UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 11-K



(Mark One)
[x]  ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
For the fiscal year ended             December 31, 1997
                         ------------------------------------------------

                                              OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
For the transition period from                    to
                               ------------------    ---------------------

Commission file number                         1-12459
                       ---------------------------------------------------



           IOWA POWER INC. PAYROLL-BASED EMPLOYEE STOCK OWNERSHIP PLAN
--------------------------------------------------------------------------
                            (Full title of the plan)




                       MIDAMERICAN ENERGY HOLDINGS COMPANY
---------------------------------------------------------------------------
          (Name of Issuer of the securities held pursuant to the plan)

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








<PAGE>

                                 IOWA POWER INC.
                                  PAYROLL-BASED
                          EMPLOYEE STOCK OWNERSHIP PLAN
              STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS




                                                        As of December 31
                                                     -----------------------
                                                       1997         1996
                                                     -----------  ----------
INVESTMENTS
  MidAmerican Energy Holdings Company 
    common stock held by Trustee--  185,740
    shares and 205,841 shares, respectively
          Value at date of  contribution             $1,905,966   $2,108,834

          Unrealized appreciation in market value     2,180,306    1,158,897
                                                      ---------   ----------

          Market value as of December 31              4,086,272    3,267,731

OTHER ASSETS                                                 10           10
                                                    -----------   ----------

  TOTAL                                             $4,086,282    $3,267,741
                                                    ==========    ==========




              The accompanying notes to financial statements are an
                       integral part of these statements.



                                       -2-

<PAGE>


                                 IOWA POWER INC.
                                  PAYROLL-BASED
                          EMPLOYEE STOCK OWNERSHIP PLAN
         STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS


                                                   Year Ended December 31
                                           ------------------------------------
                                              1997         1996         1995
                                           ----------   ----------   ----------

BALANCE, beginning of year                 $3,267,741   $4,419,407   $3,841,812
                                           ----------   ----------   ----------

PLAN INCOME
  Dividends on stock held by Trustee          231,623      277,216      316,003
   Net appreciation (depreciation)
    in fair value of investments            1,162,990     (153,461)     798,985
                                           ----------   ----------   ----------
                                            1,394,613      123,755    1,114,988
                                           ----------   -----------  ----------

DISTRIBUTIONS TO PLAN PARTICIPANTS
  Shares distributed                          344,449      998,205      221,390
  Dividends paid                              231,623      277,216      316,003
                                           ----------   ----------   ----------
                                              576,072    1,275,421      537,393
                                           ----------   ----------   ----------

BALANCE, end of year                       $4,086,282   $3,267,741   $4,419,407
                                           ==========   ==========   ==========


              The accompanying notes to financial statements are an
                       integral part of these statements.



                                       -3-

<PAGE>
                                 IOWA POWER INC.
                                  PAYROLL-BASED
                          EMPLOYEE STOCK OWNERSHIP PLAN
                          NOTES TO FINANCIAL STATEMENTS

(1) THE PLAN:

     The  following  brief  description  of the Iowa  Power  Inc.  Payroll-Based
Employee  Stock  Ownership  Plan (the Plan) is provided for general  information
purposes only.  Participants should refer to the Plan document for more complete
information.

     (a) General and Plan Participants

     Iowa Resources Inc.  (Iowa  Resources)  adopted the Iowa Resources Inc. Tax
Reduction Act Employee  Stock  Ownership  Plan (Prior Plan) without  change from
Iowa Power and Light Company on November 1, 1979.  The Prior Plan was amended in
1980 to comply with certain  changes in tax laws.  The Prior Plan was amended to
the Iowa Resources Inc.  Payroll-Based  Employee Stock  Ownership Plan effective
January 1, 1983 to comply with  changes in federal tax laws which  replaced  the
investment-based  tax credit with a  payroll-based  tax credit.  Pursuant to the
merger of Iowa Resources and Midwest Energy Company into Midwest  Resources Inc.
(Resources) on November 7, 1990, Iowa Power Inc.  (formerly Iowa Power and Light
Company)   became  the   sponsor  and  the  Plan  became  the  Iowa  Power  Inc.
Payroll-Based  Employee  Stock  Ownership  Plan.  Pursuant to the merger of Iowa
Power and Iowa Public  Service  Company with and into Midwest Power Systems Inc.
(Midwest) on July 22, 1992,  Midwest  became the sponsor of the Plan. On July 1,
1995,  Resources,  Iowa-Illinois  Gas and Electric Company  (Iowa-Illinois)  and
Midwest  merged  with and into  MidAmerican  Energy  Company  (MidAmerican)  and
MidAmerican became the plan sponsor.

