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

                                           FORM 10-Q

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

For the quarterly period ended      September 30, 1996
                                 --------------------------------------------


                                              or

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

For the transition period from                  to
                               -------------         ------------------------
Commission File Number   1-11505
                           MIDAMERICAN ENERGY COMPANY
                           --------------------------
             (Exact name of registrant as specified in its charter)

             IOWA                                        42-1425214
-------------------------------                     --------------------
(State or other jurisdiction of                      (I.R.S. Employer
 incorporation or organization)                      Identification No.)

666 Grand Ave., P.O. Box 657, Des Moines, Iowa                 50303
----------------------------------------------           --------------------
  (Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code          515-242-4300
                                                         --------------------

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

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock as of the latest practicable date.

     Common Stock, without par value                   100,751,713
     -------------------------------         ---------------------------------

                   (class)                   (outstanding at October 31, 1996)



<PAGE>
                           MIDAMERICAN ENERGY COMPANY

                                      INDEX


                                                                PAGE NO.
PART I.  FINANCIAL INFORMATION

         Consolidated Statements of Income                          3

         Consolidated Balance Sheets                                4

         Consolidated Statements of Cash Flows                      5

         Notes to Consolidated Financial Statements                 6

         Management's Discussion and Analysis of
           Financial Condition and Results of Operations           10

PART II. OTHER INFORMATION                                         22


                                      -2-

<PAGE>

<TABLE>
                           MIDAMERICAN ENERGY COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                    (In Thousands, except per share amounts)
<CAPTION>
                                                        Three Months                Nine Months                 Twelve Months
                                                       Ended Sept. 30              Ended Sept. 30               Ended Sept. 30
                                                 --------------------------    -------------------------   ------------------------
                                                     1996           1995          1996          1995         1996          1995
                                                 ------------    ----------    ----------    -----------   ----------    ----------
<S>                                              <C>             <C>           <C>           <C>           <C>           <C>
OPERATING REVENUES
Electric utility ............................    $    311,169    $  338,626    $  840,023    $   847,989   $1,086,681    $1,083,901
Gas utility .................................          72,902        64,609       354,506        312,436      501,658       444,636
Nonregulated ................................          50,607        16,767       139,211         64,552      169,765        93,821
                                                 ------------    ----------    ----------    -----------    ---------     ---------
                                                      434,678       420,002     1,333,740      1,224,977    1,758,104     1,622,358
                                                 ------------    ----------    ----------    -----------    ---------     ---------
OPERATING EXPENSES
Utility:
Cost of fuel, energy and capacity ...........          61,164        65,625       177,662        177,694      230,229       228,928
Cost of gas sold ............................          48,300        38,261       219,725        189,192      309,558       273,859
Other operating expenses ....................          82,357       110,388       260,126        295,143      364,631       389,351
Maintenance .................................          24,741        20,103        68,616         63,298       90,681        92,318
Depreciation and amortization ...............          41,120        40,182       123,126        118,392      163,684       157,205
Property and other taxes ....................          22,686        25,447        71,788         77,683       90,455       102,494
                                                 ------------    ----------    ----------    -----------    ---------    ----------
                                                      280,368       300,006       921,043        921,402    1,249,238     1,244,155
                                                 ------------    ----------    ----------    -----------    ---------    ----------
Nonregulated:
Cost of sales ...............................          47,247        11,793       124,497         46,274      148,432        67,294
Other .......................................           9,144         9,978        25,136         28,082       34,235        37,741
                                                 ------------    ----------    ----------    -----------    ---------    ----------
                                                       56,391        21,771       149,633         74,356      182,667       105,035
                                                 ------------    ----------    ----------    -----------    ---------    ----------
Total operating expenses ....................         336,759       321,777     1,070,676        995,758    1,431,905     1,349,190
                                                 ------------    ----------    ----------    -----------    ---------    ----------

OPERATING INCOME ............................          97,919        98,225       263,064        229,219      326,199       273,168
                                                 ------------    ----------    ----------    -----------    ---------    ----------

NON-OPERATING INCOME
Interest income .............................             564         1,288         3,088          3,332        4,241         5,039
Dividend income .............................           4,179         4,354        13,081         12,143       17,892        16,494
Realized gains and losses
on securities, net ..........................             (30)         (291)        3,204             63        3,829         2,062
Other, net ..................................          (4,187)      (17,330)          541         (6,892)      (3,034)       (6,079)
                                                 ------------    ----------    ----------    -----------    ---------    ----------
                                                          526       (11,979)       19,914          8,646       22,928        17,516
                                                 ------------    ----------    ----------    -----------    ---------    ----------

INTEREST CHARGES
Interest on long-term debt ..................          25,818        26,280        77,523         79,389      103,684       105,606
Other interest expense ......................           2,556         1,248         8,279          6,878       10,850         8,659
Allowance for borrowed funds ................            (830)       (1,379)       (3,286)        (3,966)      (4,872)       (5,466)
                                                 ------------    ----------    ----------    -----------    ---------     ---------
                                                       27,544        26,149        82,516         82,301      109,662       108,799
                                                 ------------    ----------    ----------    -----------    ---------     ---------
INCOME FROM CONTINUING OPERATIONS
  BEFORE INCOME TAXES .......................          70,901        60,097       200,462        155,564      239,465       181,885
INCOME TAXES ................................          28,266        22,962        79,662         55,285       91,180        59,555
                                                 ------------    ----------    ----------    -----------    ---------     ---------
INCOME FROM CONTINUING OPERATIONS ...........          42,635        37,135       120,800        100,279      148,285       122,330
DISCONTINUED OPERATIONS
Income (Loss) From Operations
(net of income taxes) .......................          (3,628)          322         2,910          1,945        4,024         1,892
Loss on disposal (net of income taxes) ......         (14,364)         --         (14,364)          --        (14,364)         --
                                                 ------------    ----------    ----------    -----------    ---------     ---------
                                                      (17,992)          322       (11,454)         1,945      (10,340)        1,892
                                                 ------------    ----------    ----------    -----------    ---------     ---------

NET INCOME ..................................          24,643        37,457       109,346        102,224      137,945       124,222
PREFERRED DIVIDENDS .........................           2,087         1,677         6,748          6,240        8,567         9,071
                                                 ------------    ----------    ----------    -----------   ----------    ----------
EARNINGS ON COMMON STOCK ....................    $     22,556    $   35,780    $  102,598    $    95,984   $  129,378    $  115,151
                                                 ============    ==========    ==========    ===========   ==========    ==========

AVERAGE COMMON SHARES OUTSTANDING ...........         100,752       100,752       100,752        100,364      100,752       100,035

EARNINGS PER COMMON SHARE
Continuing operations .......................    $       0.40    $     0.35    $     1.13    $      0.94   $     1.38    $     1.13
Discontinued operations .....................           (0.18)         0.01         (0.11)          0.02        (0.10)         0.02
                                                 ------------    ----------    ----------    -----------   ----------    ----------
Earnings per average common share ...........    $       0.22    $     0.36    $     1.02    $      0.96   $     1.28    $     1.15
                                                 ============    ==========    ==========    ===========   ==========    ==========
DIVIDENDS DECLARED PER SHARE ................    $       0.30    $     0.30    $     0.90    $      0.88   $     1.20    $     1.18
                                                 ============    ==========    ==========    ===========   ==========    ==========
</TABLE>
The accompanying notes are an integral part of these statements.
                                       -3-
<PAGE>


<TABLE>
                           MIDAMERICAN ENERGY COMPANY
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)
<CAPTION>

                                                                                    As of
                                                                    Sept. 30              December 31
                                                            ------------------------     -----------
                                                               1996          1995             1995
                                                            ----------    ----------       ----------
                                                                   (Unaudited)
<S>                                                         <C>           <C>              <C>
ASSETS
UTILITY PLANT
Electric...........................................         $3,981,980    $3,853,520       $3,881,699
Gas................................................            718,796       689,209          695,741
                                                            ----------    ----------       ----------
                                                             4,700,776     4,542,729        4,577,440
Less accumulated depreciation and amortization.....          2,132,456     1,984,797        2,027,055
                                                            ----------    ----------       ----------
                                                             2,568,320     2,557,932        2,550,385
Construction work in progress......................             56,452        91,286          104,164
                                                            ----------    ----------       ----------
                                                             2,624,772     2,649,218        2,654 549
                                                            ----------    ----------       ----------
POWER PURCHASE CONTRACT............................            207,725       223,183          212,148
                                                            ----------    ----------       ----------
INVESTMENT IN DISCONTINUED OPERATIONS..............            214,594       180,407          174,694
                                                            ----------    ----------       ----------

CURRENT ASSETS
Cash and cash equivalents..........................             23,138        26,356           32,915
Receivables........................................            196,245       179,982          228,128
Inventories........................................             91,061        90,200           85,235
Other..............................................             10,275        11,779           18,428
                                                            ----------    ----------       ----------
                                                               320,719       308,317          364,706
                                                            ----------    ----------       ----------

