
PREFERRED DIVIDENDS .....................       1,238        1,238        2,477        2,477
                                            ---------    ---------    ---------    ---------

EARNINGS ON COMMON STOCK ................   $  22,637    $  19,114    $  66,197    $  44,059
                                            =========    =========    =========    =========

</TABLE>

        The accompanying notes are an integral part of these statements.

                                      -4-
<PAGE>


                           MIDAMERICAN ENERGY COMPANY
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                 AS OF
                                                       -------------------------
                                                         JUNE 30,   DECEMBER 31,
                                                           2000         1999
                                                       -----------  ------------
                                                       (UNAUDITED)
<S>                                                     <C>          <C>
ASSETS
UTILITY PLANT
Electric .............................................  $4,404,772   $4,348,740
Gas ..................................................     819,600      809,112
                                                        ----------   ----------
                                                         5,224,372    5,157,852
Less accumulated depreciation and amortization .......   2,627,548    2,548,160
                                                        ----------   ----------
                                                         2,596,824    2,609,692
Construction work in progress ........................      29,197       33,739
                                                        ----------   ----------
                                                         2,626,021    2,643,431
                                                        ----------   ----------

POWER PURCHASE CONTRACT ..............................     102,164      106,481
                                                        ----------   ----------
CURRENT ASSETS
Cash and cash equivalents ............................       4,474        5,167
Receivables ..........................................     185,416      190,986
Inventories ..........................................      39,138       80,649
Prepaid taxes ........................................      22,889       22,889
Other ................................................       8,981       10,355
                                                        ----------   ----------
                                                           260,898      310,046
                                                        ----------   ----------

INVESTMENTS AND NONREGULATED PROPERTY, NET ...........     253,170      228,105
REGULATORY ASSETS ....................................     255,320      278,757
OTHER ASSETS .........................................      57,110       25,737
                                                        ----------   ----------
TOTAL ASSETS .........................................  $3,554,683   $3,592,557
                                                        ==========   ==========

CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common shareholder's equity ..........................  $1,124,052   $1,057,855
MidAmerican preferred securities, not subject to
  mandatory redemption ...............................      31,759       31,759
Preferred securities, subject to mandatory redemption:
  MidAmerican preferred securities ...................      50,000       50,000
  MidAmerican-obligated preferred securities of
     subsidiary trust holding solely MidAmerican
     junior subordinated debentures ..................     100,000      100,000
Long-term debt (excluding current portion) ...........     758,368      759,638
                                                        ----------   ----------
                                                         2,064,179    1,999,252
                                                        ----------   ----------
CURRENT LIABILITIES
Notes payable ........................................     214,711      204,000
Current portion of long-term debt ....................       1,517      110,861
Current portion of power purchase contract ...........      15,767       15,767
Accounts payable .....................................     125,288      131,186
Taxes accrued ........................................      88,521      112,663
Interest accrued .....................................      10,045       12,925
Other ................................................      31,206       30,226
                                                        ----------   ----------
                                                           487,055      617,628
                                                        ----------   ----------
OTHER LIABILITIES
Power purchase contract ..............................      52,281       52,281
Deferred income taxes ................................     558,244      561,000
Investment tax credit ................................      68,827       71,757
Other ................................................     324,097      290,639
                                                        ----------   ----------
                                                         1,003,449      975,677
                                                        ----------   ----------

TOTAL CAPITALIZATION AND LIABILITIES .................  $3,554,683   $3,592,557
                                                        ==========   ==========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      -5-
<PAGE>

                           MIDAMERICAN ENERGY COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                        SIX MONTHS
                                                                      ENDED JUNE 30,
                                                                  ----------------------
                                                                     2000         1999
                                                                  ---------    ---------
<S>                                                               <C>          <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net income ....................................................   $  68,674    $  46,536
Adjustments to reconcile net income to net cash provided:
  Depreciation and amortization ...............................      97,681       97,525
  Deferred income taxes and investment tax credit, net ........      (5,687)      (4,075)
  Amortization of other assets ................................      24,490       30,063
  Cash inflows (outflows) of accounts receivable securitization      12,877       (4,025)
  Impact of changes in working capital ........................       3,638       32,879
  Other .......................................................     (12,082)      (3,260)
                                                                  ---------    ---------
    Net cash provided .........................................     189,591      195,643
                                                                  ---------    ---------

NET CASH FLOWS FROM INVESTING ACTIVITIES
Utility construction expenditures .............................     (80,780)     (77,865)
Quad Cities Nuclear Power Station decommissioning trust fund ..      (4,152)      (5,658)
Other investing activities, net ...............................      (2,802)     (11,630)
                                                                  ---------    ---------
  Net cash used ...............................................     (87,734)     (95,153)
                                                                  ---------    ---------

NET CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid ................................................      (2,477)     (39,183)
Retirement of long-term debt, including reacquisition cost ....    (110,784)        (629)
Net change in notes payable ...................................      10,711      (56,321)
                                                                  ---------    ---------
  Net cash used ...............................................    (102,550)     (96,133)
                                                                  ---------    ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..........        (693)       4,357
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ..............       5,167        5,370
                                                                  ---------    ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ....................   $   4,474    $   9,727
                                                                  =========    =========

ADDITIONAL CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized .....................   $  34,395    $  37,213
                                                                  =========    =========
Income taxes paid .............................................   $  89,477    $  24,843
                                                                  =========    =========

</TABLE>

        The accompanying notes are an integral part of these statements.

                                      -6-
<PAGE>
                           MIDAMERICAN ENERGY COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.  GENERAL:

     The consolidated financial statements included herein have been prepared by
MidAmerican Energy Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange  Commission.  Certain information and disclosures
normally included in financial  statements prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted pursuant to such
rules and regulations.  In the opinion of MidAmerican  Energy,  all adjustments,
consisting of normal recurring adjustments, have been made to present fairly the
financial position,  the results of operations and the changes in cash flows for
the periods  presented.  Prior year  amounts have been  reclassified  to a basis
consistent  with the current year  presentation.  All  significant  intercompany
transactions have been eliminated. Although MidAmerican Energy believes that the
disclosures are adequate to make the information presented not misleading, it is
suggested  that  these  financial  statements  be read in  conjunction  with the
consolidated  financial statements and the notes thereto included in MidAmerican
Energy's latest Annual Report on Form 10-K.

     MidAmerican  Energy is a public  utility  with  electric  and  natural  gas
operations  and is the  principal  subsidiary  of MHC Inc. MHC is a wholly owned
indirect  subsidiary of MidAmerican Energy Holdings Company.  MidAmerican Energy
Holdings  is an exempt  public  utility  holding  company  headquartered  in Des
Moines, Iowa.

B.  ENVIRONMENTAL MATTERS:

     (1) MANUFACTURED GAS PLANT FACILITIES -

     The  United   States   Environmental   Protection   Agency  and  the  state
environmental  agencies have determined that  contaminated  wastes  remaining at
decommissioned manufactured gas plant facilities may pose a threat to the public
health or the environment if such contaminants are in sufficient  quantities and
at such concentrations as to warrant remedial action.

