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

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended SEPTEMBER 30, 2001
                                               ------------------

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

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

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

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

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

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

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

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

As of October 31, 2001, all 70,980,203 outstanding shares of MidAmerican Energy
Company's voting stock were held by its parent company, MHC Inc.


<PAGE>


                           MIDAMERICAN ENERGY COMPANY

                                    FORM 10-Q

                                TABLE OF CONTENTS



                      PART I.  FINANCIAL INFORMATION                  PAGE NO.

ITEM 1.    Financial Statements

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

ITEM 2.    Management's Discussion and Analysis of
             Financial Condition and Results of Operations..............  13

                           PART II. OTHER INFORMATION

ITEM 1.    Legal Proceedings............................................  25
ITEM 6.    Exhibits and Reports on Form 8-K.............................  27

Signatures..............................................................  28

Exhibit Index...........................................................  29

                                      -2-

<PAGE>


INDEPENDENT ACCOUNTANTS' REPORT


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

We have reviewed the  accompanying  consolidated  balance  sheet of  MidAmerican
Energy Company and subsidiaries  (the Company) as of September 30, 2001, and the
related  consolidated  statements of income for the  three-month  and nine-month
periods  ended  September  30,  2001  and  2000,  and the  related  consolidated
statements of cash flows for the nine-month periods ended September 30, 2001 and
2000.  These  financial  statements  are  the  responsibility  of the  Company's
management.

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

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

We have  previously  audited,  in accordance with auditing  standards  generally
accepted in the United  States of America,  the  consolidated  balance sheet and
statement of capitalization (not presented herein) of MidAmerican Energy Company
and  subsidiaries  as  of  December  31,  2000,  and  the  related  consolidated
statements of income,  comprehensive income,  retained earnings,  and cash flows
for the year then ended (not presented herein);  and in our report dated January
18, 2001, we expressed an unqualified  opinion on those  consolidated  financial
statements.  In our  opinion,  the  information  set  forth in the  accompanying
consolidated  balance  sheet as of December  31, 2000 is fairly  stated,  in all
material respects,  in relation to the consolidated  balance sheet from which it
has been derived.




DELOITTE & TOUCHE LLP

Des Moines, Iowa
October 26, 2001

                                      -3-
<PAGE>


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

                                                THREE MONTHS                  NINE MONTHS
                                             ENDED SEPTEMBER 30,           ENDED SEPTEMBER 30,
                                          --------------------------    --------------------------
                                             2001           2000           2001           2000
                                          -----------    -----------    -----------    -----------
<S>                                       <C>            <C>            <C>            <C>
OPERATING REVENUES
Regulated electric ....................   $   386,674    $   359,430    $   986,864    $   919,866
Regulated gas .........................        56,354         71,573        510,509        349,628
Nonregulated ..........................       108,291        122,430        540,173        267,853
                                          -----------    -----------    -----------    -----------
                                              551,319        553,433      2,037,546      1,537,347
                                          -----------    -----------    -----------    -----------
OPERATING EXPENSES
Regulated:
  Cost of fuel, energy and capacity ...        88,322         68,062        214,528        183,551
  Cost of gas sold ....................        24,729         39,029        369,914        211,581
  Other operating expenses ............       113,362        102,906        315,247        307,660
  Maintenance .........................        34,735         29,761         93,681         84,438
  Depreciation and amortization .......        50,260         48,062        151,715        145,596
  Property and other taxes ............        17,614         18,380         53,431         56,789
                                          -----------    -----------    -----------    -----------
                                              329,022        306,200      1,198,516        989,615
                                          -----------    -----------    -----------    -----------
Nonregulated:
  Cost of sales .......................       104,233        118,409        521,245        252,994
  Other ...............................         4,724          5,609         13,255         14,479
                                          -----------    -----------    -----------    -----------
                                              108,957        124,018        534,500        267,473
                                          -----------    -----------    -----------    -----------
Total operating expenses ..............       437,979        430,218      1,733,016      1,257,088
                                          -----------    -----------    -----------    -----------

OPERATING INCOME ......................       113,340        123,215        304,530        280,259
                                          -----------    -----------    -----------    -----------

NON-OPERATING INCOME
Interest and dividend income ..........         3,051          4,594         11,339          7,179
Other, net ............................        (1,944)        (1,924)        (9,911)        (5,984)
                                          -----------    -----------    -----------    -----------
                                                1,107          2,670          1,428          1,195
                                          -----------    -----------    -----------    -----------

FIXED CHARGES
Interest on long-term debt ............        14,803         15,929         46,471         44,316
Other interest expense ................         1,448          1,176          5,195          8,177
Preferred dividends of subsidiary trust         1,995          1,995          6,047          6,047
Allowance for borrowed funds ..........          (351)          (467)        (1,104)        (1,220)
                                          -----------    -----------    -----------    -----------
                                               17,895         18,633         56,609         57,320
                                          -----------    -----------    -----------    -----------

INCOME BEFORE INCOME TAXES ............        96,552        107,252        249,349        224,134
INCOME TAXES ..........................        39,988         42,821        104,360         91,029
                                          -----------    -----------    -----------    -----------
NET INCOME ............................        56,564         64,431        144,989        133,105
PREFERRED DIVIDENDS ...................           976          1,239          3,483          3,716
                                          -----------    -----------    -----------    -----------
EARNINGS ON COMMON STOCK ..............   $    55,588    $    63,192    $   141,506    $   129,389
                                          ===========    ===========    ===========    ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       -4-
<PAGE>


                           MIDAMERICAN ENERGY COMPANY
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                  AS OF
                                                       ---------------------------
                                                       SEPTEMBER 30,  DECEMBER 31,
                                                            2001         2000
                                                       ------------   ------------
                                                        (UNAUDITED)
<S>                                                      <C>            <C>
ASSETS
UTILITY PLANT
Electric .............................................   $4,548,164     $4,471,839
Gas ..................................................      852,585        831,203
                                                         ----------     ----------
                                                          5,400,749      5,303,042
Less accumulated depreciation and amortization .......    2,816,103      2,680,420
                                                         ----------     ----------
                                                          2,584,646      2,622,622
Construction work in progress ........................       68,826         38,584
                                                         ----------     ----------
                                                          2,653,472      2,661,206
                                                         ----------     ----------

POWER PURCHASE CONTRACT ..............................       76,516         82,231
                                                         ----------     ----------
CURRENT ASSETS
Cash and cash equivalents ............................      125,207          9,677
Receivables ..........................................      129,626        422,661
Inventories ..........................................       54,017         69,130
Prepaid taxes ........................................       23,956         22,889
Other ................................................       11,866          9,789
                                                         ----------     ----------
                                                            344,672        534,146
                                                         ----------     ----------

INVESTMENTS AND NONREGULATED PROPERTY, NET ...........      264,082        256,053
REGULATORY ASSETS ....................................      218,072        240,934
OTHER ASSETS .........................................       70,160         48,996
                                                         ----------     ----------
TOTAL ASSETS .........................................   $3,626,974     $3,823,566
                                                         ==========     ==========

CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common shareholder's equity ..........................   $1,219,240     $1,161,968
MidAmerican preferred securities, not subject to
  mandatory redemption ...............................       31,759         31,759
Preferred securities, subject to mandatory redemption:
  MidAmerican preferred securities ...................       36,680         50,000
  MidAmerican-obligated preferred securities of
    subsidiary trust holding solely MidAmerican
    junior subordinated debentures ...................      100,000        100,000
Long-term debt (excluding current portion) ...........      657,026        820,082
                                                         ----------     ----------
                                                          2,044,705      2,163,809
                                                         ----------     ----------
CURRENT LIABILITIES
Notes payable ........................................         --           81,600
Current portion of long-term debt ....................      263,480        101,600
Current portion of power purchase contract ...........       16,554         16,554
Accounts payable .....................................      136,974        308,784
Taxes accrued ........................................      104,148        124,493
Interest accrued .....................................       14,914         12,016
Other ................................................       33,651         34,667
                                                         ----------     ----------
                                                            569,721        679,714
                                                         ----------     ----------
OTHER LIABILITIES
Power purchase contract ..............................       35,728         35,728
Deferred income taxes ................................      535,944        540,608
Investment tax credit ................................       62,521         66,209
Other ................................................      378,355        337,498
                                                         ----------     ----------
                                                          1,012,548        980,043
                                                         ----------     ----------
TOTAL CAPITALIZATION AND LIABILITIES .................   $3,626,974     $3,823,566
                                                         ==========     ==========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       -5-
<PAGE>


                           MIDAMERICAN ENERGY COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                   NINE MONTHS
                                                               ENDED SEPTEMBER 30,
                                                             ----------------------
                                                               2001         2000
                                                             ---------    ---------
<S>                                                          <C>          <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net income ...............................................   $ 144,989    $ 133,105
Adjustments to reconcile net income to net cash provided:
  Depreciation and amortization ..........................     152,226      145,816
  Deferred income taxes and investment tax credit, net ...     (12,374)      (8,780)
  Amortization of other assets ...........................      37,268       37,059
  Net change in accrued customer rate credits ............      16,869       (1,675)
  Cash inflow of accounts receivable securitization ......        --         12,877
  Impact of changes in working capital ...................     114,731          676
  Other ..................................................       7,330        8,821
                                                             ---------    ---------
    Net cash provided ....................................     461,039      327,899
                                                             ---------    ---------

NET CASH FLOWS FROM INVESTING ACTIVITIES
Utility construction expenditures ........................    (150,867)    (119,447)
Quad Cities Generating Station decommissioning trust fund       (6,224)      (6,227)
Nonregulated capital expenditures ........................      (1,984)         (87)
Other investing activities, net ..........................       3,529         (359)
                                                             ---------    ---------
  Net cash used ..........................................    (155,546)    (126,120)
                                                             ---------    ---------

NET CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid ...........................................     (93,483)      (3,716)
Issuance of long-term debt, net of issuance cost .........        --        161,156
Retirement of long-term debt, including reacquisition cost      (1,560)    (110,825)
Reacquisition of preferred securities ....................     (13,320)        --
Net decrease in notes payable ............................     (81,600)    (204,000)
                                                             ---------    ---------
  Net cash used ..........................................    (189,963)    (157,385)
                                                             ---------    ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS ................     115,530       44,394
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .........       9,677        5,167
                                                             ---------    ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...............   $ 125,207    $  49,561
                                                             =========    =========

ADDITIONAL CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized ................   $  42,692    $  43,984
                                                             =========    =========
Income taxes paid ........................................   $ 166,537    $ 109,677
                                                             =========    =========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      -6-
<PAGE>

                           MIDAMERICAN ENERGY COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.  GENERAL:

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

     MidAmerican  Energy is a public  utility  with  electric  and  natural  gas
operations  and is the  principal  subsidiary  of MHC Inc. MHC is a wholly owned
subsidiary of MidAmerican Funding,  LLC, whose sole member is MidAmerican Energy
Holdings Company.

B.  ENVIRONMENTAL MATTERS:

     (1) MANUFACTURED GAS PLANT FACILITIES -

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

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

     MidAmerican Energy estimates the range of possible costs for investigation,
remediation  and monitoring for the sites  discussed  above to be $22 million to
$68 million.  MidAmerican Energy's estimate of the probable cost for these sites
as of September  30, 2001 was $24 million.  The estimate  consists of $3 million
for  investigation  costs,  $8 million for  remediation  costs,  $11 million for
groundwater  treatment  and  monitoring  costs and $2 million  for  closure  and
administrative  costs.  This  estimate  has been  recorded as a liability  and a
regulatory  asset for future  recovery.  MidAmerican  Energy projects that these
amounts will be paid or incurred over the next 10 years.

     The  estimate  of  probable   remediation   costs  is   established   on  a
site-specific basis. The costs are accumulated in a three-step process. First, a
determination  is made as to  whether  MidAmerican  Energy

                                      -7-
<PAGE>

has potential  legal  liability for the site and whether  information  exists to
indicate  that  contaminated  wastes  remain  at the site.  If so,  the costs of
performing  a  preliminary   investigation  and  the  costs  of  removing  known
contaminated  soil are accrued.  As the  investigation is performed and if it is
determined  remedial action is required,  the best estimate of remedial costs is
accrued.  If necessary,  the estimate is revised when a consent order is issued.
The estimated  recorded  liabilities for these  properties  include  incremental
direct costs of the remediation effort, costs for future monitoring at sites and
costs of compensation to employees for time expected to be spent directly on the
remediation effort. The estimated recorded  liabilities for these properties are
based upon preliminary  data. Thus, actual costs could vary  significantly  from
the  estimates.  The  estimate  could  change  materially  based  on  facts  and
circumstances  derived from site  investigations,  changes in required  remedial
action and changes in technology  relating to remedial  alternatives.  Insurance
recoveries have been received for some of the sites under  investigation.  Those
recoveries are intended to be used principally for accelerated  remediation,  as
specified  by the  Iowa  Utilities  Board,  and  are  recorded  as a  regulatory
liability.

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

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

     (2) CLEAN AIR ACT -

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

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

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

                                      -8-
<PAGE>

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

     The impact of the new standards on MidAmerican Energy is currently unknown.
MidAmerican  Energy's fossil fuel generating stations may be subject to emission
reductions  if the stations are located in  nonattainment  areas.  As part of an
overall state plan to achieve  attainment of the standards,  MidAmerican  Energy
could be required to install  control  equipment  on its fossil fuel  generating
stations or decrease the number of hours during  which these  stations  operate.
The degree to which  MidAmerican  Energy  may be  required  to  install  control
equipment or decrease  operating  hours under a  nonattainment  scenario will be
determined  by  the  state's   assessment  of  MidAmerican   Energy's   relative
contribution,  along with other emission sources,  to the nonattainment  status.
The  installation  of  control  equipment  would  result in  increased  costs to
MidAmerican  Energy. A decrease in the number of hours during which the affected
stations operate would increase  operating costs and decrease wholesale electric
revenues of MidAmerican Energy.

C.  RATE MATTERS:

     In 1997,  pursuant to a rate  proceeding  before the Iowa Utilities  Board,
MidAmerican  Energy,  the Office of Consumer  Advocate and other parties entered
into a pricing plan settlement agreement establishing  MidAmerican Energy's Iowa
retail electric rates. That settlement agreement expired on December 31, 2000.