INVESTMENTS........................................            628,553       649,413          646,456
                                                            ----------    ----------       ----------

OTHER ASSETS.......................................            399,755       409,270          414,938
                                                            ----------    ----------       ----------

TOTAL ASSETS.......................................         $4,396,118    $4,419,808       $4,467,491
                                                            ==========    ==========       ==========


CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common shareholders' equity........................         $1,238,615    $1,231,588       $1,225,715
Preferred shares, not subject to mandatory
  redemption.......................................             77,534        89,955           89,945
Preferred shares, subject to mandatory redemption..             50,000        50,000           50,000
Long-term debt (excluding current portion).........          1,372,007     1,385,281        1,403,322
                                                            ----------    ----------       ----------
                                                             2,738,156     2,756,824        2,768,982
                                                            ----------    ----------       ----------

CURRENT LIABILITIES
Notes payable......................................            157,728       135,700          184,800
Current portion of long-term debt..................             77,624        74,159           65,295
Current portion of power purchase contract.........             13,029        12,080           13,029
Accounts payable...................................            102,423       119,087          130,432
Taxes accrued......................................             61,307        85,671           81,898
Interest accrued...................................             24,091        24,103           30,635
Other..............................................             59,702        62,253           37,890
                                                            ----------    ----------       ----------
                                                               495,904       513,053          543,979
                                                            ----------    ----------       ----------

OTHER LIABILITIES
Power purchase contract............................            112,700       125,729          112,700
Deferred income taxes..............................            732,233       716,137          721,981
Investment tax credit..............................             90,692        96,819           95,041
Other .............................................            226,433       211,246          224,808
                                                            ----------    ----------       ----------
                                                             1,162,058     1,149,931        1,154,530
                                                            ----------    ----------       ----------
TOTAL CAPITALIZATION AND LIABILITIES...............         $4,396,118    $4,419,808       $4,467,491
                                                            ==========    ==========       ==========
</TABLE>

The accompanying notes are an integral part of these statements.

                                       -4-

<PAGE>

<TABLE>
                           MIDAMERICAN ENERGY COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In Thousands)

<CAPTION>


                                                                   Three Months Ended          Nine Months Ended
                                                                      September 30                September 30
                                                                  ----------------------    ----------------------
                                                                     1996         1995         1996         1995
                                                                  ----------   ---------    ---------    ---------
<S>                                                               <C>          <C>          <C>          <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net income ......................................................   $ 24,643    $  37,457    $ 109,346    $ 102,224
Adjustments to reconcile net income to net cash provided:
  Depreciation, depletion and amortization ......................     50,797       46,126      139,303      135,831
  Net increase (decrease) in deferred income taxes and
     investment tax credit, net .................................      4,848       (8,272)       3,276      (10,643)
  Amortization of other assets ..................................      5,626        7,171       17,559       14,761
  Capitalized cost of real estate sold ..........................        397          334        2,895          969
  Loss (income) from discontinued operations ....................     17,992         (322)      11,454       (1,945)
  (Gain) Loss on sale of securities, assets and other investments     (1,898)          94       (5,471)      (9,618)
  Other than temporary decline in value of investments ..........       --         14,497        2,566       14,848
  Impact of changes in working capital, net of effects
     from discontinued operations ...............................    (23,383)      15,912      (14,422)      38,989
  Other .........................................................     11,109       (3,820)      17,327        1,539
                                                                    --------    ---------    ---------    ---------
     Net cash provided ..........................................     90,131      109,177      283,833      286,955
                                                                    --------    ---------    ---------    ---------

NET CASH FLOWS FROM INVESTING ACTIVITIES
Utility construction expenditures ...............................    (35,468)     (55,082)    (101,061)    (140,615)
Quad Cities Nuclear Power Station decommissioning trust fund ....     (2,159)      (2,159)      (6,477)      (6,519)
Deferred energy efficiency expenditures .........................     (5,753)      (7,699)     (13,200)     (18,561)
Nonregulated capital expenditures ...............................    (11,860)      (2,152)     (36,989)     (11,419)
Purchase of securities ..........................................    (33,755)     (45,644)    (168,049)    (109,152)
Proceeds from sale of securities ................................     33,381       14,345      197,472       42,229
Proceeds from sale of assets and other investments ..............     16,681        3,271       17,989       36,058
Investment in discontinued operations ...........................      5,221       (5,583)     (34,022)     (10,170)
Other investing activities, net .................................      3,174      (12,618)       7,506       10,972
                                                                    --------    ---------    ---------    ---------
  Net cash provided (used) ......................................    (30,538)    (113,321)    (136,831)    (207,177)
                                                                    --------    ---------    ---------    ---------

NET CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid ..................................................    (32,310)     (31,902)     (97,412)     (94,845)
Retirement of long-term debt, including reacquisition cost ......    (64,449)     (74,452)     (65,495)     (88,515)
Reacquisition of preferred shares, including reacquisition cost .     (1,075)        --        (12,800)        --
Increase in MidAmerican Capital Company
  unsecured revolving credit facility ...........................     44,000       73,500       46,000       75,000
Issuance of common shares .......................................       --           --           --         15,087
Net increase (decrease) in notes payable ........................     (6,762)      33,400      (27,072)      11,200
                                                                    --------    ---------    ---------    ---------
  Net cash provided (used) ......................................    (60,596)         546     (156,779)     (82,073)
                                                                    --------    ---------    ---------    ---------

NET DECREASE IN CASH AND CASH EQUIVALENTS .......................     (1,003)      (3,598)      (9,777)      (2,295)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................     24,141       29,954       32,915       28,651
                                                                    --------    ---------    ---------    ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................   $ 23,138    $  26,356    $  23,138    $  26,356
                                                                    ========    =========    =========    =========

ADDITIONAL CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized .......................   $ 37,278    $  32,967    $  92,706    $  88,878
                                                                    ========    =========    =========    =========
Income taxes paid ...............................................   $ 32,586    $  23,299    $  82,324    $  60,059
                                                                    ========    =========    =========    =========
</TABLE>

The accompanying notes are an integral part of these statements

                                       -5-

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A)   General:

     The consolidated financial statements included herein have been prepared by
MidAmerican Energy Company (Company or MidAmerican),  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 the
Company,  all  adjustments  have  been  made to  present  fairly  the  financial
position,  the  results  of  operations  and the  changes  in cash flows for the
periods  presented.  Although  the Company  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  incorporated  by reference in the
Company's latest Annual Report on Form 10-K.

     On July 1, 1995,  Iowa-Illinois  Gas and Electric Company  (Iowa-Illinois),
Midwest  Resources  Inc.  (Resources),  and Midwest Power Systems Inc.  (Midwest
Power)  merged  with and into the  Company.  The merger was  accounted  for as a
pooling-of-interests  and the financial statements included herein are presented
as if the companies were merged as of the earliest period shown.  MidAmerican is
a utility company with two wholly owned nonregulated  subsidiaries:  MidAmerican
Capital Company  (MidAmerican  Capital) and Midwest Capital Group, Inc. (Midwest
Capital).

B)   Environmental Matters:

     The  United  States   Environmental   Protection  Agency  (EPA)  and  state
environmental  agencies have determined that  contaminated  wastes  remaining at
certain decommissioned manufactured gas plant (MGP) 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.

     The Company is evaluating 27 properties  which were, at one time,  sites of
gas  manufacturing  plants in which it may be a  potentially  responsible  party
(PRP). The purpose of these  evaluations is to determine whether waste materials
are present,  whether such materials constitute an environmental or health risk,
and whether the Company has any  responsibility for remedial action. The Company
is currently  conducting  field  investigations  at fifteen of the sites and has
completed  investigations  at three of the sites.  In  addition,  the Company is
currently  removing  contaminated  soil at three of the sites, and has completed
removals at two of the sites.  The Company is continuing to evaluate  several of
the sites to  determine  the  future  liability,  if any,  for  conducting  site
investigations or other site activity.

     The Company's present estimate of probable  remediation costs for the sites
discussed  above is $22 million.  This estimate has been recorded as a liability
and a regulatory asset for future  recovery.  The Illinois  Commerce  Commission
(ICC) has  approved  the use of a tariff  rider  which  permits  recovery of the
actual costs of litigation, investigation and remediation relating to former MGP
sites.  The Company's  present rates in Iowa provide for a fixed annual recovery
of MGP costs.  The Company intends to pursue  recovery of the remediation  costs
from other PRPs and its insurance carriers.

     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.

                                      -6-
<PAGE>


     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 the Company's financial position or results of operations.

