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 March 31, 2001
                                                --------------

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 April 30, 2001, 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............  13

                         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 March 31, 2001,  and the
related  consolidated  statements  of income and cash flows for the  three-month
periods  ended  March 31,  2001 and 2000.  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 and
statement of capitalization of MidAmerican Energy Company and subsidiaries as of
December  31,  2000,  and  the  related   consolidated   statements  of  income,
comprehensive income,  retained earnings, and cash flows for the year then ended
(not presented  herein);  and in our report dated January 18, 2001, 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, 2000 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
April 18, 2001

                                      -3-
<PAGE>



                           MIDAMERICAN ENERGY COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
                                 (IN THOUSANDS)

                                                             THREE MONTHS
                                                            ENDED MARCH 31,
                                                      -------------------------
                                                        2001            2000
                                                      ---------       ---------
OPERATING REVENUES
Regulated electric .............................      $ 294,390       $ 278,463
Regulated gas ..................................        366,858         179,902
Nonregulated ...................................        227,289          56,487
                                                      ---------       ---------
                                                        888,537         514,852
                                                      ---------       ---------
OPERATING EXPENSES
Regulated:
  Cost of fuel, energy and capacity ............         65,800          58,317
  Cost of gas sold .............................        292,450         111,498
  Other operating expenses .....................         96,452         101,891
  Maintenance ..................................         27,790          24,739
  Depreciation and amortization ................         50,810          48,394
  Property and other taxes .....................         17,274          19,299
                                                      ---------       ---------
                                                        550,576         364,138
                                                      ---------       ---------
Nonregulated:
  Cost of sales ................................        219,204          51,138
  Other ........................................          4,181           3,599
                                                      ---------       ---------
                                                        223,385          54,737
                                                      ---------       ---------
Total operating expenses .......................        773,961         418,875
                                                      ---------       ---------

OPERATING INCOME ...............................        114,576          95,977
                                                      ---------       ---------

NON-OPERATING INCOME
Interest and dividend income ...................          4,525           1,373
Other, net .....................................         (3,945)         (2,119)
                                                      ---------       ---------
                                                            580            (746)
                                                      ---------       ---------

FIXED CHARGES
Interest on long-term debt .....................         16,028          14,583
Other interest expense .........................          1,177           2,900
Preferred dividends of subsidiary trust ........          2,057           1,995
Allowance for borrowed funds ...................           (492)           (379)
                                                      ---------       ---------
                                                         18,770          19,099
                                                      ---------       ---------

INCOME BEFORE INCOME TAXES .....................         96,386          76,132
INCOME TAXES ...................................         40,597          31,333
                                                      ---------       ---------
NET INCOME .....................................         55,789          44,799
PREFERRED DIVIDENDS ............................          1,239           1,239
                                                      ---------       ---------

EARNINGS ON COMMON STOCK .......................      $  54,550       $  43,560
                                                      =========       =========

        The accompanying notes are an integral part of these statements.

                                      -4-
<PAGE>


                           MIDAMERICAN ENERGY COMPANY
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                                                AS OF
                                                         -----------------------
                                                         MARCH 31,  DECEMBER 31,
                                                           2001        2000
                                                         ---------- ------------
                                                         (UNAUDITED)
ASSETS
UTILITY PLANT
Electric .............................................   $4,489,092   $4,471,839
Gas ..................................................      837,033      831,203
                                                         ----------   ----------
                                                          5,326,125    5,303,042
Less accumulated depreciation and amortization .......    2,728,440    2,680,420
                                                         ----------   ----------
                                                          2,597,685    2,622,622
Construction work in progress ........................       38,362       38,584
                                                         ----------   ----------
                                                          2,636,047    2,661,206
                                                         ----------   ----------

POWER PURCHASE CONTRACT ..............................       80,335       82,231
                                                         ----------   ----------
CURRENT ASSETS
Cash and cash equivalents ............................       10,745        9,677
Receivables ..........................................      368,840      422,661
Inventories ..........................................       23,902       69,130
Prepaid taxes ........................................       23,956       22,889
Other ................................................        9,824        9,789
                                                         ----------   ----------
                                                            437,267      534,146
                                                         ----------   ----------

INVESTMENTS AND NONREGULATED PROPERTY, NET ...........      262,797      256,053
REGULATORY ASSETS ....................................      231,051      240,934
OTHER ASSETS .........................................       56,294       48,996
                                                         ----------   ----------
TOTAL ASSETS .........................................   $3,703,791   $3,823,566
                                                         ==========   ==========

CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common shareholder's equity ..........................   $1,125,910   $1,161,968
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) ...........      820,210      820,082
                                                         ----------   ----------
                                                          2,127,879    2,163,809
                                                         ----------   ----------
CURRENT LIABILITIES
Notes payable ........................................       45,600       81,600
Current portion of long-term debt ....................      101,560      101,600
Current portion of power purchase contract ...........       16,554       16,554
Accounts payable .....................................      244,491      308,784
Taxes accrued ........................................      136,300      124,493
Interest accrued .....................................       12,976       12,016
Other ................................................       35,988       34,667
                                                         ----------   ----------
                                                            593,469      679,714
                                                         ----------   ----------
OTHER LIABILITIES
Power purchase contract ..............................       35,728       35,728
Deferred income taxes ................................      537,286      540,608
Investment tax credit ................................       64,247       66,209
Other ................................................      345,182      337,498
                                                         ----------   ----------
                                                            982,443      980,043
                                                         ----------   ----------
TOTAL CAPITALIZATION AND LIABILITIES .................   $3,703,791   $3,823,566
                                                         ==========   ==========

        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>


                                                                  THREE MONTHS
                                                                 ENDED MARCH 31,
                                                             ----------------------
                                                                2001         2000
                                                             ---------    ---------
<S>                                                          <C>          <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net income ...............................................   $  55,789    $  44,799
Adjustments to reconcile net income to net cash provided:
  Depreciation and amortization ..........................      50,923       48,468
  Deferred income taxes and investment tax credit, net ...      (4,852)      (2,707)
  Amortization of other assets ...........................      12,941       12,095
  Cash inflow of accounts receivable securitization ......           -       12,877
  Impact of changes in working capital ...................      47,742       52,409
  Other ..................................................      (1,493)        (807)
                                                             ---------    ---------
    Net cash provided ....................................     161,050      167,134
                                                             ---------    ---------

NET CASH FLOWS FROM INVESTING ACTIVITIES
Utility construction expenditures ........................     (26,805)     (28,988)
Quad Cities Generating Station decommissioning trust fund       (2,075)      (2,075)
Nonregulated capital expenditures ........................      (1,133)        (617)
Other investing activities, net ..........................      (2,690)      (3,060)
                                                             ---------    ---------
   Net cash used .........................................     (32,703)     (34,740)
                                                             ---------    ---------

NET CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid ...........................................     (91,239)      (1,239)
Retirement of long-term debt, including reacquisition cost         (40)    (110,142)
Net decrease in notes payable ............................     (36,000)     (23,452)
                                                             ---------    ---------
  Net cash used ..........................................    (127,279)    (134,833)
                                                             ---------    ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .....       1,068       (2,439)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .........       9,677        5,167
                                                             ---------    ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...............   $  10,745    $   2,728
                                                             =========    =========

ADDITIONAL CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized ................   $  14,097    $  17,240
                                                             =========    =========
Income taxes paid ........................................   $  13,054    $  18,230
                                                             =========    =========
</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
subsidiary of MidAmerican Funding,  LLC, whose sole member is MidAmerican Energy
Holdings Company.

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 March 31, 2001 was $25 million.  The  estimate  consists of $3 million for
investigation   costs,  $8  million  for  remediation  costs,  $12  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.

     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

                                      -7-
<PAGE>

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.  Insurance
recoveries have been received for some of the sites under  investigation.  Those
recoveries are intended to be used principally for accelerated  remediation,  as
specified  by the  Iowa  Utilities  Board,  and  are  recorded  as a  regulatory
liability.

     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.

     On February 27, 2001,  the Supreme Court,  in Whitman v. American  Trucking
Associations,  upheld the standards,  ruling that the  Environmental  Protection
Agency did not exceed its constitutional delegation of authority in establishing
the standards in 1997. The court ruled that the Clean Air Act's  requirement for
the Environmental  Protection  Agency to establish  National Ambient Air Quality
Standards at a level "requisite" to protect public health,  or "sufficient,  but
not more than necessary",  is within the constitutional scope of discretion that
Congress can delegate to a federal  agency.  The court also explicitly held that
cost cannot be taken into account when setting the standards. The court remanded

                                      -8-
<PAGE>

the issue of  implementation of the ozone standard.  However,  the Environmental
Protection Agency is moving forward with analyzing  existing  monitored data and
determining attainment status.