     On March 14,  2001,  the Office of the Consumer  Advocate  filed a petition
with  the  Iowa  Utilities  Board  to  reduce  Iowa  retail  electric  rates  by
approximately  $77  million  annually.  On June  11,  2001,  MidAmerican  Energy
responded to that petition by filing a request with the Iowa Utilities  Board to
increase  MidAmerican  Energy's  Iowa  retail  electric  rates  by  $51  million
annually. On July 12, 2001,  MidAmerican Energy, the Office of Consumer Advocate
and other parties  jointly filed a proposed  settlement  with the Iowa Utilities
Board that,  if approved,  will freeze the rates in effect on December 31, 2000,
through December 31, 2005, and, with  modifications,  will reinstate the revenue
sharing  provisions  of the 1997 pricing plan  settlement  agreement.  Under the
proposed  settlement,  50% of revenues associated with returns on equity between
12% and 14%, and 83.33% of revenues associated with returns on equity above 14%,
in each year would be deferred as a regulatory  liability to be used to offset a
portion of the cost of future generating plant  investments.  The Iowa Utilities
Board held a public  hearing on the proposed  settlement  in October  2001,  and
interested  parties  submitted  briefs  thereafter.  The Iowa Utilities  Board's
decision on approving the proposed settlement is pending.

     Under an Illinois restructuring law enacted in 1997, a sharing mechanism is
in place for MidAmerican  Energy's Illinois regulated retail electric operations
whereby  earnings  above a computed  threshold  will be shared  equally  between
customers and  shareholders.  A two-year average return on common equity greater
than a two-year  average  benchmark will trigger an equal sharing of earnings on
the excess.  MidAmerican  Energy's  computed level of return on common equity is
based on a rolling  two-year  average of the 30-year  Treasury Bond rates plus a
premium of 5.50% for 1998 and 1999 and a premium of 8.5% for 2000 through  2004.
The two-year  average above which sharing must occur for 2000 was 12.83%.  Using
the same 30-year  Treasury Bond average,  the computed  level of return would be
14.33% for 2001 through 2004. The law allows  MidAmerican Energy to mitigate the
sharing  of  earnings  above  the  threshold  return on  common  equity  through
accelerated recovery of regulatory assets.

     On September 21, 2001,  MidAmerican  Energy filed a petition with the South
Dakota Public Utilities  Commission (SDPUC) to increase its South Dakota natural
gas rates by $3.7  million  annually.  Under  South  Dakota  law,  the SDPUC may
suspend  the  new  rates  for up to six  months  during  the  pendency  of  rate
proceedings.

                                      -9-
<PAGE>


     On October 19, 2001  MidAmerican  Energy filed a petition with the Illinois
Commerce  Commission to increase its Illinois  natural gas rates by $3.2 million
annually.  A final decision on the petition is required  within eleven months of
the date of filing.

D.  ACCOUNTING FOR THE EFFECTS OF CERTAIN TYPES OF REGULATION

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

     A possible  consequence  of  deregulation  in the utility  industry is that
Statement  of  Financial  Accounting  Standards  No.  71 (SFAS 71) may no longer
apply.  SFAS 71  sets  forth  accounting  principles  for  operations  that  are
regulated and meet the stated  criteria.  For operations that meet the criteria,
SFAS 71 allows, among other things, the deferral of expense or income that would
otherwise be recognized  when incurred.  MidAmerican  Energy's  electric and gas
utility operations currently meet the criteria of SFAS 71, but its applicability
is periodically reexamined. If portions of its utility operations no longer meet
the criteria of SFAS 71,  MidAmerican  Energy could be required to write off the
related  regulatory  assets and  liabilities  from its balance sheet and thus, a
material adjustment to earnings in that period could result if regulatory assets
are not recovered in transition provisions of any deregulation legislation.

E.  DERIVATIVE FINANCIAL INSTRUMENTS:

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

     MidAmerican Energy enters into derivative financial instruments,  including
futures,  swaps,  options  and forward  contracts,  to hedge the effect of price
changes on cash flows from  expected  future  physical  transactions  (cash flow
hedges) and the fair value of physical purchase and sale commitments (fair value
hedges) and to reduce natural gas price  volatility for regulated gas customers.
The objective of MidAmerican  Energy's hedging program is to minimize the impact
of changing prices for natural gas and electricity on its cash flows.  From time
to time,  MidAmerican Energy also enters into derivative  financial  instruments
for  trading  purposes  to profit  from  changing  prices  for  natural  gas and
electricity or to take advantage of price arbitrage opportunities.

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

                                      -10-
<PAGE>

     For the nine months ended September 30, 2001, net gains $2,000 and $43,000,
representing the  ineffectiveness  of cash flow hedges, are reflected in Cost of
Gas Sold and Regulated Cost of Fuel, Energy and Capacity,  respectively.  During
the twelve months beginning October 1, 2001, it is anticipated that $4.9 million
of the $5.7 million after-tax net unrealized gains on cash flow hedges presently
recorded as accumulated other comprehensive income will be realized and recorded
in  earnings.  MidAmerican  Energy has hedged a portion of its  exposure  to the
variability of cash flows for future transactions through December 2002.

     Unrealized  gains and losses on fair value hedges are  recognized in income
as either Nonregulated Operating Revenues or Cost of Gas Sold depending upon the
nature of the item being hedged.  Purchase and sales commitments  hedged by fair
value  hedges are  recorded  at fair  value,  with the  changes  in values  also
recognized in income and  substantially  offsetting  the impact of the hedges on
earnings.  For the nine months ended  September  30, 2001, a net pre-tax gain of
$3,000,  representing the  ineffectiveness  of fair value hedges, is included in
Nonregulated Operating Revenues.

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

F.  SEGMENT INFORMATION:

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

                                      -11-

<PAGE>


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

                                     Three Months            Nine Months
                                  Ended September 30,    Ended September 30
                                  -------------------   -----------------------
                                    2001       2000        2001         2000
                                  --------   --------   ----------   ----------
Revenues:
  Electric.....................   $386,674   $359,430   $  986,864   $  919,866
  Gas   .......................     56,354     71,573      510,509      349,628
  Nonregulated and other (a)...    108,291    122,430      540,173      267,853
                                  --------   --------   ----------   ----------
                                  $551,319   $553,433   $2,037,546   $1,537,347
                                  ========   ========   ==========   ==========

Earnings on Common Stock:
  Electric.....................   $ 63,522   $ 69,765   $  133,804   $  123,699
  Gas   .......................     (7,516)    (4,586)       4,484       10,802
  Nonregulated and other (a)...       (418)    (1,987)       3,218       (5,112)
                                  --------   --------   ----------   ----------
                                  $ 55,588   $ 63,192   $  141,506   $  129,389
                                  ========   ========   ==========   ==========

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

G.  OTHER COMPREHENSIVE INCOME:

     For the three months and nine months ended September 30, 2001,  MidAmerican
Energy's  total  comprehensive  income was $54.8  million  and  $147.2  million,
respectively.  The  difference  from  Earnings  on  Common  Stock  is due to the
effective  portion of net gains and losses on  MidAmerican  Energy's  derivative
instruments classified as cash flow hedges. For the three months and nine months
ended September 30, 2000, there was no difference between  MidAmerican  Energy's
total  comprehensive  income and  Earnings on Common  Stock.  Accumulated  other
comprehensive  income  (loss),  which also includes  recognition  of the minimum
pension  liability  in the fourth  quarter of 2000,  was $3.3 million and $(2.4)
million as of September 30, 2001, and December 31, 2000.