C)   Discontinued Operations:

     The Company  has  announced  the  discontinuation  of certain  nonstrategic
businesses in support of its strategy of becoming a leading  regional energy and
communications  provider.  In October of 1996, the Company entered into a letter
of  intent  with  KCS  Energy,  Inc.  to sell an oil  and  gas  exploration  and
development  subsidiary.  In the third quarter of 1996, the Company  recorded an
anticipated after-tax loss of $6.6 million for the transaction.  The Company has
also  announced its plan to divest a subsidiary  that developed and continues to
operate a computerized information system facilitating the real-time exchange of
power in the electric  industry.  The Company  expects the  disposition to occur
during  the  first  half  of 1997  and has  recorded  a $4.0  million  estimated
after-tax loss on disposal in the third quarter of 1996 . The Company  reflected
as discontinued operations at September 30, 1994, all activities of a subsidiary
that  constructed  generating  facilities  and  a  subsidiary  that  constructed
electric distribution and transmission systems. Essentially all of the assets of
the  construction  subsidiaries  have been sold but some remaining  activity has
been recorded in the periods reported. In addition, in the third quarter of 1996
the  Company  received  a  final  settlement  from  the  sale  of a coal  mining
subsidiary  which was  reflected as a  discontinued  operation by a  predecessor
company in 1982.  The final  settlement,  which resulted in an after-tax loss of
$3.3 million,  included the  reacquisition  of preferred equity by the buyer and
the settlement of reclamation reserves.


     Proceeds  expected to be received from the  disposition  of the oil and gas
subsidiary are $217 million.  Proceeds  received from the coal mining subsidiary
settlement  and the  disposition  of the  construction  subsidiaries  were,  $15
million and $4 million,  respectively. Net assets of the discontinued operations
are  separately  presented on the  Consolidated  Balance Sheets as Investment in
Discontinued Operations.  Revenues from discontinued activities,  as well as the
results of  operations  and the estimated  loss on the disposal of  discontinued
operations  for the three,  nine and twelve  months  ended  September  30 are as
follows (in thousands):
<TABLE>
<CAPTION>

                                         Three Months            Nine Months          Twelve Months
                                        Ended Sept. 30         Ended Sept. 30         Ended Sept. 30
                                    --------------------    --------------------   ---------------------
                                       1996        1995        1996        1995       1996        1995
                                    --------    --------    ---------    -------   ---------    --------
<S>                                 <C>         <C>         <C>          <C>       <C>          <C>
OPERATING REVENUES                  $ 58,605    $ 14,621    $ 164,322    $42,780   $ 195,845    $ 56,269
                                    ========    ========    =========    =======   =========    ========

INCOME (LOSS) FROM
DISCONTINUED OPERATIONS
Income (Loss) before income taxes   $ (6,932)   $    421    $   2,976    $ 2,945   $   4,738    $  2,933
Income tax benefit (expense)           3,304         (99)         (66)    (1,000)        (714)     (1,041)
                                    --------    --------    ---------    -------   ---------    --------
Income (Loss) from discontinued
operations                          $ (3,628)   $    322    $   2,910    $ 1,945   $   4,024    $  1,892
                                    ========    ========    =========    =======   =========    ========
LOSS ON DISPOSAL
Income before income taxes          $  9,840    $   --      $   9,840    $  --     $   9,840    $   --
Income tax expense                   (24,204)       --        (24,204)      --       (24,204)       --
                                    --------    --------    ---------    -------   ---------    --------
Loss on disposal                    $(14,364)   $   --      $ (14,364)   $  --     $ (14,364)   $   --
                                    ========    ========    =========    =======   =========    ========

</TABLE>
                                      -7-

<PAGE>



D)   Subsidiary Company Restructuring:

     During the second  quarter of 1996,  the  Company  restructured  one of its
nonregulated  subsidiaries  and changed  the  subsidiary's  name to  MidAmerican
Capital. Following the restructuring,  InterCoast Energy Company (InterCoast), a
newly formed subsidiary of MidAmerican Capital,  filed a registration  statement
with the Securities and Exchange Commission for an initial public offering (IPO)
of common stock.  The primary assets of InterCoast  are oil and gas  exploration
properties. On July 29, 1996, the Company canceled the IPO due to adverse market
conditions.  In October of 1996, the Company  entered into a letter of intent to
sell the  majority  of the  assets  of  InterCoast.  See Note C) for  additional
information.  MidAmerican Capital is retaining the rail service businesses,  the
marketable  securities  and passive  investment  activities,  and a nonregulated
retail natural gas subsidiary.

E)   Holding Company:

     The Company's Board of Directors,  holders of a majority of the outstanding
shares of the Company's  common stock,  the Iowa Utilities Board (IUB), the ICC,
the Nuclear Regulatory  Commission and the Federal Energy Regulatory  Commission
have approved,  or issued orders that will permit,  the formation of MidAmerican
Energy  Holdings  Company  as the  holding  company  for  the  Company  and  its
subsidiaries.  Each share of  MidAmerican  common  stock will be  exchanged on a
tax-free  basis for one  share of the  holding  company's  common  stock.  It is
management's  intent to complete the formation of the holding  company and share
exchange on or about December 1, 1996.  The holding  company will initially have
three wholly owned subsidiaries  consisting of MidAmerican,  MidAmerican Capital
and Midwest Capital.

F)   Proposed Merger:

     On August 5, 1996, the Company announced that it had proposed to merge with
IES Industries  Inc. (IES), a utility  holding  company  headquartered  in Cedar
Rapids,  Iowa.  The IES board of directors  rejected the  Company's  proposal in
favor of a pending  merger  with WPL  Holdings  and  Interstate  Power Co.  (the
Wisconsin  Transaction).  The Company  solicited  proxies  against the Wisconsin
Transaction for use at the IES annual meeting of shareholders  which was held on
September 5, 1996.  At that meeting,  a majority of the IES common  shareholders
voted in favor of the Wisconsin Transaction and the Company has discontinued its
attempt to merge with IES.  The Company  incurred tax  deductible  costs of $8.6
million in the  attempt  which are  included in Other,  Net on the  Consolidated
Statements of Income during the third quarter of 1996.


                                      -8-

<PAGE>



G)   McLeod, Inc. Investment:

     At September 30, 1996,  the Company had  investments in Class A and Class B
Common Stock of McLeod,  Inc. (McLeod).  The Class B Common Stock is Convertible
into Class A Common  Stock.  On June 14,  1996,  McLeod  made an initial  public
offering  of its Class A Common  Stock.  As part of an investor  agreement,  the
Company is prohibited  from selling or otherwise  disposing of any of the common
stock  of  McLeod  for a period  of two  years  from  the  date of the IPO.  The
Company's  investment in McLeod is considered  restricted stock and, as such, is
recorded at cost. At September 30, 1996,  the carrying  amount and fair value of
this investment were $36.3 million and $270.8 million, respectively.

H)   Rate Matters:

     On June 4, 1996, the Company filed a new electric  pricing proposal in Iowa
and Illinois. The proposal would reduce electric revenues, on a graduated basis,
to the  level of  approximately  $25  million  annually  within  five  years and
eliminate automatic fuel adjustment clauses. The price reductions,  possible due
to merger and restructuring related cost savings,  reduce price disparity within
customer  classes and are expected to move the Company closer to prices that can
be sustained in a competitive market. In addition,  the proposals,  if approved,
would provide the Company more  flexibility to negotiate with customers who have
service options and to mitigate strandable costs.

     On October 15,  1996,  the ICC ordered the Company to reduce  rates for its
Illinois  customers by 10%, or $13.1  million  annually,  effective  November 3,
1996, and commenced an investigation  into the  reasonableness  of the Company's
rates.  Hearings  have not been  scheduled.  The Company is reviewing the effect
this order will have on its electric pricing proposal.

     On August 1, 1996, the Iowa Office of Consumer Advocate (OCA) requested the
IUB to order the Company to reduce  electric  rates by 10.7%,  or  approximately
$101 million annually in Iowa electric  revenues.  On September 6, 1996, the IUB
docketed  the OCA request and  initiated  an  investigation  into the  Company's
rates.  The  IUB  also  consolidated  the   investigation   with  the  Company's
alternative regulation and pricing proposal for purposes of the hearing which is
scheduled to begin in December 1996. The Company  intends to reduce its electric
rates in Iowa to the levels  proposed in its pricing  proposal  filed on June 4,
1996.  The  planned  effective  date for the initial  reduction,  which has been
approved by the IUB, is November 1, 1996.  The Company has  recorded a liability
for the  portion of its Iowa  electric  revenues  between  August 1,  1996,  and
September  30,  1996,  that  were in  excess of those  proposed  in the  pricing
proposal.

     While the ultimate outcome can not be accurately predicted,  based upon the
Company's  analysis of the issues asserted in this filing , management  believes
that the  resolution  of the OCA's  filing will not differ  materially  from the
cumulative effect of the pricing plan proposed by MidAmerican.

I)   Accounting for the Effects of Certain Types of Regulation:

     Statement  of  Financial  Accounting  Standards  (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.  A
possible  consequence of the changes in the utility industry is the discontinued
applicability of SFAS 71. The Company's  electric and gas utility operations are
currently  subject  to the  provisions  of SFAS  71,  but its  applicability  is
periodically  reexamined.  If a portion of the Company's  utility  operations no
longer meets the criteria of SFAS 71, the Company would be required to eliminate
from its balance sheet the regulatory  assets and  liabilities  related to those
operations that resulted from actions of its regulators.  Although the amount of
such an  elimination  would  depend on the  specific  circumstances,  a material
adjustment  to  earnings  in  the  appropriate  period  could  result  from  the
discontinuance   of  SFAS  71.  As  of  September  30,  1996,  the  Company  had
approximately  $385 million of  regulatory  assets in its  Consolidated  Balance
Sheet.

