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, 2000
                                              ------------------

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

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

Securities registered pursuant to Section 12(b) of the Act:
                                                         Name of each Exchange
     Title of Each Class                                  On which Registered
     -------------------                                 ---------------------
7.98% MidAmerican Energy Company - Obligated
  Preferred Securities of Subsidiary Trust              New York Stock Exchange

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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter  period that the  registrants  were
required  to file  such  reports),  and (2) have  been  subject  to such  filing
requirements for the past 90 days. Yes X   No
                                      ---    ---
As of October 31, 2000, all 70,980,203  outstanding shares of MidAmerican Energy
Company's voting stock were held by its parent company, MHC Inc.


<PAGE>


                           MIDAMERICAN ENERGY COMPANY

                                    FORM 10-Q

                                TABLE OF CONTENTS



                          PART I. FINANCIAL INFORMATION              PAGE NO.

ITEM 1.       Financial Statements

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

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

                          PART II. OTHER INFORMATION

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

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

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

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

                                      -2-

<PAGE>


INDEPENDENT ACCOUNTANTS' REPORT


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

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

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

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

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




DELOITTE & TOUCHE LLP

Des Moines, Iowa
October 27, 2000

                                      -3-
<PAGE>


                           MIDAMERICAN ENERGY COMPANY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                               THREE MONTHS                NINE MONTHS
                                            ENDED SEPTEMBER 30,         ENDED SEPTEMBER 30,
                                          ----------------------    --------------------------
                                             2000        1999           2000          1999
                                          ---------    ---------    -----------    -----------
<S>                                       <C>          <C>          <C>            <C>
OPERATING REVENUES
Regulated electric ....................   $ 359,430    $ 352,861    $   919,866    $   894,339
Regulated gas .........................      71,573       62,472        349,628        304,532
Nonregulated ..........................     122,430       43,062        267,853        106,113
                                          ---------    ---------    -----------    -----------
                                            553,433      458,395      1,537,347      1,304,984
                                          ---------    ---------    -----------    -----------
OPERATING EXPENSES
Regulated:
  Cost of fuel, energy and capacity ...      68,062       66,072        183,551        167,739
  Cost of gas sold ....................      39,029       29,474        211,581        164,928
  Other operating expenses ............     102,906      107,828        307,660        328,854
  Maintenance .........................      29,761       26,969         84,438         85,440
  Depreciation and amortization .......      48,062       49,574        145,596        146,952
  Property and other taxes ............      18,380       17,731         56,789         58,544
                                          ---------    ---------    -----------    -----------
                                            306,200      297,648        989,615        952,457
                                          ---------    ---------    -----------    -----------
Nonregulated:
  Cost of sales .......................     118,409       40,181        252,994         98,585
  Other ...............................       5,609        3,723         14,479         11,845
                                          ---------    ---------    -----------    -----------
                                            124,018       43,904        267,473        110,430
                                          ---------    ---------    -----------    -----------
Total operating expenses ..............     430,218      341,552      1,257,088      1,062,887
                                          ---------    ---------    -----------    -----------

OPERATING INCOME ......................     123,215      116,843        280,259        242,097
                                          ---------    ---------    -----------    -----------

NON-OPERATING INCOME
Interest and dividend income ..........       4,594          767          7,179          2,454
Other, net ............................      (1,924)        (689)        (5,984)        (6,068)
                                          ---------    ---------    -----------    -----------
                                              2,670           78          1,195         (3,614)
                                          ---------    ---------    -----------    -----------

FIXED CHARGES
Interest on long-term debt ............      15,929       16,696         44,316         49,803
Other interest expense ................       1,176        1,124          8,177          9,210
Preferred dividends of subsidiary trust       1,995        1,995          6,047          5,985
Allowance for borrowed funds ..........        (467)        (311)        (1,220)          (917)
                                          ---------    ---------    -----------    -----------
                                             18,633       19,504         57,320         64,081
                                          ---------    ---------    -----------    -----------

INCOME BEFORE INCOME TAXES ............     107,252       97,417        224,134        174,402
INCOME TAXES ..........................      42,821       38,422         91,029         68,871
                                          ---------    ---------    -----------    -----------
NET INCOME ............................      64,431       58,995        133,105        105,531
PREFERRED DIVIDENDS ...................       1,239        1,239          3,716          3,716
                                          ---------    ---------    -----------    -----------

EARNINGS ON COMMON STOCK ..............   $  63,192    $  57,756    $   129,389    $   101,815
                                          =========    =========    ===========    ===========
</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,
                                                            2000            1999
                                                        -------------   ------------
                                                        (UNAUDITED)
<S>                                                      <C>            <C>
ASSETS
UTILITY PLANT
Electric .............................................   $4,423,032     $4,348,740
Gas ..................................................      824,942        809,112
                                                         ----------     ----------
                                                          5,247,974      5,157,852
Less accumulated depreciation and amortization .......    2,662,908      2,548,160
                                                         ----------     ----------
                                                          2,585,066      2,609,692
Construction work in progress ........................       29,280         33,739
                                                         ----------     ----------
                                                          2,614,346      2,643,431
                                                         ----------     ----------