     The impact of the new standards on MidAmerican Energy is currently unknown.
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,  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 will 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:

     A pricing plan settlement  agreement entered into in 1997 among MidAmerican
Energy,  the Office of Consumer  Advocate and other  parties  pursuant to a rate
proceeding  before the Iowa Utilities Board  establishing  MidAmerican  Energy's
Iowa  retail  electric  rates,  expired  on  December  31,  2000.  With  limited
exceptions,  the pricing plan settlement agreement precluded  MidAmerican Energy
from  seeking an increase in these rates and the other  parties,  including  the
Office of Consumer  Advocate,  from seeking a decrease in rates prior to January
1, 2001.  The rates  established by the pricing plan  settlement  agreement will
remain in effect  until  either  the plan is  renegotiated  by the  parties or a
change in rates is established pursuant to a rate proceeding,  both of which are
subject to approval by the Iowa Utilities Board.

     On March 14,  2001,  the Office of the Consumer  Advocate  filed a petition
with  the  Iowa  Utilities  Board  to  reduce  Iowa  retail  electric  rates  by
approximately  $77  million   annually.   This  filing  is  being  contested  by
MidAmerican  Energy and, under Iowa law, the Iowa  Utilities  Board must rule on
the petition within ten months from March 14, 2001. The Iowa Utilities Board has
established  a procedural  schedule  that sets a hearing  date of September  24,
2001.  Iowa law  provides  that the  rates  collected  after  the  filing of the
petition  are subject to refund  with  interest  if they  exceed  rates  finally
approved by the Iowa Utilities Board.

     Under an Illinois restructuring law enacted in 1997, a sharing mechanism is
in place for MidAmerican  Energy's Illinois regulated retail electric operations
whereby  earnings  above a computed  threshold  will be shared  equally  between
customers and  shareholders.  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.  MidAmerican  Energy's  computed level of return on common equity is
based on a rolling  two-year  average of the 30-year  Treasury Bond rates plus a
premium of 5.50% for 1998 and 1999 and a premium of 8.5% for 2000 through  2004.
The two-year  average above which sharing must occur for 2000 was 12.83%.  Using
the same 30-year  Treasury Bond average,  the computed  level of return would be
14.33% 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.

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

                                      -9-
<PAGE>

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 (SFAS 71) may no longer
apply.  SFAS 71  sets  forth  accounting  principles  for  operations  that  are
regulated and meet the stated  criteria.  For operations that meet the criteria,
SFAS 71 allows, among other things, the deferral of expense or income that would
otherwise be recognized  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.

E.  DERIVATIVE FINANCIAL INSTRUMENTS:

     In  January  2001  MidAmerican   Energy  adopted   Statement  of  Financial
Accounting  Standards (SFAS) Nos. 133 and 138,  pertaining to the accounting for
derivative instruments and hedging activities. These pronouncements require that
derivative  instruments  be  recorded  at fair  value on the  balance  sheet and
changes  in fair value  recognized  in income.  To the  extent  that  derivative
instruments are used for hedging  purposes,  and are highly effective as hedges,
hedge accounting is permitted,  as discussed below, which mitigates the impact
on earnings of changes in the fair value of the derivatives.

     MidAmerican  Energy uses a variety of derivative  financial  instruments to
hedge the effect of price  changes on cash flows from expected  future  physical
transactions (cash flow hedges) and the fair value of physical purchase and sale
commitments  (fair value hedges) and to minimize price  volatility for regulated
gas  purchases.  The objective of  MidAmerican  Energy's  hedging  program is to
minimize the impact of changing  prices for natural gas and  electricity  on its
cash  flows.  Instruments  used for gas  hedging  transactions  include  futures
contracts, swaps and options. Instruments used for electric hedging transactions
include  forward  contracts and options.  Small volumes of derivative  financial
instruments  are  traded  from  time to  time to  profit  from  price  arbitrage
opportunities.

     Unrealized gains and losses on cash flow hedges of future  transactions are
recorded in other comprehensive income. Only hedges that are highly effective in
offsetting  the risk of  variability  in future cash flows are  accounted for in
this  manner.  Future  transactions  include  purchases  of gas  for  resale  to
regulated  and  nonregulated  customers,  purchases  of  gas  for  storage,  and
purchases and sales of wholesale  electric  energy.  When the associated  hedged
future transaction occurs or if a hedging relationship is no longer appropriate,
the unrealized gains and losses are reversed from other comprehensive income and
recognized  in net income.  Realized  gains on cash flow hedges are  recorded in
Cost  of Gas  Sold,  Nonregulated  Cost  of  Sales,  or  Nonregulated  Operating
Revenues, depending upon the nature of the physical transaction being hedged.