     MidAmerican Energy has evaluated or is evaluating 27 properties which were,
at one time, sites of gas manufacturing  plants in which it may be a potentially
responsible  party.  The purpose of these  evaluations  is to determine  whether
waste materials are present,  whether the materials  constitute an environmental
or health  risk,  and  whether  MidAmerican  Energy has any  responsibility  for
remedial action. MidAmerican Energy is currently conducting field investigations
at  eighteen  sites and has  conducted  interim  removal  actions  at six of the
eighteen sites. In addition, MidAmerican Energy has completed investigations and
removals at four sites.  MidAmerican Energy is continuing to evaluate several of
the sites to  determine  the  future  liability,  if any,  for  conducting  site
investigations or other site activity.

     MidAmerican Energy estimates the range of possible costs for investigation,
remediation  and monitoring for the sites  discussed  above to be $22 million to
$68 million.  MidAmerican Energy's estimate of the probable cost for these sites
as of June 30, 2000 was $27  million.  The  estimate  consists of $3 million for
investigation   costs,  $9  million  for  remediation  costs,  $13  million  for
groundwater  treatment  and  monitoring  costs and $2 million  for  closure  and
administrative  costs.  This  estimate  has been  recorded as a liability  and a
regulatory  asset for future  recovery.  MidAmerican  Energy projects that these
amounts will be paid or incurred over the next 10 years.

                                      -7-
<PAGE>

     The  estimate  of  probable  remediation  costs  is  established  on a site
specific  basis.  The costs are  accumulated in a three-step  process.  First, a
determination  is made as to  whether  MidAmerican  Energy has  potential  legal
liability  for  the  site  and  whether  information  exists  to  indicate  that
contaminated  wastes  remain  at the site.  If so,  the  costs of  performing  a
preliminary  investigation and the costs of removing known contaminated soil are
accrued.  As the  investigation  is performed and if it is  determined  remedial
action  is  required,  the  best  estimate  of  remedial  costs is  accrued.  If
necessary, the estimate is revised when a consent order is issued. The estimated
recorded  liabilities for these properties  include  incremental direct costs of
the  remediation  effort,  costs  for  future  monitoring  at sites and costs of
compensation  to  employees  for  time  expected  to be  spent  directly  on the
remediation effort. The estimated recorded  liabilities for these properties are
based upon preliminary  data. Thus, actual costs could vary  significantly  from
the  estimates.  The  estimate  could  change  materially  based  on  facts  and
circumstances  derived from site  investigations,  changes in required  remedial
action and changes in technology relating to remedial alternatives. In addition,
insurance  recoveries  for some or all of the  costs  may be  possible,  but the
liabilities recorded have not been reduced by any estimate of such recoveries.

     The  Illinois  Commerce  Commission  has approved the use of a tariff rider
which  permits  recovery of the actual costs of  litigation,  investigation  and
remediation  relating  to  former  manufactured  gas  plant  sites.  MidAmerican
Energy's  present  rates  in  Iowa  provide  for  a  fixed  annual  recovery  of
manufactured gas plant costs.  MidAmerican  Energy intends to pursue recovery of
the  remediation  costs  from  other  potentially  responsible  parties  and its
insurance carriers.

     Although the timing of potential  incurred costs and recovery of such costs
in rates may affect the results of operations in individual periods,  management
believes  that the  outcome of these  issues  will not have a  material  adverse
effect on MidAmerican Energy's financial position or results of operations.

     (2) CLEAN AIR ACT -

     On July 18, 1997, the Environmental  Protection Agency adopted revisions to
the National Ambient Air Quality Standards for ozone and a new standard for fine
particulate  matter.  Based  on  data  to  be  obtained  from  monitors  located
throughout each state, the Environmental  Protection Agency will determine which
states have areas that do not meet the air quality  standards (i.e.,  areas that
are  classified  as  nonattainment).  If  a  state  has  area(s)  classified  as
nonattainment  area(s),  the state is required to submit a State  Implementation
Plan specifying how it will reach  attainment of the standards  through emission
reductions or other means.  In August 1998,  the Iowa  Environmental  Protection
Commission  adopted by reference the National Ambient Air Quality  Standards for
ozone and fine particulate matter.

     In May 1999,  the  United  States  Court of  Appeals  for the  District  of
Columbia  Circuit  remanded  the  standards  adopted  in July  1997  back to the
Environmental  Protection Agency indicating the Environmental  Protection Agency
had not expressed  sufficient  justification  for the basis of establishing  the
standards and ruling that the  Environmental  Protection Agency has exceeded its
constitutionally-delegated authority in setting the standards. The Environmental
Protection Agency's appeal of the court's ruling to the full panel of the United
States District Court of Appeals for the District of Columbia was denied. In May
2000 the United States  Supreme  Court granted  certiorari to review the appeals
court decision. Oral arguments are expected in the fall of 2000.

     As a result of the court's  initial  decision and the current status of the
standards,  the impact of any new standards on  MidAmerican  Energy is currently
unknown. If the Environmental Protection Agency successfully appeals the court's
decision,  however,  and the new standards  are  implemented,  then  MidAmerican
Energy's fossil fuel generating  stations may be subject to emission  reductions
if the stations are located in nonattainment  areas. As part of an overall state
plan to  achieve  attainment  of the  standards,

                                      -8-
<PAGE>

MidAmerican  Energy could be required to install control equipment on its fossil
fuel  generating  stations or decrease  the number of hours  during  which these
stations  operate.  The degree to which  MidAmerican  Energy may be  required to
install  control  equipment or decrease  operating  hours under a  nonattainment
scenario would be determined by the state's  assessment of MidAmerican  Energy's
relative  contribution,  along with other emission sources, to the nonattainment
status. The installation of control equipment would result in increased costs to
MidAmerican  Energy. A decrease in the number of hours during which the affected
stations operate would decrease the revenues of MidAmerican Energy.

C.  RATE MATTERS:

     Under a 1997  pricing  plan  settlement  agreement  resulting  from an Iowa
Utilities  Board  rate  proceeding,  electric  prices  for Iowa  industrial  and
commercial  customers  were  reduced  through  a retail  access  pilot  project,
negotiated  individual electric contracts and a tariffed rate reduction for some
non-contract commercial customers.

     The negotiated  electric  contracts have differing  terms and conditions as
well as prices.  The contracts range in length from five to ten years,  and some
have price renegotiation and early termination  provisions exercisable by either
party.  The vast majority of the contracts are for terms of seven years or less,
although, some large customers have agreed to ten-year contracts. Prices are set
as fixed prices;  however,  many contracts allow for potential price adjustments
with respect to environmental costs, government imposed public purpose programs,
tax changes,  and transition costs.  While the contract prices are fixed (except
for the potential adjustment  elements),  the costs MidAmerican Energy incurs to
fulfill these  contracts  will vary. On an aggregate  basis the annual  revenues
under contract are approximately $180 million.

     If  MidAmerican  Energy's  annual Iowa  electric  jurisdictional  return on
common  equity  exceeds 12%,  then  earnings  above the 12% level will be shared
equally  between  customers and MidAmerican  Energy;  if the return exceeds 14%,
then  two-thirds of  MidAmerican  Energy's share of those earnings above the 14%
level will be used for  accelerated  recovery  of  regulatory  assets.  The 1997
pricing plan settlement  agreement precludes  MidAmerican Energy from filing for
increased  rates prior to 2001 unless the return falls below 9%.  Other  parties
signing the agreement are prohibited from filing for reduced rates prior to 2001
unless the return after reflecting credits to customers, exceeds 14%.