POWER PURCHASE CONTRACT ..............................      100,130        106,481
                                                         ----------     ----------
CURRENT ASSETS
Cash and cash equivalents ............................       49,561          5,167
Receivables ..........................................      214,491        190,986
Inventories ..........................................       82,153         80,649
Prepaid taxes ........................................       22,889         22,889
Other ................................................        9,226         10,355
                                                         ----------     ----------
                                                            378,320        310,046
                                                         ----------     ----------

INVESTMENTS AND NONREGULATED PROPERTY, NET ...........      257,660        228,105
REGULATORY ASSETS ....................................      245,378        278,757
OTHER ASSETS .........................................       57,657         25,737
                                                         ----------     ----------
TOTAL ASSETS .........................................   $3,653,491     $3,592,557
                                                         ==========     ==========

CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common shareholder's equity ..........................   $1,187,244     $1,057,855
MidAmerican preferred securities, not subject to
  mandatory redemption ...............................       31,759         31,759
Preferred securities, subject to mandatory redemption:
  MidAmerican preferred securities ...................       50,000         50,000
  MidAmerican-obligated preferred securities of
    subsidiary trust holding solely MidAmerican
    junior subordinated debentures ...................      100,000        100,000
Long-term debt (excluding current portion) ...........      920,114        759,638
                                                         ----------     ----------
                                                          2,289,117      1,999,252
                                                         ----------     ----------
CURRENT LIABILITIES
Notes payable ........................................           --        204,000
Current portion of long-term debt ....................        1,477        110,861
Current portion of power purchase contract ...........       15,767         15,767
Accounts payable .....................................      179,178        131,186
Taxes accrued ........................................       97,967        112,663
Interest accrued .....................................       15,494         12,925
Other ................................................       31,794         30,226
                                                         ----------     ----------
                                                            341,677        617,628
                                                         ----------     ----------
OTHER LIABILITIES
Power purchase contract ..............................       52,281         52,281
Deferred income taxes ................................      556,866        561,000
Investment tax credit ................................       67,111         71,757
Other ................................................      346,439        290,639
                                                         ----------     ----------
                                                          1,022,697        975,677
                                                         ----------     ----------
TOTAL CAPITALIZATION AND LIABILITIES .................   $3,653,491     $3,592,557
                                                         ==========     ==========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      -5-
<PAGE>


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


                                                                        NINE MONTHS
                                                                    ENDED SEPTEMBER 30,
                                                                  ----------------------
                                                                    2000         1999
                                                                  ---------    ---------
<S>                                                               <C>          <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net income ....................................................   $ 133,105    $ 105,531
Adjustments to reconcile net income to net cash provided:
  Depreciation and amortization ...............................     145,816      147,175
  Deferred income taxes and investment tax credit, net ........      (8,780)      (6,750)
  Amortization of other assets ................................      37,059       44,745
  Cash inflows of accounts receivable securitization...........      12,877        5,643
  Impact of changes in working capital ........................         676      (18,536)
  Other .......................................................       7,146       12,328
                                                                  ---------    ---------
    Net cash provided .........................................     327,899      290,136
                                                                  ---------    ---------

NET CASH FLOWS FROM INVESTING ACTIVITIES
Utility construction expenditures .............................    (119,447)    (115,997)
Quad Cities Nuclear Power Station decommissioning trust fund ..      (6,227)      (8,278)
Other investing activities, net ...............................        (446)     (11,717)
                                                                  ---------    ---------
    Net cash used .............................................    (126,120)    (135,992)
                                                                  ---------    ---------

NET CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid ................................................      (3,716)     (40,422)
Issuance of long-term debt, net of issuance cost ..............     161,156           --
Retirement of long-term debt, including reacquisition cost ....    (110,825)        (763)
Net change in notes payable ...................................    (204,000)    (117,106)
                                                                  ---------    ---------
    Net cash used .............................................    (157,385)    (158,291)
                                                                  ---------    ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..........      44,394       (4,147)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ..............       5,167        5,370
                                                                  ---------    ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ....................   $  49,561    $   1,223
                                                                  =========    =========

ADDITIONAL CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized .....................   $  43,984    $  53,614
                                                                  =========    =========
Income taxes paid .............................................   $ 109,677    $ 128,014
                                                                  =========    =========

</TABLE>

        The accompanying notes are an integral part of these statements.

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

A.   GENERAL:

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

     MidAmerican  Energy is a public  utility  with  electric  and  natural  gas
operations  and is the  principal  subsidiary  of MHC Inc. MHC is a wholly owned
subsidiary of MidAmerican Funding,  LLC, whose sole member is MidAmerican Energy
Holdings Company.  MHC,  MidAmerican Funding and MidAmerican Energy Holdings are
exempt public utility holding companies headquartered in Des Moines, Iowa.

