SECURITIES AND EXCHANGE COMMISSION
                               
                    Washington, D.C. 20549



                           FORM 8-K



                        CURRENT REPORT



              Pursuant to Section 13 or 15(d) of
              The Securities Exchange Act of 1934



Date of Report (Date of earliest event reported):  March 15, 1995




                      IES UTILITIES INC.
    (Exact name of registrant as specified in its charter)





             Iowa                    0-4117-1              42-0331370
(State or other jurisdiction       (Commission          (I.R.S. Employer
 of incorporation)                  File No.)            Identification No.)



IES Tower, Cedar Rapids, Iowa                                52401
(Address of principal executive offices)                   (Zip Code)



Registrant's  telephone number, including area code:  319-398-4411

<PAGE>

      The  purpose  of  this Current Report is  to  file  certain
consolidated financial information regarding the Registrant  (IES
Utilities Inc.).  Such financial information is set forth in  the
Financial Statements and Exhibits to this Current Report.


Item  7.   Financial Statements, Pro Forma Financial  Information
           and Exhibits.


                                                                       Page
(a)  Financial Statements

       Report of Management                                           4 -  5

       Report of Independent Public Accountants                         6

       Consolidated Statements of Income for the years ended
       December 31, 1994, 1993 and 1992                                 7

       Consolidated Statements of Retained Earnings for the
       years ended December 31, 1994, 1993 and 1992                     8

       Consolidated Balance Sheets as of December 31, 1994
       and 1993                                                       9 - 10

       Consolidated Statements of Capitalization as of
       December 31, 1994 and 1993                                       11

       Consolidated  Statements of Cash Flows for the years
       ended December 31, 1994, 1993 and 1992                           12

       Notes to Consolidated Financial Statements                    13 - 39

       Management's Discussion and Analysis of the
       Results of Operations and Financial Condition                 40 - 56

       Selected Consolidated Quarterly Financial
       Data (Unaudited)                                                 57


(b)  Pro Forma Financial Information

       None.


(c)  Exhibits

        3   Bylaws of Registrant, as amended February 7, 1995
 
       12   Ratio of Earnings to Fixed Charges

       23   Consent of Independent Public Accountants

       27   Financial Data Schedule

<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.





                                        IES UTILITIES INC.
                                          (Registrant)




                 By /s/              Richard A. Gabbianelli
                                          (Signature)
                                     Richard A. Gabbianelli
                             Controller & Chief Accounting Officer



Date        March 15, 1995

<PAGE>

Item 7.  Financial Statements, Pro Forma Financial Information
         and Exhibits.


                     REPORT OF MANAGEMENT


      The Company's management has prepared and is responsible
for   the  presentation,  integrity  and  objectivity  of  the
consolidated  financial  statements  and  related  information
included   in   this   report.   The  consolidated   financial
statements  have  been prepared in conformity  with  generally
accepted  accounting principles applied on a consistent  basis
and,  in  some  cases, include estimates that are  based  upon
management's  judgment  and  the best  available  information,
giving due consideration to materiality. Financial information
contained elsewhere in this report is consistent with that  in
the consolidated financial statements.

      The  Company  maintains a system of internal  accounting
controls  which it believes is adequate to provide  reasonable
assurance  that  assets  are  safeguarded,  transactions   are
executed in accordance with management authorization  and  the
financial  records are reliable for preparing the consolidated
financial  statements.   The  system  of  internal  accounting
controls is supported by written policies and procedures, by a
staff  of  internal auditors and by the selection and training
of  qualified  personnel.  The internal audit  staff  conducts
comprehensive  audits  of  the Company's  system  of  internal
accounting  controls.   Management  strives  to  maintain   an
adequate  system  of internal controls, recognizing  that  the
cost  of such a system should not exceed the benefits derived.
In  accordance with generally accepted auditing standards, the
independent public accountants (Arthur Andersen LLP)  obtained
a  sufficient understanding of the Company's internal controls
to  plan  their  audit and determine the  nature,  timing  and
extent  of  other  tests to be performed.  Management  is  not
aware of any material internal control weaknesses.

      The  Board  of  Directors, through its  Audit  Committee
comprised  entirely  of outside directors, meets  periodically
with management, the internal auditor and Arthur Andersen  LLP
to  discuss financial reporting matters, internal control  and
auditing.   To  ensure their independence, both  the  internal
auditor  and Arthur Andersen LLP have full and free access  to
the Audit Committee.

<PAGE>

            REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Board of Directors of
IES Utilities Inc.:

We  have audited the accompanying consolidated balance  sheets
and  statements  of capitalization of IES UTILITIES  INC.  (an
Iowa    corporation)   AND   SUBSIDIARY  COMPANIES   as    of
December  31,  1994  and  1993, and the  related  consolidated
statements  of  income, retained earnings and cash  flows  for
each of the three years in the period ended December 31, 1994.
These  financial  statements are  the  responsibility  of  the
Company'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 statements referred  to  above
present  fairly,  in  all  material  respects,  the  financial
position of IES Utilities Inc. and subsidiary companies as  of
December  31,  1994  and  1993,  and  the  results  of   their
operations and their cash flows for each of the three years in
the  period  ended  December  31,  1994,  in  conformity  with
generally accepted accounting principles.

As   discussed  in  Note  7  to  the  consolidated   financial
statements, effective January 1, 1993, IES Utilities Inc.  and
subsidiary  companies changed their method of  accounting  for
postretirement benefits other than pensions.


                         ARTHUR ANDERSEN LLP

Chicago, Illinois,
February 3, 1995

<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
                                                Year Ended December 31
                                           1994           1993          1992
                                                    (in thousands)

Operating revenues:
    Electric                          $   537,327    $   550,521   $   462,999
    Gas                                   139,033        154,318       139,455
    Other                                   9,006          8,911         7,808
                                          685,366        713,750       610,262


Operating expenses:
    Fuel for production                    85,952         87,702        73,368
    Purchased power                        68,794         93,449        74,794
    Gas purchased for resale               95,340        109,122       101,605
    Other operating expenses              132,281        123,210       119,607
    Maintenance                            49,542         46,219        39,573
    Depreciation and amortization          75,316         69,407        64,107
    Taxes other than income taxes          42,550         41,312        36,847
                                          549,775        570,421       509,901


Operating income                          135,591        143,329       100,361


Interest expense and other:
   Interest expense                        41,572         40,169        39,628
   Allowance for  funds used during
     construction                          -3,910         -1,972        -3,177
   Miscellaneous, net                      -1,247           -801        -2,104
                                           36,415         37,396        34,347


Income before income taxes                 99,176        105,933        66,014


Federal and state income taxes             37,966         37,963        20,723


Net income                                 61,210         67,970        45,291
Preferred dividend requirements               914            914         1,729
Net income available for common stock  $   60,296     $   67,056    $   43,562

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

<PAGE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                                Year Ended December 31
                                           1994          1993          1992
                                                    (in thousands)

Balance at beginning of year           $   188,862   $   153,106   $   134,822
Add:
    Net income                              61,210        67,970        45,291

Deduct:
    Cash dividends declared -
        Common stock                        52,000        31,300        24,721
        Preferred stock, at stated rates       914           914         1,729
    Other                                        0             0           557

Balance at end of year
    ($18,209,000 restricted as to
     payment of cash dividends)        $   197,158   $   188,862   $   153,106

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

<PAGE>
CONSOLIDATED BALANCE SHEETS
                                                             December 31
ASSETS                                                   1994           1993
                                                           (in thousands)

Property, plant and equipment, at original cost:
 Utility -
    Plant in service -
        Electric                                  $  1,798,059    $  1,708,757
        Gas                                            158,115         147,956
        Other                                           86,005          75,845
                                                     2,042,179       1,932,558
    Less - Accumulated depreciation                    880,888         813,312
                                                     1,161,291       1,119,246
    Leased nuclear fuel, net of amortization            49,731          51,681
    Construction work in progress                       73,339          45,566
                                                     1,284,361       1,216,493
 Other                                                   1,824               0
                                                     1,286,185       1,216,493


Current assets:
   Cash and temporary cash investments                   2,135          18,313
   Accounts receivable -
      Customer, less reserve                            12,051          22,679
      Other                                              9,763          10,330
   Income tax refunds receivable                         3,450           3,082
   Production fuel, at average cost                     13,988          14,338
   Materials and supplies, at average cost              26,699          26,861
   Adjustment clause balances                            1,433               0
   Regulatory assets                                    20,145          14,225
   Prepayments and other                                29,546          30,985
                                                       119,210         140,813


Investments:
   Nuclear decommissioning trust funds                  33,779          28,059
   Cash surrender value of life insurance policies       2,915           2,380
   Other                                                 1,085           1,258
                                                        37,779          31,697


Other assets:
   Regulatory assets                                   192,955         148,592
   Deferred charges and other                            9,239           9,383
                                                       202,194         157,975
                                                     1,645,368       1,546,978


                                                             December 31
CAPITALIZATION AND LIABILITIES                           1994           1993
                                                           (in thousands)
Capitalization (See Consolidated Statements of 
  Capitalization):

    Common stock                                  $     33,427    $     33,427
    Paid-in surplus                                    279,042         279,042
    Retained earnings                                  197,158         188,862
        Total common equity                            509,627         501,331
    Cumulative preferred stock                          18,320          18,320
    Long-term debt                                     380,404         480,074
                                                       908,351         999,725


Current liabilities:
    Notes payable to associated companies               18,495               0
    Short-term borrowings                               37,000          24,000
    Capital lease obligations                           14,385          15,345
    Maturities and sinking funds                       100,140             224
    Accounts payable                                    70,354          47,179
    Accrued interest                                     9,438           9,438
    Accrued taxes                                       47,188          39,763
    Accumulated refueling outage provision              15,196           2,660
    Dividends payable                                      229           5,229
    Adjustment clause balances                               0           5,149
    Provision for rate refund liability                      0           8,670
    Environmental liabilities                            5,428           4,721
    Other                                               18,095          17,648
                                                       335,948         180,026


Long-term liabilities:
    Capital lease obligations                           35,346          36,336
    Environmental liabilities                           37,853          21,114
    Other                                               46,724          29,866
                                                       119,923          87,316


Deferred credits:
    Accumulated deferred income taxes                  241,345         237,464
    Accumulated deferred investment tax credits         39,801          42,447
                                                       281,146         279,911


Commitments and contingencies (Note 11)


                                                  $  1,645,368    $  1,546,978
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

<PAGE>
CONSOLIDATED STATEMENTS OF CAPITALIZATION
                                                             December 31
                                                         1994           1993
                                                           (in thousands)
Common equity:
    Common stock - par value $2.50 per share - 
      authorized 24,000,000 shares; 
      outstanding 13,370,788 shares                 $    33,427    $    33,427
    Paid-in surplus                                     279,042        279,042
    Retained earnings                                   197,158        188,862
                                                        509,627        501,331


Cumulative preferred stock                               18,320         18,320


Long-term debt of IES Utilities Inc.:
    Collateral Trust Bonds -
        6% series, due 2008                              50,000         50,000
        7% series, due 2023                              50,000         50,000
        5.5% series, due 2023                            19,400         19,400
                                                        119,400        119,400

    First Mortgage Bonds -
        Series J, 6-1/4%, due 1996                       15,000         15,000
        Series L, 7-7/8%, due 2000                       15,000         15,000
        Series M, 7-5/8%, due 2002                       30,000         30,000
        Series W, 9-3/4%, due 1995                       50,000         50,000
        Series X, 9.42%, due 1995                        50,000         50,000
        Series Y, 8-5/8%, due 2001                       60,000         60,000
        Series Z, 7.60%, due 1999                        50,000         50,000
        6-1/8% series, due 1997                           8,000          8,000
        9-1/8% series, due 2001                          21,000         21,000
        7-3/8% series, due 2003                          10,000         10,000
        7-1/4% series, due 2007                          30,000         30,000
                                                        339,000        339,000
    Pollution control obligations -
       5.75%, due serially 1995 to 2003                   3,696          3,920
       5.95%, due 2007, secured by 
          First Mortgage Bonds                           10,000         10,000
       Variable rate (5.45% - 5.60% at 
          December 31, 1994), due 2000 to 2010           11,100         11,100
                                                         24,796         25,020
    Unamortized debt premium and (discount), net         -2,652         -3,122
                                                        480,544        480,298
          Less - Amount due within one year             100,140            224
                                                        380,404        480,074
                                                        908,351        999,725