     Under an  Illinois  restructuring  law enacted in 1997,  a similar  sharing
mechanism is in place for MidAmerican Energy's Illinois electric  operations.  A
two-year  average  return on  common  equity  greater  than a  two-year  average
benchmark will trigger an equal sharing of earnings on the excess. The benchmark
is a calculation of average  30-year  Treasury Bond rates plus 5.5% for 1998 and
1999 and 8.5% for 2000  through  2004.  The initial  calculation,  which was due
March 31, 2000, was based on 1998 and 1999 results.  The two-year  average above
which  sharing must occur for 1999 was 11.21%.  Using the same 30-year  Treasury
bond average,  the computed  level of return would be 12.71% for 2000 and 14.21%
for 2001 through 2004. The law allows MidAmerican Energy to mitigate the sharing
of earnings  above the  threshold  return on common equity  through  accelerated
recovery of regulatory assets.

                                      -9-

<PAGE>
D.  ACCOUNTING FOR THE EFFECTS OF CERTAIN TYPES OF REGULATION:

     MidAmerican  Energy's  utility  operations are subject to the regulation of
the Iowa Utilities Board,  the Illinois  Commerce  Commission,  the South Dakota
Public  Utilities  Commission,  and the Federal  Energy  Regulatory  Commission.
MidAmerican  Energy's  accounting  policies  and the  accompanying  consolidated
financial  statements  conform  to  generally  accepted  accounting   principles
applicable  to  rate-regulated  enterprises  and  reflect  the  effects  of  the
ratemaking process.

     A possible  consequence  of  deregulation  in the utility  industry is that
Statement of Financial Accounting Standards No. 71 may no longer apply. SFAS No.
71 sets forth  accounting  principles for operations that are regulated and meet
certain criteria.  For operations that meet the criteria,  SFAS 71 allows, among
other  things,  the  deferral of costs that would  otherwise  be  expensed  when
incurred.  With the exception of the generation  operations serving the Illinois
jurisdiction, MidAmerican Energy's electric and gas utility operations currently
meet the criteria of SFAS 71, but its applicability is periodically  reexamined.
If portions of its utility  operations  no longer meet the  criteria of SFAS 71,
MidAmerican  Energy could be required to write off the related regulatory assets
and  liabilities  from its  balance  sheet and thus,  a material  adjustment  to
earnings in that period could result if  regulatory  assets are not recovered in
transition  provisions  of any  resulting  legislation.  As of  June  30,  2000,
MidAmerican  Energy had $255 million of  regulatory  assets on its  Consolidated
Balance Sheet.

E.  SEGMENT INFORMATION:

     MidAmerican Energy has two reportable operating segments: electric and gas.
The electric  segment derives most of its revenue from retail sales of regulated
electricity to residential,  commercial,  and industrial  customers and sales to
other  utilities.  The gas segment derives most of its revenue from retail sales
of regulated natural gas to residential,  commercial,  and industrial  customers
and also earns significant  revenues by transporting gas owned by others through
its  distribution  systems.  Pricing for electric and gas sales are  established
separately  by  regulatory  agencies;  therefore,  management  also reviews each
segment  separately to make decisions  regarding  allocation of resources and in
evaluating performance. Common operating costs such as interest income, interest
expense,  income  tax  expense  and  equity  in the net  loss of  investees  are
allocated to each segment.

                                      -10-
<PAGE>

         The following  table  provides  MidAmerican  Energy  information  on an
operating segment basis (in thousands):

                                    Three Months               Six Months
                                    Ended June 30            Ended June 30
                               ----------------------   ----------------------
                                  2000         1999        2000         1999
                               ---------    ---------   ---------    ---------
Revenues:
  Electric .................   $ 281,973    $ 279,350   $ 560,436    $ 541,478
  Gas ......................      98,153       71,282     278,055      242,060
  Nonregulated and other (a)      88,936       27,709     145,423       63,051
                               ---------    ---------   ---------    ---------
                               $ 469,062    $ 378,341   $ 983,914    $ 846,589
                               =========    =========   =========    =========
Earnings on common stock:
  Electric .................   $  26,163    $  25,284   $  53,934    $  37,959
  Gas ......................         550       (5,991)     15,388        8,330
  Nonregulated and other (a)      (4,076)        (179)     (3,125)      (2,230)
                               ---------    ---------   ---------    ---------
                               $  22,637    $  19,114   $  66,197    $  44,059
                               =========    =========   =========    =========

(a)     "Nonregulated and other" consists of nonregulated gas operations,  CBEC
Railway and other nonregulated activities.

F.  OTHER COMPREHENSIVE INCOME:

     For the three  months and six months  ended June 30,  2000 and 1999,  there
were no  differences  between  MidAmerican  Energy's  comprehensive  income  and
earnings on common stock.

                                      -11-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------

RESULTS OF OPERATIONS
---------------------

                                  INTRODUCTION
                                  ------------

     MidAmerican  Energy  Company is a public  utility with electric and natural
gas operations and is the principal  subsidiary of MHC Inc. MHC is headquartered
in  Des  Moines,  Iowa,  and  has  the  following   nonregulated   subsidiaries:
MidAmerican  Capital Company,  MidAmerican  Services Company and Midwest Capital
Group, Inc. MHC is a wholly owned subsidiary of MidAmerican Funding,  LLC, which
is a wholly owned subsidiary of MidAmerican Energy Holdings Company.

     MHC,  MidAmerican Funding and MidAmerican Energy Holdings are exempt public
utility holding companies headquartered in Des Moines.

FORWARD-LOOKING STATEMENTS

     From time to time,  MidAmerican Energy may make forward-looking  statements
within the  meaning  of the  federal  securities  laws that  involve  judgments,
assumptions and other uncertainties  beyond its control.  These  forward-looking
statements may include,  among others,  statements  concerning  revenue and cost
trends,  cost recovery,  cost reduction  strategies  and  anticipated  outcomes,
pricing   strategies,   changes  in  the  utility   industry,   planned  capital
expenditures,  financing  needs  and  availability,  statements  of  MidAmerican
Energy's expectations,  beliefs, future plans and strategies, anticipated events
or trends and similar comments concerning matters that are not historical facts.
These type of forward-looking  statements are based on current  expectations and
involve a number of known and unknown risks and  uncertainties  that could cause
the actual results and  performance of MidAmerican  Energy to differ  materially
from any expected  future results or performance,  expressed or implied,  by the
forward-looking statements. In connection with the safe harbor provisions of the
Private  Securities  Litigation  Reform  Act of  1995,  MidAmerican  Energy  has
identified   important  factors  that  could  cause  actual  results  to  differ
materially  from  those  expectations,  including  weather  effects on sales and
revenues,  fuel prices, fuel  transportation and other operating  uncertainties,
acquisition  uncertainty,  uncertainties  relating  to  economic  and  political
conditions and  uncertainties  regarding the impact of  regulations,  changes in
government policy,  utility industry  deregulation and competition.  MidAmerican
Energy assumes no responsibility to update forward-looking information contained
herein.

                              RESULTS OF OPERATIONS
                              ---------------------

EARNINGS DISCUSSION

     MidAmerican  Energy's  earnings on common  stock for the second  quarter of
2000 were $22.6  million  compared to $19.1  million  for the second  quarter of
1999.  Decreases  in  regulated  operating  and  maintenance  costs and interest
expense contributed to the improvement in earnings.