B.   ENVIRONMENTAL MATTERS:

     (1) MANUFACTURED GAS PLANT FACILITIES -

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

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

     MidAmerican Energy estimates the range of possible costs for investigation,
remediation  and monitoring for the sites  discussed  above to be $22 million to
$68 million.  MidAmerican Energy's estimate of the probable cost for these sites
as of September  30, 2000 was $26 million.  The estimate  consists of $3 million
for  investigation  costs,  $8 million for  remediation  costs,  $13 million for
groundwater  treatment  and  monitoring  costs and $2 million  for  closure  and
administrative  costs.  This  estimate  has been  recorded as a liability  and a
regulatory  asset for future  recovery.  MidAmerican  Energy projects that these
amounts will be paid or incurred over the next 10 years.

                                      -7-
<PAGE>
     The  estimate  of  probable  remediation  costs  is  established  on a site
specific  basis.  The costs are  accumulated in a three-step  process.  First, a
determination  is made as to  whether  MidAmerican  Energy has  potential  legal
liability  for  the  site  and  whether  information  exists  to  indicate  that
contaminated  wastes  remain  at the site.  If so,  the  costs of  performing  a
preliminary  investigation and the costs of removing known contaminated soil are
accrued.  As the  investigation  is performed and if it is  determined  remedial
action  is  required,  the  best  estimate  of  remedial  costs is  accrued.  If
necessary, the estimate is revised when a consent order is issued. The estimated
recorded  liabilities for these properties  include  incremental direct costs of
the  remediation  effort,  costs  for  future  monitoring  at sites and costs of
compensation  to  employees  for  time  expected  to be  spent  directly  on the
remediation effort. The estimated recorded  liabilities for these properties are
based upon preliminary  data. Thus, actual costs could vary  significantly  from
the  estimates.  The  estimate  could  change  materially  based  on  facts  and
circumstances  derived from site  investigations,  changes in required  remedial
action and changes in technology relating to remedial alternatives. In addition,
insurance  recoveries  for some or all of the  costs  may be  possible,  but the
liabilities recorded have not been reduced by any estimate of such recoveries.

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

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

     (2) CLEAN AIR ACT -

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

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

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

                                      -8-

<PAGE>

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

C.   RATE MATTERS:

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

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

     Under the 1997 pricing plan settlement  agreement,  if MidAmerican Energy's
annual Iowa electric  jurisdictional  return on common equity  exceeds 12%, then
earnings  above  the 12% level  will be shared  equally  between  customers  and
MidAmerican  Energy;  if the return exceeds 14%, then  two-thirds of MidAmerican
Energy's  share  of  those  earnings  above  the 14%  level  will  be  used  for
accelerated  recovery of regulatory  assets. The year 2000 is the last year this
Iowa electric  retail revenue  sharing plan remains in effect.  The 1997 pricing
plan  settlement  agreement  also precludes  MidAmerican  Energy from filing for
increased  rates prior to 2001 unless the return falls below 9%.  Other  parties
signing the agreement are prohibited from filing for reduced rates prior to 2001
unless the return after reflecting credits to customers, exceeds 14%.

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


                                      -9-
<PAGE>
D.   ACCOUNTING FOR THE EFFECTS OF CERTAIN TYPES OF REGULATION:

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

     A possible  consequence  of  deregulation  in the utility  industry is that
Statement of Financial Accounting Standards No. 71 may no longer apply. SFAS No.
71 sets forth  accounting  principles for operations that are regulated and meet
certain criteria.  For operations that meet the criteria,  SFAS 71 allows, among
other  things,  the  deferral of costs that would  otherwise  be  expensed  when
incurred.  With the exception of the generation  operations serving the Illinois
jurisdiction, MidAmerican Energy's electric and gas utility operations currently
meet the criteria of SFAS 71, but its applicability is periodically  reexamined.
If portions of its utility  operations  no longer meet the  criteria of SFAS 71,
MidAmerican  Energy could be required to write off the related regulatory assets
and  liabilities  from its  balance  sheet and thus,  a material  adjustment  to
earnings in that period could result if  regulatory  assets are not recovered in
transition  provisions of any resulting  legislation.  As of September 30, 2000,
MidAmerican  Energy had $245 million of  regulatory  assets on its  Consolidated
Balance Sheet.

E.   SEGMENT INFORMATION:

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

                                      -10-
<PAGE>

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

                                    Three Months                   Nine Months
                                  Ended September 30           Ended September 30
                               ------------------------    ---------------------------
                                  2000         1999           2000           1999
                               ---------    -----------    -----------    ------------
<S>                            <C>          <C>            <C>            <C>
Revenues:
  Electric .................   $ 359,430    $   352,861    $   919,866    $   894,339
  Gas ......................      71,573         62,472        349,628        304,532
  Nonregulated and other (a)     122,430         43,062        267,853        106,113
                               ---------    -----------    -----------    -----------
                               $ 553,433    $   458,395    $ 1,537,347    $ 1,304,984
                               =========    ===========    ===========    ===========
Earnings on common stock:
  Electric .................   $  69,765    $    65,655    $   123,699    $   103,614
  Gas ......................      (4,586)        (7,342)        10,802            988
  Nonregulated and other (a)      (1,987)          (557)        (5,112)        (2,787)
                               ---------    -----------    -----------    -----------
                               $  63,192    $    57,756    $   129,389    $   101,815
                               =========    ===========    ===========    ===========
</TABLE>