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                                                  Year Ended December 31
                                                                           1994            1993            1992
                                                                                      (in thousands)
<S>                                                               <C>             <C>             <C>
Cash flows from operating activities:
  Net income                                                         $     61,210    $     67,970    $     45,291
  Adjustments to reconcile net income to net cash
   flows from operating activities -
     Depreciation and amortization                                         75,316          69,407          64,107
     Principal payments under capital lease obligations                    16,246          11,429          11,725
     Deferred taxes and investment tax credits                               -410          10,531          -2,406
     Refueling outage provision                                            12,536          -4,889          -5,503
     Allowance for equity funds used during construction                   -2,299            -824          -1,831
     Other                                                                  3,240           1,613           1,134
  Other changes in assets and liabilities -
     Accounts receivable                                                   10,395          -8,553            -571
     Production fuel, materials and supplies                                  404           5,909           1,579
     Accounts payable                                                      20,444           5,620             345
     Accrued taxes                                                          7,057         -10,991           6,118
     Provision for rate refunds                                            -8,670            -350           7,528
     Adjustment clause balances                                            -6,582           6,366          -4,122
     Gas in storage                                                         1,919          -2,309          -7,867
     Other                                                                  4,082             183           2,441
       Net cash flows from operating activities                           194,888         151,112         117,968


Cash flows from financing activities:
  Dividends declared on common stock                                      -52,000         -31,300         -24,721
  Dividends declared on preferred stock                                      -914            -914          -1,729
  Equity infusion from parent company                                           0          50,000               0
  Proceeds from issuance of long-term debt                                      0         119,400          83,400
  Reductions in long-term debt and preferred stock                           -224         -79,624         -39,429
  Net change in short-term borrowings                                      31,495         -68,560          51,660
  Principal payments under capital lease obligations                      -16,304         -11,276         -12,337
  Sale of utility accounts receivable                                         800          10,490           7,710
  Other                                                                    -5,000           5,010             231
    Net cash flows from financing activities                              -42,147          -6,774          64,785


Cash flows from investing activities:
  Construction and acquisition expenditures                              -148,062        -113,212        -171,013
  Nuclear decommissioning trust funds                                      -5,532          -5,532          -5,532
  Deferred energy efficiency costs                                        -16,157          -9,747          -6,877
  Other                                                                       832             723          -3,009
    Net cash flows from investing activities                             -168,919        -127,768        -186,431


Net increase (decrease) in cash and temporary cash investments            -16,178          16,570          -3,678


Cash and temporary cash investments at beginning of year                   18,313           1,743           5,421


Cash and temporary cash investments at end of year                   $      2,135    $     18,313    $      1,743


Supplemental cash flow information:
  Cash paid during the year for -
    Interest                                                         $     42,678    $      39,291   $     35,770
    Income taxes                                                     $     34,479    $      40,130   $     23,640

  Noncash investing and financing activities -
    Capital lease obligations incurred                               $     14,297     $     14,605   $      1,973

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>

<PAGE>
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
          (a)  Basis of Consolidation -

       IES   Utilities  Inc.  (Utilities)  is  a  wholly-owned
subsidiary   of   IES   Industries  Inc.  (Industries).    The
Consolidated  Financial  Statements include  the  accounts  of
Utilities and its consolidated subsidiaries (collectively  the
Company).  All subsidiaries for which Utilities owns  directly
or indirectly more than 50% of the voting stock, which are IES
Ventures  Inc. and IES Midland Development Inc., are  included
as consolidated subsidiaries.  Both of these subsidiaries were
formed  in  December 1994 and had no operations in 1994.   All
significant intercompany balances and transactions  have  been
eliminated from the Consolidated Financial Statements.

      Investments  for which the Company has at  least  a  20%
interest  are  accounted  for  under  the  equity  method   of
accounting.  These investments are stated at acquisition cost,
increased   or   decreased  for  the   Company's   equity   in
undistributed  net  income  or  loss,  which  is  included  in
"Interest  expense  and  other - Miscellaneous,  net"  in  the
Consolidated Statements of Income.

      Certain prior period amounts have been reclassified on a
basis consistent with the 1994 presentation.

     (b)  Regulation -

      Utilities is subject to regulation by the Iowa Utilities
Board  (IUB)  and  the  Federal Energy  Regulatory  Commission
(FERC).   Utilities' consolidated subsidiaries are not subject
to regulation by the IUB or the FERC.

     (c)  Regulatory Assets -

      Utilities  is subject to the provisions of Statement  of
Financial  Accounting Standards No. 71,  "Accounting  for  the
Effects  of  Certain  Types  of Regulation"  (SFAS  71).   The
regulatory   assets  represent  probable  future  revenue   to
Utilities  associated  with certain incurred  costs  as  these
costs  are  recovered  through the rate  making  process.   At
December   31,   regulatory  assets  as   reflected   in   the
Consolidated  Balance Sheets were comprised of  the  following
items:

                                                      1994       1993
                                                       (in millions)
                                                          
Deferred income taxes (Note 1(d))                   $  90.1   $  88.6
Environmental liabilities (Note 11(f))                 43.8      25.4
Energy efficiency programs (Note 3(b))                 34.7      18.5
Employee pension and benefit costs (Note 7)            25.0      14.1
FERC Order No. 636 transition costs (Note 11(h))        8.0       5.0
Unamortized loss on reacquired debt                     6.1       6.4
Cancelled plant costs                                   2.4       3.3
Other                                                   3.0       1.5
                                                      213.1     162.8
Classified as "Current assets - regulatory assets"     20.1      14.2
Classified as "Other assets - regulatory assets"    $ 193.0   $ 148.6

      Refer to the individual footnotes referenced above for a
further  discussion of certain items reflected  in  regulatory
assets.

     (d)  Income Taxes -

      The  Company follows the liability method of  accounting
for deferred income taxes, which requires the establishment of
deferred tax liabilities and assets, as appropriate,  for  all
temporary  differences between the tax  basis  of  assets  and
liabilities   and  the  amounts  reported  in  the   financial
statements.   Deferred  taxes  are  recorded  using  currently
enacted tax rates.

      Except  as  noted  below, income  tax  expense  includes
provisions  for deferred taxes to reflect the tax  effects  of
temporary differences between the time when certain costs  are
recorded  in the accounts and when they are deducted  for  tax
return  purposes.   As  temporary  differences  reverse,   the
related  accumulated  deferred income taxes  are  reversed  to
income.   Investment  tax  credits  for  Utilities  have  been
deferred  and  are subsequently credited to  income  over  the
average lives of the related property.

      Consistent  with  rate making practices  for  Utilities,
deferred  tax  expense is not recorded for  certain  temporary
differences (primarily related to utility property, plant  and
equipment).  Accordingly, Utilities has recorded deferred  tax
liabilities and regulatory assets, as identified in Note 1(c).

     (e)  Temporary Cash Investments -

      Temporary  cash investments are stated  at  cost,  which
approximates market value, and are considered cash equivalents
for   the  Consolidated  Statements  of  Cash  Flows.    These
investments  consist  of short-term liquid  investments  which
have  maturities  of  less  than 90  days  from  the  date  of
acquisition.

       (f)   Depreciation  of  Utility  Property,  Plant   and
             Equipment -

      The  average rates of depreciation for electric and  gas
properties   of   Utilities,  including   Utilities'   nuclear
generating  station,  the Duane Arnold Energy  Center  (DAEC),
which  is  being  depreciated over  a  36-year  life  using  a
remaining  life  method, consistent with current  rate  making
practices, were as follows:

                        1994       1993        1992
                                                     
        Electric        3.6%       3.5%        3.5%
        Gas             3.8%       3.5%        3.0%



     (g)  Decommissioning of the DAEC -

      Included  in Utilities' proposed electric rate  increase
discussed  in Note 3(a) is a proposal to increase  the  annual
recovery  of  anticipated costs to decommission  the  DAEC  to
approximately  $9 million annually from the current  level  of
$5.5   million.   Decommissioning  expense  is   included   in
"Depreciation and amortization" in the Consolidated Statements
of   Income   and  the  cumulative  amount  is   included   in
"Accumulated depreciation" in the Consolidated Balance  Sheets
to  the extent recovered through rates.  The proposal is based
on the following assumptions: 1) cost to decommission the DAEC
of  $252.7  million  in  1993 dollars, based  on  the  Nuclear
Regulatory Commission (NRC) minimum formula (which exceeds the
amount  in the current site-specific study completed in 1994);
2)  inflation  of  4.91%  annually  to  the  year  2014,  when
decommissioning   is  expected  to  begin;   3)   the   prompt
dismantling and removal method of decommissioning; 4)  monthly
funding  of  all future collections into external trust  funds
and funded on a tax-qualified basis to the extent possible; 5)
an   average  after-tax  return  of  6.82%  for  all  external
investments; and 6) collection of the costs on a straight-line
basis,    in    real    terms,    through    2014.     Current
levels  of rate recovery: 1) do not recognize estimated future
inflation for the entire period prior to commencement  of  the
decommissioning process; 2) assume that decommissioning begins
in  2010;  and  3)  provide recovery on a straight-line  basis
without considering the effects of inflation.  At December 31,
1994,   Utilities  had  $33.8  million  invested  in  external
decommissioning  trust funds as indicated in the  Consolidated
Balance  Sheets,  and  also  had an  internal  decommissioning
reserve of $21.7 million recorded as accumulated depreciation.
Earnings on the external trust funds, which were $1.0  million
in  1994,  are recorded as interest income and a corresponding
interest  expense  payable  to the  funds  is  recorded.   The
earnings accumulate in the external trust fund balances and in
accumulated depreciation on utility plant.

      See "Management's Discussion and Analysis of the Results
of  Operations  and Financial Condition" for a  discussion  of
industry issues raised by the staff of the SEC and a Financial
Accounting  Standards  Board  review  regarding  the  electric
utility  industry  method  of accounting  for  decommissioning
costs.

     (h)  Allowance for Funds Used During Construction -

      The  allowance for funds used during construction (AFC),
which  represents the cost during the construction  period  of
funds  used  for  construction  purposes,  is  capitalized  by
Utilities  as a component of the cost of utility  plant.   The
amount  of AFC applicable to debt funds and to other  (equity)
funds,  a  non-cash item, is computed in accordance  with  the
prescribed  FERC formula.  The aggregate gross rates  used  by
Utilities   for   1994-1992  were   9.3%,   5.7%   and   9.2%,
respectively.

     (i)  Operating Revenues -

      The  Company accrues revenues for services rendered  but
unbilled at month-end in order to more properly match revenues
with expenses.

     (j)  Adjustment Clauses -

      Utilities' tariffs provide for subsequent adjustments to
its electric and natural gas rates for changes in the cost  of
fuel  and  purchased  energy and in the cost  of  natural  gas
purchased for resale.  Changes in the under/over collection of
these  costs are reflected in "Fuel for production"  and  "Gas
purchased  for  resale"  in  the  Consolidated  Statements  of
Income.    The  cumulative  effects  are  reflected   in   the
Consolidated  Balance  Sheets as a current  asset  or  current
liability, pending automatic reflection in future billings  to
customers.

     (k)  Accumulated Refueling Outage Provision -

      The IUB allows Utilities to collect, as part of its base
revenues,  funds  to  offset other operating  and  maintenance
expenditures  incurred during refueling outages at  the  DAEC.
As  these  revenues  are collected, an  equivalent  amount  is
charged  to  other operating and maintenance expenses  with  a
corresponding credit to a reserve.  During a refueling outage,
the  reserve  is  reversed  to  offset  the  refueling  outage
expenditures.

(2)  ACQUISITION  OF  IOWA  SERVICE  TERRITORY  OF  UNION
     ELECTRIC COMPANY:

     Effective December 31, 1992, Utilities purchased the Iowa
distribution  system  and a portion of the  Iowa  transmission
facilities  of  Union Electric Company (UE) for  approximately
$65  million  in  cash.  The net book value  of  the  acquired
assets  was  approximately $35 million and the amount  of  the
purchase price in excess of the book value (approximately  $30
million)  has been recorded as an acquisition adjustment.  The
acquisition adjustment is being amortized over the life of the
property and the amortization is included in "Interest expense
and other - Miscellaneous, net" in the Consolidated Statements
of  Income.   Recovery of the acquisition  adjustment  through
rates  has been requested in Utilities' current electric  rate
filing, which is discussed in Note 3(a).  See Note 11(b) for a
discussion  of the purchase power contracts between  Utilities
and UE associated with this acquisition.

(3)  RATE MATTERS:
     (a)  1994 Electric Rate Case -

      In 1994, Utilities applied to the IUB for an increase in
retail  electric rates of approximately $26 million  annually,
or   5.2%.    Utilities'   proposal   includes   approximately
$12 million in annual revenue requirement related to increased
recovery   levels   of   depreciation  expense   and   nuclear
decommissioning  expense.  To the extent these  proposals  are
approved by the IUB, corresponding increases in expense  would
be  recorded and there would be no effect on net  income.   No
interim increase was requested.