                                      -9-
<PAGE>

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

                               CORPORATE OVERVIEW

     MidAmerican  Energy Company (the Company or MidAmerican),  headquartered in
Des  Moines,  Iowa,  was  formed on July 1,  1995,  as a result of the merger of
Iowa-Illinois Gas and Electric Company (Iowa- Illinois),  Midwest Resources Inc.
(Resources) and its utility subsidiary, Midwest Power Systems Inc.
(Midwest).

     The  merger  has  been  accounted  for as a  pooling-of-interests,  and the
Consolidated Financial Statements included in this Form 10-Q are presented as if
the merger  occurred  as of the  beginning  of the  earliest  period  presented.
Portions of the following  discussion  provide  information  related to material
changes in the Company's  financial  condition and results of operations between
the  periods  presented  based on the  combined  historical  information  of the
predecessor  companies.  It is not  necessarily  indicative  of what  would have
occurred had the predecessor  companies  actually merged at the beginning of the
earliest period.

     The Company's  utility  operations  (the Utility)  consist of two principal
business units: an electric business unit headquartered in Davenport,  Iowa, and
a natural gas  business  unit  headquartered  in Sioux City,  Iowa.  MidAmerican
Capital Company  (formerly  InterCoast  Energy  Company),  discussed  below, and
Midwest Capital Group,  Inc.  (Midwest  Capital) are the Company's  nonregulated
subsidiaries and are headquartered in Des Moines. Midwest Capital functions as a
regional business development company in the utility service territory.

     During the second quarter the Company  restructured one of its nonregulated
subsidiaries, the former InterCoast Energy Company, and changed the subsidiary's
name to MidAmerican  Capital Company  (MidAmerican  Capital).  In addition,  the
Company formed a new subsidiary  under  MidAmerican  Capital,  named  InterCoast
Energy Company  (InterCoast).  The new InterCoast  has as its  subsidiaries  the
Company's wholesale nonregulated energy companies,  including InterCoast Oil and
Gas Company,  formerly named Medallion  Production Company.  MidAmerican Capital
retained the rail service  businesses,  the  marketable  securities  and passive
investment activities, and a nonregulated retail natural gas subsidiary.

     Following the restructuring, InterCoast filed a registration statement with
the Securities and Exchange  Commission for an initial public  offering (IPO) of
common  stock.  On July 29,  1996,  the Company  canceled the IPO as a result of
adverse general market conditions for initial public offerings.

     Three  transactions  are  reflected  as  discontinued   operations  in  the
Company's consolidated financial statements in this Form 10-Q. The transactions,
discussed  below,  are part of the Company's  effort to redirect  certain of its
nonregulated  investments in order to support its strategy of becoming a leading
regional energy and communications provider.

     In October 1996, the Company announced that it has entered into a letter of
intent with KCS Energy Inc.(KCS) of Edison, New Jersey, to sell a portion of the
Company's nonregulated operations for a total of $217 million. The sale includes
the oil and gas  exploration  and  development  operations  of the Company.  The
Company  and KCS  expect to  complete  the  transaction  by the end of 1996.  In
September  1996,  the Company  recorded an  anticipated  after-tax  loss of $6.6
million for the transaction.

     Also in  October,  the  Company  received  $15.3  million  in cash as final
settlement for the sale of a former coal mining  subsidiary  which was reflected
as  discontinued  operations in 1982 by one of the Company's  predecessors.  The
final settlement included  reacquisition by the buyer of preferred equity issued
to the Company and the settlement of reclamation reserves.  The Company recorded
an after-tax loss on disposal of $3.3 million in September 1996.

                                      -10-

<PAGE>

     In addition,  the Company  intends to divest a subsidiary that develops and
continues to operate a computerized  information system  facilitating  real-time
exchange of power in the electric industry.  The Company expects the disposition
to occur during the first half of 1997 and, accordingly, recorded a $4.0 million
anticipated after-tax loss on disposal of those operations in September 1996.

     The related  income (loss) from  operations and the  anticipated  losses on
disposal  are  reflected  as  discontinued  operations  in each  of the  periods
presented  in  the   Consolidated   Statements  of  Income.   Also  included  in
discontinued  operations  in the  Consolidated  Statements of Income are amounts
related to the  discontinuance  of the Company's  construction  subsidiaries  in
1994. Net assets of the discontinued  operations are separately presented in the
Consolidated Balance Sheets as Investment in Discontinued Operations.

     During the third quarter,  the Company made an investment in a company that
is a leading provider of digital  wireless  communications  in the Midwest.  The
investment expands the Company's presence in the  communications  industry.  The
Company also has an investment in a growing telecommunications company that made
an initial public offering of its common stock in June 1996.

     On April 24, 1996, the Company's common shareholders approved a proposal to
form a holding company, MidAmerican Energy Holdings Company. The holding company
would be an exempt holding  company under the Public Utility Holding Company Act
of 1935 and would initially have three wholly owned  subsidiaries  consisting of
MidAmerican, MidAmerican Capital and Midwest Capital. The Board of Directors and
management  believe a holding  company  structure  will provide a more  flexible
organization better designed to operate in a more competitive  environment.  The
Company  has  received  orders  from the Federal  Energy  Regulatory  Commission
(FERC),  the Iowa Utilities Board (IUB), the Illinois Commerce  Commission (ICC)
and the Nuclear  Regulatory  Commission  (NRC) which  permit the  formation of a
holding  company.  It is  management's  intent to complete the  formation of the
holding  company and share exchange on or about December 1, 1996.  Each share of
MidAmerican  common stock will be exchanged on a tax free basis for one share of
the holding company's common stock.

     On August 5, 1996, the Company announced that it had proposed to merge with
IES Industries  Inc.  (IES), a holding  company  headquartered  in Cedar Rapids,
Iowa. The IES board of directors  rejected the Company's  proposal in favor of a
pending  merger  with WPL  Holdings  and  Interstate  Power Co.  (the  Wisconsin
Transaction).  The Company solicited  proxies against the Wisconsin  Transaction
for use at the IES annual meeting of shareholders which was held on September 5,
1996. At that meeting, a majority of the IES common  shareholders voted in favor
of the Wisconsin  Transaction,  and the Company has  discontinued its attempt to
merge with IES. In the effort, the Company incurred tax deductible costs of $8.6
million which are included in Other,  Net for each 1996 period  presented in the
Consolidated Statements of Income.


                                      -11-

<PAGE>



                           FORWARD-LOOKING STATEMENTS

     From time to time, the Company or one of its subsidiaries  individually may
make  forward-looking  statements  within the meaning of the federal  securities
laws that involve  judgments,  assumptions  and other  uncertainties  beyond the
control of the Company or any of its subsidiaries  individually.  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 the Company's
expectations, beliefs, future plans and strategies, anticipated events or trends
and similar comments concerning matters that are not historical facts. Investors
and  other  users of the  forward-looking  statements  are  cautioned  that such
statements  are not a guarantee  of future  performance  of the Company and that
such  forward-looking  statements  are subject to risks and  uncertainties  that
could cause actual  results to differ  materially  from those  expressed  in, or
implied by, such statements.  Some, but not all, of the risks and  uncertainties
include  weather  effects on sales and revenues,  competitive  factors,  general
economic  conditions  in the Company's  service  territory and federal and state
regulatory actions.


                              RESULTS OF OPERATIONS

EARNINGS

     The following table provides a summary of the earnings contributions of the
Company's operations for each of the periods presented:
<TABLE>
<CAPTION>

                                                       Periods Ended September 30
                                        Three Months          Nine Months            Twelve Months
                                      1996       1995       1996        1995       1996        1995
                                    --------   --------   ---------   --------   ---------   ---------
<S>                                 <C>        <C>        <C>         <C>        <C>         <C>
Earnings (in millions)
    Electric utility                $   48.4   $   54.7   $    95.9   $   96.2   $   111.5   $   104.5
    Gas utility                         (6.8)     (10.3)       15.4        2.1        26.0        10.9
                                    --------   --------   ---------   --------   ---------   ---------
         Utility operations             41.6       44.4       111.3       98.3       137.5       115.4
    Nonregulated operations             (1.0)      (8.9)        2.8       (4.2)        2.2        (2.1)
    Income (loss) from
         discontinued operations       (18.0)       0.3       (11.5)       1.9       (10.3)        1.9
                                    --------   --------   ---------   --------   ---------   ---------
     Consolidated earnings          $   22.6   $   35.8   $   102.6   $   96.0   $   129.4   $   115.2
                                    ========   ========   =========   ========   =========   =========

Earnings Per Common Share
    Electric utility                $    0.48  $    0.54  $     0.95  $    0.96  $     1.10  $     1.04
    Gas utility                         (0.07)     (0.10)       0.15       0.02        0.26        0.11
                                    ---------  ---------  ----------  ---------  ----------  ----------
         Utility operations              0.41       0.44        1.10       0.98        1.36        1.15
    Nonregulated operations             (0.01)     (0.09)       0.03      (0.04)       0.02       (0.02)
    Income (loss) from
         discontinued operations        (0.18)      0.01       (0.11)      0.02       (0.10)       0.02
                                    ---------  ---------  ----------  ---------  ----------  ----------
    Consolidated earnings           $    0.22  $    0.36  $     1.02  $    0.96  $     1.28  $     1.15
                                    =========  =========  ==========  =========  ==========  ==========
</TABLE>

     Discontinued  operations,  as  discussed  in  Corporate  Overview,  reduced
earnings for each of the 1996 periods.