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

F.   OTHER COMPREHENSIVE INCOME:

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

                                      -11-
<PAGE>
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

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

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

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

FORWARD-LOOKING STATEMENTS

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

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

REGULATED GROSS MARGIN

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

                                        Three Months          Nine Months
                                     Ended September 30    Ended September 30
                                     ------------------    ------------------
                                       2000      1999        2000      1999
                                       ----      ----        ----      ----
                                                  (In millions)
Operating revenues ..............      $359      $353        $920      $894
Cost of fuel, energy and capacity        68        66         184       168
                                       ----      ----        ----      ----
Electric gross margin ...........      $291      $287        $736      $726
                                       ====      ====        ====      ====

                                      -12-
<PAGE>
     MidAmerican  Energy's  electric  gross margin for the third quarter of 2000
increased $4 million compared to the third quarter of 1999. A refund accrual for
a revenue sharing arrangement in Iowa was $3.6 million less in the third quarter
of 2000 than in the 1999 quarter, resulting in an increase in electric margin.

     Temperatures  during  the three  months  ended  September  30,  2000,  were
slightly higher than  temperatures in the third quarter of 1999,  resulting in a
$1 million  increase in electric  margin.  Growth in the number of customers and
other usage factors not dependent on weather  increased  electric margin by $2.8
million  compared  to the  third  quarter  of 1999.  In total,  retail  sales of
electricity  increased  3.3% for the three  months  ended  September  30,  2000,
compared to the same period in 1999.

     A higher cost of sales for Iowa  retail  sales  resulted in a $2.0  million
decrease in electric margin compared to the third quarter of 1999. Additionally,
electric  margin  decreased  $1.0  million  due  to a  decrease  in  margins  on
off-system sales compared to the quarter ended September 30, 1999. Related sales
volumes  increased 6.9%;  however,  prices of off-system sales were less than in
the 1999 quarter.  Off-system sales are the supply of energy to other utilities,
municipalities and marketers which in turn distribute it to end-use customers.

     Electric  gross  margin  for the nine  months  ended  September  30,  2000,
increased $10 million compared to the same period in 1999.

     A refund accrual for a revenue sharing arrangement in Iowa was $5.1 million
less in the nine months ended  September 30, 2000,  than in the 1999  nine-month
period, resulting in an increase in electric margin.

     Growth in the number of customers  and other usage factors not dependent on
weather  increased  electric margin by $13.4 million  compared to the nine-month
period  ended  September  30,  1999.  Temperatures  during the nine months ended
September  30, 2000,  were more  moderate  than  temperatures  in the first nine
months of 1999, resulting in a $6 million decrease in electric margin. In total,
retail  sales of  electricity  increased  2.7% for the first nine months of 2000
compared to the same period in 1999.

     MidAmerican Energy's margins on off-system sales increased $1.5 million for
the nine months  ended  September  30,  2000,  compared to the nine months ended
September 30, 1999.  Related off-system sales volumes increased 3.6% compared to
the 1999 period.

     Electric  revenues from the recovery of energy  efficiency  program  costs,
decreased  $1.2 million  compared to the nine months ended  September  30, 1999.
Changes in these revenues are substantially  matched with corresponding  changes
in other operating expenses.  The decrease in energy efficiency program costs is
due to the completion in 1999 of two of the four-year recovery phases. One phase
remains and will be completed in 2001.  Refer to the  discussion  under  "Energy
Efficiency" in the OPERATING  ACTIVITIES  AND OTHER MATTERS  section of MD&A for
further discussion of energy efficiency cost recovery.

     Additionally,  electric revenues from recovery mechanisms related to Cooper
Nuclear Station costs,  decommissioning  costs and  manufactured gas plant costs
decreased $3.0 million compared to the nine months ended September 30, 1999. The
decreases relate  principally to corresponding  decreases in costs for which the
recovery mechanisms were established.

                                      -13-

<PAGE>

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

                             Three Months          Nine Months
                          Ended September 30    Ended September 30
                          ------------------    ------------------
                            2000      1999        2000      1999
                            ----      ----        ----      ----
                                       (In millions)
     Operating revenues..    $72       $62        $350      $305
     Cost of gas sold ...     39        29         212       165
                             ---       ---        ----      ----
       Gas gross margin..    $33       $33        $138      $140
                             ===       ===        ====      ====

     MidAmerican Energy's regulated gas revenues include purchase gas adjustment
clauses through which  MidAmerican  Energy is allowed to recover the cost of gas
sold from most of its gas utility customers.  Consequently,  fluctuations in the
cost of gas sold do not  affect  gross  margin or net  income  because  revenues
reflect  comparable  fluctuations from the purchase gas adjustment  clauses.  An
increase in the per-unit cost of gas for the three- and nine-month periods ended
September 30, 2000 compared to the same periods in 1999  increased  revenues and
cost of gas sold by approximately $13 million and $63 million, respectively.

     Gross  margin for gas  transported  decreased  $0.7  million  due to a 6.9%
decrease in volumes  transported  compared to the quarter  ended  September  30,
1999. The decrease was partially  offset by the impact of higher retail rates in
Illinois and other usage factors.