                                      -12-

<PAGE>


REGULATED GROSS MARGIN

Regulated Electric Gross Margin:
--------------------------------

                                   Three Months         Six Months
                                   Ended June 30       Ended June 30
                                   -------------       -------------
                                    2000    1999       2000    1999
                                    ----   -----       ----    ----
                                             (In millions)
Operating revenues................  $282    $279       $560    $541
Cost of fuel, energy and capacity.    57      51        115     102
                                    ----   -----       ----    ----
Electric gross margin.............  $225    $228       $445    $439
                                    ====    ====       ====    ====

     MidAmerican  Energy's  electric gross margin for the second quarter of 2000
decreased $3 million compared to the second quarter of 1999.

     Temperatures  during  the  three  months  ended  June 30,  2000,  were more
moderate  than  temperatures  in the second  quarter of 1999,  resulting in a $3
million decrease in electric margin. Growth in the number of customers and other
usage factors not dependent on weather increased electric margin by $2.8 million
compared to the second  quarter of 1999. In total,  retail sales of  electricity
increased  1.8% for the three months  ended June 30, 2000,  compared to the same
period in 1999.

     Electric revenues from the recovery of energy efficiency  program costs and
a tracking mechanism related to Cooper Nuclear Station costs, referred to as the
Cooper Tracker,  decreased $2.2 million  compared to the second quarter of 1999.
Changes in revenues from these  recovery  items are  substantially  matched with
corresponding  changes  in other  operating  expenses.  The  decrease  in energy
efficiency  program  costs  is due  to  the  completion  in  1999  of two of the
four-year  recovery  phases.  One phase  remains and will be  completed in 2001.
Refer to the discussion  under "Energy  Efficiency" in the OPERATING  ACTIVITIES
AND OTHER MATTERS  section of MD&A for further  discussion of energy  efficiency
cost recovery.

     A refund accrual for a revenue sharing arrangement in Iowa was $1.1 million
less in the second  quarter of 2000 than in the 1999  quarter,  resulting  in an
increase in electric margin. Conversely,  electric margin decreased $0.8 million
due to a decrease in margins on off-system  sales  compared to the quarter ended
June 30, 1999.  Related sales volumes decreased 13.4%.  Off-system sales are the
supply of energy to other utilities,  municipalities and marketers which in turn
distribute it to end-use customers.

     Revenues  from  electric   transmission  services  decreased  $0.7  million
compared to the 1999  quarter due  principally  to a reduction  in  transactions
under MidAmerican  Energy's  transmission  tariff. Under an order by the Federal
Energy  Regulatory  Commission,  beginning  in the fourth  quarter of 1999,  the
Mid-Continent Area Power Pool tariff was opened to transactions which previously
would have been under the MidAmerican Energy tariff.

     Electric gross margin for the six months ended June 30, 2000,  increased $6
million compared to the same period in 1999.

     Growth in the number of customers  and other usage factors not dependent on
weather  increased  electric  margin by $10.6 million  compared to the six-month
period  ended June 30, 1999.  Temperatures  during the six months ended June 30,
2000, were warmer than  temperatures in the first six months of 1999,  resulting
in a $7  million  decrease  in  electric  margin.  In  total,  retail  sales  of
electricity increased 2.3% for the first six months of 2000 compared to the same
period in 1999.

                                      -13-
<PAGE>

     MidAmerican Energy's margins on off-system sales increased $2.5 million for
the six months  ended June 30,  2000,  compared to the six months ended June 30,
1999.  Related  off-system  sales  volumes  increased  2.2% compared to the 1999
period.

     Electric revenues from the recovery of energy efficiency  program costs and
the Cooper Tracker  decreased  $2.9 million  compared to the first six months of
1999. Changes in revenues from these recovery items are substantially  offset by
corresponding changes in other operating expenses.

     A refund accrual for a revenue sharing arrangement in Iowa was $1.6 million
less in the six months ended June 30, 2000,  than in the 1999 six-month  period,
resulting in an increase in electric  margin.  A decrease in fuel costs compared
to the second quarter of 1999 improved electric margin by $2.0 million.

     Revenues  from  electric   transmission  services  decreased  $1.0  million
compared to the six months ended June 30, 1999,  for the same reasons  discussed
above in the comparison of the three-month periods.

Regulated Gas Gross Margin:
---------------------------

                            Three Months         Six Months
                            Ended June 30       Ended June 30
                            -------------       -------------
                            2000     1999       2000     1999
                            ----     ----       ----     ----
                                      (In millions)
Operating revenues....      $ 98     $ 71       $278     $242
Cost of gas sold......        61       39        173      135
                            ----     ----       ----     ----
  Gas gross margin....      $ 37     $ 32       $105     $107
                            ====     ====       ====     ====

     MidAmerican Energy's regulated gas revenues include purchase gas adjustment
clauses through which  MidAmerican  Energy is allowed to recover the cost of gas
sold from most of its gas utility customers.  Consequently,  fluctuations in the
cost of gas sold do not  affect  gross  margin or net  income  because  revenues
reflect  comparable  fluctuations  in revenues from the purchase gas  adjustment
clauses.  An increase in the per-unit  cost of gas for the three- and  six-month
periods  ended June 30,  2000  compared  to the same  periods in 1999  increased
revenues  and cost of gas sold by  approximately  $24 million  and $50  million,
respectively.

     Compared  to the  second  quarter  of  1999,  gas  gross  margin  increased
approximately  $5 million due  primarily  to a $3.6  million  adjustment  to gas
margin in the second quarter of 1999 for sales to the electric generation unit.

     Changes in retail gas rates  increased  gas  margin by  approximately  $1.1
million  compared to the second  quarter of 1999.  On January 22, 1999,  the IUB
approved a $6.7  million  annual  interim  increase in gas rates for Iowa retail
customers.  An additional  increase was implemented on May 27, 1999, as a result
of the Iowa Utilities Board's approval of a final rate increase of $13.9 million
annually.  Rates for South Dakota  customers  increased  $2.4  million  annually
effective May 1, 1999.

     Recovery of gas energy  efficiency costs decreased $1.0 million compared to
the second quarter of 1999.  Again,  changes in revenues from energy  efficiency
cost  recovery  are  substantially  offset  by  corresponding  changes  in other
operating expenses.

     A $1 million  decrease in gas margin due to more moderate  temperatures was
offset by a similar  increase  from  customer  growth  and other  sales  factors
compared to the second  quarter of 1999.  Margin for

                                      -14-
<PAGE>

gas  transported  increased  $0.9  million  due to a 4.9%  increase  in  volumes
transported compared to the quarter ended June 30, 1999.

     Compared  to the first  six  months of 1999,  gas  gross  margin  decreased
approximately $2 million.  Warmer  temperatures in the six months ended June 30,
2000,  resulted  in a $6 million  decrease  in gas margin  compared  to the same
period in 1999. In total, retail sales of natural gas decreased 9.8% compared to
the 1999 period.

     Rate changes increased gas margin by approximately $5.4 million compared to
the first six months of 1999 due to the rate increases discussed above. Recovery
of gas energy  efficiency  costs decreased $2.2 million for the first six months
of 2000 compared to the first six months of 2000.