     Earnings  per  share  for the  third  quarter  of 1996  decreased  14 cents
compared  to the third  quarter  of 1995.  Gross  margin  for  utility  electric
operations  reduced  earnings per share by 14 cents.  Approximately 12 cents per
share was due to cooler than normal weather during the 1996 third quarter. Gross
margin is the amount of  electric  or gas  revenues  remaining  after  deducting
electric fuel costs or the cost of gas sold, as appropriate.  In addition, costs
related to the merger  proposal to IES reduced  earnings per share by 5 cents in
the 1996 third quarter. Realization of cost savings resulting from the Company's
merger and the absence of 1995 merger-

                                      -12-

<PAGE>

related costs had a favorable  effect on 1996 utility  earnings  compared to the
third quarter of 1995.  Nonregulated  continuing  operations  reported less of a
loss in the third  quarter of 1996 than in the 1995  quarter  because  the third
quarter of 1995 included an 8 cents per share charge for  write-downs of certain
assets of nonregulated subsidiaries.

     Earnings per share for the nine months ended September 30, 1996,  increased
6 cents  compared to the nine months ended  September 30, 1995.  Realization  of
cost savings  resulting  from the merger and the absence of 1995  merger-related
costs had a favorable  effect on the comparison of 1996 and 1995  earnings.  The
cost of the IES merger  proposal  partially  offset the  improvement  in utility
earnings.  Earnings of nonregulated  continuing  operations improved 7 cents per
share in the 1996 nine-month period compared to the 1995 period due primarily to
the impact of the write-downs mentioned above.

     For the twelve months ended September 30, 1996,  earnings per share were 13
cents greater than the comparable  1995 period.  An increase in gross margin for
utility gas operations contributed to improved utility earnings. The improvement
was due primarily to an increase in gas retail sales volumes resulting from cold
weather in the first  quarter of 1996.  Electric and gas service rate  increases
effective in August 1995 also  contributed  to gross  margins.  A portion of the
rate increases  relate directly to increases in certain  operating  expenses and
thus did not materially increase earnings.  A reduction in maintenance  expenses
and property and other taxes also favorably affected earnings.

     During 1995, the Company's  earnings were reduced by merger-related  costs.
As  part  of  the  process  of  combining  the   operations   of   MidAmerican's
predecessors, the Company developed a restructuring plan which included employee
incentive  early  retirement,  relocation and separation  programs.  The Company
recorded $33.4 million of  restructuring  costs during 1995. Of the total,  $6.0
million was recorded in the second  quarter,  $24.6 million in the third quarter
and $2.8  million in the fourth  quarter.  These  costs are  reflected  in Other
Operating Expenses in the Consolidated Statements of Income.

     In addition, the Company incurred transaction costs to complete the merger.
In the fourth  quarter of 1994,  the  Company  expensed  $2.1  million of merger
transaction  costs.  During 1995,  the Company  expensed  $4.6 million of merger
transaction  costs,  $3.8 million of which were  expensed in the third  quarter.
These  costs are  included  in Other  Non-Operating  Income in the  Consolidated
Statements of Income.

     In total, restructuring and transaction costs reduced earnings for the 1995
three-month and nine-month periods by 18 cents per share and 22 cents per share,
respectively.  Earnings were reduced by 2 cents per share and 24 cents per share
for such costs for the 1996 and 1995 twelve-month periods, respectively.

     Write-downs  of certain assets of the Company's  nonregulated  subsidiaries
also  reduced  earnings  for each of the  twelve-month  periods.  For the twelve
months  ended  September  30,  1996,  earnings  from  continuing  operations  of
nonregulated  subsidiaries  were  reduced  by $1.8  million  as a result of such
write-downs.   For  the  1995  twelve-month  period,  earnings  from  continuing
operations on nonregulated subsidiaries were reduced by $8.4 million due to such
write- downs. The pre-tax amount of the write-downs,  which is included in Other
Non-Operating  Income  in  the  Consolidated   Statements  of  Income,  reflects
other-than-temporary  declines in the value of those nonregulated investments of
$3.0 million and $15.0 million for the 1996 and 1995 periods,  respectively. The
investments are primarily  alternative energy projects.  The 1995 nine-month and
twelve-month  periods also reflect $5.0 million in after-tax  gains on the sales
of  a   partnership   interest   in  a   gas   marketing   organization   and  a
telecommunications subsidiary.


                                      -13-

<PAGE>

<TABLE>


UTILITY GROSS MARGIN

     Electric Gross Margin:
<CAPTION>

                                               Periods Ended September 30
                                               --------------------------
                                        Three Months Nine Months  Twelve Months
                                        ------------ -----------  -------------
                                         1996  1995  1996  1995   1996    1995
                                         ----  ----  ----  ----  ------  ------
                                                    (In millions)
     <S>                                 <C>   <C>   <C>   <C>   <C>     <C>
     Operating revenues                  $311  $339  $840  $848  $1,087  $1,084
     Cost of fuel, energy and capacity     61    66   178   178     230     229
                                         ----  ----  ----  ----  ------  ------
         Electric gross margin           $250  $273  $662  $670  $  857  $  855
                                         ====  ====  ====  ====  ======  ======
</TABLE>

     Variations  in gross  margin are the result of changes in  revenues  due to
price and sales volume  variances.  Changes in the cost of electric fuel, energy
and capacity  (collectively,  Energy Costs) reflect  fluctuations  in generation
levels and mix, fuel cost,  and energy and capacity  purchases.  The Company has
been allowed to recover Energy Costs from most of its electric utility customers
through energy  adjustment  clauses  (EACs) in revenues.  Variations in revenues
collected through the EACs, reflecting changes in Energy Costs per unit sold and
volumes sold, do not affect gross margin or net income.

     The electric gross margin decreased for the 1996 three-month and nine-month
periods  compared  to the  comparable  1995  periods.  The  decreases  were  due
primarily to cooler than normal weather  conditions in the third quarter of 1996
and hotter than normal weather in the third quarter of 1995. Cooling degree days
were 22 percent less than normal in the third  quarter of 1996 compared to being
28 percent  greater than normal in the third quarter of 1995 Decreases in retail
sales due to cooler  weather were  partially  offset by increases  from customer
growth  and  improved  sales  to  large  general  service  customers.   For  the
twelve-months-ended  comparison,  retail sales were relatively unchanged. Colder
weather during the 1995-1996  heating season than in the 1994-1995 season helped
to offset  the  impact of the mild  cooling  season  in 1996.  Customer  growth,
increased sales to large general service customers and rate increases, discussed
below,  contributed  to the  slight  increase  in  electric  margin for the 1996
twelve-months-ended period compared to the 1995 period.

     An increase in electric retail rates also contributed to revenues and gross
margin.  Retail rates in the first and second  quarters of 1995 reflect  interim
rates  representing an increase of $13.6 million in annual electric  revenues in
connection with an Iowa electric rate filing, which the Company began collecting
in  January  1995.  The 1996  periods  reflect  the final rate  increase  in the
proceeding,  which was  effective  in August 1995,  representing  an increase of
$20.3 million in annual electric revenues. Approximately $8 million of the $20.3
million increase in annual electric  revenues relates to increased  expensing of
other  postretirement  employee  benefit (OPEB) costs.  Additionally,  in August
1995, the Company began collection of $18.6 million over a four-year prospective
period related to an energy  efficiency cost recovery filing.  Revenue increases
for energy  efficiency cost recovery have an immaterial impact on net income due
to  corresponding   increases  in  other  operating  expenses,   reflecting  the
amortization of previously deferred energy efficiency costs.

     In addition to the electric rate increases  discussed above, the comparison
of the  twelve-month  gross margins was affected by two other energy  efficiency
cost recovery filings. In October 1994 and January 1995, the Company implemented
rate increases for Iowa energy  efficiency  cost recovery  filings which allow a
total increase in electric revenues of $31.7 million over a four-year period. As
stated above, a corresponding increase in other operating expenses results in an
immaterial  impact on net income for revenue  increases  from energy  efficiency
cost recovery.