     Compared  to the first  nine  months of 1999,  gas gross  margin  decreased
approximately $2 million. Warmer temperatures in the nine months ended September
30, 2000,  resulted in a $6 million  decrease in gas margin compared to the same
period in 1999. Customer growth and other usage factors not dependent on weather
resulted in a $1.1 million  increase in margin compared to the nine months ended
September  30,  1999.  In total,  retail  sales of natural  gas  decreased  9.9%
compared to the 1999 period.

     Changes in retail gas rates  increased  gas  margin by  approximately  $5.5
million  compared to the first nine months of 1999. On January 22, 1999, the IUB
approved a $6.7  million  annual  interim  increase in gas rates for Iowa retail
customers.  An additional  increase was implemented on May 27, 1999, as a result
of the Iowa Utilities Board's approval of a final rate increase of $13.9 million
annually.  Rates for South Dakota  customers  increased  $2.4  million  annually
effective May 1, 1999. On July 11, 2000, the Illinois Commerce Commission issued
an order approving a gas rate increase totaling $2.1 million annually  effective
July 18, 2000.

     Recovery of gas energy  efficiency  costs  decreased  $2.5  million for the
first nine months of 2000 compared to the first nine months of 1999.  Consistent
with  electric  revenues,  changes in gas revenues from energy  efficiency  cost
recovery are  substantially  offset by corresponding  changes in other operating
expenses.

                                      -14-
<PAGE>

REGULATED OPERATING EXPENSES

     Regulated  other  operating  expenses  decreased $4.9 million for the third
quarter of 2000 compared to the third quarter of 1999.  Decreases in health care
and other benefit costs, injuries and damages costs and nuclear operations costs
were  the  major  causes  of the  decrease.  Energy  efficiency  program  costs,
information technology expenses and assessments from utility regulatory agencies
also decreased compared to the third quarter of 1999.

     For the nine months ended  September  30, 2000,  other  operating  expenses
decreased  $21.2  million  compared  to the same  period  in  1999.  Information
technology  expenses for system maintenance and implementation were $7.3 million
lower  for the  nine  months  ended  September  30,  2000,  due  principally  to
consulting  and other  costs in the 1999  period to  support  newly  implemented
systems and for Y2K  preparation.  Energy  efficiency  costs and Cooper  Tracker
costs  decreased  $5.0 million  compared to the nine months ended  September 30,
1999.  Costs related to  manufactured  gas plant clean up decreased $1.1 million
due primarily to the timing of expenditures.  Other factors  contributing to the
decrease  were  reductions  in employee  incentive  plan costs and  injuries and
damages  costs  and an  increase  in  2000  of a  reserve  distribution  from an
insurance fund compared to the distribution in 1999.

     Maintenance  expenses  increased  $2.8  million for the three  months ended
September  30,  2000,  compared  to the same period in 1999 due to the timing of
coal-fired  generating plant  maintenance and increased  forestry service costs.
Maintenance  expenses for the nine months ended  September  30, 2000,  decreased
$1.0  million  due  to  reductions  in  nuclear  generating  plant  and  general
maintenance  expenses and a recovery from insurance of transformer failure costs
incurred in prior periods. The decreases were partially offset by an increase in
forestry service costs.

     Depreciation  and  amortization  expense  decreased  compared  to the  1999
periods due to decreases in nuclear  decommissioning expense and amortization of
regulatory assets for MidAmerican  Energy's Illinois  operations.  Utility plant
depreciation increased due to the increase in utility plant.

     Property and other taxes  decreased for the nine months ended September 30,
2000,  compared to the 1999 period due to a reduction  in  MidAmerican  Energy's
Iowa property tax assessed  values.  Property taxes  increased for third quarter
comparison due to the effect of adjustments to the accruals in each of the third
quarters.

NONREGULATED OPERATING REVENUES AND OPERATING EXPENSES

     Nonregulated Gas Gross Margin -

                                  Three Months          Nine Months
                               Ended September 30    Ended September 30
                               ------------------    ------------------
                                2000         1999     2000        1999
                               ------      ------    ------      ------
                                          (In millions)
     Operating revenues        $113.2      $ 34.1    $239.3      $ 92.1
     Cost of gas sold .         112.1        33.7     236.4        91.2
                               ------      ------    ------      ------
       Gross margin ...        $  1.1      $  0.4    $  2.9      $  0.9
                               ======      ======    ======      ======

     Revenues from nonregulated natural gas marketing operations increased $79.1
million for the third  quarter of 2000  compared to the same period in 1999.  An
increase in the average price per unit sold, reflective of a 70% increase in the
average cost of gas,  accounted  for $46.3  million of the increase in revenues.
Sales  volumes  increased 12 million  MMBtus (96%)  resulting in a $32.8 million
increase in

                                      -15-
<PAGE>

revenues.  The increase in sales volumes was driven  principally by the addition
of  larger-use  wholesale  customers.  The  increase  in  related  cost of sales
reflects the increases in cost per unit sold and sales volumes.