     On April 24,  1996,  MidAmerican  shareholders  approved a proposal to form
MidAmerican  Energy Holdings Company  (Holdings or Company) as a holding company
for MidAmerican and its subsidiaries.  Effective December 1, 1996, each share of
MidAmerican  common stock was exchanged  for one share of Company  common stock.
All share amounts are presented in equivalent Holdings shares.

     The Plan  terminates  by its own terms "at  midnight on the last day of the
Plan-Year  immediately  preceding the first Plan-Year in which the payroll-based
credit  is no  longer  available  under  the  Code."  The  1986 Tax  Reform  Act
eliminated the payroll-based credit, and therefore, the Plan terminated December
31, 1986. Iowa Resources  discontinued its contributions in 1987, and no further
employee-matching  contributions were permitted under the Plan. Nonetheless, the
Payroll-Based  Employee  Stock  Ownership  Trust provides that the Trustee shall
continue to fulfill all holding requirements under the Plan.

     At  December  31,  1997,  1996 and  1995,  there  were  571,  632,  and 791
participants,  respectively,  in the Plan. Included in the assets of the Plan at
December 31, 1997 are 5,948  shares of Holdings  common stock valued at $130,848
held for 24 former  employees  who  elected to defer the  distribution  of their
stock to future periods.

     (b) Trustee Arrangements

     Contributions  made under the Plan are held,  managed and controlled by use
of a trust (the Trust) by a trustee and  administered by a committee  designated
by Holding's Board of Directors,  pursuant to the Iowa Power Inc.  Payroll-Based
Employee Stock Ownership Plan Agreement.

                                       -4-

<PAGE>



     (c) Ownership Interest

     A separate account is maintained to reflect the common stock balance of
each participant.

     (d) Dividends

     Cash  dividends on shares of common stock  allocated to each  participant's
account  are paid to the  participant  when  received  by the Trustee or, at the
participant's election,  reinvested in common stock under the terms of Holding's
Shareholder Options Plan.

     (e) Benefits and Vesting

     Participants have a vested right to all shares of common stock allocated to
their accounts and dividends reinvested under the optional election described in
(d)  above.  Common  stock in the trust can be  withdrawn  at the  option of the
participants.  In the event of  termination  of  employment,  death or permanent
disability, a participant's account will be totally distributed. Distribution of
participants'  accounts  will be made in  common  stock  except  for  fractional
shares.  Fractional shares will be purchased for cash at the then current market
value.

     (f) Legal and Income Tax Status

     The Plan is subject to the Employee  Retirement Income Security Act of 1974
(ERISA),  which was enacted to protect the interests of  participants  and their
beneficiaries.  Iowa  Resources  received  a  formal  Internal  Revenue  Service
determination on February 4, 1985 that Iowa Resources' contributions to the Plan
were  qualified  under  Section 401 of the  Internal  Revenue  Code of 1954,  as
amended.  The Plan has been amended since  receiving the  determination  letter.
However, the Plan administrator and the Plan's tax counsel believe that the Plan
is  currently  designed and being  operated in  compliance  with the  applicable
requirements of the Internal Revenue Code. Therefore, they believe that the plan
was qualified and tax-exempt as of the financial statement date.

(2)  ACCOUNTING POLICIES:

     (a) Basis of Accounting

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires the use of estimates and  assumptions
that affect the reported  amounts of assets  available  for plan benefits at the
date of the  financial  statements  and the amounts of the changes in net assets
available for plan  benefits  during the reporting  period.  Actual  results may
differ from those estimates.

     The  financial   statements   are  presented  on  the  accrual  basis  and,
accordingly, income is reflected when earned.

     (b) Valuation of Investments

     Common  stock of Holdings  held in the Trust is reported at market value as
determined   by  the   closing   price  at   year-end  on  the  New  York  Stock
Exchange-Composite  Transaction  Listing.  The  market  value  per  share  as of
December 31, 1997 and 1996 was $22 and $15 7/8, respectively.