     The Office of Consumer Advocate (OCA) filed a petition in
connection with this proceeding to reduce the rates for retail
electric  service by approximately $27 million or  5.5%.   The
primary   differences  between  the  amount  of  the  increase
requested  by Utilities and the decrease proposed by  the  OCA
are: 1) a 13.9% return on common equity requested by Utilities
compared  to 11.1% proposed by the OCA; 2) OCA's rejection  of
Utilities'    proposal    to    increase    collections    for
decommissioning  the  DAEC; 3) OCA's rejection  of  Utilities'
proposal to increase depreciation rates; 4) OCA's proposal  to
reject  most  of Utilities' request to recover an  acquisition
adjustment associated with its acquisition of the Iowa service
territory  of  UE;  and 5) an adjustment to  test  year  sales
levels proposed by the OCA.  If a rate reduction is ultimately
ordered  by  the  IUB, the reduction would be  effective  from
October  22,  1994, and revenues collected  beyond  that  date
would  be  subject  to refund to the extent of  the  reduction
approved  by  the  IUB,  if any.  As  of  December  31,  1994,
Utilities'   revenues  collected  subject   to   refund   were
approximately $5 million.

      Intervenors in the proceeding also submitted filings  in
October   1994.   These  parties,  which  primarily  represent
individual  or  groups  of  customers,  generally  object   to
particular elements of the price increase and Utilities' price
design  proposals.   Those intervenors that  quantified  their
positions have generally argued for a price decrease, but none
as large as that proposed by the OCA.

     Utilities expects to receive an order from the IUB in May
1995.

     (b)  1994 Energy Efficiency Cost Recovery Filing -

     The IUB has adopted rules that mandate Utilities to spend
2% of electric and 1.5% of gas gross retail operating revenues
for  energy efficiency programs.  Under provisions of the  IUB
rules,  in  August  1994, Utilities applied  to  the  IUB  for
recovery of approximately $23 million and $13 million for  the
electric  and  gas  programs, respectively, related  to  costs
incurred  through  1993 for such programs.   The  $36  million
total  for  the  electric  and gas programs  is  comprised  of
$21   million  of  direct  expenditures  and  carrying   costs
(recorded as a "Regulatory asset" in the Consolidated  Balance
Sheets, including $3.6 million as current), $7 million  for  a
return  on  the  expenditures over  the  recovery  period  and
$8  million for a reward based on a sharing of the benefits of
such programs.

      In  October  1994,  the OCA and  an  intervenor  in  the
proceeding  filed  their  direct  testimony.   The   principal
difference   between  Utilities  and  the  other  parties   is
approximately $7 million in the reward calculation.   Hearings
in  the  proceeding were held in January 1995.   Any  increase
approved  by  the  IUB is not expected to be effective  before
April 1995, and recovery will be over a four-year period  with
a  return allowed on the unrecovered portion over the recovery
period.

(4)   LEASES:

      Utilities has a capital lease covering its 70% undivided
interest  in  nuclear  fuel purchased for  the  DAEC.   Future
purchases  of fuel may also be added to the fuel lease.   This
lease  provides for annual one-year extensions  and  Utilities
intends  to  exercise  such  extensions  through  the   DAEC's
operating  life. Interest costs under the lease are  based  on
commercial  paper costs incurred by the lessor.  Utilities  is
responsible  for the payment of taxes, maintenance,  operating
cost, risk of loss and insurance relating to the leased fuel.

      The  lessor has an $80 million credit agreement  with  a
bank   supporting  the  nuclear  fuel  lease.   The  agreement
continues  on  a  year-to-year  basis,  unless  either   party
provides at least a three-year notice of termination; no  such
notice of termination has been provided by either party.

      Annual  nuclear fuel lease expenses include the cost  of
fuel,  based  on  the  quantity  of  heat  produced  for   the
generation  of  electric energy, plus  the  lessor's  interest
costs  related  to  fuel  in  the reactor  and  administrative
expenses.   These expenses (included in "Fuel for  production"
in  the Consolidated Statements of Income) for 1994-1992  were
$17.8 million, $12.4 million and $12.9 million, respectively.

       The  Company's  operating  lease  rental  expenses  for
1994-1992  were $9.8 million, $8.4 million and  $6.8  million,
respectively.

      The Company's future minimum lease payments by year  are
as follows:

                                           Capital       Operating
        Year                                Lease          Leases
                                               (in thousands)
                                                         
        1995                                 $ 15,634      $   7,023
        1996                                   15,653          6,987
        1997                                   12,942          4,591
        1998                                    6,394          3,317
        1999                                    4,176          2,544
        2000 - 2002                             1,267           -
                                               56,066      $  24,462
        Less:  Amount representing interest     6,335          
        Present value of net minimum                     
            capital lease payments           $ 49,731         


(5)  UTILITY ACCOUNTS RECEIVABLE:

       Customer   accounts   receivable,  including   unbilled
revenues,  arise  primarily from the sale of  electricity  and
natural  gas.  At December 31, 1994, Utilities was  serving  a
diversified  base  of residential, commercial  and  industrial
customers  consisting  of approximately 330,000  electric  and
173,000 gas customers.

     Utilities has entered into an agreement, which expires in
1999,  with  a  financial institution to  sell,  with  limited
recourse,   an  undivided  fractional  interest   of   up   to
$65  million  in its pool of utility accounts receivable.   At
December 31, 1994, $54 million was sold under the agreement.

(6)   INCOME TAXES:

      The components of Federal and state income taxes for the
years ended December 31, were as follows:


                                 1994          1993         1992
                                          (in millions)
                                                       
Current tax expense             $ 38.4       $  27.5      $ 23.2
Deferred tax expense               2.2          15.4         0.3
Amortization and adjustment                            
  of investment tax credits       (2.6)         (4.9)       (2.8)
                                $ 38.0       $  38.0      $ 20.7


      The  overall effective income tax rates shown below  for
the  years ended December 31, were computed by dividing  total
income tax expense by income before income taxes.


                                                  1994       1993       1992
                                                                     
Statutory Federal income tax rate                 35.0%      35.0%      34.0%
Add (deduct):                                                        
    State income taxes, net of Federal benefits    6.1        5.8        5.6
    Effect of property related temporary                             
        differences for which deferred taxes                         
        are not provided under rate making
        principles                                 3.2        1.5        0.5
    Amortization of investment tax credits        (2.7)      (2.5)      (4.2)
    Reversal through tariffs of deferred                             
        taxes provided at rates in excess of                         
        the current statutory Federal income
        tax rate                                  (1.5)      (1.7)      (2.7)
    Adjustment of prior period taxes              (1.9)      (2.0)      (2.0)
    Other items, net                               0.1       (0.3)       0.2
Overall effective income tax rate                 38.3%      35.8%      31.4%

      The accumulated deferred income taxes as set forth below
in  the Consolidated Balance Sheets at December 31, arise from
the following temporary differences:


                                           1994         1993
                                             (in millions)
                                            
  Property related                        $ 276       $ 272
  Investment tax credit related             (28)        (30)
  Decommissioning related                   (13)        (12)
  Other                                       6           7
                                          $ 241       $ 237



(7)  BENEFIT PLANS:
     (a)  Pension Plans -

     The Company has one contributory and two non-contributory
retirement  plans that, collectively, cover substantially  all
of  its employees.  Plan benefits are generally based on years
of service and compensation during the employees' latter years
of  employment.   Payments  made from  the  pension  funds  to
retired   employees  and  beneficiaries  during  1994  totaled
$9.7 million.

      The  Company's policy is to fund the pension cost at  an
amount  that is at least equal to the minimum funding  require-
ments mandated by the Employee Retirement Income Security  Act
(ERISA)  and  that does not exceed the maximum tax  deductible
amount for the year.

       Pursuant   to  the  provisions  of  SFAS  71,   certain
adjustments  to Utilities' pension provision are necessary  to
reflect  the accounting for pension costs allowed in its  most
recent rate cases.

      The  components of the pension provision for  the  years
ended December 31, were as follows:
 
                                                1994       1993       1992
                                                      (in thousands)
                                                                   
Service cost                              $   5,786    $   4,275   $   4,439
Interest cost on projected
  benefit obligation                         11,265       11,131       9,999
Assumed return on plans' assets             (12,426)     (12,177)    (11,640)
Amortization of unrecognized gain              (180)        (763)       (135)
Amortization of prior service cost            1,335        1,195         938
Amortization of unrecognized plans'                                
    assets as of January 1, 1987               (329)        (384)       (382)
Pension cost                                  5,451        3,277       3,219
Adjustment to funding level                  (5,340)      (2,867)        301
Total pension costs paid to the Trustees  $     111    $     410   $   3,520
                                                                   
Actual return on plans' assets            $    (101)   $  12,718   $   8,861

     A reconciliation of the funded status of the plans to the
amounts  recognized  in  the Consolidated  Balance  Sheets  at
December 31, is presented below:
                                                             1994        1993
                                                              (in thousands)
                                                                      
Fair market value of plans' assets                      $ 165,267    $ 174,133
Actuarial present value of benefits rendered to date -                
  Accumulated benefits based on compensation to                     
    date, including vested benefits of $96,968,000
    and $100,905,000, respectively                       107,017       110,676
  Additional benefits based on estimated
    future salary levels                                  39,565        42,938
Projected benefit obligation                             146,582       153,614
Plans' assets in excess of projected benefit obligation   18,685        20,519
Remaining unrecognized net asset existing at                          
  January 1, 1987, being amortized over 20 years          (3,792)       (4,109)
Unrecognized prior service cost                           17,991        16,708
Unrecognized net gain                                    (33,942)      (28,830)
Prepaid (accrued) pension cost recognized in the                      
  Consolidated Balance Sheets                           $ (1,058)    $   4,288
                                                                      
Assumed rate of return, all plans                           8.00%         8.00%
Weighted average discount rate of projected benefit                   
  obligation, all plans                                     8.25%         7.50%
Range of assumed rates of increase in future                          
  compensation levels for the plans                    4.00-5.75%    4.00-5.75%


     (b)  Other Postemployment Benefit Plans -

       The  Company  provides  certain  benefits  to  retirees
(primarily  health care benefits).  Through 1992, the  Company
expensed  such costs as benefits were paid ($2.2  million  for
1992), which was consistent with rate making practices at that
time.

      Effective January 1, 1993, the Company adopted SFAS 106,
which   requires   the  accrual  of  the  expected   cost   of
postretirement  benefits  other  than  pensions   during   the
employees'  years  of  service.  The  IUB  has  adopted  rules
stating that postretirement benefits other than pensions  will
be  included in Utilities' rates pursuant to the provisions of
SFAS  106.   The  rules  permit  Utilities  to  amortize   the
transition obligation as of January 1, 1993, over 20 years and
require  that all amounts collected are to be funded  into  an
external  trust to pay benefits as they become due.  Beginning
in  1993, the gas portion of these costs is being recovered in
Utilities'  gas rates, and is funded in external trust  funds.
The  IUB  has  adopted a rule that permits a deferral  of  the
incremental electric SFAS 106 costs until the earlier of:   1)
an  order in an electric rate case, or  2) December 31,  1995.
Accordingly, pursuant to the provisions of SFAS 71,  Utilities
had  deferred $5.6 million of such costs at December 31, 1994.
Utilities  has  requested  recovery  of  these  costs  in  the
electric rate case discussed in Note 3(a).