     Revenues  from  nonregulated  natural gas  marketing  operations  increased
$147.2  million for the nine months ended  September  30, 2000,  compared to the
same period in 1999. An increase in the average price per unit sold,  reflective
of a 69% increase in the average cost of gas, accounted for $97.7 million of the
increase in revenues.  Sales volumes increased 22 million MMBtus (54%) resulting
in a $49.5  million  increase in  revenues.  The  increase in sales  volumes was
driven  principally  by the  addition of  larger-use  wholesale  customers.  The
increase in related cost of sales  reflects the  increases in cost per unit sold
and sales volumes.

     Other Nonregulated Revenues and Cost of Sales -

     Nonregulated  revenues  for the third  quarter of 2000 include $4.8 million
from  MidAmerican  Energy's  market  access  service  project,  compared to $6.6
million in the third quarter of 1999, the initial  quarter for the project.  The
pilot project allows  participating  Iowa customers with at least 4 megawatts of
load to choose their electric power supplier. MidAmerican Energy's revenues from
project participants  related to non-supply  services,  such as distribution and
transmission,  are  reflected  in  regulated  electric  revenues.  Cost of sales
decreased  $1.9 million to $4.2  million  related to the market  access  service
project.

     Revenues and cost of sales for the market access service project  increased
$6.8 million and $6.9 million, respectively, for the nine months ended September
30, 2000.

     Beginning October 1, 1999, some  non-residential  customers in Illinois are
allowed  to  select  their  electric  power   supplier.   MidAmerican   Energy's
nonregulated revenues for the nine months ended September 30, 2000, include $1.9
million in agency  fees and other  revenues  related to these  supply  services.
Related cost of sales totaled $2.7 million. For the three months ended September
30,  2000,  revenues and cost of sales  totaled  $0.5 million and $1.6  million,
respectively.

     MidAmerican  Energy  performs work for its customers that is not regulated,
including distribution  maintenance and forestry services.  Increased efforts in
these services also contributed to the increase in nonregulated revenues.

     Nonregulated Operating Expenses: Other -

     Other operating  expenses for MidAmerican  Energy's  nonregulated  services
increased  $1.9  million and $2.6  million for the three  months and nine months
ended September 30, 2000, compared to the same periods in 1999. The increase was
due principally to costs related to nonregulated distribution services performed
for customers.

NON-OPERATING INCOME AND INTEREST EXPENSE

     Interest and dividend income -

     The increase in interest  income for the three months and nine months ended
September 30, 2000, was due  principally to interest from a joint plant operator
for funds held by them.  Additionally,  a more  favorable  cash  position and an
increase in a note receivable related to accounts receivable sold contributed to
the increase in interest income.

                                      -16-
<PAGE>
     Other, Net -

     Other,  Net, which includes a number of non-operating  income and deduction
items,  decreased  $1.2 million for the three months ended  September  30, 2000,
compared to the same period in 1999.  For the nine months  ended  September  30,
2000, Other, Net increased $0.1 million compared to the 1999 period.

     Other,  Net  includes  a discount  on sold  accounts  receivable,  net of a
subservicer fee charged to MidAmerican Energy Funding  Corporation for servicing
the  accounts.  The  discount is designed to cover the  expenses of  MidAmerican
Energy  Funding  Corporation,  including  bad debt  expense,  subservicer  fees,
monthly  administrative  costs and interest.  The discount is recorded in Other,
Net  because it is not  reflected  in utility  cost of  service  for  regulatory
purposes.  The discount,  net of the subservicer fee, reduced Other, Net by $2.5
million and $1.8  million in the third  quarter of 2000 and 1999,  respectively,
and $6.9 million and $6.4 million in the nine months  ended  September  30, 2000
and 1999, respectively.

     Other,  Net for the three months and nine months ended  September 30, 1999,
also  includes a $1.9 million gain on the sale of rail cars.  Income  related to
the cash surrender value of corporate-owned life insurance policies totaled $0.6
million and $1.9 million for the three  months and nine months  ended  September
30, 2000, respectively,  compared to a net loss of $0.5 million and $1.6 million
for the three months and nine months ended September 30, 1999, respectively.

     Fixed Charges -

     The  decrease in  interest  on  long-term  debt was due to  long-term  debt
maturities  in 1999  and  2000.  The  decreases  resulting  from  maturities  of
long-term  debt were  partially  offset by  interest  on $162  million of 7.375%
medium-term notes issued July 24, 2000.

     Other  interest  expense  decreased in the nine months ended  September 30,
2000, compared to the nine months ended September 30, 1999, due to a decrease in
short-term debt outstanding.  The decrease was partially offset by the effect of
a credit to  interest on state  income  taxes in the third  quarter of 1999.  In
addition,  the nine months ended  September  30, 2000,  includes $0.6 million of
interest related to a gas supplier tax refund that is refundable to customers.

                         LIQUIDITY AND CAPITAL RESOURCES

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

     As  reflected on the  Consolidated  Statements  of Cash Flows,  MidAmerican
Energy's net cash provided from  operating  activities was $328 million and $290
million the first nine months of 2000 and 1999, respectively.