     For the quarter  ended March 31, 2001,  $33,000 of net gains were  realized
from the ineffectiveness of cash flow hedges. During the twelve months beginning
April 1, 2001, it is anticipated  that all of the net unrealized  gains (losses)
on cash flow hedges presently recorded as accumulated other comprehensive income
will be reclassified into earnings.

     Unrealized  gains and losses on fair value hedges are  recognized in income
as either Nonregulated  Operating Revenues,  Nonregulated Cost of Sales, or Cost
of Gas Sold  depending  upon the nature of the item being  hedged.  Purchase and
sales  commitments  hedged by fair value hedges are recorded at fair value, with
the changes in values also recognized in income and substantially offsetting the
impact of the

                                      -10-
<PAGE>

hedges  on  earnings.   A  net  pre-tax  gain  of  $69,000,   representing   the
ineffectiveness of fair value hedges, is included in Nonregulated Cost of Sales.

     Unrealized  gains and losses on derivatives  held for trading  purposes are
recognized in income each reporting period as Nonregulated Operating Revenues.

     As of March 31, 2001,  MidAmerican Energy held the following instruments as
hedges:

                                   Notional     Unit of        Fair Value
                                    Amount      Measure     Asset (Liability)
                                    ------      -------     -----------------

Natural Gas Futures - Net Short      240,000      MMBtu        $2,456,840
Natural Gas Swaps                    895,607      MMBtu           528,478
Electricity Forward
  Contracts - Net Short              120,800        MWh          (925,600)

     A $1/MMBtu  increase  in the price of natural gas would  increase  the fair
value of the natural  gas  instruments  by $1.1  million.  A $5/MWh  increase in
electricity would decrease the fair value of the electricity  forwards contracts
by $0.6 million.

F.   SEGMENT INFORMATION:

     MidAmerican  Energy  has  two  reportable  operating  segments:   regulated
electric and regulated  gas,  referred to as the electric and gas segments.  The
electric  segment  derives  most of its revenue  from retail  sales of regulated
electricity  to  residential,  commercial,  and  industrial  customers  and from
wholesale sales to other utilities.  The gas segment derives most of its revenue
from retail  sales of 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,  interest
income,  interest  expense,  income tax  expense and equity in the net income or
loss of investees are allocated to each segment.

                                      -11-

<PAGE>


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

                                                Three Months
                                               Ended March 31,
                                           -----------------------
                                             2001           2000
                                           --------       --------
Revenues:
  Electric.....................            $294,390       $278,463
  Gas..........................             366,858        179,902
  Nonregulated and other (a)...             227,289         56,487
                                           --------       --------
                                           $888,537       $514,852
                                           ========       ========

Earnings on Common Stock:
  Electric.....................            $ 34,435       $ 27,771
  Gas..........................              17,875         14,838
  Nonregulated and other (a)...               2,240            951
                                           --------       --------
                                           $ 54,550       $ 43,560
                                           ========       ========

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

G.  OTHER COMPREHENSIVE INCOME:

     For the three  months  ended March 31,  2001,  MidAmerican  Energy's  total
comprehensive  income was $53.9 million.  The difference from Earnings on Common
Stock is due to the  effective  portion of net gains and  losses on  MidAmerican
Energy's  derivative  instruments  classified as cash flow hedges. For the three
months  ended  March 31,  2000,  there  was no  difference  between  MidAmerican
Energy's total comprehensive income and Earnings on Common Stock.

                                      -12-

<PAGE>


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

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

     MidAmerican Energy Company is a public utility company headquartered in Des
Moines,  Iowa,  and  incorporated  in the  state  of Iowa.  It is the  principal
subsidiary of MHC Inc. MHC is a wholly owned subsidiary of MidAmerican  Funding,
LLC, whose sole member is MidAmerican Energy Holdings Company.

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

REGULATED GROSS MARGIN

     Regulated Electric Gross Margin -

                                                    Three Months
                                                  Ended March 31,
                                                  ---------------
                                                 2001         2000
                                                 ----         ----
                                                   (In millions)
     Operating revenues...................       $294         $278
     Cost of fuel, energy and capacity....         66           58
                                                 ----         ----
       Electric gross margin..............       $228         $220
                                                 ====         ====

     Electric  gross margin for the first  quarter of 2001  increased $8 million
compared  to the first  quarter of 2000.  Temperatures  during the three  months
ended March 31,  2001,  were colder than  temperatures  in the first  quarter of
2000, resulting in a $9 million increase in electric margin. Other usage factors
not dependent on weather  decreased  electric margin by $7.3 million compared to
the first quarter of 2000. In total, retail sales of electricity  increased 2.0%
for the three months ended March 31, 2001.