      The  components of postretirement benefit costs for  the
years ended December 31, were as follows:
                                                  1994         1993
                                                    (in thousands)
                                                        
Service cost                                    $ 1,785      $ 1,685
Interest cost on accumulated postretirement                           
  benefit obligation                              3,175        3,247
Actual return on plan assets                        (47)         -
Amortization of transition obligation                   
  existing at January 1, 1993                     2,024        2,024
Amortization of unrecognized asset loss             (13)         -
Amortization of unrecognized gain                    (4)         -
Amortization of prior service cost                   19          -
Postretirement benefit costs                      6,939        6,956
Less:  Deferred postretirement benefit costs      2,732        2,858
Net postretirement benefit costs                $ 4,207      $ 4,098

     A reconciliation of the funded status of the plans to the
amounts  recognized  in  the Consolidated  Balance  Sheets  at
December 31, is presented below:
                                                      1994         1993
                                                        (in thousands)
                                                           
Fair market value of plans' assets                $   1,127    $   1,171
Accumulated postretirement benefit obligation -                        
    Active employees not yet eligible                18,216       18,325
    Active employees eligible                         5,119        4,130
    Retirees                                         18,161       20,140
Total accumulated postretirement benefit                   
    obligation                                       41,496       42,595
Accumulated postretirement benefit obligation                        
    in excess of plans' assets                      (40,369)     (41,424)
Unrecognized transition obligation                   36,439       38,463
Unrecognized net gain                                (5,358)      (1,167)
Unrecognized prior service cost                         170          -
Accrued postretirement benefit cost in the                 
    Consolidated Balance Sheets                   $  (9,118)   $  (4,128)
                                                           
Assumed rate of return                                 8.00%        8.00%
Weighted average discount rate of                          
    accumulated postretirement benefit
    obligation                                         8.25%        7.50%
Medical trend on paid charges:                             
    Initial trend rate                                11.00%       12.00%
    Ultimate trend rate                                6.50%        6.50%

      The assumed medical trend rates are critical assumptions
in determining the service cost and accumulated postretirement
benefit obligation related to postretirement benefit costs.  A
1%  change  in  the  medical trend rates,  holding  all  other
assumptions constant, would have changed the 1994 service cost
by  $1.0  million  (20%)  and  the accumulated  postretirement
benefit  obligation  at  December 31, 1994,  by  $6.6  million
(16%).

     On January 1, 1994, the Company adopted the provisions of
SFAS 112, "Employers' Accounting for Postemployment Benefits,"
and  its  adoption  did  not have a  material  effect  on  the
Company's financial position or results of operations.

(8)  PREFERRED AND PREFERENCE STOCK:

      Utilities  has  466,406 shares of  Cumulative  Preferred
Stock,   $50   par   value,   authorized   for   issuance   at
December 31, 1994, of which the 6.10%, 4.80% and 4.30%  Series
had   100,000,   146,406  and  120,000  shares,  respectively,
outstanding at both December 31, 1994 and 1993.  These  shares
are  redeemable at the option of Utilities upon 30 days notice
at  $51.00,  $50.25  and $51.00 per share, respectively,  plus
accrued  dividends.  In addition, there are 700,000 shares  of
Utilities   Cumulative  Preference  Stock  ($100  par   value)
authorized  for  issuance, of which none were  outstanding  at
December 31, 1994.

(9)  DEBT:
     (a)  Long-Term Debt -

      Utilities'  Indentures and Deeds of Trust  securing  its
First  Mortgage  Bonds constitute direct first mortgage  liens
upon  substantially  all  tangible  public  utility  property.
Utilities' Indenture and Deed of Trust securing its Collateral
Trust  Bonds  constitutes a second lien on  substantially  all
tangible  public utility property while First  Mortgage  Bonds
remain outstanding.

      Total sinking fund requirements, which Utilities intends
to  meet  by pledging additional property under the  terms  of
Utilities'  Indentures and Deeds of Trust, and debt maturities
for 1995-1999 are as follows:

                                        Debt Maturities
                                        (in thousands)
                                                                       
Debt Issue               1995      1996       1997       1998       1999

  Sinking fund                                                                  
   requirements       $    780  $    630  $     550   $     550  $     550
  Pollution control        140       140        140         140        140
  Series W              50,000         -          -           -          -
  Series X              50,000         -          -           -          -
  Series J                   -    15,000          -           -          -
  6-1/8% Series              -         -      8,000           -          -
  Series Z                   -         -          -           -     50,000
Total               $  100,920  $ 15,770  $   8,690   $     690  $  50,690



     The Company intends to refinance the majority of the debt
maturities with long-term securities.

     (b)  Short-Term Debt -

      At  December  31, 1994, the Company had  bank  lines  of
credit  aggregating $67.7 million, of which  $37  million  was
being  used  to  support  commercial paper  (weighted  average
interest  rate  of 6.13%) and $7.7 million was being  used  to
support  certain  pollution control  obligations.   Commitment
fees  are  paid  to  maintain these lines  and  there  are  no
conditions  which  restrict the unused lines  of  credit.   In
addition  to  the  above, Utilities has an uncommitted  credit
facility with a financial institution whereby it can borrow up
to  $40 million. Rates are set at the time of borrowing and no
fees    are    paid   to   maintain   this    facility.     At
December  31,  1994,  there  were  no  borrowings  under  this
facility.  Utilities also has a letter of credit in the amount
of  $3.4 million supporting two of its variable rate pollution
control obligations.

(10) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS:

      The  estimated  fair values of financial instruments  at
December  31,  1994,  and  the  basis  upon  which  they  were
estimated are as follows:

     (a)  Current Assets and Current Liabilities -

      The  carrying amount approximates fair value because  of
the short maturity of such financial instruments.

     (b)  Nuclear Decommissioning Trust Funds -

      The  carrying amount represents the fair value of  these
trust  funds, as reported by the trustee.  On January 1, 1994,
the   Company  adopted  SFAS  115,  "Accounting  for   Certain
Investments  in  Debt and Equity Securities."  This  standard,
which  applies  to  Utilities' nuclear  decommissioning  trust
funds,  requires  that unrealized gains  and  losses  on  such
investments  be  included  in the  reported  balance  of  such
investments. At December 31, 1994, the balance of the "Nuclear
decommissioning  trust  funds" as shown  in  the  Consolidated
Balance  Sheets included $0.8 million of unrealized losses  on
the  investments  held  in the trust funds.   The  accumulated
reserve   for   decommissioning  costs  was  adjusted   by   a
corresponding  amount and there was no effect  on  net  income
from adopting this standard.

     (c)  Cumulative Preferred Stock of Utilities -

      The  estimated fair value of this stock of $10.2 million
is based upon the market yield of similar securities.

     (d)  Long-Term Debt -

      The  carrying amount of long-term debt was $483  million
compared  to  estimated  fair  value  of  $459  million.   The
estimated  fair value of long-term debt is based  upon  quoted
market prices.

      Since  Utilities is subject to regulation, any gains  or
losses  related to the difference between the carrying  amount
and  the  fair  value  of  financial instruments  may  not  be
realized by the Company's parent.

(11) COMMITMENTS AND CONTINGENCIES:
     (a)  Construction Program -

       The  Company's  construction  and  acquisition  program
anticipates  expenditures of approximately  $163  million  for
1995, and additional expenditures of approximately $13 million
for mandated energy efficiency programs. The energy efficiency
expenditures  will  be  deferred  pursuant  to  IUB  rules  as
discussed in Note 3(b). Substantial commitments have been made
in connection with all such expenditures.

     (b)  Purchase Power Contracts -

      In  connection with the acquisition of the UE properties
discussed  in  Note 2, Utilities is purchasing power  from  UE
under  a  firm  capacity contract with a 1995  requirement  of
100  Mw  of  delivered capacity declining to 60  Mw  in  1997.
Utilities  will  also  purchase an additional  annual  maximum
interruptible  capacity of up to 54 Mw of 25 Hz  power,  which
extends  through  1998  and  will continue  thereafter  unless
either  party gives a three-year notice of cancellation.   The
costs  of capacity purchases for these contracts are reflected
in "Purchased power" in the Consolidated Statements of Income.

      Utilities has a contract to purchase capacity of  50  Mw
from the City of Muscatine for the period May 1, 1995, through
October  31,  1995.   Utilities  has  also  entered  into   an
agreement  with Basin Electric Power Cooperative  to  purchase
capacity of 50 Mw, 75 Mw, 100 Mw and 100 Mw during the  annual
six-month  summer  season  for the years  1996  through  1999,
respectively.

      Total capacity charges under all existing contracts will
approximate  $16.3  million,  $14.3  million,  $12.3  million,
$4.7  million  and  $3.4  million  for  the  years  1995-1999,
respectively.

     (c)  Coal Contract Commitments -

      Utilities  has entered into coal supply contracts  which
expire  between 1996 and 2001 for its fossil-fueled generating
stations.    At   December  31,  1994,  the  contracts   cover
approximately  $199  million of coal  over  the  life  of  the
contracts, which includes $50 million expected to be  incurred
in 1995.  Utilities expects to supplement these coal contracts
with  spot market purchases to fulfill its future fossil  fuel
needs.

      (d)  Information Technology Services -

      The Company entered into an agreement, expiring in 2004,
with Electronic Data Systems Corporation (EDS) for information
technology  services.   The contract is subject  to  declining
termination  fees.   The  Company's  anticipated  expenditures
under the agreement for 1995 are estimated to be approximately
$9.1  million.  Future costs under the agreement are  variable
and  are  dependent  upon  the Company's  level  of  usage  of
technological services from EDS.

     (e)  Nuclear Insurance Programs -

      The  Price-Anderson Amendments Act of  1988  (1988  Act)
provides Utilities with the benefit of $8.9 billion of  public
liability coverage consisting of $200 million of insurance and
$8.7  billion  of potential retroactive assessments  from  the
owners  of nuclear power plants.  Based upon its ownership  of
the  DAEC,  under the 1988 Act, Utilities could be assessed  a
maximum  of $79.3 million per nuclear incident, with a maximum
of  $10  million per year (of which Utilities'  70%  ownership
portion  would  be approximately $55 million and  $7  million,
respectively)  if  losses relating to the  incidents  exceeded
$200  million.   These limits are subject to  adjustments  for
inflation in future years.

      Utilities  is  a  member of Nuclear  Electric  Insurance
Limited (NEIL), which provides insurance coverage for the cost
of  certain property losses at nuclear generating stations and
for  the  cost  of  replacement power during certain  outages.
Companies  insured  through NEIL are  subject  to  retroactive
premium  adjustments  if  losses  exceed  accumulated  reserve
funds.    NEIL's  accumulated  reserve  funds  are   currently
sufficient to more than cover its exposure in the event  of  a
single incident under the property damage or replacement power
coverages.   However, Utilities could be assessed  annually  a
maximum  of  $8.5  million  for certain  property  losses  and
$0.7  million for replacement power if NEIL's losses  relating
to   accidents   exceeded  its  accumulated   reserve   funds.
Utilities  is  not aware of any losses that  it  believes  are
likely to result in an assessment.

     (f)  Environmental Liabilities -

      The  Company  has recorded environmental liabilities  of
approximately $43 million, including $5.4 million  as  current
liabilities,  in its Consolidated Balance Sheets  at  December
31, 1994.  The significant items are discussed below.

          Former Manufactured Gas Plant (FMGP) Sites

      Utilities  has  been named as a Potentially  Responsible
Party (PRP) by either the Iowa Department of Natural Resources
(IDNR), the Minnesota Pollution Control Agency (MPCA)  or  the
United  States Environmental Protection Agency  (EPA)  for  28
FMGP sites.  Utilities believes that it is not responsible for
two  of  the  sites  for which it has been designated  a  PRP.
Utilities has another FMGP site for which it has not yet  been
formally  designated as a PRP.  Utilities is working  pursuant
to  the requirements of the IDNR, MPCA and EPA to investigate,
mitigate,  prevent and remediate, where necessary,  damage  to
property, including damage to natural resources, at and around
the  remaining 27 sites in order to protect public health  and
the  environment.  In addition, Utilities has recently  become
aware that two additional sites may exist, but it has not  yet
been able to determine if any liability may exist.

      Utilities  has completed the remediation of three  sites
and   is   in  various  stages  of  the  investigation  and/or
remediation processes for 22 sites.  The investigation process
is scheduled to begin in 1995 or 1996 for the two other sites.
In 1994, Utilities received updated investigation reports on a
number  of  sites, which, at some sites, indicated  a  greater
volume  of contaminated soil, surface and ground water needing
treatment, and a greater volume of substances requiring higher
cost  incineration, than was anticipated in  prior  estimates.
It is possible that future cost estimates will be greater than
the  current  estimates as the investigation process  proceeds
and as additional facts become known.

      Utilities has recorded environmental liabilities related
to  the  FMGP sites of $31 million (including $4.3 million  as
current liabilities) at December 31, 1994.  These amounts  are
based  upon Utilities' best current estimate of the amount  to
be  incurred for investigation and remediation costs for those
sites   where  the  investigation  process  has  been  or   is
substantially   completed.   For   those   sites   where   the
investigation is in its earlier stages or has not started, the
liability represents the minimum of the estimated cost  range.
All  investigations are expected to be completed by  1999  and
site-specific remediations, based on recommendations from  the
IDNR,  MPCA   and EPA, are anticipated to be completed  within
three years after the completion of the investigations of each
site. Utilities may be required to monitor these sites for a
number of years upon completion of remediation, as is the case
with the three sites for which remediation has been completed.