INVESTING ACTIVITIES AND PLANS

     Utility Construction Expenditures -

     MidAmerican  Energy's  primary  need for  capital is  utility  construction
expenditures.   For  the  first  nine  months  of  2000,  utility   construction
expenditures  totaled $119  million,  including  allowance for funds

                                      -17-
<PAGE>

used  during  construction,  or  capitalized  financing  costs,  and Quad Cities
Station  nuclear  fuel  purchases.  All such  expenditures  were  met with  cash
generated from utility operations.

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

         Nuclear Decommissioning -

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

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

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

FINANCING ACTIVITIES, PLANS AND AVAILABILITY

     Debt Authorization and Credit Facilities -

     MidAmerican   Energy  currently  has  authority  from  the  Federal  Energy
Regulatory  Commission to issue  short-term debt in the form of commercial paper
and bank notes aggregating $400 million.  As of September 30, 2000,  MidAmerican
Energy had in place a $250 million  commercial  paper program which is supported
by $250 million of revolving credit facilities. In addition,  MidAmerican Energy
has a $5 million  bank line of credit.  MidAmerican  Energy also has a revolving
credit  facility which is dedicated to

                                      -18-
<PAGE>

providing  liquidity for its obligations  under  outstanding  pollution  control
revenue bonds that are periodically remarketed.

     MidAmerican  Energy has  authorization  from the Federal Energy  Regulatory
Commission  to  issue up to an  additional  $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.  Funding Corp. in turn sells receivable interests to outside
investors.  In  consideration  for the sale,  MidAmerican  Energy  received  $70
million in cash and the remaining  balance in the form of a  subordinated  note,
bearing  interest at 8%, from  Funding  Corp.  As of  September  30,  2000,  the
revolving  cash balance was $70 million,  and the amount  outstanding  under the
subordinated  note was $57 million.  As part of the agreement,  the creditors of
Funding  Corp.  will be  entitled to be  satisfied  out of the assets of Funding
Corp. prior to any value being returned to MidAmerican  Energy or its creditors.
Therefore,  the  accounts  receivable  sold  are not  reflected  on  MidAmerican
Energy's  Consolidated  Balance Sheets. As of September 30, 2000, $128.7 million
of accounts receivable, net of reserves, were sold under the agreement.

OPERATING ACTIVITIES AND OTHER MATTERS

     Industry Evolution -

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

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

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

                                      -19-
<PAGE>

     Legislative and Regulatory Evolution -

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

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

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

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

     Accounting Effects of Industry Restructuring -

     A possible  consequence  of  deregulation  in the utility  industry is that
Statement of Financial  Accounting Standards No. 71 may no longer apply. SFAS 71
sets forth  accounting  principles  for  operations  that are regulated and meet
certain criteria.  For operations that meet the criteria,  SFAS 71 allows, among
other  things,  the  deferral of costs that would  otherwise  be  expensed  when
incurred.  With the exception of the generation  operations serving the Illinois
jurisdiction, MidAmerican Energy's electric and gas utility operations currently
meet the criteria  required by SFAS 71, but its  applicability  is  periodically
reexamined. If portions of its utility operations no longer meet the criteria of
SFAS  71,  MidAmerican  Energy  could  be  required  to  write  off the  related
regulatory  assets and liabilities  from its balance sheet, and thus, a material
adjustment to earnings in that period could result if regulatory  assets are not
recovered in transition provisions of any resulting legislation. As of September
30,  2000,  MidAmerican  Energy  had $245  million of  regulatory  assets on its
Consolidated Balance Sheet.

                                      -20-

<PAGE>
     Energy Efficiency -

     MidAmerican  Energy's  regulatory assets as of September 30, 2000, included
$24.3 million of deferred energy efficiency costs. Based on the current level of
recovery,  MidAmerican Energy expects to recover these costs by the end of 2001.
MidAmerican  Energy is also  allowed to recover  its ongoing  energy  efficiency
costs on a  current  basis.  Recovery  of these  costs is being  collected  from
customers  based  on  projected  annual  costs of $16.4  million,  which  may be
adjusted  annually.  Amortization  of the deferred energy  efficiency  costs and
current  expenditures  for energy  efficiency  costs will be  reflected in other
operating expenses over the related periods of recovery. The total of such costs
for the years 2000 and 2001 is  estimated  to be $40  million  and $34  million,
respectively.

     Rate Matters: Electric -

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

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

     Under the 1997 pricing plan settlement  agreement,  if MidAmerican Energy's
annual Iowa electric  jurisdictional  return on common equity  exceeds 12%, then
earnings  above  the 12% level  will be shared  equally  between  customers  and
MidAmerican  Energy.  If the return exceeds 14%, then  two-thirds of MidAmerican
Energy's  share  of  those  earnings  above  the 14%  level  will  be  used  for
accelerated  recovery of certain  regulatory  assets.  The year 2000 is the last
year this Iowa  electric  retail  revenue  sharing plan  remains in effect.  The
pricing plan settlement agreement also precludes  MidAmerican Energy from filing
for  increased  rates  prior to 2001  unless the return  falls  below 9%.  Other
parties signing the agreement are prohibited from filing for reduced rates prior
to 2001 unless the return,  after reflecting credits to customers,  exceeds 14%.
The agreement also eliminated  MidAmerican  Energy's energy  adjustment  clause,
and, as a result, the cost of fuel is not directly passed on to customers.