     Revenues  from  sales for  resale  increased  for each of the 1996  periods
compared to the 1995 periods.  Variations in the amount of available  generation
was the primary cause of the  differences.  Sales for resale have a lower margin
than other sales and, accordingly, increases in related revenues do not increase
gross margin and net income as much as increases in retail  revenues.  Effective
November  1995,  the margin on most  electric  energy sales for resale is flowed
through to retail customers and has a minimal effect on gross margin.

                                       -14-

<PAGE>

<TABLE>

     Gas Gross Margin:
<CAPTION>
                                      Periods Ended September 30,
                              Three Months   Nine Months  Twelve Months
                              ------------   -----------  -------------
                               1996   1995   1996   1995   1996   1995
                               ----   ----   ----   ----   ----   ----
                                            (In millions)
     <S>                       <C>    <C>    <C>    <C>    <C>    <C>
     Operating revenues        $ 73   $ 65   $355   $312   $502   $445
     Cost of gas sold            48     38    220    189    310    274
                               ----   ----   ----   ----   ----   ----
         Gas gross margin      $ 25   $ 27   $135   $123   $192   $171
                               ====   ====   ====   ====   ====   ====
</TABLE>

      Similar to electric  gross margin,  variations in gas gross margin are the
result of changes  in  revenues  due to price and sales  volume  variances.  The
Company  has been  allowed to recover  the cost of gas sold from most of its gas
utility  customers  through purchase gas adjustment  clauses (PGAs) in revenues.
Variations in revenues  collected  through the PGAs,  reflecting  changes in the
cost of gas per unit and volumes sold, do not affect gross margin or net income.

     Gas gross margin increased for the nine-month and  twelve-month  periods in
1996  compared to the 1995  periods.  The  increases  were due both to price and
sales  increases.  Retail  sales  increased  7.1% and 10.5% for nine and  twelve
months  ended  September  30, 1996,  respectively,  compared to the related 1995
periods.  As stated in the electric  gross margin  discussion,  the increases in
sales were due in part to colder  weather  conditions in the  1995-1996  heating
season than during the 1994-1995 heating season. The nine months ended September
30, 1996, was significantly  affected by colder weather during the first quarter
of 1996 than in the comparable period in 1995. Colder temperatures in the fourth
quarter of 1995 than in the fourth quarter of 1994 also increased  sales for the
twelve months ended September 30, 1996. The Company has continued to have growth
in the number of natural gas customers.

     An  increase  in gas  retail  rates  also  was a cause of the  increase  in
revenues and gross  margin.  Retail rates in the 1995 quarters  reflect  interim
rates  representing  an  increase  of $8.2  million  in annual gas  revenues  in
connection with an Iowa gas rate filing,  which the Company began  collecting in
October  1994.  The  1996  quarters  reflect  the  final  rate  increase  in the
proceeding,  which was  effective  in August 1995,  representing  an increase of
$10.6  million in annual gas revenues.  Approximately  $2.5 million of the $10.6
million increase in annual gas revenues  relates to increased  expensing of OPEB
costs.

     In addition to the gas rate increase discussed above, the comparison of the
twelve-month  gas  gross  margins  was  affected  by an energy  efficiency  cost
recovery  filing.  In January 1995,  the Company  implemented a gas service rate
increase  for an Iowa energy  efficiency  cost  recovery  filing which allows an
increase  in gas  revenues of $6.7  million  over a  four-year  period.  Revenue
increases for energy  efficiency cost recovery have an immaterial  impact on net
income due to corresponding increases in other operating expenses.

UTILITY OPERATING EXPENSES

     Other  operating  expenses  for  the  quarter  ended  September  30,  1996,
decreased  $28.0 million  compared to the third quarter of 1995 due primarily to
the  restructuring  costs  included  in the 1995  quarter  as  discussed  in the
Earnings section of Results of Operations. In addition,  savings from work force
reductions  and other  efficiencies  following  the  merger  contributed  to the
decrease.  These decreases were partially  offset by increased  outside services
and, as discussed  above,  amortization of deferred  energy  efficiency and OPEB
costs.

     Other  operating  expenses  for the nine months ended  September  30, 1996,
decreased $35.0 million  compared to the comparable  period in 1995. In addition
to the items affecting the quarter  comparison,  the nine months ended September
30,1996,  reflects  decreases  in  manufactured  gas  plant  clean-up  costs due
primarily to timing.

     For the twelve months ended September 30, 1996,  other  operating  expenses
decreased  $24.7  million  compared  to the 1995 period due  primarily  to costs
related to the  restructuring  plan discussed in the Earnings


                                       -15-

<PAGE>


section  of Results  of  Operations.  Restructuring  costs  resulted  in a $26.2
million  decrease in utility other operating  expenses  between the periods.  In
addition,  the 1996 period reflects merger savings and a $4.6 million  reduction
in  nuclear  operations  costs.  The 1996  twelve-month  period  reflects a $5.0
million  increase from the  amortization of deferred energy  efficiency and OPEB
costs. Increases in consulting services expenses and some general administrative
costs also increased other operating expenses.

     Maintenance  expenses  increased for the three months and nine months ended
September  30,  1996,  compared to the 1995  periods.  The timing of power plant
maintenance and an increase in general plant  maintenance  accounted for much of
the  variation  between the periods.  For the  comparable  twelve-months-  ended
periods, maintenance expenses decreased $1.6 million due primarily to the timing
of power plant maintenance.

     Depreciation  expense increased compared to each prior period due primarily
to additions to utility plant in service.

     Property  and other  taxes  decreased  due to a reduction  in property  and
payroll  taxes.  Lower  than  expected  assessed  property  values and tax rates
reduced  property tax expense for the 1996 periods compared to the 1995 periods.
A decrease  in the  number of  employees  as a result of the  merger  caused the
reduction in payroll tax expense.

NONREGULATED OPERATING REVENUES

     Revenues   for   the   Company's   nonregulated    subsidiaries   increased
significantly  for each 1996 period compared to the comparable 1995 period.  The
increase is due primarily to revenues  from natural gas marketing  subsidiaries,
some of which did not exist in the 1995 periods.

NONREGULATED OPERATING EXPENSES

     Cost of sales includes  expenses  directly related to sales of natural gas.
The  increase  in cost of  sales is due to the  newly  established  natural  gas
subsidiaries which did not exist in 1995.

REALIZED GAINS AND LOSSES ON SECURITIES, NET

     Realized gains and losses on securities increased for the nine months ended
September  30, 1996,  due to an increase in gains on the  disposition  of equity
fund holdings and managed preferred stock portfolios.

NON-OPERATING INCOME - OTHER, NET

     During the 1996 third quarter, the Company sold the Hub Tower, a Des Moines
office  building,  and  recorded a $1.8 million  pre-tax  gain on the sale.  The
Company had written the property down to  anticipated  market values in 1992 and
in December 1995.  The nine months ended  September 30, 1995,  includes  pre-tax
gains  totalling  $8.5 million on the sales of a  partnership  interest in a gas
marketing  organization and a  telecommunication  subsidiary.  In addition,  the
adjustments to nonregulated investments discussed at the beginning of Results of
Operations  decreased Other, Net for each of the 1995 periods presented.  Of the
total adjustments to these investments,  $14.4 million is reflected in the third
quarter of 1995.  Merger  transaction  costs also reduced Other, Net in the 1995
periods.  The 1996 periods  include $8.6  million of costs  associated  with the
merger proposal to IES Industries Inc.

INTEREST CHARGES

     Decreased  interest on long-term  debt in the 1996 periods  compared to the
1995  periods  was  due  to  a  lower  overall  rate  on  debt  of  nonregulated
subsidiaries.

                                       -16-

<PAGE>


PREFERRED DIVIDENDS

     Preferred  dividends for the 1996 periods  include losses on the redemption
of shares of the $1.7375  Series of preferred  shares.  During 1996, the Company
has  redeemed  512,000  shares of the $1.7375  series.  A change in the dividend
payment  date  compared  to that of a  predecessor  company  resulted  in  lower
preferred  dividends  in the 1995 third  quarter.  Preferred  dividends  for the
twelve months ended September 30, 1996, compared to the 1995 period were reduced
by the redemption of three other series of preferred shares in December 1994.


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

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

     For the first nine months of 1996,  the Company had net cash  provided from
operating  activities of $284 million and net cash used of $137 million and $157
million for investing and financing activities, respectively.

INVESTING ACTIVITIES AND PLANS

Utility Capital Expenditures:
-----------------------------

     Utility  construction  expenditures,  including  allowance  for funds  used
during  construction  (AFUDC),  Quad Cities  Station  nuclear fuel purchases and
Cooper  capital  improvements,  were $101  million  for the first nine months of
1996.

     Forecasted  utility  construction  expenditures  for 1996 are $166  million
including  AFUDC.  Capital  expenditures  needs are  reviewed  regularly  by the
Company's  management and may change  significantly as a result of such reviews.
For the years 1996 through 2000, the Company  forecasts $818 million for utility
construction  expenditures.  The  Company  presently  expects  that all  utility
construction  expenditures for 1996 through 2000 will be met with cash generated
from utility operations, net of dividends.