                                      -12-

<PAGE>


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

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

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

FORWARD-LOOKING STATEMENTS

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

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

REGULATED GROSS MARGIN

     Regulated Electric Gross Margin -

                                         Three Months           Nine Months
                                      Ended September 30,   Ended September 30,
                                      -------------------   -------------------
                                        2001        2000      2001       2000
                                        ----        ----      ----       ----
                                                     (In millions)
  Operating revenues................    $387        $359      $987       $920
  Cost of fuel, energy and capacity.      88          68       215        184
                                        ----        ----      ----       ----
    Electric gross margin...........    $299        $291      $772       $736
                                        ====        ====      ====       ====

     Electric  gross margin for the third  quarter of 2001  increased $8 million
compared to the third quarter of 2000.

     MidAmerican  Energy's  margins on  wholesale  sales,  net of a reserve  for
revenue sharing,  increased $28.1 million compared to the third quarter of 2000.
Sales volumes for wholesale sales increased 4.4%.  Wholesale sales are the sales
of  energy  to  other  utilities,   municipalities   and  marketers  outside  of
MidAmerican Energy's delivery system.

                                      -13-
<PAGE>

     An  increase  in fuel  costs  per unit for Iowa  retail  customers  reduced
electric gross margin by $20.4 million for the third quarter of 2001 compared to
the third  quarter of 2000.  Usage  factors not  dependent on weather  decreased
electric  margin by $2.0  million  compared  to the  third  quarter  of 2000.  A
fluctuation  in temperature  conditions  accounted for an approximate $1 million
increase in gross margin compared to the third quarter of 2000. In total, retail
sales of  electricity  increased  1.7% for the three months ended  September 30,
2001.

     For the nine months ended  September  30, 2001,  compared to the first nine
months of 2000, electric gross margin increased $36 million.

     MidAmerican  Energy's  margins on  wholesale  sales,  net of a reserve  for
revenue  sharing,  increased $50.2 million  compared to the first nine months of
2000,  and  related  sales  volumes  increased  20.4%.  Revenues  from  electric
transmission  services  increased  $4.0 million for the 2001  nine-month  period
compared  to  the  2000  nine-month  period  due  to  additional   revenue  from
Mid-Continent  Area Power Pool.  Additionally,  electric  revenues  for the nine
months ended September 30, 2001,  reflect a $3.3 million  increase in gains from
the sale of emission allowances.

     Temperatures  during the nine months ended  September  30, 2001,  were more
extreme than temperatures in the nine months ended September 30, 2000, resulting
in a $16 million increase in electric margin.  Other usage factors not dependent
on weather decreased electric margin by $15.3 million compared to the first nine
months of 2000.  An increase  in fuel costs per unit for Iowa  retail  customers
reduced electric margin by $21.9 million for the nine months ended September 30,
2001,  compared to the nine months ended  September 30, 2000.  In total,  retail
sales of  electricity  increased  1.8% for the nine months ended  September  30,
2001.

     Regulated Gas Gross Margin -

                                   Three Months            Nine Months
                                Ended September 30,    Ended September 30,
                              ---------------------    -------------------
                                2001         2000        2001       2000
                              --------     --------    --------   --------
                                               (In millions)
     Operating revenues....     $ 56         $ 72        $511       $350
     Cost of gas sold......       25           39         370        212
                                ----         ----        ----       ----
       Gas gross margin....     $ 31         $ 33        $141       $138
                                ====         ====        ====       ====

     Regulated gas revenues  include  purchase gas  adjustment  clauses  through
which  MidAmerican  Energy is allowed  to recover  the cost of gas sold from its
retail gas utility customers. Consequently, fluctuations in the cost of gas sold
do not affect gross margin or net income  because  revenues  reflect  comparable
fluctuations  from the  purchase  gas  adjustment  clauses.  An  increase in the
per-unit  cost  of gas for the  nine-month  period  ended  September  30,  2001,
compared to the same period in 2000,  increased revenues and cost of gas sold by
approximately $136 million.

     Gas  gross  margin  decreased  $2  million  for the third  quarter  of 2001
compared to the 2000 quarter due to  conservation by customers and a fluctuation
in temperature conditions. Total gas retail sales decreased 6.0%.

     Compared to the first nine months of 2000,  gas gross  margin  increased $3
million  due to  the  colder-than-normal  temperature  conditions  in the  first
quarter of 2001,  offset  partially by  conservation  by  customers  due to high
natural gas prices.

                                      -14-

<PAGE>


REGULATED OPERATING EXPENSES

     Regulated  other operating  expenses  increased $10.5 million for the third
quarter of 2001 compared to the third quarter of 2000.  Increases include a $3.9
million increase in the allowance for uncollectible  accounts as a result of the
high natural gas prices,  a $3.0 million  increase in health care benefits costs
and a $2.6 million increase in pension and other post-employment benefits costs.

     Regulated  other  operating  expenses  increased  $7.6 million for the nine
months  ended  September  30, 2001  compared to the  nine-month  period in 2000.
Increases  include a $7.2 million  increase in the allowance  for  uncollectible
accounts as a result of the high natural gas prices,  a $6.2 million increase in
pension and other post-employment  benefits costs and a $3.4 million increase in
electric distribution expense. The increases were partially offset by reductions
in Quad Cities Station operating expenses, electric transmission expense, Cooper
Nuclear Station costs, energy efficiency program costs,  information  technology
expenses and assessments from utility regulatory agencies.

     Maintenance  expenses  for the  three  months  ended  September  30,  2001,
increased  $5.0  million  compared  to the 2000  period  due  principally  to an
increase in fossil fuel generating plant maintenance  costs. For the nine months
ended September 30, 2001,  compared to the nine months ended September 30, 2000,
maintenance expenses increased $9.2 million.  Electric distribution  maintenance
increased $4.4 million in part due to a more aggressive  tree-trimming  program.
Fossil fuel generating plant maintenance  expense increased $3.8 million,  while
maintenance costs for Quad Cities Station (nuclear) decreased $2.9 million.  Gas
distribution system maintenance increased $1.9 million and maintenance costs for
general plant increased $1.3 million.

     Depreciation and amortization  expense increased $2.2 million for the third
quarter of 2001 and $6.1  million for the first nine months of 2001  compared to
the  respective  periods  in 2000.  The  increases  were due  principally  to an
increase in depreciation rates implemented in 2001. An increase in utility plant
also contributed to the increases.

     Property  and other  taxes  for the  three  months  and nine  months  ended
September  30,  2001,  decreased  $0.8 million and $3.4  million,  respectively,
relative to their  comparable  periods in 2000 due  principally to a decrease in
Iowa property taxes. For the nine-month comparision, the 2000 period included an
accrual for use taxes, which increased total taxes for that period.