     Utilities has begun pursuing coverage for investigation,
mitigation, prevention, remediation and monitoring costs from
its insurance carriers and is investigating the potential for
third party cost sharing for FMGP investigation and clean-up
costs.  The amount of shared costs, if any, cannot be
reasonably determined and, accordingly, no potential sharing
has been recorded at December 31, 1994.  Regulatory assets of
$31.0 million have been recorded in the Consolidated Balance
Sheets, which reflect the future recovery that is being
provided through Utilities' rates.  Considering the rate
treatment allowed by the IUB, management believes that the
clean-up costs incurred by Utilities for these FMGP sites will
not have a material adverse effect on its financial position
or results of operations.

          National Energy Policy Act of 1992

     The National Energy Policy Act of 1992 requires owners of
nuclear  power  plants  to  pay a special  assessment  into  a
"Uranium Enrichment Decontamination and Decommissioning Fund."
The assessment is based upon prior nuclear fuel purchases and,
for the DAEC, averages $1.4 million annually through 2007,  of
which  Utilities'  70%  share is $1.0 million.   Utilities  is
recovering  the costs associated with this assessment  through
its electric fuel adjustment clauses over the period the costs
are  assessed.  Utilities' 70% share of the future assessment,
$12.0  million  payable through 2007, has been recorded  as  a
liability   in  the  Consolidated  Balance  Sheets,  including
$0.8  million included in "Current liabilities - Environmental
liabilities,"  with  a  related  regulatory  asset   for   the
unrecovered amount.

     (g)  Clean Air Act -

      The  Clean Air Act Amendments Act of 1990 (Act) requires
emission  reductions of sulfur dioxide and nitrogen oxides  to
achieve reductions of atmospheric chemicals believed to  cause
acid  rain.  The provisions of the Act will be implemented  in
two  phases  with  Phase I affecting two of  Utilities'  units
beginning  in 1995 and Phase II affecting all units  beginning
in  the  year 2000.  Utilities is in the process of completing
the modifications necessary to meet the Phase I requirements.

     Utilities expects to meet the requirements of Phase II by
switching   to   lower  sulfur  fuels  and   through   capital
expenditures  primarily related to fuel burning equipment  and
boiler    modifications.     Utilities    estimates    capital
expenditures   at   approximately  $22.5  million,   including
$4.4 million in 1995, in order to meet the requirements of the
Act.

     (h)  FERC Order No. 636 -

     The FERC issued Order No. 636 (Order 636) in 1992.  Order
636, as modified on rehearing: 1) requires Utilities' pipeline
suppliers to unbundle their services so that gas supplies  are
obtained   separately   from   transportation   service,   and
transportation and storage services are operated and billed as
separate  and  distinct  services; 2)  requires  the  pipeline
suppliers  to  offer "no notice" transportation service  under
which  firm  transporters  (such  as  Utilities)  can  receive
delivery of gas up to their contractual capacity level on  any
day  without prior scheduling; 3) allows pipelines to  abandon
long-term  (one year or more) transportation service  provided
to a customer under an expiring contract whenever the customer
fails  to  match the highest rate and longest term (up  to  20
years)  offered  to  the pipeline by other customers  for  the
particular  capacity; and 4) provides for  a  mechanism  under
which  pipelines  can  recover prudently  incurred  transition
costs  associated  with the restructuring process.   Utilities
has  enhanced  access to competitively priced gas  supply  and
more   flexible  transportation  services  as  a   result   of
Order 636.  However, under Order 636, Utilities is required to
pay  certain  transition  costs incurred  and  billed  by  its
pipeline suppliers.

      Utilities'  three pipeline suppliers have  made  filings
with  the FERC to begin collecting their respective transition
costs,  and additional filings are expected.  Utilities  began
paying  the  transition costs in 1993, and,  at  December  31,
1994,  has  recorded  a liability of $8.0  million  for  those
transition  costs that have been incurred by the pipelines  to
date,  including  $3.0 million expected to be  billed  through
1995.   Utilities is currently recovering the transition costs
from  its  customers  through  its  Purchased  Gas  Adjustment
Clauses as such costs are billed by the pipelines.  Transition
costs,  in  addition  to  the  recorded  liability,  that  may
ultimately   be   charged  to  Utilities   could   approximate
$10  million.   The ultimate level of costs to  be  billed  to
Utilities depends on the pipelines' filings with the FERC  and
other  future  events, including the market price  of  natural
gas.   However, Utilities believes any transition  costs  that
the  FERC  would allow the pipelines to collect from Utilities
would  be  recovered from its customers, based upon regulatory
treatment of these costs currently and similar past  costs  by
the   IUB.    Accordingly,  regulatory  assets,   in   amounts
corresponding to the recorded liabilities, have been  recorded
to reflect the anticipated recovery.

(12) JOINTLY-OWNED ELECTRIC UTILITY PLANT:

       Under  joint  ownership  agreements  with  other   Iowa
utilities,  Utilities  has undivided  ownership  interests  in
jointly-owned   electric  generating  stations   and   related
transmission  facilities.  Each of the  respective  owners  is
responsible   for  the  financing  of  its  portion   of   the
construction  costs.  Kilowatt-hour generation  and  operating
expenses are divided on the same basis as ownership with  each
owner  reflecting  its respective costs in its  Statements  of
Income.  Information relative to Utilities' ownership interest
in these facilities at December 31, 1994 is as follows:

                                           Ottumwa     Neal
                                  DAEC     Unit 1     Unit 3
                                       ($ in millions)
                                                      
Utility plant in service        $ 490.8   $  187.9    $  55.5
Accumulated depreciation        $ 242.4   $   80.6    $  25.7
Construction work in progress   $   5.3   $    -      $   1.3
Plant capacity - Mw                 515        716        515
Percent ownership                    70%        48%        28%
In-service date                    1974       1981       1975

 (13)     SEGMENTS OF BUSINESS:

      The  principal business segments of the Company are  the
generation,  transmission, distribution and sale  of  electric
energy and the purchase, distribution and sale of natural  gas
by  Utilities.  Certain financial information relating to  the
Company's significant segments of business is presented below:

                                         Year Ended December 31
                                     1994         1993           1992
                                             (in thousands)
Operating results:                                                     
  Revenues -                                                           
    Electric                          $   537,327  $   550,521   $   462,999
    Gas                                   139,033      154,318       139,455
                                                                       
  Operating income -                                                   
    Electric                              125,487      128,994        90,891
    Gas                                     8,135       13,750         8,367
                                                                       
Other information:                                                     
  Depreciation and amortization -                                        
    Electric                               68,640       63,832        59,707
    Gas                                     6,214        5,186         4,024
                                                                       
  Construction and acquisition
  expenditures -
    Electric                               99,543       84,720       154,902
    Gas                                    12,719       12,582        17,308
                                                                       
  Assets -                                                             
    Identifiable assets -                                              
      Electric                          1,347,024    1,288,505     1,226,614
      Gas                                 186,911      164,773       141,801
                                        1,533,935    1,453,278     1,368,415
    Other corporate assets                111,433       93,700        72,476
                                                                       
        Total consolidated assets    $  1,645,368  $ 1,546,978  $  1,440,891


<PAGE>

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

      The following discussion analyzes significant changes in
the  components of net income and financial condition from the
prior  periods  for  IES Utilities Inc.  (Utilities)  and  its
consolidated    subsidiaries   (the   Company).     Utilities'
consolidated subsidiaries, IES Ventures Inc. and  IES  Midland
Development  Inc., were formed in December  1994  and  had  no
operations in 1994.

                     RESULTS OF OPERATIONS

      The  Company's  net income available  for  common  stock
decreased $6.8 million during 1994 and increased $23.5 million
during  1993.  The 1994 results were affected by  milder  than
normal  weather, particularly during the summer  months.   The
1993  results  reflect  Utilities'  acquisition  of  the  Iowa
service territory of Union Electric Company (UE) (as discussed
in  Note  2 of the Notes to Consolidated Financial Statements)
and  a  return to more normal weather conditions in Utilities'
service  territory from that experienced in  1992.   The  1992
results  were  adversely  affected by  extremely  cool  summer
weather and a mild winter in Utilities' service territory.

      The  Company's operating income decreased  $7.7  million
during  1994 and increased $43.0 million during 1993.  Reasons
for the changes in the results of operations are explained  in
the following discussion.

                       ELECTRIC REVENUES

      Electric  revenues and Kwh sales for Utilities increased
or (decreased) as compared with the prior year as follows:
 
                                                1994       1993
                                                ($ in millions)
                                         
Electric revenues                             $ (13.2)   $ 87.5
                                         
Electric sales (excluding off-system sales):
    Residential and Rural                        (1.4%)    17.1%
    Commercial                                   3.4%      17.4%
    Industrial                                   9.3%      40.6%
Total                                            4.3%      24.9%


     The 1994 Kwh sales were adversely affected by milder than
normal  weather, particularly during the summer  months.   The
largest  effect  of  weather was on sales to  residential  and
rural  customers.  Under normal weather conditions, 1994 sales
would  have  been  flat and total sales (excluding  off-system
sales)  would  have increased 4.8%, compared  to  1993  actual
sales.    The  growth  in  commercial  and  industrial   sales
continues to reflect the underlying strength of the economy as
several  major  industrial expansions  in  Utilities'  service
territory were announced in 1994.

       The  1993  sales  increases  are  attributable  to  the
acquisition  of the UE territory and a return to  more  normal
weather   conditions.   After  adjusting  for   these   items,
underlying  total electric sales (excluding off-system  sales)
increased  6% in 1993, which reflects the economic  growth  in
the industrial and commercial customer base.

      Utilities'  electric tariffs include  energy  adjustment
clauses (EAC) that are designed to currently recover the costs
of  fuel and the energy portion of purchased power billings to
customers.   See  Note  1(j)  of  the  Notes  to  Consolidated
Financial Statements for discussion of the EAC.

       The   decrease  in  the  1994  electric   revenues   is
attributable  to lower fuel costs collected through  the  EAC,
lower  off-system sales to other utilities and the  effect  of
the mix of sales between lower margin industrial customers and
higher  margin  residential  and rural  customers.   Increased
total sales (excluding off-system sales) partially offset  the
effects of the above items.  The increase in electric revenues
for  1993  is  primarily  because  of  the  higher  sales  and
increased recovery of fuel costs through the EAC.

      See  Note  3(a)  of the Notes to Consolidated  Financial
Statements  for a discussion of Utilities' 1994 electric  rate
case.

                         GAS REVENUES

      Utilities'  gas revenues decreased $15.3 million  during
1994  and  increased $14.9 million during 1993.  Gas sales  in
therms (including transported volumes), which also reflect the
effects of weather, decreased 2.7% in 1994 and increased  5.3%
in  1993.   Adjusting  for the effects of weather,  gas  sales
decreased 1.8% and 1.5% in 1994 and 1993, respectively.

      Utilities' gas tariffs include purchased gas  adjustment
clauses (PGA) that are designed to currently recover the  cost
of  gas  sold.   See  Note 1(j) of the Notes  to  Consolidated
Financial Statements for discussion of the PGA.

      Utilities'  gas  revenues decreased  in  1994  primarily
because of lower gas costs recovered through the PGA and, to a
lesser  extent, the effect of the lower sales.   Gas  revenues
increased in 1993 substantially because of increased costs  of
gas  recovered  through  the  PGA,  the  effect  of  gas  rate
increases  that  became effective in September  1992  and  the
sales increase.

                        OTHER REVENUES

      Other  revenues increased $0.1 million and $1.1  million
during 1994 and 1993, respectively, primarily due to increased
steam sales.

                      OPERATING EXPENSES

      Despite an increase in the amount of Kwh generation from
a year ago, fuel for production decreased $1.8 million in 1994
largely because of lower average fuel prices and the effect of
lower fuel cost recoveries through the EAC, which are included
in  fuel  for production. Generation at Utilities'  generating
stations  increased because of the increase  in  electric  Kwh
sales  and  because  of increased availability  of  Utilities'
nuclear  generating  station, the Duane Arnold  Energy  Center
(DAEC), which was down for part of 1993 because of a scheduled
refueling  outage.  There were refueling outages in  1993  and
1992,  but  no  such  outage  in 1994.   Fuel  for  production
increased   $14.3  million  in  1993  because   of   increased
availability of Utilities' fossil-fueled generating  stations,
which  experienced extended maintenance outages in  1992,  and
because of increased sales.