                                       -5-
<PAGE>


     (c) Dividend Distributions

     Cash dividends  distributed or reinvested are allocated among  participants
to the nearest cent based upon each participant's ownership interest.

     (d) Net Appreciation (Depreciation)

     The Plan presents in the  statement of changes in net assets  available for
Plan  benefits  the  net  appreciation  (depreciation)  in  the  fair  value  of
investments,  which consists of the realized gain or losses on  investments  and
the unrealized appreciation (depreciation) on those investments.

(3)  RECLASSIFICATIONS

     Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 presentation.



                                       -6-

<PAGE>


Report of Independent Accountants


To MidAmerican Energy Company:

We have  audited the  accompanying  statement of net assets  available  for plan
benefits of the Iowa Power Inc. Payroll-Based Employee Stock Ownership Plan (the
Plan) as of  December  31,  1997,  and the related  statement  of changes in net
assets  available  for plan  benefits for the year then ended.  These  financial
statements are the responsibility of the Plan's  management.  Our responsibility
is to express an opinion on these financial  statements  based on our audit. 

We  conducted  our  audit in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting  principles used and significant  estimates made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1997, and the changes in net assets  available for plan benefits
for the year  then  ended  in  conformity  with  generally  accepted  accounting
principles.




Kansas City, Missouri                       /s/  Coopers & Lybrand L.L.P.
                                           ------------------------------
March 20, 1998                                   COOPERS & LYBRAND L.L.P.



                                       -7-

<PAGE>
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To MidAmerican Energy Company:

We have  audited the  accompanying  Statement of Net Assets  Available  for Plan
Benefits of the Iowa Power Inc.  Payroll-Based  Employee Stock Ownership Plan as
of  December  31,  1996,  and the  related  Statements  of Changes in Net Assets
Available  for Plan  Benefits  for each of the two  years  in the  period  ended
December 31, 1996.  These  financial  statements are the  responsibility  of the
Plan's  management.  Our  responsibility  is to  express  an  opinion  on  these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statement referred to above present fairly, in all
material respects,  the net assets available for plan benefits of the Iowa Power
Inc. Payroll-Based Employee Stock Ownership Plan as of December 31, 1996 and the
changes in net assets  available  for plan benefits for each of the two years in
the period  ended  December  31,  1996 in  conformity  with  generally  accepted
accounting principles.




                                                /s/ Arthur Andersen LLP
                                                -----------------------
                                                ARTHUR ANDERSEN LLP

Chicago, Illinois
March 14, 1997

                                      -8-
<PAGE>




                                    SIGNATURE

Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the Iowa
Power Inc. Payroll-Based Employee Stock Ownership Plan Committee has duly caused
this annual report to be signed by the undersigned thereunto duly authorized.


                                       IOWA POWER INC. PAYROLL-BASED
                                       EMPLOYEE STOCK OWNERSHIP PLAN


                                       By  /s/ J. S. Rozema, Trustee
                                         ---------------------------
                                               J. S. Rozema, Trustee



Dated: March 20, 1998


                                      -9-
<PAGE>

EXHIBITS INDEX

The following exhibit is filed herewith:

        23.1     Consent of Coopers & Lybrand L.L.P.

        23.2     Consent of Arthur Andersen LLP







                                       -10-

<PAGE>

                                                              Exhibit 23.1


                       CONSENT OF INDEPENDENT ACCOUNTANTS



We consent to the  incorporation by reference in the  registration  statement of
MidAmerican  Energy  Holdings  Company  on Form S-8 (File No. 2-85102)  of our
report  dated March 20,  1998 on our audit of the Iowa Power Inc.  Payroll-Based
Employee  Stock  Ownership  Plan as of  December  31, 1997 and for the year then
ended, which report is included in the Annual Report on Form 11-K.




Kansas City, Missouri                        /s/ Coopers & Lybrand L.L.P.
April 23, 1998                               ----------------------------
                                                 COOPERS & LYBRAND L.L.P.

                                      -11-
<PAGE>
                                                                  Exhibit 23.2


                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT


As independent public accountants, we hereby consent to the incorporation of our
report  included  in this  Annual  Report  Form 11-K,  into  MidAmerican  Energy
Company's previously filed Form S-8 Registration Statement File No. 2-85102.




                                                /s/ Arthur Andersen LLP
                                                -----------------------
                                                ARTHUR ANDERSEN LLP

Chicago, Illinois
April 21, 1998


                                      -12-