REGULATED OPERATING EXPENSES

     Regulated  other operating  expenses  decreased $1.5 million for the second
quarter of 2000 compared to the second quarter of 1999.  Information  technology
expenses  were  $1.0  million  lower  in the 2000  quarter  due  principally  to
consulting  and other  costs in the 1999  quarter to support  newly  implemented
systems and for Y2K  preparation.  As  mentioned  in the gross  margin  sections
above,  energy  efficiency costs and Cooper Tracker costs decreased  compared to
the three months ended June 30, 1999, which reduced other operating  expenses by
$2.9 million.  Pension expense  increased $2.4 million for the second quarter of
2000 compared to the same period in 1999.

     For the six months ended June 30, 2000, other operating  expenses decreased
$16.3  million  compared  to the same  period  in 1999.  Information  technology
expenses for system maintenance and  implementation  were $6.9 million lower for
the six months ended June 30, 2000,  due  principally  to  consulting  and other
costs in the 1999  period  to  support  newly  implemented  systems  and for Y2K
preparation.  Energy  efficiency  costs and Cooper Tracker costs  decreased $4.4
million  compared  to the six  months  ended  June 30,  1999.  Costs  related to
manufactured  gas plant clean up  decreased  $2.3  million due  primarily to the
timing of  expenditures.  Other  factors  contributing  to the  decrease  were a
reduction in employee  incentive plan costs and an increase in 2000 of a reserve
distribution from a nuclear insurance fund compared to the distribution in 1999.

     Maintenance  expenses decreased $2.0 million and $3.8 million for the three
months and six months  ended June 30, 2000,  respectively,  compared to the same
periods in 1999 due to the timing of  coal-fired  and nuclear  generating  plant
maintenance.  In addition,  the six-month  period ended June 30, 2000,  includes
recovery from insurance of transformer failure costs incurred in prior periods.

     Depreciation   and  amortization   expense   increased  for  the  quarterly
comparison  due to an increase in utility plant.  For the six-month  comparison,
the increase in utility  plant  depreciation  was offset by decreases in nuclear
decommissioning  expense and  amortization of regulatory  assets for MidAmerican
Energy's Illinois operations.

     Property and other taxes  decreased for the three and six months ended June
30,  2000,  compared  to the 1999  periods  due to a  reduction  in  MidAmerican
Energy's Iowa property tax assessed values.

                                      -15-
<PAGE>

NONREGULATED OPERATING REVENUES AND OPERATING EXPENSES

     Revenues and Cost of Sales -

     Revenues from nonregulated natural gas marketing operations increased $55.6
million to $80.0  million  for the second  quarter of 2000  compared to the same
period in 1999. An increase in the average price per unit sold,  reflective of a
65%  increase in the average  cost of gas,  accounted  for $30.7  million of the
increase in revenues. Sales volumes increased 11 million MMBtus (102%) resulting
in a $24.9 million  increase in revenues.  Related cost of sales increased $55.7
million and reflects the increase in cost per unit and sales volumes.

     Nonregulated  revenues for the second  quarter of 2000 include $4.5 million
from  MidAmerican  Energy's  market access service  project,  which began in the
third quarter of 1999.  The pilot project  allows  participating  Iowa customers
with at least 4  megawatts  of load to choose  their  electric  power  supplier.
MidAmerican  Energy's revenues from project  participants  related to non-supply
services,  such as  distribution  and  transmission,  are reflected in regulated
electric  revenues.  Cost of sales for the second  quarter of 2000 includes $4.1
million related to the market access service project.

     Revenues from nonregulated natural gas marketing operations increased $68.2
million to $126.1  million for the six months ended June 30,  2000,  compared to
the same  period in 1999.  An  increase  in the  average  price  per unit  sold,
reflective  of a 60%  increase in the average cost of gas,  accounted  for $48.1
million of the increase in revenues.  Sales volumes  increased 10 million MMBtus
(35%) resulting in a $20.1 million  increase in revenues.  Related cost of sales
increased  $66.7  million and  reflects  the increase in cost per unit and sales
volumes.

     Revenues and cost of sales for the market access  service  project  totaled
$8.6 million and $8.7 million,  respectively,  for the six months ended June 30,
2000.

     Beginning October 1, 1999, some  non-residential  customers in Illinois are
allowed  to  select  their  electric  power   supplier.   MidAmerican   Energy's
nonregulated  revenues  include  $1.5  million in agency  fees  related to these
supply services.

NON-OPERATING INCOME AND INTEREST EXPENSE

     Interest and dividend income -

     The increase in interest  income is due to an increase in a note receivable
related to accounts receivable sold.

     Other, Net -

     Other,  Net  reflects the discount on sold  accounts  receivable,  net of a
subservicer fee charged to MidAmerican Energy Funding  Corporation for servicing
the  accounts.  The  discount is designed to cover the  expenses of  MidAmerican
Energy  Funding  Corporation,  including  bad debt  expense,  subservicer  fees,
monthly  administrative  costs and interest.  The discount is recorded in Other,
Net  because it is not  reflected  in utility  cost of  service  for  regulatory
purposes.  The discount,  net of the subservicer fee, reduced Other, Net by $2.3
million and $1.7 million in the second  quarter of 2000 and 1999,  respectively,
and $4.4  million  and $4.6  million in the six months  ended June 30,  2000 and
1999, respectively.

                                      -16-

<PAGE>

     Fixed Charges -

     The  decrease  in  interest  on  long-term  debt is due to  long-term  debt
maturities in 1999 and 2000. Other interest expense  decreased in the six months
ended June 30, 2000,  compared to the six months  ended June 30, 1999,  due to a
decrease in short-term debt  outstanding.  For the quarter,  average  short-term
debt  outstanding was greater in 2000 than in 1999,  resulting in an increase in
interest  expense.  In  addition,  the 2000  quarter  includes  $0.6  million on
interest related to a gas supplier tax refund that is refundable to customers.

                         LIQUIDITY AND CAPITAL RESOURCES
                         -------------------------------

     MidAmerican  Energy has  available  a variety of sources of  liquidity  and
capital  resources,  both internal and external.  These resources  provide funds
required for current  operations,  construction  expenditures,  dividends,  debt
retirement and other capital requirements.

     As  reflected on the  Consolidated  Statements  of Cash Flows,  MidAmerican
Energy's net cash provided from  operating  activities was $190 million and $196
million the first six months of 2000 and 1999, respectively.

INVESTING ACTIVITIES AND PLANS

     Utility Construction Expenditures -

     MidAmerican  Energy's  primary  need for  capital is  utility  construction
expenditures.   For  the  first  six  months  of  2000,   utility   construction
expenditures  totaled $81  million,  including  allowance  for funds used during
construction,  or capitalized  financing  costs, and Quad Cities Station nuclear
fuel purchases.  All such expenditures were met with cash generated from utility
operations.

     Forecasted utility construction expenditures, including allowance for funds
used during  construction  for 2000 are $211  million and $732  million for 2001
through 2004. Capital expenditure needs are reviewed regularly by management and
may  change  significantly  as a  result  of such  reviews.  MidAmerican  Energy
presently expects that all utility  construction  expenditures for the next five
years will be met with cash generated from utility operations, net of dividends.
The actual level of cash generated from utility operations is affected by, among
other things, economic conditions in the utility service territory,  weather and
federal and state regulatory actions.