     Operators of a nuclear  facility are required to set aside funds to provide
for costs of future  decommissioning  of their  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,  the Utility  expects to
contribute  approximately  $45 million during the period 1996 through 2000 to an
external trust established for the investment of funds for  decommissioning  the
Quad Cities Station.  The funds are invested  predominately  in investment grade
municipal and U.S.  Treasury bonds. In addition,  a portion of the payments made
under the power  purchase  contract  with NPPD are for  decommissioning  funding
related to Cooper. The Cooper costs are reflected in Other Operating Expenses in
the  Consolidated  Statements of Income.  Based on NPPD  estimates,  the Utility
expects to pay  approximately  $57  million  to NPPD for Cooper  decommissioning
during the period 1996  through  2000.  NPPD  invests  the funds in  instruments
similar to those of the Quad Cities Station trust fund. The Company'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.  The Company  currently
recovers Quad Cities Station decommissioning costs charged to Illinois customers
through a rate  rider on  customer  billings.  Cooper  and Quad  Cities  Station
decommissioning  costs charged to Iowa customers are included in base rates, and
increases in those amounts must be sought through the normal ratemaking process.


Nonregulated Capital Expenditures:
----------------------------------

     Capital expenditures of nonregulated  subsidiaries were $37 million for the
first nine months of 1996.  Capital  expenditures of  nonregulated  subsidiaries
depend  primarily upon the  availability  of suitable  investment  opportunities
which meet the Company's objectives.


                                       -17-

<PAGE>

     During the third quarter,  a nonregulated  subsidiary of the Company made a
$10 million  investment in convertible  preferred stock of a leading provider of
digital wireless communications in the Midwest.

     MidAmerican Capital invests in a variety of marketable  securities which it
holds  for  indefinite  periods  of time.  For the  first  nine  months of 1996,
MidAmerican  Capital  had net cash  inflows of $38 million  from its  marketable
securities investment activities.  In the Consolidated Statements of Cash Flows,
the lines  Purchase of Securities  and Proceeds from Sale of Securities  consist
primarily of the gross amounts of these activities, including realized gains and
losses on investments in marketable securities.

     The  Company,  through  one  of  its  nonregulated  subsidiaries,   has  an
investment  in Class A and Class B common  stock of  McLeod,  Inc.  (McLeod),  a
telecommunications company. The Class B stock is convertible to Class A stock on
a one-for-one  basis.  On June 14, 1996,  McLeod made an initial public offering
(IPO) of common stock. At September 30, 1996, the carrying amount and fair value
of the Company's investment were $36.3 million and $270.8 million, respectively.
As part of an investor  agreement,  the Company is  prohibited  from  selling or
otherwise  disposing  of any of the  common  stock of McLeod for a period of two
years from the date of the IPO, and  accordingly,  no market  value  adjustments
have been  reflected  in the  Company's  financial  statements.  The Company has
agreed to make an  additional  equity  investment  in McLeod of $10  million  in
connection with a planned public offering of McLeod's common stock.

FINANCING ACTIVITIES, PLANS AND AVAILABILITY

Corporate:
----------

     The Company has the necessary  authority to issue up to 6,000,000 shares of
common  stock  through its  Shareholder  Options  Plan (the  Company's  dividend
reinvestment  and stock purchase plan).  Since the effective date of the merger,
the Company  has used open  market  purchases  of its common  stock  rather than
original  issue  shares  to meet  share  obligations  under its  Employee  Stock
Purchase Plan and the Shareholder  Options Plan. The Company  currently plans to
continue  using open  market  purchases  to meet share  obligations  under these
plans.

     Several   financial   relationships   between  the  Company's  utility  and
nonregulated  operations were eliminated  subsequent to the merger.  One support
agreement  remains  between  the  Utility  and  Midwest  Capital  related  to  a
performance guarantee by Midwest Capital of a joint venture turnkey engineering,
procurement and construction  contract for a cogeneration  project.  The project
received  preliminary  acceptance from the owner in 1995,  which pursuant to the
construction  contract,  eliminates the potential for  liquidated  damages being
incurred  related to the project.  In August 1996,  Midwest Capital extended the
maturity date of approximately $25 million of long-term debt which was supported
by a  guarantee  from the  Utility.  During the third  quarter of 1996,  Midwest
Capital  sold the Hub Tower,  a Des Moines  office  building and retired the $25
million debt.  Proceeds  from the sale  provided most of the funds  necessary to
retire  the  debt.  The  deficiency  was  funded  by  a  $4.5  million   capital
contribution in  extinguishment of the guarantee.  In addition,  Midwest Capital
has a $25 million line of credit with the Utility.

     On October 30, 1996, the Company's Board of Directors  declared a quarterly
dividend  on common  shares of $0.30 per share  payable  December  1, 1996.  The
dividend represents an annual rate of $1.20 per share.


Utility:
--------

     The Utility  currently has authority from the FERC to issue short-term debt
in the form of commercial paper and bank notes  aggregating $400 million.  As of
September 30, 1996,  the Utility had a $250 million  revolving  credit  facility
agreement and a $10 million line of credit to provide  short-term  financing for
utility operations.  The Utility's  commercial paper borrowings,  which totalled
$157  million at September  30, 1996,  are  supported  by the  revolving  credit
facility  and the  line of  credit.  The  Utility  also has a  revolving  credit
facility  which is  dedicated to provide  liquidity  for its  obligations  under
outstanding pollution control revenue bonds that are periodically remarketed.

                                      -18-

<PAGE>




     The Utility has $346 million of long-term debt  maturities and sinking fund
requirements  for 1997  through  2000,  of which $50  million  matures  in 1997.
Management  is  considering  several  long-term  financing  options,   including
unsecured  debt and  preferred  securities,  for the remainder of 1996 and early
1997.  Proceeds from those financings  would be used to reduce  commercial paper
outstanding  and to refinance  existing  securities.  The Company  currently has
authority  from  the  FERC for $500  million  of  long-term  debt in the form of
secured first mortgage  bonds and unsecured  debentures.  Similar  authority has
been  requested  from the ICC,  and the Company  expects to file a  registration
statement with the Securities and Exchange Commission in the fourth quarter.

Nonregulated:
-------------

      MidAmerican  Capital has two  floating-rate-to-fixed  interest  rate swaps
each in the amount of $32 million.  The interest  rate swaps have fixed rates of
5.97% and  6.00%,  respectively,  and are for  three-year  and  two-year  terms,
respectively, with an optional third year on the latter.

     MidAmerican  Capital's  aggregate  amounts of  maturities  and sinking fund
requirements  for long-term  debt  outstanding  at September 30, 1996,  are $294
million for the years 1997 through 2000, of which $30 million is in 1997.


OPERATING ACTIVITIES AND OTHER MATTERS

Utility Operations and Competition:
-----------------------------------

     The  Utility  is  subject  to  regulation  by  several  utility  regulatory
agencies. The operating environment and the recoverability of costs from utility
customers are significantly  influenced by the regulation of those agencies. The
Company  supports  changes in the electric  utility  industry that will create a
more  competitive  environment  for  the  entire  electric  industry  as long as
appropriate  transitional  steps  are  in  place  to  accomodate  moving  from a
regulated  cost-of-service  industry to a competitive  industry.  Although these
anticipated changes may create  opportunities,  they will also create additional
challenges and risks for utilities.  The Company is evaluating  strategies  that
will assist it in a more competitive environment.

     A possible  consequence  of  competition  in the  utility  industry  is the
discontinued applicability of Statement of Financial Accounting Standards (SFAS)
No.  71.  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.  The Company's  electric and gas utility  operations are
currently  subject  to the  provisions  of SFAS  71,  but its  applicability  is
periodically  reexamined.  If a portion of the Company's  utility  operations no
longer meets the criteria of SFAS 71, the Company would be required to eliminate
from its balance sheet the regulatory  assets and  liabilities  related to those
operations that resulted from actions of its regulators.  Although the amount of
such an  elimination  would  depend on the  specific  circumstances,  a material
adjustment  to  earnings  in  the  appropriate  period  could  result  from  the
discontinuance   of  SFAS  71.  As  of  September  30,  1996,  the  Company  had
approximately  $385 million of  regulatory  assets in its  Consolidated  Balance
Sheet.