      Purchased power decreased $24.7 million in 1994  because
of  lower  off-system  sales  to  other  utilities,  increased
generation   at   Utilities'  generating  stations   and   the
expiration, in April 1993, of a purchase power agreement  with
the  City  of  Muscatine.   Purchased  power  increased  $18.7
million   in  1993,  of  which  approximately  $14.7   million
represents   increased  energy  purchases  and   approximately
$4.0  million  is  a  net increase in capacity  charges.   The
increase  in energy purchases is because of the increased  Kwh
sales.   The  increased capacity costs reflect  the  contracts
associated  with the acquisition of the UE service  territory,
partially  offset  by  the expiration of  the  purchase  power
agreement with the City of Muscatine.  (See Note 11(b) of  the
Notes to Consolidated Financial Statements).

      Gas purchased for resale decreased $13.8 million in 1994
because  of  lower gas costs and lower gas sales at Utilities.
Gas  purchased for resale increased $7.5 million  during  1993
primarily because of increased per unit gas costs at Utilities
and the increased sales.

      Other operating expenses increased $9.1 million and $3.6
million  in 1994 and 1993, respectively. The 1994 increase  is
primarily  attributable to increases  in  labor  and  benefits
costs, nuclear operating costs, former manufactured gas  plant
(FMGP)  clean-up  costs and information  technology  costs  at
Utilities.    The  1993  increase  is  primarily  because   of
increased labor and benefits costs and higher electric and gas
transmission and distribution costs, partially offset by lower
non-labor costs at the DAEC.

      Maintenance  expenses increased $3.3  million  and  $6.6
million  during 1994 and 1993, respectively. The 1994 increase
is  primarily because of increased labor costs and maintenance
at   the  DAEC,  partially  offset  by  lower  maintenance  at
Utilities'  fossil-fueled  generating  stations.    The   1993
increase  is  primarily  because of increased  maintenance  at
Utilities' fossil-fueled generating stations and the DAEC.

     Depreciation and amortization increased during both years
because of increases in utility plant in service and, in 1993,
the acquisition of the UE territory on December 31, 1992.   An
increase  in  the  average gas utility  property  depreciation
rate,  resulting  from  an  updated depreciation  study,  also
contributed   to   the   1993  increase.    Depreciation   and
amortization expenses for all years include $5.5  million  for
the DAEC decommissioning provision, which is collected through
rates.

     The staff of the Securities and Exchange Commission (SEC)
has questioned certain of the current accounting practices  of
the  electric  utility  industry  regarding  the  recognition,
measurement  and classification of decommissioning  costs  for
nuclear  generating  stations in the financial  statements  of
electric  utilities.   In  response to  these  questions,  the
Financial Accounting Standards Board has agreed to review  the
accounting  for removal costs, including decommissioning.   If
current  electric  utility industry accounting  practices  for
such  decommissioning are changed:  (1) annual provisions  for
decommissioning  could increase, (2) the  estimated  cost  for
decommissioning could be recorded as a liability  rather  than
as  accumulated depreciation, and (3) trust fund  income  from
the  external  decommissioning trusts  could  be  reported  as
investment   income   rather   than   as   a   reduction    to
decommissioning  expense.   If  such  changes  are   required,
Utilities  believes that there would not be an adverse  effect
on  its  financial position or results of operations based  on
current rate making practices.  (See Note 1(g) of the Notes to
Consolidated   Financial  Statements  for  a   discussion   of
Utilities'  proposal  for collection of decommissioning  costs
included in its current rate filing).

      Taxes other than income taxes increased $1.2 million and
$4.5  million  during  1994  and 1993,  respectively,  largely
because  of  increased property taxes.  The 1993  increase  is
related,  in  part,  to  the acquisition  of  the  UE  service
territory.

                  INTEREST EXPENSE AND OTHER

      Interest expense increased $1.4 million and $0.5 million
during  1994 and 1993, respectively, primarily because  of  an
increase  in  the  average  amount  of  debt  outstanding.   A
reduction  in  the average interest rate in 1993 substantially
offset the effect of the higher average outstanding debt.  The
lower  average  interest  rate  reflects  the  refinancing  of
certain  long-term debt issues at lower rates and  lower  cost
short-term borrowings outstanding for interim periods  between
the  redemption  of  certain long-term  debt  series  and  the
issuance of their long-term replacements.

      Federal and state income taxes were constant in 1994 and
increased  $17.2  million in 1993. A decrease in income before
income taxes in 1994 was offset by a higher effective income
tax rate (see Note 6 of the Notes to Consolidated Financial
Statements). The 1993 increase  results from  an increase in
taxable income and an increase of  1%  in the  Federal  statutory
income tax rate. Adjustments  of  $1.5 million, recorded in the
second quarter of 1992, to previously recorded tax reserves also
affected the comparability of  1993 with the prior period.

                         OTHER MATTERS

      The National Energy Policy Act of 1992 addresses several
matters  designed  to  promote  competition  in  the  electric
wholesale  power  generation market, including  mandated  open
access   to  the  electric  transmission  system  and  greater
encouragement    of   independent   power    production    and
cogeneration.  Although various states throughout the  country
are   currently   exploring   the  possibility   of   expanded
competition in the retail electric energy market, there is  no
significant activity underway in Iowa.

      The Company cannot predict the long-term consequences of
these  competitive  issues  on its results  of  operations  or
financial condition.  The Company's strategy for dealing  with
these  emerging  issues includes seeking growth opportunities,
continuing  to  offer quality customer service, on-going  cost
reductions   and  productivity  enhancements.    The   Company
recently initiated a major project to review and redesign  its
business  processes  with  the  primary  goals  being  reduced
operating  costs,  increased efficiency and enhanced  customer
service.

                LIQUIDITY AND CAPITAL RESOURCES

       The   Company's  capital  requirements  are   primarily
attributable to its construction programs, debt maturities and
sinking  fund  requirements.  The Company's pre-tax  ratio  of
earnings  to  fixed charges was 3.39, 3.64 and 2.71  in  1994-
1992,  respectively.   In  1994,  cash  flows  from  operating
activities were $195 million.  These funds were primarily used
for  construction  and  acquisition expenditures,  for  energy
efficiency program costs mandated by the Iowa Utilities  Board
(IUB) and to pay dividends.

      The Company anticipates that future capital requirements
will  be  met  by cash generated from operations and  external
financing.   The  level of cash generated from  operations  is
partially  dependent  upon  economic  conditions,  legislative
activities, environmental matters and timely rate  relief  for
Utilities.   (See Notes 3 and 11 of the Notes to  Consolidated
Financial Statements).

     Access to the long-term and short-term capital and credit
markets   is   necessary  for  obtaining   funds   externally.
Utilities' debt ratings are as follows:


                            Moody's       Standard & Poor's
                                         
      Long-term debt          A1                  A
      Short-term debt         P1                 A1


      Utilities'  liquidity  and  capital  resources  will  be
affected  by  environmental and legislative issues,  including
the ultimate disposition of remediation issues surrounding the
FMGP  issue, the Clean Air Act as amended, the National Energy
Policy  Act  of 1992 and Federal Energy Regulatory  Commission
(FERC)  Order  636, as discussed in Note 11 of  the  Notes  to
Consolidated  Financial  Statements.   Consistent  with   rate
making  principles  of the IUB, management believes  that  the
costs  incurred for the above matters will not have a material
adverse  effect  on  the  financial  position  or  results  of
operations of the Company.

      The  IUB  has  adopted rules which require Utilities  to
spend  2%  of electric and 1.5% of gas gross retail  operating
revenues  annually  for  energy efficiency  programs.   Energy
efficiency  costs in excess of the amount in the  most  recent
electric  and gas rate cases are being recorded as  regulatory
assets  by  Utilities.  At December 31,  1994,  Utilities  had
$35  million  of  such  costs recorded as  regulatory  assets.
Under  provisions of the IUB rules, Utilities made its initial
filing  for  recovery of the costs in August 1994.   See  Note
3(b)  of the Notes to Consolidated Financial Statements for  a
discussion of the filing.

             CONSTRUCTION AND ACQUISITION PROGRAM

       The  Company's  construction  and  acquisition  program
anticipates  expenditures of approximately  $163  million  for
1995,  of which approximately 32% represents expenditures  for
electric   transmission  and  distribution   facilities,   23%
represents   fossil-fueled   generation   expenditures,    15%
represents  expenditures for steam distribution plant  and  9%
represents nuclear generation expenditures.  The remaining 21%
represents    miscellaneous   electric,   gas   and    general
expenditures.   In  addition to the  $163  million,  Utilities
anticipates  expenditures of $13 million  in  connection  with
mandated  energy efficiency programs. Substantial  commitments
have been made in connection with all such expenditures.

      The  Company's  levels of construction  and  acquisition
expenditures  are projected to be $167 million in  1996,  $146
million  in  1997, $170 million in 1998 and  $182  million  in
1999.   It is estimated that approximately 80% of construction
expenditures   will  be  provided  by  cash   from   operating
activities  (after  payment of dividends)  for  the  five-year
period 1995-1999.

      Capital  expenditure and investment and financing  plans
are  subject  to  continual review  and  change.  The  capital
expenditure   and   investment   programs   may   be   revised
significantly  as  a  result of many considerations  including
changes in economic conditions, variations in actual sales and
load   growth   compared   to   forecasts,   requirements   of
environmental,  nuclear  and  other  regulatory   authorities,
acquisition  opportunities,  the  availability  of   alternate
energy  and  purchased power sources, the  ability  to  obtain
adequate  and  timely rate relief, escalations in construction
costs and conservation and energy efficiency programs.


                      LONG-TERM FINANCING

     Other than Utilities' periodic sinking fund requirements,
which   Utilities  intends  to  meet  by  pledging  additional
property,  approximately $174 million of long-term  debt  will
mature  prior  to December 31, 1999.  The Company  intends  to
refinance  the majority of the debt maturities with  long-term
securities.

      In  order  to provide an up-to-date instrument  for  the
issuance  of  bonds, notes or other evidence of  indebtedness,
Utilities has entered into an Indenture of Mortgage  and  Deed
of  Trust dated September 1, 1993 (New Mortgage).  The lien of
the  New  Mortgage  is subordinate to the lien  of  Utilities'
first mortgages until such time as all bonds issued under  the
first   mortgages  have  been  retired  and   such   mortgages
satisfied.   The  New Mortgage provides for  the  issuance  of
Collateral Trust Bonds upon the basis of, among other  things,
First  Mortgage Bonds being issued by Utilities.  Accordingly,
to  the extent that Utilities issues Collateral Trust Bonds on
the  basis  of First Mortgage Bonds, it must comply  with  the
requirements  for the issuance of First Mortgage  Bonds  under
Utilities'  first  mortgages.  Under  the  terms  of  the  New
Mortgage, Utilities has covenanted not to issue any additional
First  Mortgage  Bonds  under its first  mortgages  except  to
provide the basis for issuance of Collateral Trust Bonds.

      The  Indentures pursuant to which Utilities issues First
Mortgage  Bonds  constitute direct first mortgage  liens  upon
substantially all tangible public utility property and contain
covenants which restrict the amount of additional bonds  which
may  be issued.  At December 31, 1994, such restrictions would
have  allowed  Utilities to issue $320 million  of  additional
First Mortgage Bonds.  Utilities has received authority   from
the  FERC  to  issue  $250 million of long-term  debt  and  is
currently  authorized  by  the SEC to  issue  $50  million  of
long-term  debt  under  an  existing  registration  statement.
Utilities  expects  to replace two series  of  First  Mortgage
Bonds that mature in 1995 with other long-term securities.

      The Articles of Incorporation of Utilities authorize and
limit  the aggregate amount of additional shares of Cumulative
Preferred Stock and Cumulative Preference Stock which  may  be
issued.  At December 31, 1994, Utilities could have issued  an
additional 700,000 shares of Cumulative Preference  Stock  and
100,000 additional shares of Cumulative Preferred Stock.

      The Company's capitalization ratios at December 31, 1994
and 1993, were as follows:

               Long-term debt          48%
               Preferred stock          2
               Common equity           50
                                      100%


               The  1994 ratios include $100 million  of
        Utilities' First Mortgage Bonds maturing in 1995
        that  are  classified as a current liability  in
        the  Consolidated Balance Sheets, but which  are
        expected   to   be  refinanced  with   long-term
        securities.



                     SHORT-TERM FINANCING

      For  interim financing, Utilities is authorized  by  the
FERC  to issue, through 1996, up to $200 million of short-term
notes.   In addition to providing for ongoing working  capital
needs,  this  availability  of short-term  financing  provides
Utilities flexibility in the issuance of long-term securities.
At  December  31,  1994, Utilities had outstanding  short-term
borrowings of $55.5 million, including $18.5 million of  notes
payable to associated companies.

     Utilities has an agreement, which expires in 1999, with a
financial  institution  to  sell, with  limited  recourse,  an
undivided fractional interest of up to $65 million in its pool
of   utility  accounts  receivable.   At  December  31,  1994,
Utilities had sold $54 million under the agreement.