                                      -15-

<PAGE>


NONREGULATED OPERATING REVENUES AND OPERATING EXPENSES

     Nonregulated Gross Margin -

                                 Three Months                  Nine Months
                              Ended September 30,          Ended September 30,
                            ---------------------       ----------------------
                              2001         2000           2001          2000
                            --------     --------       --------      --------
                                              (In millions)
     Operating revenues...    $108         $122           $540          $268
     Cost of sales........     104          118            521           253
                              ----         ----           ----          ----
          Gross margin....    $  4         $  4           $ 19          $ 15
                              ====         ====           ====          ====

     Nonregulated   revenues  and  cost  of  sales  consist   substantially   of
nonregulated  natural gas marketing  operations.  The  nonregulated  natural gas
marketing operations include wholesale and retail activities.  Approximately 82%
of the nonregulated natural gas revenues for the nine months ended September 30,
2001, are related to wholesale sales.

     Gross margin for the  nonregulated  natural gas  operations  increased $0.4
million to $1.4 million for the third quarter of 2001. The  improvement in gross
margin reflects an increase in sales volumes  partially  offset by a decrease in
margin per unit. Revenues from nonregulated natural gas operations decreased for
the  third  quarter  of 2001  compared  to the  third  quarter  of 2000 due to a
decrease in the average price per unit sold, reflective of a 34% decrease in the
average cost of gas.  The decrease in price per unit was offset  partially by an
increase in sales volumes of 12 million  MMBtus (48%).  Cost of sales  decreased
for the three  months ended  September  30,  2001,  due to the  variances in the
per-unit cost of gas sold and sales volumes.

     Gross margin for the  nonregulated  natural gas  operations  increased $4.6
million to $7.4 million for the first nine months of 2001  compared to the first
nine months of 2000.  The  improvement  in gross margin  reflects an increase in
margin  per unit and sales  volumes.  Revenues  from  nonregulated  natural  gas
operations  increased  $281.8  million  for the first  nine  months of 2001.  An
increase in the average price per unit sold, reflective of a 25% increase in the
average cost of gas,  accounted for $105.3  million of the increase in revenues.
Sales volumes  increased 47 million  MMBtus (74%)  resulting in a $176.5 million
increase in revenues. Cost of sales increased $277.2 million for the nine months
ended  September 30, 2001, due to the increases in the per-unit cost of gas sold
and sales volumes.

     As of December 31, 2000, all non-residential customers in Illinois had been
phased in to allow them to select their electric power  supplier.  For the three
months ended  September 30, 2001,  compared to the three months ended  September
30, 2000, gross margin related to these sales decreased $0.2 million while gross
margin for the  nine-month  period  ended  September  30, 2001,  increased  $0.8
million.

     Nonregulated  revenues for the third  quarter of 2000 included $4.8 million
from MidAmerican Energy's market access service project. The pilot project which
concluded in May 2001,  allowed larger Iowa customers that were participating in
the  project to choose  their  electric  power  supplier.  MidAmerican  Energy's
revenues  from project  participants  related to  non-supply  services,  such as
distribution and  transmission,  are reflected in regulated  electric  revenues.
Cost of sales related to the market access service  project totaled $4.2 million
for the third quarter of 2000. For the nine-month comparison,  revenues from the
project totaled $6.2 million and $13.4 million for 2001 and 2000,  respectively;
the related cost of sales  totaled  $5.4 million and $12.5  million for 2001 and
2000, respectively.

                                      -16-
<PAGE>

     MidAmerican  Energy's  nonregulated  revenues in the third  quarter of 2001
include $1.9 million from an award for successful performance under an incentive
gas  procurement  program.  Awards totaled $4.1 million and $1.9 million for the
first nine months of 2001 and 2000, respectively.

     MidAmerican  Energy's  nonregulated  revenues for the 2000 periods  include
revenues for nonregulated  transmission and distribution services, some of which
are now performed by affiliated companies.  The revenues totaled $1.9 million in
the third  quarter of 2000 and $4.3 million in the nine months  ended  September
30, 2000.

NON-OPERATING INCOME AND INTEREST EXPENSE

     Interest and Dividend Income -

     Interest  income  decreased $1.5 million for the  three-month  period ended
September 30, 2001, and increased  $4.2 million for the nine-month  period ended
September 30, 2001,  relative to their comparable periods in 2000. A decrease in
interest  from a joint  plant  operator  for funds held by it  reduced  interest
income by  approximately  $2.3 million for each of the 2001  periods  presented.
Interest  income  increased $1.0 million and $5.9 million in the three-month and
nine-month  periods,  respectively,  for  interest  income on a note  receivable
related to MidAmerican  Energy's  accounts  receivable sold. The increase in the
note  receivable is a result of the  increased  balance in  receivables  sold. A
reduction in interest rates also reduced interest income for the periods.

     Other, Net -

     Other,  Net, which includes a number of non-operating  income and deduction
items, decreased Non-Operating Income by $1.9 million for the three months ended
September 30 in both 2001 and 2000. Other, Net reduced  Non-Operating  Income by
$9.9 million for the  nine-month  period  ended  September  30,  2001,  and $6.0
million for the nine-month period ended September 30, 2000.

     Other,  Net  includes  a discount  on sold  accounts  receivable,  net of a
subservicer fee charged to MidAmerican Energy Funding  Corporation for servicing
the  accounts.  The  discount is designed to cover the  expenses of  MidAmerican
Energy Funding Corporation,  including subservicer fees, monthly  administrative
costs and  interest.  The  discount is recorded in Other,  Net because it is not
reflected in utility cost of service for regulatory purposes.  The discount, net
of the subservicer  fee,  reduced Other, Net by $3.1 million and $2.5 million in
the third quarter of 2001 and 2000, respectively,  and by $11.9 million and $6.9
million for the nine months ended September 30, 2001 and 2000, respectively.

     Other,  Net for the first nine months of 2001  reflects a $1.4 million gain
on the sale of MidAmerican Energy rail cars.

     Income related to  corporate-owned  life insurance  policies decreased $0.2
million and $1.2 million in the three months and nine months ended September 30,
2001, respectively, compared to the same periods in 2000.

     Other,  Net,  for the 2001  quarter and nine  months  ended  September  30,
reflects  $0.8 million of income for an  allowance  for equity funds used during
construction.  As a regulated public utility,  MidAmerican  Energy is allowed to
capitalize,  and record as income, a cost of construction for equity funds used,
based on guidelines set forth by the Federal Energy Regulatory Commission.

                                      -17-
<PAGE>

     Fixed Charges -

     The  decrease in interest on long-term  debt for the third  quarter of 2001
compared to the third quarter of 2000 is due to maturities of long-term debt and
lower  interest  rates on  variable  rate debt.  The  increase  in  interest  on
long-term  debt for the nine months ended  September  30, 2001,  compared to the
nine-month  period in 2000 is due to  interest  on $162  million of  MidAmerican
Energy medium-term notes issued in July 2000, net of the impact of maturities in
2000 of long-term debt and lower interest rates.