     Environmental Matters -

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

     MidAmerican Energy has evaluated or is evaluating 27 properties which were,
at one time, sites of gas manufacturing  plants in which it may be a potentially
responsible  party.  The purpose of these  evaluations  is to determine  whether
waste materials are present,  whether the materials  constitute an

                                      -21-
<PAGE>

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, 2000,  was $26 million.  This
estimate  has been  recorded as a liability  and a  regulatory  asset for future
recovery  through  the  regulatory  process.  Refer  to Note  B(1) of  Notes  to
Consolidated Financial Statements for further discussion of MidAmerican Energy's
environmental  activities  related  to  manufactured  gas  plant  sites and cost
recovery.

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

     On July 18, 1997,  the EPA adopted  revisions  to the National  Ambient Air
Quality  Standards for ozone and a new standard for fine particulate  matter. In
May 1999,  the U.S.  Court of  Appeals  for the  District  of  Columbia  Circuit
remanded the standards  adopted in July 1997 back to the EPA  indicating the EPA
had not expressed  sufficient  justification  for the basis of establishing  the
standards  and ruling that the EPA has exceeded  its  constitutionally-delegated
authority in setting the standards.  As a result of the court's initial decision
and the current  status of the  standards,  the impact of any new  standards  on
MidAmerican  Energy is currently  unknown.  If the EPA successfully  appeals the
court's  decision,  however,  and  the  new  standards  are  implemented,   then
MidAmerican Energy could incur increased costs and a decrease in revenues. Refer
to  Note  B(2)  of  Notes  to  Consolidated  Financial  Statements  for  further
discussion of this issue.

     Generating Capability -

     MidAmerican  Energy is interconnected  with Iowa and neighboring  utilities
and is involved in an electric power pooling  agreement  known as  Mid-Continent
Area Power Pool.  Each MAPP  participant  is required to maintain for  emergency
purposes a net  generating  capability  reserve of at least 15% above its system
peak  demand.  MidAmerican  Energy was able to  maintain  its  capacity  reserve
requirement during the 2000 cooling season and was not adversely affected by the
seasonal high prices in the off-system market.

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

ACCOUNTING ISSUES

     In June 1998, the Financial  Accounting  Standards Board (FASB) issued SFAS
133, "Accounting for Derivative  Instruments and Hedging Activities",  which was
delayed by SFAS 137 and  amended by SFAS 138 and is  effective  for  MidAmerican
Energy  beginning  January 1, 2001. SFAS 133 requires an entity to recognize all
of its derivatives as either assets or liabilities in its statement of financial
position and measure those instruments at fair value.  MidAmerican  Energy is in
the  process of  evaluating  the impact of this  accounting  standard.  Based on
derivative positions in place at September 30, 2000, MidAmerican Energy believes
the adoption of the standard  will not have a material  impact on its  financial
position or results of  operations.  The adoption of the standard  will not have
any impact on its cash flows.

                                      -22-
<PAGE>


     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
Accounting  Bulletin  101 (SAB 101),  "Revenue  Recognition".  SAB 101  provides
additional  guidance on revenue  recognition  criteria  and  related  disclosure
requirements.  This SAB is effective  beginning  in the fourth  quarter of 2000.
Management  does not  anticipate  that the final adoption of SAB 101 will have a
material impact on MidAmerican Energy's consolidated 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. The exposure to changes
in market  prices and  interest  rates at September  30, 2000 is not  materially
different than at December 31, 1999.

                          PART II - OTHER INFORMATION

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

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

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

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

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

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

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

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

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

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

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

                                     -23-
<PAGE>

     (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;

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

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

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

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

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

     On October 6, 1999, the court rendered summary judgment for Nebraska Public
Power  District  on  the   above-mentioned   issue   concerning   liability  for
decommissioning  (issue  one in the  first  paragraph  above)  and  the  related
contingent counterclaims filed by MidAmerican Energy (issues one, two, three and
five in the second paragraph above).  The court referred all remaining issues in
the case to mediation,  and cancelled the November 1999 trial date.  MidAmerican
Energy has appealed the court's  summary  judgment.  Oral  arguments  concerning
MidAmerican  Energy's appeal of the summary judgment were held before the United
States Court of Appeals,  Eighth Circuit,  on October 16, 2000.

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

(A)      EXHIBITS

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

         Exhibit 15 - Awareness Letter of Independent Accountants

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

(B)      REPORTS ON FORM 8-K

         None.

                                      -24-
<PAGE>


                                   SIGNATURES


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





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







Date  November 9, 2000                /s/  Patrick J. Goodman
    -------------------        -------------------------------------------------
                                            Patrick J. Goodman
                               Senior Vice President and Chief Financial Officer


                                      -25-
<PAGE>


                                  EXHIBIT INDEX

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


15   Awareness Letter of Independent Accountants

27   Financial Data Schedules (for electronic filing only).


                                      -26-