                                      -13-
<PAGE>

     MidAmerican  Energy's  margins on  wholesale  sales,  net of a reserve  for
revenue  sharing,  increased $3.3 million compared to the first quarter of 2000.
Sales volumes for  wholesale  sales  increased  20.2% for the three months ended
March 31, 2001,  relative to the comparable period in 2000.  Wholesale sales are
the sales of energy to other utilities,  municipalities and marketers outside of
MidAmerican  Energy's delivery system.  Additionally,  electric revenues for the
three months ended March 31, 2001, reflect a gain of $3.2 million on the sale of
emission allowances.

     Regulated Gas Gross Margin -

                                        Three Months
                                       Ended March 31,
                                      -----------------
                                      2001         2000
                                      ----         ----
                                        (In millions)
     Operating revenues...........    $367         $180
     Cost of gas sold.............     292          111
                                      ----         ----
       Gas gross margin...........    $ 75         $ 69
                                      ====         ====

     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-month  period ended March 31, 2001,
compared to the same period in 2000,  increased revenues and cost of gas sold by
approximately $160 million.

     Temperatures during the three months ended March 31, 2001, were colder than
temperatures in the first quarter of 2000, resulting in a $7 million increase in
gas gross margin.  Other rate and usage factors  decreased  gross margin by $0.4
million compared to the first quarter of 2000.

REGULATED OPERATING EXPENSES

     Regulated other operating  expenses decreased $5.4 for the first quarter of
2001 compared to the first  quarter of 2000.  The decrease was due to reductions
in health care and other benefit costs, Quad Cities Station operating  expenses,
information   technology   expenses,   energy  efficiency   program  costs,  and
assessments from utility regulatory agencies.

     Maintenance  expenses  increased  $3.1  million for the three  months ended
March 31,  2001,  compared  to the 2000  period  due  principally  to  increased
electric and gas distribution expenses.

     Depreciation  and amortization  expense  increased $2.4 million compared to
the first quarter of 2000 due  principally  to the increase in utility plant and
an increase in depreciation rates implemented in 2001.

     Property and other taxes  decreased $2.0 million for the three months ended
March 31, 2001,  compared to the 2000 period due to a decrease in Iowa  property
taxes and an adjustment to payroll taxes in the first quarter of 2001.

                                      -14-

<PAGE>


NONREGULATED OPERATING REVENUES AND OPERATING EXPENSES

     Nonregulated Gross Margin -

                                              Three Months
                                             Ended March 31,
                                             ---------------
                                             2001      2000
                                             ----      ----
                                              (In millions)
     Operating revenues..............        $227      $56
     Cost of sales...................         219       51
                                             ----      ---
       Gross margin..................        $  8      $ 5
                                             ====      ===

     Nonregulated   revenues  and  cost  of  sales  consist   substantially   of
nonregulated  natural  gas  marketing  operations.  Revenues  from  nonregulated
natural gas marketing  operations increased $170.6 million compared to the first
quarter of 2000 to $216.7  million for the first quarter of 2001. An increase in
the average  price per unit sold,  reflective  of a 171% increase in the average
cost of gas,  accounted  for $135.5  million of the increase in revenues.  Sales
volumes  increased 13 million MMBtus (76%) resulting in a $35.1 million increase
in revenues.  Cost of sales  increased  $168.7 million to $213.5 million for the
three months ended March 31, 2001,  due to the increases in the per-unit cost of
gas sold and sales  volumes.  Gross  margin  for the  nonregulated  natural  gas
operations increased $1.9 million to $3.2 million for the first quarter of 2001.
The  improvement  in gross  margin  reflects  an increase in margin per unit and
sales volumes.

     Nonregulated  revenues  for the first  quarter of 2001 include $3.6 million
from MidAmerican Energy's market access service project compared to $4.2 million
in the first  quarter of 2000.  The pilot project  allows larger Iowa  customers
that are  participating  in the project 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 decreased $1.3 million to $3.3 million related
to the market access service project.

     As of December 31, 2000,  all  non-residential  customers in Illinois  have
been allowed to select their electric power supplier. For the three months ended
March 31,  2001,  compared to the three  months  ended March 31,  2000,  related
revenues  increased  $2.1  million to $3.6  million,  and related  cost of sales
increased $0.4 million to $1.9 million,  resulting in a $1.7 million increase in
gross margin.

     MidAmerican  Energy's  nonregulated  revenues in the first three  months of
2000  include  $1.0  million  of  pre-tax  income  from an award for  successful
performance under an incentive gas procurement  program. A similar award was not
recorded in the 2001 period.