     Nuclear Decommissioning -

     Each  licensee  of a nuclear  facility  is  required  to provide  financial
assurance for the cost of  decommissioning  its licensed  nuclear  facility.  In
general,  decommissioning  of a  nuclear  facility  means to safely  remove  the
facility  from  service  and  restore  the  property  to  a  condition  allowing
unrestricted  use by the operator.  Based on  information  presently  available,
MidAmerican  Energy expects to contribute  approximately  $42 million during the
period 2000 through 2004 to external  trusts  established  for the investment of
funds for decommissioning Quad Cities Station.  Approximately 65% of the trust's
funds are invested in domestic  corporate debt and common equity securities.
The remainder is invested in investment grade municipal and U.S. Treasury bonds.

     In addition, MidAmerican Energy makes payments to the Nebraska Public Power
District  related to  decommissioning  Cooper.  These  payments are reflected in
other  operating  expenses in the  Consolidated  Statements of Income.  Nebraska
Public Power District estimates call for MidAmerican Energy to pay

                                      -17-
<PAGE>

approximately   $57  million  to  Nebraska  Public  Power  District  for  Cooper
decommissioning  during the period 2000  through  2004.  Nebraska  Public  Power
District invests the funds  predominantly in U.S.  Treasury Bonds and other U.S.
Government  securities.  Approximately  20% was  invested in domestic  corporate
debt. MidAmerican Energy's obligation for Cooper decommissioning may be affected
by the actual plant shutdown date and the status of the power purchase  contract
at that time. In July 1997,  Nebraska  Public Power  District filed a lawsuit in
United States  District  Court for the District of Nebraska  naming  MidAmerican
Energy as the defendant and seeking a declaration of MidAmerican Energy's rights
and obligations in connection with Cooper nuclear decommissioning funding. Refer
to Part II, Item 1. Legal Proceedings, for further discussion of the litigation.

     Cooper  and Quad  Cities  Station  decommissioning  costs  charged  to Iowa
customers  are to a  large  extent  included  in base  rates,  and  recovery  of
increases in those amounts must be sought through the normal ratemaking process.
Cooper decommissioning costs charged to Illinois customers are recovered through
a rate rider on customer billings that is reviewed annually.

FINANCING ACTIVITIES, PLANS AND AVAILABILITY

     Debt Authorization and Credit Facilities -

     MidAmerican   Energy  currently  has  authority  from  the  Federal  Energy
Regulatory  Commission to issue  short-term debt in the form of commercial paper
and bank notes aggregating $400 million. As of June 30, 2000, MidAmerican Energy
had in place a $325 million  commercial paper program which is supported by $325
million of revolving credit facilities. In addition, MidAmerican Energy has a $5
million  bank line of credit.  MidAmerican  Energy also has a  revolving  credit
facility  which is dedicated to providing  liquidity for its  obligations  under
outstanding pollution control revenue bonds that are periodically remarketed.

     MidAmerican  Energy has  authorization  from the Federal Energy  Regulatory
Commission  to  issue up to an  additional  $338  million  in  various  forms of
long-term  debt.  MidAmerican  Energy  will  also  need  authorization  from the
Illinois Commerce Commission prior to issuing any securities.  If 90% or more of
the proceeds  from a  securities  issuance  are used for  refinancing  purposes,
MidAmerican  Energy need only  provide  the  commission  with an  "informational
statement"  prior to the issuance  which sets forth the type,  amount and use of
the proceeds of the  securities  to be issued.  If less than 90% of the proceeds
are  used  for  refinancing,   MidAmerican  Energy  must  file  a  comprehensive
application  seeking  authorization  prior to issuance.  The  Illinois  Commerce
Commission is required to hold a hearing before issuing its authorization.

     On July  24,  2000,  MidAmerican  Energy  issued  $162  million  of  7.375%
medium-term notes due August 1, 2002.  Additionally,  MidAmerican Energy entered
into a two-year fixed-to-floating interest rate swap. The floating rate is based
on a three-month LIBOR rate.

     Accounts Receivable Sold -

     In 1997,  MidAmerican  Energy  entered  into a revolving  agreement,  which
expires in 2002, to sell all of its right, title and interest in the majority of
its billed  accounts  receivable to MidAmerican  Energy Funding  Corporation,  a
special  purpose  entity  established  to  purchase  accounts   receivable  from
MidAmerican Energy.  Funding Corp. in turn sells receivable interests to outside
investors.  In  consideration  for the sale,  MidAmerican  Energy  received  $70
million in cash and the remaining  balance in the form of a  subordinated  note,
bearing  interest at 8%, from Funding Corp.  As of June 30, 2000,  the revolving
cash balance was $70 million,  and the amount outstanding under the subordinated
note was $45

                                      -18-
<PAGE>

million.  As part of the  agreement,  the  creditors  of Funding  Corp.  will be
entitled to be satisfied out of the assets of Funding  Corp.  prior to any value
being returned to MidAmerican Energy or its creditors.  Therefore,  the accounts
receivable sold are not reflected on MidAmerican  Energy's  Consolidated Balance
Sheets.  As of June 30,  2000,  $118.1  million of accounts  receivable,  net of
reserves, were sold under the agreement.

OPERATING ACTIVITIES AND OTHER MATTERS

     Industry Evolution -

     Retail electric competition is presently not permitted in Iowa, MidAmerican
Energy's primary market.  Legislation to initiate  competition was introduced in
the Iowa  legislature  in the 2000  session,  but it did not  pass.  MidAmerican
Energy cannot predict the timing or ultimate  outcome of any potential  electric
restructuring  legislation  in Iowa.  Deregulation  of the gas  supply  function
related to small volume customers is also being considered by the Iowa Utilities
Board.  MidAmerican  Energy has actively  participated  in the  legislative  and
regulatory processes.

     As retail choice becomes more prevalent, the generation and retail portions
of MidAmerican  Energy's electric business will be most affected by competition.
The  introduction  of  competition  in the  wholesale  market has  resulted in a
proliferation of power marketers and a substantial  increase in market activity.
As retail choice evolves,  competition from other traditional  utilities,  power
marketers and customer-owned generation could put pressure on utility margins.

     During the  transition  to full  competition,  increased  volatility in the
marketplace  can be  expected.  With the  elimination  of the energy  adjustment
clause in Iowa, MidAmerican Energy is financially exposed to movements in energy
prices.  Although  MidAmerican  Energy has sufficient low cost generation  under
typical  operating  conditions for its retail electric needs, a loss of adequate
generation by  MidAmerican  Energy at a time of high market prices could subject
MidAmerican Energy to losses on its energy sales.

     Legislative and Regulatory Evolution -

     In  December  1997,  the  Governor  of  Illinois  signed into law a bill to
restructure   Illinois'  electric  utility  industry  and  transition  it  to  a
competitive   market.   Under  the  law,   beginning  October  1,  1999,  larger
non-residential  customers in Illinois and 33% of the remaining  non-residential
Illinois  customers  are allowed to select  their  provider  of electric  supply
services. All other non-residential customers will have supplier choice starting
December 31, 2000.  Residential  customers all receive the opportunity to select
their electric supplier on May 1, 2002.