      At  December  31, 1994, the Company had  bank  lines  of
credit  aggregating $67.7 million, of which  $37  million  was
being  used  to  support  commercial paper  (weighted  average
interest  rate  of 6.13%) and $7.7 million was being  used  to
support  certain  pollution control  obligations.   Commitment
fees  are  paid  to  maintain these lines  and  there  are  no
conditions  which  restrict the unused lines  of  credit.   In
addition  to  the  above, Utilities has an uncommitted  credit
facility with a financial institution whereby it can borrow up
to $40 million.  Rates are set at the time of borrowing and no
fees    are    paid   to   maintain   this    facility.     At
December  31,  1994,  there  were  no  borrowings  under  this
facility.  Utilities also has a letter of credit in the amount
of  $3.4 million supporting two of its variable rate pollution
control obligations.

                     ENVIRONMENTAL MATTERS

      Utilities  has  been named as a Potentially  Responsible
Party (PRP) by either the Iowa Department of Natural Resources
(IDNR), the Minnesota Pollution Control Agency (MPCA)  or  the
United  States Environmental Protection Agency  (EPA)  for  28
FMGP sites.  Utilities believes that it is not responsible for
two  of  the  sites  for which it has been designated  a  PRP.
Utilities has another FMGP site for which it has not yet  been
formally  designated as a PRP.  Utilities is working  pursuant
to  the requirements of the IDNR, MPCA and EPA to investigate,
mitigate,  prevent and remediate, where necessary,  damage  to
property, including damage to natural resources, at and around
the  remaining 27 sites in order to protect public health  and
the  environment.  In addition, Utilities has recently  become
aware that two additional sites may exist, but it has not  yet
been able to determine if any liability may exist.

      Utilities  has completed the remediation of three  sites
and   is   in  various  stages  of  the  investigation  and/or
remediation processes for 22 sites.  The investigation process
is scheduled to begin in 1995 or 1996 for the two other sites.
In 1994, Utilities received updated investigation reports on a
number  of  sites, which, at some sites, indicated  a  greater
volume  of contaminated soil, surface and ground water needing
treatment, and a greater volume of substances requiring higher
cost  incineration, than was anticipated in  prior  estimates.
It is possible that future cost estimates will be greater than
the  current  estimates as the investigation process  proceeds
and as additional facts become known.

      Utilities has recorded environmental liabilities related
to  the  FMGP sites of $31 million (including $4.3 million  as
current liabilities) at December 31, 1994.  These amounts  are
based  upon Utilities' best current estimate of the amount  to
be  incurred for investigation and remediation costs for those
sites   where  the  investigation  process  has  been  or   is
substantially   completed.   For   those   sites   where   the
investigation is in its earlier stages or has not started, the
liability represents the minimum of the estimated cost  range.
All  investigations are expected to be completed by  1999  and
site-specific remediations, based on recommendations from  the
IDNR,  MPCA  and  EPA, are anticipated to be completed  within
three years after the completion of the investigations of each
site.  Utilities may be required to monitor these sites for  a
number of years upon completion of remediation, as is the case
with the three sites for which remediation has been completed.

      Utilities has begun pursuing coverage for investigation,
mitigation, prevention, remediation and monitoring costs  from
its  insurance carriers and is investigating the potential for
third  party cost sharing for FMGP investigation and  clean-up
costs.   The  amount  of shared costs,  if  any,  can  not  be
reasonably  determined and, accordingly, no potential  sharing
has been recorded at December 31, 1994.  Regulatory assets  of
$31.0  million have been recorded in the Consolidated  Balance
Sheets,  which  reflect  the future  recovery  that  is  being
provided  through  Utilities'  rates.   Considering  the  rate
treatment  allowed  by the IUB, management believes  that  the
clean-up costs incurred by Utilities for these FMGP sites will
not  have  a material adverse effect on its financial position
or results of operations.

      The  Clean Air Act Amendments Act of 1990 (Act) requires
emission  reductions of sulfur dioxide and nitrogen oxides  to
achieve reductions of atmospheric chemicals believed to  cause
acid  rain.  The provisions of the Act will be implemented  in
two  phases  with  Phase I affecting two of  Utilities'  units
beginning  in 1995 and Phase II affecting all units  beginning
in  the  year 2000.  Utilities is in the process of completing
the modifications necessary to meet the Phase I requirements.

     Utilities expects to meet the requirements of Phase II by
switching   to   lower  sulfur  fuels  and   through   capital
expenditures  primarily related to fuel burning equipment  and
boiler    modifications.     Utilities    estimates    capital
expenditures  at approximately $22.5 million,  including  $4.4
million in 1995, in order to meet the requirements of the Act.

     The National Energy Policy Act of 1992 requires owners of
nuclear  power  plants  to  pay a special  assessment  into  a
"Uranium Enrichment Decontamination and Decommissioning Fund."
The assessment is based upon prior nuclear fuel purchases and,
for the DAEC, averages $1.4 million annually through 2007,  of
which  Utilities'  70%  share is $1.0 million.   Utilities  is
recovering  the costs associated with this assessment  through
its electric fuel adjustment clauses over the period the costs
are  assessed.  Utilities' 70% share of the future assessment,
$12.0  million  payable through 2007, has been recorded  as  a
liability   in  the  Consolidated  Balance  Sheets,  including
$0.8  million included in "Current liabilities - Environmental
liabilities,"  with  a  related  regulatory  asset   for   the
unrecovered amount.

       The   Nuclear   Waste  Policy  Act  of  1982   assigned
responsibility  to  the U.S. Department  of  Energy  (DOE)  to
establish  a  facility for the ultimate  disposition  of  high
level  waste and spent nuclear fuel and authorized the DOE  to
enter  into  contracts with parties for the disposal  of  such
material  beginning in January 1998.  Utilities  entered  into
such a contract and has made the agreed payments to DOE.   The
DOE,  however,  has  experienced  significant  delays  in  its
efforts  and material acceptance is now expected to  occur  no
earlier  than 2010.  Utilities has been storing spent  nuclear
fuel  on-site  since plant operations began in  1974  and  has
current  on-site  capability to store spent fuel  until  2002.
Utilities  is  aggressively reviewing options  for  additional
spent nuclear fuel storage capability, including expanding on-
site  storage, pursuing other off-site storage and  supporting
legislation to resolve the lack of progress by the DOE.

      The Low-Level Radioactive Waste Policy Amendments Act of
1985 mandated that each state must take responsibility for the
storage  of  low-level radioactive waste produced  within  its
borders.   The State of Iowa has joined the Midwest Interstate
Low-Level  Radioactive  Waste  Compact  Commission  (Compact),
which is planning a storage facility to be located in Ohio  to
store waste generated by the Compact's six member states.   At
December   31,   1994,   Utilities  has   prepaid   costs   of
approximately $1 million  to the Compact  for the building  of
such  a  facility.  Currently, Utilities is storing  its  low-
level  radioactive waste generated at the DAEC  on-site  until
new  disposal  arrangements are finalized  among  the  Compact
members. A  Compact disposal facility is anticipated to be  in
operation   in  approximately  ten  years.   On-site   storage
capability  currently exists for low-level  radioactive  waste
expected to be generated until the Compact facility is able to
accept waste materials.

      The  possibility that exposure to electric and  magnetic
fields  emanating from power lines, household  appliances  and
other  electric  sources may result in adverse health  effects
has  been  the  subject of increased public, governmental  and
media attention.  A considerable amount of scientific research
has  been  conducted on this topic without definitive results.
Research   is  continuing  in  order  to  resolve   scientific
uncertainties.

                     EFFECTS OF INFLATION

      Under  the  rate  making principles  prescribed  by  the
regulatory commissions to which Utilities is subject, only the
historical  cost  of  plant  is  recoverable  in  revenues  as
depreciation.  As a result, Utilities has experienced economic
losses equivalent to the current year's impact of inflation on
utility plant.

     In addition, the regulatory process imposes a substantial
time lag between the time when operating and capital costs are
incurred  and  when  they are recovered.  Utilities  does  not
expect  the effects of inflation at current levels to  have  a
significant effect on its results of operations.

<PAGE>

  Selected Consolidated Quarterly Financial Data (unaudited)

      The following unaudited consolidated quarterly data,  in
the  opinion of the Company, includes adjustments,  which  are
normal  and  recurring  in  nature,  necessary  for  the  fair
presentation  of  the  results  of  operations  and  financial
position.   The  quarterly amounts were affected  by  seasonal
weather conditions.  In addition, increased operating expenses
in  the fourth quarter of 1994 affected the comparability   of
the fourth quarter amounts.
 

                                              Quarter Ended
                              March        June     September     December
                                31          30          30           31
                                             (in thousands)
1994                                                            
  Operating revenues       $ 192,013   $  148,019  $  179,477  $   165,857
  Operating income            34,248       24,777      51,777       24,789
  Net income                  14,944        9,255      25,733       11,278
  Net income available
    for common stock          14,715        9,026      25,504       11,051
                                                                
1993                                                            
  Operating revenues       $ 193,785   $  148,919  $  187,392  $   183,654
  Operating income            32,974       24,523      54,497       31,335
  Net income                  14,423       10,491      26,214       16,842
  Net income available                                                   
    for common stock          14,194       10,262      25,985       16,615


      Prior period operating income figures have been restated
on  a  basis consistent with the current presentation  as  the
income  statement  format  was revised  as  a  result  of  the
formation   in   December   1994  of  Utilities'   non-utility
subsidiaries,  IES  Ventures Inc. and IES Midland  Development
Inc.
[{"type": "8-K", "sequence": "1", "secsgml_size_bytes": 109270}]
{"company-data": {"conformed-name": "IES UTILITIES INC", "cik": "0000052485", "assigned-sic": "4931", "irs-number": "420331370", "state-of-incorporation": "IA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-04117", "film-number": "95520800"}, "business-address": {"street1": "200 FIRST STREET SE", "city": "CEDAR RAPIDS", "state": "IA", "zip": "52401", "phone": "3193984411"}, "former-company": [{"former-conformed-name": "IOWA ELECTRIC LIGHT & POWER CO", "date-changed": "19920703"}, {"former-conformed-name": "IOWA RAILWAY & LIGHT CORP", "date-changed": "19670629"}]}
SECURITIES AND EXCHANGE COMMISSION
                               
                    Washington, D.C. 20549

                           FORM 8-K

                        CURRENT REPORT

              Pursuant to Section 13 or 15(d) of
              The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  March 15, 1995

                      IES UTILITIES INC.
    (Exact name of registrant as specified in its charter)

             Iowa                    0-4117-1              42-0331370
(State or other jurisdiction       (Commission          (I.R.S. Employer
 of incorporation)                  File No.)            Identification No.)

IES Tower, Cedar Rapids, Iowa                                52401
(Address of principal executive offices)                   (Zip Code)

Registrant's  telephone number, including area code:  319-398-4411
The  purpose  of  this Current Report is  to  file  certain
consolidated financial information regarding the Registrant  (IES
Utilities Inc.).  Such financial information is set forth in  the
Financial Statements and Exhibits to this Current Report.

Item  7.   Financial Statements, Pro Forma Financial  Information
           and Exhibits.

                                                                       Page
(a)  Financial Statements

       Report of Management                                           4 -  5

       Report of Independent Public Accountants                         6

       Consolidated Statements of Income for the years ended
       December 31, 1994, 1993 and 1992                                 7

       Consolidated Statements of Retained Earnings for the
       years ended December 31, 1994, 1993 and 1992                     8

       Consolidated Balance Sheets as of December 31, 1994
       and 1993                                                       9 - 10

       Consolidated Statements of Capitalization as of
       December 31, 1994 and 1993                                       11

       Consolidated  Statements of Cash Flows for the years
       ended December 31, 1994, 1993 and 1992                           12

       Notes to Consolidated Financial Statements                    13 - 39

       Management's Discussion and Analysis of the
       Results of Operations and Financial Condition                 40 - 56

       Selected Consolidated Quarterly Financial
       Data (Unaudited)                                                 57

(b)  Pro Forma Financial Information

       None.

(c)  Exhibits

        3   Bylaws of Registrant, as amended February 7, 1995
 
       12   Ratio of Earnings to Fixed Charges

       23   Consent of Independent Public Accountants

       27   Financial Data Schedule
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.

                                        IES UTILITIES INC.
                                          (Registrant)

                 By /s/              Richard A. Gabbianelli
                                          (Signature)
                                     Richard A. Gabbianelli
                             Controller & Chief Accounting Officer

Date        March 15, 1995
Item 7.  Financial Statements, Pro Forma Financial Information
         and Exhibits.