     Nonregulated Operating Expenses: Other -

     Nonregulated  other operating expenses increased $0.6 million for the three
months ended March 31, 2001,  due to an increase in costs related to MidAmerican
Energy's nonregulated retail services.

NON-OPERATING INCOME AND INTEREST EXPENSE

     Interest and Dividend Income -

     The  increase  in interest  income was due  principally  to a $2.5  million
increase in interest income on a note receivable related to MidAmerican Energy's
accounts receivable sold. The increase in the note receivable is a result of the
increased balance in receivables sold.

                                      -15-
<PAGE>

     Other, Net -

     Other,  Net, which includes a number of non-operating  income and deduction
items,  reduced  Non-operating  Income by $3.9  million and $2.1  million in the
three months ended March 31, 2001 and 2000, respectively.  Other, Net includes a
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 $5.5  million and $2.1 million in the
first quarter of 2001 and 2000,  respectively.  Other, Net for the first quarter
of 2001 also reflects a $1.4 million gain on the sale of MidAmerican Energy rail
cars.

     Fixed Charges -

     The  increase  in interest  on  long-term  debt was due to interest on $162
million of MidAmerican  Energy medium-term notes issued in July 2000, net of the
impact of debt maturities in 2000.

     Other interest expense decreased  compared to the first quarter of 2000 due
principally to a reduction in short-term debt outstanding at MidAmerican Energy.

                                      -16-

<PAGE>

                         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 $161 million and $167
million for the three months ended March 31, 2001 and 2000, respectively.

INVESTING ACTIVITIES AND PLANS

     Utility Construction Expenditures -

     MidAmerican  Energy's  primary  need for  capital is  utility  construction
expenditures.   For  the  first  three  months  of  2001,  utility  construction
expenditures  totaled $27  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, net of dividends.

     Forecasted utility construction expenditures, including allowance for funds
used during  construction  are $223  million for 2001 and $871  million for 2002
through 2005. 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  $41 million during the
period 2001 through 2005 to external  trusts  established  for the investment of
funds for decommissioning Quad Cities Station.  Approximately 55% of the trusts'
funds are now invested in domestic  corporate debt and common equity securities.
The remainder is invested in investment grade municipal and U.S. Treasury bonds.
Funding for Quad Cities  Station is  reflected  in  depreciation  expense in the
Consolidated Statements of Income.

     Based on  information  presently  available  and assuming a September  2004
shutdown  of Cooper,  MidAmerican  Energy  expects to accrue  approximately  $55
million for Cooper  decommissioning during the period 2001 through 2004. Amounts
related to Cooper  decommissioning  are reflected in Other Operating Expenses in
the Consolidated  Statements of Income. The funds that were previously  provided
to Nebraska Public Power District,  with the  understanding  that Cooper will be
shutdown in September 2004, are invested  predominately  in U.S.  Treasury Bonds
and  other  U.S.  Government  securities.  Approximately  30% of the  funds  are
invested in domestic corporate debt.  MidAmerican Energy's  obligation,  if any,
for Cooper  decommissioning  will be affected by the actual plant shutdown date.
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.

                                      -17-
<PAGE>

     Cooper  and Quad  Cities  Station  decommissioning  costs  charged  to Iowa
customers are 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.

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  $500 million.  MidAmerican  Energy currently has in
place a $370.4 million  revolving credit facility that supports its $250 million
commercial  paper  program  and its  variable  rate  pollution  control  revenue
obligations. In addition, MidAmerican Energy has a $5 million line of credit.

     MidAmerican Energy has on file with the Securities and Exchange  Commission
a  registration  statement  for $500  million  in  various  forms of senior  and
subordinated, unsecured long-term debt and preferred securities.

     MidAmerican  Energy has  authorization  from the Federal Energy  Regulatory
Commission  to  issue up to an  additional  $500  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 Illinois  Commerce  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.

     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.  MidAmerican  Energy  Funding  Corporation  in  turn  sells
receivable  interests  to  outside  investors.  In  consideration  for the sale,
MidAmerican  Energy received cash and a subordinated  note,  bearing interest at
8%, from  MidAmerican  Energy  Funding  Corporation.  As of March 31, 2001,  the
revolving  cash balance was $70 million,  and the amount  outstanding  under the
subordinated  note was $213.0  million.  The  agreement is  structured as a true
sale, under which the creditors of MidAmerican  Energy Funding  Corporation will
be entitled to be  satisfied  out of the assets of  MidAmerican  Energy  Funding
Corporation  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 March 31, 2001, $284.8
million of accounts receivable, net of reserves, were sold under the agreement.