     Other interest expense  increased $0.3 million in the third quarter of 2001
compared to the third quarter of 2000 due to interest  related to a state income
tax  assessment  in 2001.  The  increase was  partially  offset by a decrease in
interest due to a reduction  in  short-term  debt  outstanding.  Other  interest
expense  decreased  $3.0 million in the  nine-months  ended  September 30, 2001,
compared to the nine-month  period in 2000 due to a reduction in short-term debt
outstanding.  Additionally,  the 2000 period  includes  $0.6 million of interest
related  to a gas  supplier  refund  that  is  refundable  to  customers.  These
decreases were partially  offset by interest related to state and federal income
tax assessments in 2001.

                                      -18-
<PAGE>


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

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

     As  reflected on the  Consolidated  Statements  of Cash Flows,  MidAmerican
Energy's net cash provided from  operating  activities was $461 million and $328
million for the nine months ended September 30, 2001 and 2000, respectively.

INVESTING ACTIVITIES AND PLANS

     Utility Construction Expenditures -

     MidAmerican  Energy's  primary  need for  capital is  utility  construction
expenditures.   For  the  first  nine  months  of  2001,  utility   construction
expenditures  totaled $151  million,  including  allowance for funds used during
construction,  or capitalized  financing  costs, and Quad Cities Station nuclear
fuel purchases.  All such expenditures were met with cash generated from utility
operations, net of dividends.

     Forecasted utility construction expenditures, including allowance for funds
used during  construction are $223 million for 2001.  Capital  expenditure needs
are reviewed regularly by management and may change significantly as a result of
such reviews.  On July 10, 2001,  MidAmerican  Energy announced plans to develop
and construct two electric generating plants in Iowa, requiring an investment of
approximately  $1.5 billion.  Participation by others in a portion of the second
plant is being  discussed.  The two  plants  will  provide  approximately  1,400
megawatts  of  generating   capacity.   MidAmerican   Energy  expects  to  begin
construction  in  Spring  2002 on the  first  project,  a  540-megawatt  natural
gas-fired combined cycle unit which has an estimated cost of $368 million. It is
anticipated  that the first phase of the project  will be completed in 2003 with
the remainder being completed in 2005. MidAmerican Energy presently expects that
all utility  construction  expenditures for the next five years will be met with
the issuance of long-term debt and cash generated from utility  operations,  net
of  dividends.  The actual level of cash  generated  from utility  operations is
affected by, among other  things,  economic  conditions  in the utility  service
territory, weather and federal and state regulatory actions.

     Nuclear Decommissioning -

     Each  licensee  of a nuclear  facility  is  required  to provide  financial
assurance for the cost of  decommissioning  its licensed  nuclear  facility.  In
general,  decommissioning  of a  nuclear  facility  means to safely  remove  the
facility  from  service  and  restore  the  property  to  a  condition  allowing
unrestricted  use by the operator.  Based on  information  presently  available,
MidAmerican  Energy expects to contribute  approximately  $41 million during the
period 2001 through 2005 to external  trusts  established  for the investment of
funds for decommissioning Quad Cities Station.  Approximately 55% of the trusts'
funds are now invested in domestic  corporate debt and common equity securities.
The remainder is invested in investment grade municipal and U.S. Treasury bonds.
Funding for Quad Cities  Station is  reflected  in  depreciation  expense in the
Consolidated Statements of Income.

     Based on  information  presently  available  and assuming a September  2004
shutdown  of Cooper,  MidAmerican  Energy  expects to accrue  approximately  $55
million for Cooper  decommissioning during the period 2001 through 2004. Amounts
related to Cooper  decommissioning  are reflected in Other Operating Expenses in
the Consolidated Statements of Income.  MidAmerican Energy's obligation, if any,
for Cooper  decommissioning  will be affected by the actual plant shutdown date.
In July 1997,  Nebraska  Public Power  District filed a lawsuit in United States
District  Court for the District of Nebraska

                                      -19-
<PAGE>

naming  MidAmerican  Energy  as the  defendant  and  seeking  a  declaration  of
MidAmerican  Energy's  rights and  obligations in connection with Cooper nuclear
decommissioning  funding.  Refer to Part  II,  Item 1 - Legal  Proceedings,  for
further discussion of the litigation.

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

FINANCING ACTIVITIES, PLANS AND AVAILABILITY

     Debt Authorization and Credit Facilities -

     MidAmerican   Energy  currently  has  authority  from  the  Federal  Energy
Regulatory  Commission to issue  short-term debt in the form of commercial paper
and bank notes  aggregating  $500 million.  MidAmerican  Energy currently has in
place a $370.4 million  revolving credit facility that supports its $250 million
commercial  paper  program  and its  variable  rate  pollution  control  revenue
obligations. In addition, MidAmerican Energy has a $5 million line of credit.

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

     MidAmerican  Energy has  authorization  from the Federal Energy  Regulatory
Commission  to  issue up to an  additional  $500  million  in  various  forms of
long-term  debt.  MidAmerican  Energy  will  also  need  authorization  from the
Illinois Commerce Commission prior to issuing any securities.  If 90% or more of
the proceeds  from a  securities  issuance  are used for  refinancing  purposes,
MidAmerican  Energy need only provide the Illinois  Commerce  Commission with an
"informational  statement"  prior to the  issuance  which  sets  forth the type,
amount and use of the proceeds of the securities to be issued.  If less than 90%
of the  proceeds  are used  for  refinancing,  MidAmerican  Energy  must  file a
comprehensive  application seeking authorization prior to issuance. The Illinois
Commerce   Commission  is  required  to  hold  a  hearing   before  issuing  its
authorization.

     Accounts Receivable Sold -

     In 1997,  MidAmerican  Energy  entered  into a revolving  agreement,  which
expires in 2002, to sell all of its right, title and interest in the majority of
its billed  accounts  receivable to MidAmerican  Energy Funding  Corporation,  a
special  purpose  entity  established  to  purchase  accounts   receivable  from
MidAmerican  Energy.  MidAmerican  Energy  Funding  Corporation  in  turn  sells
receivable  interests  to  outside  investors.  In  consideration  for the sale,
MidAmerican  Energy received cash and a subordinated  note,  bearing interest at
8%, from MidAmerican Energy Funding  Corporation.  As of September 30, 2001, the
revolving  cash balance was $70 million,  and the amount  outstanding  under the
subordinated note was $76.3 million. The agreement is structured as a true sale,
under which the creditors of  MidAmerican  Energy  Funding  Corporation  will be
entitled  to be  satisfied  out of the  assets  of  MidAmerican  Energy  Funding
Corporation  prior to any value  being  returned  to  MidAmerican  Energy or its
creditors.  Therefore,  the  accounts  receivable  sold  are  not  reflected  on
MidAmerican  Energy's  Consolidated  Balance  Sheets.  As of September 30, 2001,
$146.1  million of accounts  receivable,  net of  reserves,  were sold under the
agreement.

                                      -20-
<PAGE>

     Other Financing Information -

     MidAmerican  Energy  may from time to time seek to retire  its  outstanding
debt through cash  purchases  and/or  exchanges for equity  securities,  in open
market  purchases,   privately   negotiated   transactions  or  otherwise.   The
repurchases or exchanges,  if any, will depend on prevailing market  conditions,
MidAmerican Energy's liquidity requirements,  contractual restrictions and other
factors. The amounts involved may be material.