     In addition to rate  reductions  implemented  in 1998, the law provides for
Illinois  earnings above a certain level of return on common equity to be shared
equally  between  customers  and  MidAmerican  Energy  beginning  in April 2000.
MidAmerican  Energy's  return on common  equity level will be based on a rolling
two-year average, with the first determination being based on an average of 1998
and 1999.  The level of return at which  MidAmerican  Energy will be required to
share  earnings is a multi-step  calculation  of average  30-year  Treasury Bond
rates plus 5.50% for 1998 and 1999.  Legislation  passed in July 1999  increased
the  benchmark  for 2000  through 2004 to 8.5% above the 30-year  Treasury  bond
rate.  The two-year  average above which sharing must occur for 1999 was 11.21%.
Using the same 30-year Treasury bond average, the computed level of return would
be 12.71% for 2000 and 14.21% for 2001 through 2004. The law allows  MidAmerican
Energy to mitigate the sharing of earnings above the threshold  return on common
equity through accelerated cost recognition.

                                      -19-
<PAGE>

     MidAmerican  Energy  continues its involvement in proceedings  which detail
the new  competitive  environment  and to evaluate  the impact of the law on its
operations  and  the  opportunities  the  law  presents,  including  proceedings
involving the unbundling of customer billing and meter reading.

     In December 1999, the Federal Energy Regulatory Commission issued Order No.
2000 establishing among other things minimum  characteristics  and functions for
regional transmission organizations.  Public utilities that were not a member of
an independent system operator at the time of the order are required to submit a
plan by which its  transmission  facilities  would be  transferred to a regional
transmission   organization   on  a  schedule  that  would  allow  the  regional
transmission   organization   to  commence   operating  by  December  15,  2001.
MidAmerican Energy, which was not a member of an independent system operator, is
presently analyzing the impact that the order may have on its operations.

     Accounting Effects of Industry Restructuring -

     A possible  consequence  of  deregulation  in the utility  industry is that
Statement of Financial  Accounting Standards No. 71 may no longer apply. SFAS 71
sets forth  accounting  principles  for  operations  that are regulated and meet
certain criteria.  For operations that meet the criteria,  SFAS 71 allows, among
other  things,  the  deferral of costs that would  otherwise  be  expensed  when
incurred.  With the exception of the generation  operations serving the Illinois
jurisdiction, MidAmerican Energy's electric and gas utility operations currently
meet the criteria  required by SFAS 71, but its  applicability  is  periodically
reexamined. If portions of its utility operations no longer meet the criteria of
SFAS  71,  MidAmerican  Energy  could  be  required  to  write  off the  related
regulatory  assets and liabilities  from its balance sheet, and thus, a material
adjustment to earnings in that period could result if regulatory  assets are not
recovered in transition provisions of any resulting legislation.  As of June 30,
2000,  MidAmerican  Energy  had $255  million  of net  regulatory  assets on its
Consolidated Balance Sheet.

     Energy Efficiency -

     MidAmerican  Energy's regulatory assets as of June 30, 2000, included $30.0
million of deferred  energy  efficiency  costs.  Based on the  current  level of
recovery,  MidAmerican Energy expects to recover these costs by the end of 2001.
MidAmerican  Energy is also  allowed to recover  its ongoing  energy  efficiency
costs on a  current  basis.  Recovery  of these  costs is being  collected  from
customers  based  on  projected  annual  costs of $16.4  million,  which  may be
adjusted  annually.  Amortization  of the deferred energy  efficiency  costs and
current  expenditures  for energy  efficiency  costs will be  reflected in other
operating expenses over the related periods of recovery. The total of such costs
for the years 2000 and 2001 is  estimated  to be $40  million  and $34  million,
respectively.

     Rate Matters: Electric -

     Under a 1997  pricing  plan  settlement  agreement  resulting  from an Iowa
Utilities Board rate proceeding,  electric prices for MidAmerican  Energy's Iowa
industrial and commercial  customers were reduced  through a retail access pilot
project,  negotiated individual electric contracts and a tariffed rate reduction
for some non-contract commercial customers.

     The negotiated  electric  contracts have differing  terms and conditions as
well as prices.  The contracts range in length from five to ten years,  and some
have price renegotiation and early termination  provisions exercisable by either
party.  The vast majority of the contracts are for terms of seven years or less,
although, some large customers have agreed to ten-year contracts. Prices are set
as fixed prices;  however,  many contracts allow for potential price adjustments
with respect to environmental costs, government imposed public purpose programs,
tax changes,  and transition costs.  While the contract prices

                                      -20-
<PAGE>

are fixed (except for the potential adjustment elements),  the costs MidAmerican
Energy incurs to fulfill these contracts will vary. MidAmerican Energy presently
intends to manage this risk through hedging and other similar  arrangements.  On
an aggregate  basis the annual  revenues under contract are  approximately  $180
million.

     Under the 1997 pricing plan  settlement  agreement if MidAmerican  Energy's
annual Iowa electric  jurisdictional  return on common equity  exceeds 12%, then
earnings  above  the 12% level  will be shared  equally  between  customers  and
MidAmerican  Energy.  If the return exceeds 14%, then  two-thirds of MidAmerican
Energy's  share  of  those  earnings  above  the 14%  level  will  be  used  for
accelerated  recovery of certain  regulatory assets. The pricing plan settlement
agreement precludes  MidAmerican Energy from filing for increased rates prior to
2001 unless the return falls below 9%. Other  parties  signing the agreement are
prohibited from filing for reduced rates prior to 2001 unless the return,  after
reflecting  credits to  customers,  exceeds 14%. The agreement  also  eliminated
MidAmerican  Energy's energy adjustment  clause,  and, as a result,  the cost of
fuel is not directly passed on to customers.

     Rate Matters: Gas -

     On July  11,  2000,  the  Illinois  Commerce  Commission  issued  an  order
approving a gas rate increase totaling $2.1 million, or 4.9%, annually effective
July 18, 2000.

     Environmental Matters -

     The U.S.  Environmental  Protection Agency, or EPA, and state environmental
agencies have determined that  contaminated  wastes remaining at  decommissioned
manufactured  gas plant facilities may pose a threat to the public health or the
environment if these contaminants are in sufficient quantities and at sufficient
concentrations as to warrant remedial action.

     MidAmerican Energy has evaluated or is evaluating 27 properties which were,
at one time, sites of gas manufacturing  plants in which it may be a potentially
responsible  party.  The purpose of these  evaluations  is to determine  whether
waste materials are present,  whether the materials  constitute an environmental
or health  risk,  and  whether  MidAmerican  Energy has any  responsibility  for
remedial action.  MidAmerican  Energy's estimate of the probable costs for these
sites as of June 30, 2000, was $27 million. This estimate has been recorded as a
liability  and a regulatory  asset for future  recovery  through the  regulatory
process.  Refer to Note B(1) of Notes to Consolidated  Financial  Statements for
further discussion of MidAmerican Energy's  environmental  activities related to
manufactured gas plant sites and cost recovery.

     Although  the timing of potential  incurred  costs and recovery of costs in
rates may affect the results of  operations in  individual  periods,  management
believes  that the  outcome of these  issues  will not have a  material  adverse
effect on MidAmerican Energy's financial position or results of operations.

     On July 18, 1997,  the EPA adopted  revisions  to the National  Ambient Air
Quality  Standards for ozone and a new standard for fine particulate  matter. In
May 1999,  the U.S.  Court of  Appeals  for the  District  of  Columbia  Circuit
remanded the standards  adopted in July 1997 back to the EPA  indicating the EPA
had not expressed  sufficient  justification  for the basis of establishing  the
standards  and ruling that the EPA has exceeded  its  constitutionally-delegated
authority in setting the standards.  As a result of the court's initial decision
and the current  status of the  standards,  the impact of any new  standards  on
MidAmerican  Energy is currently  unknown.  If the EPA successfully  appeals the
court's  decision,  however,  and  the  new  standards  are  implemented,   then
MidAmerican Energy could incur increased costs

                                      -21-
<PAGE>

and a  decrease  in  revenues.  Refer  to Note  B(2) of  Notes  to  Consolidated
Financial Statements for further discussion of this issue.