                                      -18-

<PAGE>


OPERATING ACTIVITIES AND OTHER MATTERS

     Industry Evolution -

     Legislation to initiate retail  electric  competition was introduced in the
Iowa legislature in the 2000 session,  but it did not pass.  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.  MidAmerican  Energy cannot predict the
timing or ultimate outcome of any potential electric  restructuring  legislation
or gas restructuring in Iowa.

     The  introduction of competition in the wholesale  market has resulted in a
proliferation of power marketers and a substantial  increase in market activity.
The  wholesale  market has also  increased in price  volatility.  As this market
matures, volatility may decline.

     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  generation under typical operating conditions
for its retail  electric  needs,  a loss of adequate  generation by  MidAmerican
Energy  requiring  the  purchase of  replacement  power 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, larger non-residential  customers in Illinois
and 33% of the  remaining  non-residential  Illinois  customers  were allowed to
select their provider of electric  supply  services  beginning  October 1, 1999.
Starting  December 31, 2000,  all other  non-residential  customers were allowed
supplier  choice.  Residential  customers all receive the  opportunity to select
their electric supplier beginning May 1, 2002.

     The law provides for Illinois  earnings above a computed level of return on
common equity to be shared equally  between  customers and  MidAmerican  Energy.
MidAmerican  Energy's  computed  level of return on common  equity is based on a
rolling  two-year  average of the 30-year  Treasury Bond rates plus a premium of
5.50%  for 1998  and 1999 and a  premium  of 8.5%  for 2000  through  2004.  The
two-year  average above which sharing must occur for 2000 was 12.83%.  Using the
same 30-year Treasury bond average, the computed level of return would be 14.33%
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.

     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 were 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. On October
16, 2000, MidAmerican Energy filed with the Federal Energy Regulatory Commission
a plan for MidAmerican  Energy to comply with Order No. 2000 by participating in
the  formation of a for-profit  independent  transmission  company.  MidAmerican
Energy continues in its effort to form such a company.

                                      -19-

<PAGE>


     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 the
required criteria. For operations that meet the criteria,  SFAS 71 allows, among
other  things,  the  deferral  of expense  or income  that  would  otherwise  be
recognized  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 March 31,  2001,  MidAmerican  Energy had $221.8  million of
regulatory assets, net of regulatory  liabilities,  on its Consolidated  Balance
Sheet.

     Energy Efficiency -

     MidAmerican Energy's regulatory assets as of March 31, 2001, included $16.0
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.  These costs are being  collected from customers based
on  projected  annual  expenditures  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.

     Rate Matters: Electric -

     A pricing plan settlement  agreement entered into in 1997 among MidAmerican
Energy,  the Office of Consumer  Advocate and other  parties  pursuant to a rate
proceeding  before the Iowa Utilities Board  establishing  MidAmerican  Energy's
Iowa  retail  electric  rates,  expired  on  December  31,  2000.  With  limited
exceptions,  the pricing plan settlement agreement precluded  MidAmerican Energy
from  seeking an increase in these rates and the other  parties,  including  the
Office of Consumer  Advocate,  from seeking a decrease in rates prior to January
1, 2001.  The rates  established by the pricing plan  settlement  agreement will
remain in effect  until  either  the plan is  renegotiated  by the  parties  and
approved  by the  Iowa  Utilities  Board or a  change  in  rates is  established
pursuant to a rate proceeding, both of which are subject to approval by the Iowa
Utilities  Board.  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.

     On March 14,  2001,  the Office of the Consumer  Advocate  filed a petition
with  the  Iowa  Utilities  Board  to  reduce  Iowa  retail  electric  rates  by
approximately  $77  million   annually.   This  filing  is  being  contested  by
MidAmerican  Energy and, under Iowa law, the Iowa  Utilities  Board must rule on
the petition within ten months from March 14, 2001. The Iowa Utilities Board has
established  a procedural  schedule  that sets a hearing  date of September  24,
2001.  Iowa law  provides  that the  rates  collected  after  the  filing of the
petition  may be subject to refund with  interest if they exceed  rates  finally
approved by the Iowa Utilities Board.