OPERATING ACTIVITIES AND OTHER MATTERS

     Legislative and Regulatory Evolution -

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

     The law provides for Illinois  earnings above a computed level of return on
common equity to be shared equally  between  customers and  MidAmerican  Energy.
MidAmerican  Energy's  computed  level of return on common  equity is based on a
rolling  two-year  average of the 30-year  Treasury Bond rates plus a premium of
5.50%  for 1998  and 1999 and a  premium  of 8.5%  for 2000  through  2004.  The
two-year  average above which sharing must occur for 2000 was 12.83%.  Using the
same 30-year Treasury bond average, the computed level of return would be 14.33%
for 2001 through 2004. The law allows MidAmerican Energy to mitigate the sharing
of earnings  above the  threshold  return on common equity  through  accelerated
recovery of regulatory assets.

     In December 1999, the Federal Energy  Regulatory  Commission  (FERC) issued
Order No. 2000  establishing  among other  things  minimum  characteristics  and
functions for regional  transmission  organizations.  Public utilities that were
not a member of an  independent  system  operator  at the time of the order were
required  to  submit  a plan by  which  its  transmission  facilities  would  be
transferred  to a regional  transmission  organization  on a schedule that would
allow the regional  transmission  organization to commence operating by December
15, 2001. On October 16, 2000, MidAmerican Energy filed with the FERC a plan for
MidAmerican  Energy  to  comply  with  Order No.  2000 by  participating  in the
formation of a for-profit  independent  transmission  company.  On September 28,
2001, MidAmerican Energy and five other electric utilities filed with the FERC a
plan to create  TRANSLink  Transmission  Co. LLC and  integrate  their  electric
transmission systems into a single, coordinated system.

     Accounting Effects of Industry Restructuring -

     A possible  consequence  of  deregulation  in the utility  industry is that
Statement of Financial  Accounting Standards No. 71 may no longer apply. SFAS 71
sets forth accounting  principles for operations that are regulated and meet the
stated criteria.  For operations that meet the criteria,  SFAS 71 allows,  among
other  things,  the  deferral  of expense  or income  that  would  otherwise  be
recognized  when  incurred.   MidAmerican  Energy's  electric  and  gas  utility
operations   currently   meet  the  criteria   required  by  SFAS  71,  but  its
applicability is periodically reexamined.  If portions of its utility operations
no longer meet the criteria of SFAS 71,  MidAmerican Energy could be required to
write off the related  regulatory assets and liabilities from its balance sheet,
and thus,  a material  adjustment  to earnings in that  period  could  result if
regulatory assets are not recovered in transition provisions of any deregulation
legislation.

                                      -21-

<PAGE>

As of September 30, 2001, MidAmerican Energy had $218.1 million of regulatory
assets and $9.5 million of regulatory liabilities on its Consolidated Balance
Sheet.

     Rate Matters: Electric -

     In 1997,  pursuant to a rate  proceeding  before the Iowa Utilities  Board,
MidAmerican  Energy,  the Office of Consumer  Advocate and other parties entered
into a pricing plan settlement agreement establishing  MidAmerican Energy's Iowa
retail electric rates. That settlement agreement expired on December 31, 2000.

     On March 14,  2001,  the Office of the Consumer  Advocate  filed a petition
with  the  Iowa  Utilities  Board  to  reduce  Iowa  retail  electric  rates  by
approximately  $77  million  annually.  On June  11,  2001,  MidAmerican  Energy
responded to that petition by filing a request with the Iowa Utilities  Board to
increase  MidAmerican  Energy's  Iowa  retail  electric  rates  by  $51  million
annually. On July 12, 2001,  MidAmerican Energy, the Office of Consumer Advocate
and other parties  jointly filed a proposed  settlement  with the Iowa Utilities
Board that,  if approved,  will freeze the rates in effect on December 31, 2000,
through December 31, 2005, and, with  modifications,  will reinstate the revenue
sharing  provisions  of the 1997 pricing plan  settlement  agreement.  Under the
proposed  settlement,  50% of revenues associated with returns on equity between
12% and 14%, and 83.33% of revenues associated with returns on equity above 14%,
in each year would be deferred as a regulatory  liability to be used to offset a
portion of the cost of future generating plant  investments.  The Iowa Utilities
Board held a public  hearing on the proposed  settlement  in October  2001,  and
interested  parties  submitted  briefs  thereafter.  The Iowa Utilities  Board's
decision on approving the proposed settlement is pending.

     MidAmerican Energy has negotiated  individual  electric contracts with some
of its  commercial and  industrial  customers in Iowa.  The negotiated  electric
contracts  have  differing  terms and  conditions  as well as  prices.  The vast
majority of the contracts  expire during the period 2003 through 2005,  although
some large  customers  have contracts  extending to 2008.  Some of the contracts
have price renegotiation and early termination  provisions exercisable by either
party.  Prices  are set as fixed  prices;  however,  many  contracts  allow  for
potential price  adjustments  with respect to  environmental  costs,  government
imposed public purpose programs,  tax changes,  and transition costs.  While the
contract prices are fixed (except for the potential  adjustment  elements),  the
costs  MidAmerican  Energy  incurs to fulfill these  contracts  will vary. On an
aggregate  basis the annual  revenues  under  contract  are  approximately  $180
million.

     On September 21, 2001,  MidAmerican  Energy filed a petition with the South
Dakota Public Utilities  Commission (SDPUC) to increase its South Dakota natural
gas rates by $3.7  million  annually.  Under  South  Dakota  law,  the SDPUC may
suspend  the  new  rates  for up to six  months  during  the  pendency  of  rate
proceedings.

     On October 19, 2001  MidAmerican  Energy filed a petition with the Illinois
Commerce  Commission to increase its Illinois  natural gas rates by $3.2 million
annually.  A final decision on the petition is required  within eleven months of
the date of filing.

     Environmental Matters -

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

                                      -22-
<PAGE>

     MidAmerican  Energy has evaluated or is evaluating 27 properties that were,
at one time, sites of gas manufacturing  plants in which it may be a potentially
responsible  party.  The purpose of these  evaluations  is to determine  whether
waste materials are present,  whether the materials  constitute an environmental
or health  risk,  and  whether  MidAmerican  Energy has any  responsibility  for
remedial action.  MidAmerican  Energy's estimate of the probable costs for these
sites as of September 30, 2001, was $24 million. This estimate has been recorded
as a liability and a regulatory asset for future recovery through the regulatory
process.  Refer to Note B(1) of Notes to Consolidated  Financial  Statements for
further discussion of MidAmerican Energy's  environmental  activities related to
manufactured gas plant sites and cost recovery.

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

     On July 18, 1997,  the EPA adopted  revisions  to the National  Ambient Air
Quality  Standards for ozone and a new standard for fine particulate  matter. In
May 1999,  the U.S.  Court of  Appeals  for the  District  of  Columbia  Circuit
remanded the standards  adopted in July 1997 back to the EPA  indicating the EPA
had not expressed  sufficient  justification  for the basis of establishing  the
standards  and ruling that the EPA has exceeded  its  constitutionally-delegated
authority in setting the  standards.  On February 27,  2001,  the United  States
Supreme  Court  upheld  the  standards,  ruling  that the EPA did not exceed its
constitutional  delegation of authority in  establishing  the standards in 1997.
The impact of the new  standards on  MidAmerican  Energy is  currently  unknown.
MidAmerican Energy could incur increased costs and a decrease in revenues if its
generating  stations are located in nonattainment  areas.  Refer to Note B(2) of
Notes to Consolidated Financial Statements for further discussion of this issue.