     Quad Cities Nuclear Power Station -

     Quad Cities Station is operated by, and 75% owned by,  Commonwealth  Edison
Company. On May 3, 1999, the Nuclear Regulatory Commission advised ComEd that it
had classified Quad Cities Station in its Routine Oversight category for nuclear
power  plants,  which  is the best of the  commission's  three  new  categories,
removing the station from the Trending  (adversely)  Letter status  initiated in
January  1998.  During  1999,  Quad Cities  Station's  capacity  factor based on
maximum  dependable  capacity was in excess of 96.0% compared to 51.7% for 1998.
The lower capacity  factor in 1998 reflects the extended  outages at both of the
Quad Cities Station units during the first five months of 1998.

     Generating Capability -

     In July 1999,  retail  customer usage of electricity  caused an hourly peak
demand of 3,833 MW on MidAmerican Energy's energy system.  MidAmerican Energy is
interconnected  with  Iowa  and  neighboring  utilities  and is  involved  in an
electric power pooling  agreement known as  Mid-Continent  Area Power Pool. Each
MAPP participant is required to maintain for emergency purposes a net generating
capability  reserve of at least 15% above its system  peak  demand.  MidAmerican
Energy was able to maintain  its  capacity  reserve  requirement  during the hot
weather in July 1999 and was not adversely affected by the resultant high prices
in the off-system market.

     MidAmerican  Energy believes it has adequate  electric capacity reserve and
continues to manage its  generating  resources to ensure an adequate  reserve in
the future. However,  significantly  higher-than-normal  temperatures during the
cooling season could cause  MidAmerican  Energy's  reserve to fall below the 15%
minimum.  If  MidAmerican  Energy  fails to maintain  the  appropriate  reserve,
significant penalties could be contractually imposed by MAPP.

ACCOUNTING ISSUES

     In June 1998, the Financial  Accounting  Standards Board (FASB) issued SFAS
133, "Accounting for Derivative  Instruments and Hedging Activities",  which was
delayed by SFAS 137 and  amended by SFAS 138 and is  effective  for  MidAmerican
Energy  beginning  January 1, 2001. SFAS 133 requires an entity to recognize all
of its derivatives as either assets or liabilities in its statement of financial
position and measure those instruments at fair value.  MidAmerican  Energy is in
the process of evaluating the impact of this accounting standard.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     MidAmerican  Energy is exposed  to market  risk,  including  changes in the
market price of certain  commodities and interest rates. The exposure to changes
in market prices and interest rates at June 30, 2000 is not materially different
than at December 31, 1999.

                                      -22-

<PAGE>

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
-------  -----------------

     MidAmerican  Energy and its subsidiaries have no material legal proceedings
except for the following:

Environmental Matters
---------------------

     For information  relating to MidAmerican  Energy's  environmental  matters,
reference is made to Note B of Notes to Consolidated Financial Statements.

Cooper Litigation
-----------------

     On July 23, 1997, Nebraska Public Power District filed a complaint,  in the
United States  District Court for the District of Nebraska,  naming  MidAmerican
Energy as the  defendant  and seeking  declaratory  judgment as to three  issues
under the parties'  long-term  power purchase  agreement for Cooper capacity and
energy.  More specifically,  Nebraska Public Power District sought a declaratory
judgment in the following respects:

     (1)  that  MidAmerican  Energy  is  obligated  to pay 50% of all  costs and
          expenses associated with decommissioning Cooper, and that in the event
          Nebraska  Public  Power  District  continues  to operate  Cooper after
          expiration  of  the  power  purchase   agreement   (September   2004),
          MidAmerican   Energy  is  not   entitled  to   reimbursement   of  any
          decommissioning funds it has paid to date or will pay in the future;

     (2)  that the current  method of allocating  transition  costs as a part of
          the decommissioning cost is proper under the power purchase agreement;
          and

     (3)  that the current method of investing  decommissioning  funds is proper
          under the power purchase agreement.

     MidAmerican  Energy  filed its answer  and  contingent  counterclaims.  The
contingent counterclaims filed by MidAmerican Energy are generally as follows:

     (1)  that MidAmerican Energy has no duty under the power purchase agreement
          to reimburse or pay 50% of the decommissioning costs unless conditions
          to reimbursement occur;

     (2)  that Nebraska  Public Power District has the duty to repay all amounts
          that MidAmerican Energy has prefunded for decommissioning in the event
          the Nebraska  Public Power District  operates the plant after the term
          of the power purchase agreement;

     (3)  that  Nebraska  Public  Power  District  is  equitably  estopped  from
          continuing  to operate the plant after the term of the power  purchase
          agreement;

     (4)  that Nebraska Public Power District has granted  MidAmerican Energy an
          option to continue taking 50% of the power from the plant;

     (5)  that the term "monthly  power costs" as defined in the power  purchase
          agreement  does  not  include  costs  and  expenses   associated  with
          decommissioning the plant;

                                      -23-
<PAGE>

     (6)  that  MidAmerican  Energy  has  no  duty  to  pay  for  nuclear  fuel,
          operations and maintenance  projects or capital improvements that have
          useful lives after the term of the power purchase agreement;

     (7)  that transition  costs are not included in any  decommissioning  costs
          and expenses;

     (8)  that  Nebraska   Public  Power  District  has  breached  its  duty  to
          MidAmerican Energy in making investments of decommissioning funds;

     (9)  that  reserves in named  accounts are excessive and should be refunded
          to MidAmerican Energy; and

     (10) that Nebraska Public Power District must credit MidAmerican Energy for
          payments  by  MidAmerican  Energy  for  low-level   radioactive  waste
          disposal.

     On October 6, 1999, the court rendered summary judgment for Nebraska Public
Power  District  on  the   above-mentioned   issue   concerning   liability  for
decommissioning  (issue  one in the  first  paragraph  above)  and  the  related
contingent counterclaims filed by MidAmerican Energy (issues one, two, three and
five in the second paragraph above).  The court referred all remaining issues in
the case to mediation,  and cancelled the November 1999 trial date.  MidAmerican
Energy has appealed the court's summary  judgment ruling and is participating in
ongoing mediation efforts.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-------  --------------------------------

(A)  EXHIBITS

Exhibits Filed Herewith
-----------------------

     Exhibit 15 - Awareness Letter of Independent Accountants

     Exhibit 27 - Financial Data Schedules (for electronic filing only).

(B)  REPORTS ON FORM 8-K

     None.

                                      -24-
<PAGE>


                                   SIGNATURES


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





                                     MIDAMERICAN ENERGY COMPANY
                                     --------------------------
                                            (Registrant)







Date  August 10, 2000                  /s/  Patrick J. Goodman
    -----------------        -------------------------------------------------
                                            Patrick J. Goodman
                             Senior Vice President and Chief Financial Officer


                                      -25-
<PAGE>


                                  EXHIBIT INDEX

Exhibit No.
-----------

15     Awareness Letter of Independent Accountants

27     Financial Data Schedules (for electronic filing only).

                                      -26-