Energy Efficiency:
------------------

     In  May  1996,  the  Iowa  legislature  approved  a bill  enhancing  energy
efficiency program flexibility, eliminating mandatory spending levels for energy
efficiency  programs  and  allowing  more timely  recovery of energy  efficiency
expenditures as determined by the IUB. The new legislation became effective July
1, 1996.  Previously,  electric and gas utilities in Iowa were required to spend
approximately  2% and 1.5%,  respectively,  of their annual Iowa  jurisdictional
revenues on energy efficiency activities. As discussed in Results of Operations,
the Company is collecting a total of  approximately  $14.3 million  annually for
previously  deferred energy  efficiency costs for which the Company has received
approval to collect.  The  Consolidated  Balance Sheet as of September 30, 1996,
included  approximately  $26 million of such approved  costs yet to be collected
from customers. In addition, the Company had


                                      -19-

<PAGE>


approximately  $81 million of energy  efficiency  costs deferred and included as
regulatory  assets in its  September  30, 1996,  Consolidated  Balance Sheet for
which recovery will be sought in future energy efficiency  filings.  The Company
expects final rules on the  implementation  of the new  legislation in the first
quarter of 1997,  at which time the Company  will seek  approval  to  accelerate
recovery of deferred and current energy efficiency costs.

Rate Matters:
-------------

     On June 4, 1996, the Company filed a new electric  pricing proposal in Iowa
and Illinois. The proposal would reduce electric revenues, on a graduated basis,
to the  level of  approximately  $25  million  annually  within  five  years and
eliminate automatic fuel adjustment clauses. The price reductions,  possible due
to merger and restructuring related cost savings,  reduce price disparity within
customer  classes and are expected to move the Company closer to prices that can
be sustained in a competitive market. In addition,  the proposals,  if approved,
would provide the Company more  flexibility to negotiate with customers who have
service options and to mitigate strandable costs.

     On October 15,  1996,  the ICC ordered the Company to reduce  rates for its
Illinois  customers by 10%, or $13.1  million  annually,  effective  November 3,
1996, and commenced an investigation  into the  reasonableness  of the Company's
rates.  Hearings  have not been  scheduled.  The Company is reviewing the effect
this order will have on its electric pricing proposal.

     On August 1, 1996, the Iowa Office of Consumer Advocate (OCA) requested the
IUB to order the Company to reduce  electric  rates by 10.7%,  or  approximately
$101 million annually in Iowa electric  revenues.  On September 6, 1996, the IUB
docketed  the OCA request and  initiated  an  investigation  into the  Company's
rates.  The  IUB  also  consolidated  the   investigation   with  the  Company's
alternative regulation and pricing proposal for purposes of the hearing which is
scheduled to begin in December 1996. The Company  intends to reduce its electric
rates in Iowa to the levels  proposed in its pricing  proposal  filed on June 4,
1996.  The  planned  effective  date for the initial  reduction,  which has been
approved by the IUB, is November 1, 1996.  The Company has  recorded a liability
for the  portion of its Iowa  electric  revenues  between  August 1,  1996,  and
September  30,  1996,  that  were in  excess of those  proposed  in the  pricing
proposal.

     While the ultimate outcome cannot be accurately  predicted,  based upon the
Company's  analysis of the issues asserted in this filing,  management  believes
that the  resolution  of the OCA's  filing will not differ  materially  from the
cumulative effect of the pricing plan proposed by the Company.

                                      -20-

<PAGE>



Environmental Matters:
----------------------

     The  United  States   Environmental   Protection  Agency  (EPA)  and  state
environmental  agencies have determined that  contaminated  wastes  remaining at
certain  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.

     The Company is evaluating 27 properties  which were, at one time,  sites of
gas  manufacturing  plants in which it may be a  potentially  responsible  party
(PRP). The purpose of these  evaluations is to determine whether waste materials
are present,  whether such materials constitute an environmental or health risk,
and  whether  the  Company  has any  responsibility  for  remedial  action.  The
Company's present estimate of probable  remediation costs for these sites is $22
million.  This estimate has been recorded as a liability and a regulatory  asset
for future recovery through the regulatory  process.  Refer to Note (B) of Notes
for further  discussion of the  Company's  environmental  activities  related to
manufactured gas plant sites and cost recovery.

     Although the timing of potential  incurred  costs and recovery of such cost
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 the Company's financial position or results of operations.

ACCOUNTING ISSUES

     In March 1995, the Financial  Accounting Standards Board (FASB) issued SFAS
121  regarding  accounting  for asset  impairments.  This  statement,  which was
adopted by the  Company in the first  quarter of 1996,  requires  the Company to
review  long-lived   assets  for  impairment   whenever  events  or  changes  in
circumstances  indicate  that the  carrying  amount  of such  assets  may not be
recoverable.  SFAS 121 also  requires  rate-regulated  companies to recognize an
impairment  for  regulatory  assets that are not  probable  of future  recovery.
Adoption of SFAS 121 did not have a material impact on the Company's  results of
operations or financial position.

      The staff of the Securities and Exchange Commission has questioned certain
of the current  accounting  practices of the electric utility industry regarding
the recognition, measurement and classification of nuclear decommissioning costs
in the financial statements. In response to these questions, the FASB has issued
an Exposure Draft (ED),  "Accounting for Certain  Liabilities Related to Closure
or Removal of Long-Lived Assets," which addresses the accounting for closure and
removal costs,  including  decommissioning  of nuclear power plants.  If current
electric  utility industry  accounting  practices for such  decommissioning  are
changed,  the annual provision for  decommissioning  could increase  relative to
1995, and the total  estimated cost for  decommissioning  could be recorded as a
liability with  recognition of an increase in the cost of related  nuclear power
plant.  Due to the continuing  evolution of the exposure  draft,  the Company is
uncertain as to the impact on its results of operations and financial position.

                                      -21-

<PAGE>



PART II - OTHER INFORMATION

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

     The Company and its subsidiaries have no material legal proceedings  except
for the following:

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

     For information relating to the Company's Environmental Matters,  reference
is made to Part I, Note (B) of Notes to Consolidated Financial Statements.

Rate Matters
------------

     For information  relating to the Company's Rate Matters,  reference is made
to Part I. Note (H) of Notes to Consolidated Financial Statements.

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

     On May 26, 1995, the Company filed a lawsuit naming  Nebraska  Public Power
District (NPPD) as defendant. The action is filed in the U.S. District Court for
the Southern District of Iowa and is identified as No. 4-95-CV-80356.  The legal
proceeding  is based upon a  long-term  power  purchase  agreement  between  the
Company and NPPD, pursuant to which the Company purchases one-half the output of
NPPD's Cooper Nuclear  Station  (Cooper) and pays one-half the cost of operating
Cooper.  NPPD,  in turn,  is obligated to operate the plant in an efficient  and
economical  manner  consistent  with good business and utility  practices and in
compliance  with the terms of its operating  license issued to it by the Nuclear
Regulatory  Commission  (NRC).  In 1993 and 1994, as a response to NPPD actions,
the NRC issued  numerous  notices of  violations  to NPPD;  as a result of these
violations  and other  safety  issues  identified  by the NRC and  NPPD,  Cooper
experienced  unplanned  outages and outages were unduly extended.  The Company's
position  is that NPPD's  failure to meet its  obligations  with  respect to the
operation  of Cooper  deprived  the Company of the  benefits it was  entitled to
under the power sales  contract,  causing the Company to lose  profits and incur
increased  costs of  operation,  which damages the Company seeks to collect from
NPPD.  Similar  litigation  has been filed against NPPD by the Lincoln  Electric
System (LES), a municipal  utility  serving the City of Lincoln,  Nebraska,  and
purchasing  one-eighth  of the  output of  Cooper  pursuant  to a similar  power
purchase contract. The LES legal proceeding is pending in Nebraska state court.


                                      -22-

<PAGE>



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

(a)      Exhibits

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


         Exhibit 12.1 -  Computation  of ratios of earnings to fixed charges and
computation  of ratios of  earnings to fixed  charges  plus  preferred  dividend
requirements - (Consolidated).

         Exhibit 12.2 -  Computation  of ratios of earnings to fixed charges and
computation  of ratios of  earnings to fixed  charges  plus  preferred  dividend
requirements - (Utility Only).

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

         Exhibit  99.1 - Unaudited  Proforma  Statements  of Income for the nine
months and twelve  months ended  September  31, 1996,  and for the twelve months
ended December 31, 1995, and Balance Sheet as of September 30, 1996,  reflecting
the distribution of the capital stock of MidAmerican Capital Company and Midwest
Capital Group to MidAmerican Energy Holdings Company,  scheduled for December 1,
1996.

         Exhibit  99.2 - Selected  Consolidated  Financial  Data of  MidAmerican
Energy  Company for the twelve  months ended and as of December 31, 1991,  1992,
1993,  1994 and 1995  and  September  30,  1996  and for the nine  months  ended
September 30, 1995 and 1996 and as of September 30, 1995.

         Exhibit  99.3 -  Selected  Proforma  Utility  Only  Financial  Data  of
MidAmerican  Energy  Company for the twelve  months ended and as of December 31,
1991,  1992,  1993, 1994 and 1995 and September 30, 1996 and for the nine months
ended September 30, 1995 and 1996 and as of September 30, 1995.

(b)      Reports on Form 8-K

         None.

                                      -23-

<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    November 1, 1996                                 P. G. Lindner
    ----------------------                         ---------------------------
                                                         P. G. Lindner
                                                     Group Vice President and
                                                     Chief Financial Officer





                                      -24-

<PAGE>