     Under the pricing plan settlement agreement, if MidAmerican Energy's annual
Iowa electric jurisdictional return on common equity exceeded 12%, then earnings
above the 12% level were to be shared equally between  customers and MidAmerican
Energy.  If the return  exceeded 14%, then  two-thirds of  MidAmerican  Energy's
share of those  earnings  above  the 14% level  were to be used for  accelerated
recovery of certain regulatory assets. In the first quarter of 2001, MidAmerican
Energy credited $21.6

                                      -20-
<PAGE>

million to its Iowa non-contract customers related to the return calculation for
2000,  which was approved by the Iowa  Utilities  Board,  subject to  additional
refund.  This Iowa electric retail revenue sharing  arrangement  ceased with the
expiration of the pricing plan settlement agreement on December 31, 2000.

     MidAmerican Energy has negotiated  individual  electric contracts with some
of its  commercial and  industrial  customers in Iowa.  The negotiated  electric
contracts  have  differing  terms and  conditions  as well as  prices.  The vast
majority of the contracts  expire during the period 2003 through 2005,  although
some large  customers  have contracts  extending to 2008.  Some of the contracts
have price renegotiation and early termination  provisions exercisable by either
party.  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.

     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 March 31, 2001, was $25 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.  On February 27,  2001,  the United  States
Supreme  Court  upheld  the  standards,  ruling  that the EPA did not exceed its
constitutional  delegation of authority in  establishing  the standards in 1997.
The impact of the new  standards on  MidAmerican  Energy is  currently  unknown.
MidAmerican Energy could incur increased costs and a decrease in revenues if its
generating  stations are located in nonattainment  areas.  Refer to Note B(2) of
Notes to Consolidated Financial Statements for further discussion of this issue.

     Generating Capability -

     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

                                      -21-
<PAGE>

system peak demand. MidAmerican Energy was able to maintain its capacity reserve
requirement during the 2000 cooling season and was not adversely affected by the
seasonal high prices in the wholesale market.

     MidAmerican  Energy  believes it has  adequate  electric  capacity  reserve
through  2004 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  January  2001  MidAmerican  Energy  adopted  SFAS  Nos.  133  and  138,
pertaining to the accounting for derivative  instruments and hedging activities.
These  pronouncements  require that  derivative  instruments be recorded at fair
value on the balance sheet and changes in fair value  recognized in income.  The
Financial   Accounting   Standards  Board's  Derivatives   Implementation  Group
continues  to identify  and provide  guidance on various  implementation  issues
related to SFAS  133/138 that are in varying  stages of review and  clearance by
the  Derivatives  Implementation  Group  and the  FASB.  MidAmerican  Energy  is
monitoring the issues being reviewed by the Derivatives Implementation Group and
the FASB to determine what, if any, impact they may have on MidAmerican Energy's
financial statements.

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.  To manage the price
volatility  relating to these exposures,  MidAmerican Energy enters into various
financial derivative instruments.  Senior management provides overall direction,
structure,   conduct  and  control  of  MidAmerican   Energy's  risk  management
activities, including the use of financial derivative instruments, authorization
and communication of risk management policies and procedures,  strategic hedging
program  guidelines,  appropriate market and credit risk limits, and appropriate
systems for recording, monitoring and reporting the results of transactional and
risk management  activities.  Refer to Note E in Notes to Consolidated Financial
Statements  for further  discussion  of  derivatives  used to hedge price risks.
MidAmerican  Energy's  exposure to interest rate risk did not change  materially
from December 31, 2000.

     MidAmerican  Energy  uses  hedge  accounting  for  derivative   instruments
pertaining to its natural gas purchasing,  wholesale electricity  activities and
financing  activities.  Refer  to  Note E in  Notes  to  Consolidated  Financial
Statements for further discussion of the accounting for derivative instruments.

                                      -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 on 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  appealed  the  court's  summary  judgment  ruling.  On
December 12,  2000,  the United  States Court of Appeals for the Eighth  Circuit
reversed the ruling of the district court and granted summary  judgment in favor
of  MidAmerican  Energy  issues  one and  five in the  second  paragraph  above.
Additionally,   it  remanded  the  case  for  trial  on  all  other  claims  and
counterclaims. It is not likely that a trial will occur prior to fall of 2001.

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

(A)      EXHIBITS

         Exhibit 15 - Awareness Letter of Independent Accountants

(B)      REPORTS ON FORM 8-K

     On March 19, 2001,  MidAmerican  Energy filed a current  report on Form 8-K
dated  March 15,  2001.  The report  discussed  a  petition  filed with the Iowa
Utilities Board on March 14, 2001, in which the Office of the Consumer  Advocate
of the Iowa Department of Justice  requests a reduction of MidAmerican  Energy's
Iowa retail electric rates by approximately $77 million annually.

                                      -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  May 11, 2001                       /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


                                      -26-