     Generating Capability -

     MidAmerican  Energy is interconnected  with Iowa and neighboring  utilities
and is involved in an electric power pooling  agreement  known as  Mid-Continent
Area Power Pool  (MAPP).  Each MAPP  participant  is required  to  maintain  for
emergency purposes a net generating capability reserve of at least 15% above its
system peak demand.

     MidAmerican  Energy  believes it has  adequate  electric  capacity  reserve
through  2003 and  continues  to manage its  generating  resources  to ensure an
adequate reserve in the future.  MidAmerican Energy has announced plans to add a
540-megawatt natural gas fired combined cycle unit to be completed in two phases
between 2003 and 2005. An additional  900 megawatts of coal-fired  generation is
expected  to  be   operational   later  this  decade.   However,   significantly
higher-than-normal   temperatures   during  the  cooling   season   could  cause
MidAmerican  Energy's  reserve to fall  below the 15%  minimum.  If  MidAmerican
Energy fails to maintain the appropriate reserve, significant penalties could be
contractually imposed by MAPP.

     As a result of the 1997 pricing settlement  agreement's  elimination of the
energy adjustment clause in Iowa,  MidAmerican Energy is financially  exposed to
movements  in  energy  prices.  Although  MidAmerican  Energy  believes  it  has
sufficient generation under typical operating conditions for its retail electric
needs,  a loss of  adequate  generation  by  MidAmerican  Energy  requiring  the
purchase of  replacement  power at a time of high market  prices  could  subject
MidAmerican Energy to losses on its energy sales.

     MidAmerican   Energy  has  been  able  to  maintain  its  capacity  reserve
requirement and has not been adversely  affected by seasonal price variations in
the wholesale market.

                                      -23-

<PAGE>


ACCOUNTING ISSUES

     In June 2001, the FASB issued SFAS No. 141,  "Business  Combinations",  and
SFAS No. 142, "Goodwill and Other Intangible Assets" which establish  accounting
and  reporting  for  business  combinations.  SFAS No. 141 requires all business
combinations entered into subsequent to June 30, 2001, to be accounted for using
the purchase method of accounting. SFAS No. 142 provides that goodwill and other
intangible assets with indefinite lives will not be amortized but will be tested
for impairment on an annual basis. These standards are effective for MidAmerican
Energy beginning on January 1, 2002.  MidAmerican Energy does not anticipate any
impact on its results of  operations,  cash flows or  financial  condition  as a
result of the adoption of these standards.

     In  August  2001,  the FASB  issued  SFAS No.  143,  "Accounting  for Asset
Retirement  Obligations",  which addresses the accounting for legal  obligations
associated with the retirement of tangible, long-lived assets and the associated
asset  retirement  costs.  This  pronouncement  is effective for years beginning
after June 15, 2002.  MidAmerican  Energy is evaluating the impact that adoption
of this standard will have on its financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     MidAmerican  Energy is exposed  to market  risk,  including  changes in the
market  price of certain  commodities  and interest  rates.  To manage the price
volatility  relating to these exposures,  MidAmerican Energy enters into various
financial derivative instruments.  Senior management provides overall direction,
structure,   conduct  and  control  of  MidAmerican   Energy's  risk  management
activities, including the use of financial derivative instruments, authorization
and communication of risk management policies and procedures,  strategic hedging
program  guidelines,  appropriate market and credit risk limits, and appropriate
systems for recording, monitoring and reporting the results of transactional and
risk management activities.

     Refer to Note E in Notes to Consolidated  Financial  Statements for further
discussion  of  derivatives  used to hedge  price  risks.  MidAmerican  Energy's
exposure to interest rate risk did not change materially from December 31, 2000.

                                      -24-

<PAGE>


PART II - OTHER INFORMATION

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                      -25-

<PAGE>

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

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

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

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

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

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

     MidAmerican  Energy  appealed  the  court's  summary  judgment  ruling.  On
December 12,  2000,  the United  States Court of Appeals for the Eighth  Circuit
reversed the ruling of the district court and granted summary  judgment in favor
of  MidAmerican  Energy on issues  one and five in the second  paragraph  above.
Additionally,   it  remanded  the  case  for  trial  on  all  other  claims  and
counterclaims.

     Since the remand to the  District  Court from the Eighth  Circuit  Court of
Appeals,  the Nebraska Public Power District has been granted  permission,  over
MidAmerican Energy's objections,  to amend its complaint.  The amended complaint
asserts  that  even  though  the  Eighth  Circuit  Court of  Appeals  held  that
MidAmerican  Energy  has no  liability  under the power  purchase  agreement  to
reimburse   or  pay  the  Nebraska   Public  Power   District  a  50%  share  of
decommissioning  costs unless certain  conditions occur,  MidAmerican Energy has
unconditional liability for a 50% share based on agreements other than the power
purchase agreement as originally  written.  The Nebraska Public Power District's
post-remand  contentions -- all strongly disputed by MEC -- are that MidAmerican
Energy has unconditional  liability for a 50% share of decommissioning  based on
any of the  following  alternative  theories:  (i) the parties  without  written
amendment  either  modified  the power  purchase  agreement  or made a  separate
agreement  that  imposes  unconditional  liability  on  MidAmerican  Energy  for
decommissioning  costs; (ii) absent  unconditional  liability for a 50% share of
decommissioning  costs,  MidAmerican  Energy would be unjustly  enriched;  (iii)
MidAmerican   Energy   has   unconditional   liability   for  a  50%   share  of
decommissioning  costs based on promissory  estoppel;  or (iv)  Nebraska  Public
Power  District  is entitled to have the power  purchase  agreement  reformed to
provide that MidAmerican  Energy has unconditional  liability for a 50% share of
decommissioning  costs.  MidAmerican Energy will strongly dispute at trial these
contentions and theories put forth by the Nebraska Public Power District.  Trial
in these matters is scheduled to begin on March 4, 2002.

                                      -26-

<PAGE>


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

(A)  EXHIBITS

     Exhibit 15 - Awareness Letter of Independent Accountants

(B)  REPORTS ON FORM 8-K

     On July 10, 2001,  MidAmerican  Energy  filed a Current  Report on Form 8-K
dated July 10, 2001,  announcing  its plan to develop and construct two electric
generating plants in Iowa,  representing an investment of $1.5 billion.  It also
announced  that it had agreed upon a proposed  settlement  of its  pending  Iowa
electric rate  proceeding,  subject to approval by the Iowa Utilities Board. The
related press release dated July 10, 2001, was included as an exhibit.

                                      -27-
<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 9, 2001                        /s/  Patrick J. Goodman
    ------------------                        ----------------------------------
                                                   Patrick J. Goodman
                                                   Senior Vice President
                                                     and Chief Financial Officer


                                      -28-
<PAGE>



                                  EXHIBIT INDEX

EXHIBIT NO.
-----------

     15   Awareness Letter of Independent Accountants


                                      -29-