                     REPORT OF MANAGEMENT

      The Company's management has prepared and is responsible
for   the  presentation,  integrity  and  objectivity  of  the
consolidated  financial  statements  and  related  information
included   in   this   report.   The  consolidated   financial
statements  have  been prepared in conformity  with  generally
accepted  accounting principles applied on a consistent  basis
and,  in  some  cases, include estimates that are  based  upon
management's  judgment  and  the best  available  information,
giving due consideration to materiality. Financial information
contained elsewhere in this report is consistent with that  in
the consolidated financial statements.

      The  Company  maintains a system of internal  accounting
controls  which it believes is adequate to provide  reasonable
assurance  that  assets  are  safeguarded,  transactions   are
executed in accordance with management authorization  and  the
financial  records are reliable for preparing the consolidated
financial  statements.   The  system  of  internal  accounting
controls is supported by written policies and procedures, by a
staff  of  internal auditors and by the selection and training
of  qualified  personnel.  The internal audit  staff  conducts
comprehensive  audits  of  the Company's  system  of  internal
accounting  controls.   Management  strives  to  maintain   an
adequate  system  of internal controls, recognizing  that  the
cost  of such a system should not exceed the benefits derived.
In  accordance with generally accepted auditing standards, the
independent public accountants (Arthur Andersen LLP)  obtained
a  sufficient understanding of the Company's internal controls
to  plan  their  audit and determine the  nature,  timing  and
extent  of  other  tests to be performed.  Management  is  not
aware of any material internal control weaknesses.

      The  Board  of  Directors, through its  Audit  Committee
comprised  entirely  of outside directors, meets  periodically
with management, the internal auditor and Arthur Andersen  LLP
to  discuss financial reporting matters, internal control  and
auditing.   To  ensure their independence, both  the  internal
auditor  and Arthur Andersen LLP have full and free access  to
the Audit Committee.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
IES Utilities Inc.:

We  have audited the accompanying consolidated balance  sheets
and  statements  of capitalization of IES UTILITIES  INC.  (an
Iowa    corporation)   AND   SUBSIDIARY  COMPANIES   as    of
December  31,  1994  and  1993, and the  related  consolidated
statements  of  income, retained earnings and cash  flows  for
each of the three years in the period ended December 31, 1994.
These  financial  statements are  the  responsibility  of  the
Company'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 statements referred  to  above
present  fairly,  in  all  material  respects,  the  financial
position of IES Utilities Inc. and subsidiary companies as  of
December  31,  1994  and  1993,  and  the  results  of   their
operations and their cash flows for each of the three years in
the  period  ended  December  31,  1994,  in  conformity  with
generally accepted accounting principles.

As   discussed  in  Note  7  to  the  consolidated   financial
statements, effective January 1, 1993, IES Utilities Inc.  and
subsidiary  companies changed their method of  accounting  for
postretirement benefits other than pensions.

                         ARTHUR ANDERSEN LLP

Chicago, Illinois,
February 3, 1995
CONSOLIDATED STATEMENTS OF INCOME
                                                Year Ended December 31
                                           1994           1993          1992
                                                    (in thousands)

Operating revenues:
    Electric                          $   537,327    $   550,521   $   462,999
    Gas                                   139,033        154,318       139,455
    Other                                   9,006          8,911         7,808
                                          685,366        713,750       610,262

Operating expenses:
    Fuel for production                    85,952         87,702        73,368
    Purchased power                        68,794         93,449        74,794
    Gas purchased for resale               95,340        109,122       101,605
    Other operating expenses              132,281        123,210       119,607
    Maintenance                            49,542         46,219        39,573
    Depreciation and amortization          75,316         69,407        64,107
    Taxes other than income taxes          42,550         41,312        36,847
                                          549,775        570,421       509,901

Operating income                          135,591        143,329       100,361

Interest expense and other:
   Interest expense                        41,572         40,169        39,628
   Allowance for  funds used during
     construction                          -3,910         -1,972        -3,177
   Miscellaneous, net                      -1,247           -801        -2,104
                                           36,415         37,396        34,347

Income before income taxes                 99,176        105,933        66,014

Federal and state income taxes             37,966         37,963        20,723

Net income                                 61,210         67,970        45,291
Preferred dividend requirements               914            914         1,729
Net income available for common stock  $   60,296     $   67,056    $   43,562

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                                Year Ended December 31
                                           1994          1993          1992
                                                    (in thousands)

Balance at beginning of year           $   188,862   $   153,106   $   134,822
Add:
    Net income                              61,210        67,970        45,291

Deduct:
    Cash dividends declared -
        Common stock                        52,000        31,300        24,721
        Preferred stock, at stated rates       914           914         1,729
    Other                                        0             0           557

Balance at end of year
    ($18,209,000 restricted as to
     payment of cash dividends)        $   197,158   $   188,862   $   153,106

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
CONSOLIDATED BALANCE SHEETS
                                                             December 31
ASSETS                                                   1994           1993
                                                           (in thousands)

Property, plant and equipment, at original cost:
 Utility -
    Plant in service -
        Electric                                  $  1,798,059    $  1,708,757
        Gas                                            158,115         147,956
        Other                                           86,005          75,845
                                                     2,042,179       1,932,558
    Less - Accumulated depreciation                    880,888         813,312
                                                     1,161,291       1,119,246
    Leased nuclear fuel, net of amortization            49,731          51,681
    Construction work in progress                       73,339          45,566
                                                     1,284,361       1,216,493
 Other                                                   1,824               0
                                                     1,286,185       1,216,493

Current assets:
   Cash and temporary cash investments                   2,135          18,313
   Accounts receivable -
      Customer, less reserve                            12,051          22,679
      Other                                              9,763          10,330
   Income tax refunds receivable                         3,450           3,082
   Production fuel, at average cost                     13,988          14,338
   Materials and supplies, at average cost              26,699          26,861
   Adjustment clause balances                            1,433               0
   Regulatory assets                                    20,145          14,225
   Prepayments and other                                29,546          30,985
                                                       119,210         140,813

Investments:
   Nuclear decommissioning trust funds                  33,779          28,059
   Cash surrender value of life insurance policies       2,915           2,380
   Other                                                 1,085           1,258
                                                        37,779          31,697

Other assets:
   Regulatory assets                                   192,955         148,592
   Deferred charges and other                            9,239           9,383
                                                       202,194         157,975
                                                     1,645,368       1,546,978

                                                             December 31
CAPITALIZATION AND LIABILITIES                           1994           1993
                                                           (in thousands)
Capitalization (See Consolidated Statements of 
  Capitalization):

    Common stock                                  $     33,427    $     33,427
    Paid-in surplus                                    279,042         279,042
    Retained earnings                                  197,158         188,862
        Total common equity                            509,627         501,331
    Cumulative preferred stock                          18,320          18,320
    Long-term debt                                     380,404         480,074
                                                       908,351         999,725

Current liabilities:
    Notes payable to associated companies               18,495               0
    Short-term borrowings                               37,000          24,000
    Capital lease obligations                           14,385          15,345
    Maturities and sinking funds                       100,140             224
    Accounts payable                                    70,354          47,179
    Accrued interest                                     9,438           9,438
    Accrued taxes                                       47,188          39,763
    Accumulated refueling outage provision              15,196           2,660
    Dividends payable                                      229           5,229
    Adjustment clause balances                               0           5,149
    Provision for rate refund liability                      0           8,670
    Environmental liabilities                            5,428           4,721
    Other                                               18,095          17,648
                                                       335,948         180,026

Long-term liabilities:
    Capital lease obligations                           35,346          36,336
    Environmental liabilities                           37,853          21,114
    Other                                               46,724          29,866
                                                       119,923          87,316

Deferred credits:
    Accumulated deferred income taxes                  241,345         237,464
    Accumulated deferred investment tax credits         39,801          42,447
                                                       281,146         279,911

Commitments and contingencies (Note 11)

                                                  $  1,645,368    $  1,546,978
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
CONSOLIDATED STATEMENTS OF CAPITALIZATION
                                                             December 31
                                                         1994           1993
                                                           (in thousands)
Common equity:
    Common stock - par value $2.50 per share - 
      authorized 24,000,000 shares; 
      outstanding 13,370,788 shares                 $    33,427    $    33,427
    Paid-in surplus                                     279,042        279,042
    Retained earnings                                   197,158        188,862
                                                        509,627        501,331

Cumulative preferred stock                               18,320         18,320

Long-term debt of IES Utilities Inc.:
    Collateral Trust Bonds -
        6% series, due 2008                              50,000         50,000
        7% series, due 2023                              50,000         50,000
        5.5% series, due 2023                            19,400         19,400
                                                        119,400        119,400

    First Mortgage Bonds -
        Series J, 6-1/4%, due 1996                       15,000         15,000
        Series L, 7-7/8%, due 2000                       15,000         15,000
        Series M, 7-5/8%, due 2002                       30,000         30,000
        Series W, 9-3/4%, due 1995                       50,000         50,000
        Series X, 9.42%, due 1995                        50,000         50,000
        Series Y, 8-5/8%, due 2001                       60,000         60,000
        Series Z, 7.60%, due 1999                        50,000         50,000
        6-1/8% series, due 1997                           8,000          8,000
        9-1/8% series, due 2001                          21,000         21,000
        7-3/8% series, due 2003                          10,000         10,000
        7-1/4% series, due 2007                          30,000         30,000
                                                        339,000        339,000
    Pollution control obligations -
       5.75%, due serially 1995 to 2003                   3,696          3,920
       5.95%, due 2007, secured by 
          First Mortgage Bonds                           10,000         10,000
       Variable rate (5.45% - 5.60% at 
          December 31, 1994), due 2000 to 2010           11,100         11,100
                                                         24,796         25,020
    Unamortized debt premium and (discount), net         -2,652         -3,122
                                                        480,544        480,298
          Less - Amount due within one year             100,140            224
                                                        380,404        480,074
                                                        908,351        999,725

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31
                                                                           1994            1993            1992
                                                                                      (in thousands)
Cash flows from operating activities:
  Net income                                                         $     61,210    $     67,970    $     45,291
  Adjustments to reconcile net income to net cash
   flows from operating activities -
     Depreciation and amortization                                         75,316          69,407          64,107
     Principal payments under capital lease obligations                    16,246          11,429          11,725
     Deferred taxes and investment tax credits                               -410          10,531          -2,406
     Refueling outage provision                                            12,536          -4,889          -5,503
     Allowance for equity funds used during construction                   -2,299            -824          -1,831
     Other                                                                  3,240           1,613           1,134
  Other changes in assets and liabilities -
     Accounts receivable                                                   10,395          -8,553            -571
     Production fuel, materials and supplies                                  404           5,909           1,579
     Accounts payable                                                      20,444           5,620             345
     Accrued taxes                                                          7,057         -10,991           6,118
     Provision for rate refunds                                            -8,670            -350           7,528
     Adjustment clause balances                                            -6,582           6,366          -4,122
     Gas in storage                                                         1,919          -2,309          -7,867
     Other                                                                  4,082             183           2,441
       Net cash flows from operating activities                           194,888         151,112         117,968

Cash flows from financing activities:
  Dividends declared on common stock                                      -52,000         -31,300         -24,721
  Dividends declared on preferred stock                                      -914            -914          -1,729
  Equity infusion from parent company                                           0          50,000               0
  Proceeds from issuance of long-term debt                                      0         119,400          83,400
  Reductions in long-term debt and preferred stock                           -224         -79,624         -39,429
  Net change in short-term borrowings                                      31,495         -68,560          51,660
  Principal payments under capital lease obligations                      -16,304         -11,276         -12,337
  Sale of utility accounts receivable                                         800          10,490           7,710
  Other                                                                    -5,000           5,010             231
    Net cash flows from financing activities                              -42,147          -6,774          64,785

Cash flows from investing activities:
  Construction and acquisition expenditures                              -148,062        -113,212        -171,013
  Nuclear decommissioning trust funds                                      -5,532          -5,532          -5,532
  Deferred energy efficiency costs                                        -16,157          -9,747          -6,877
  Other                                                                       832             723          -3,009
    Net cash flows from investing activities                             -168,919        -127,768        -186,431

Net increase (decrease) in cash and temporary cash investments            -16,178          16,570          -3,678

Cash and temporary cash investments at beginning of year                   18,313           1,743           5,421

Cash and temporary cash investments at end of year                   $      2,135    $     18,313    $      1,743

Supplemental cash flow information:
  Cash paid during the year for -
    Interest                                                         $     42,678    $      39,291   $     35,770
    Income taxes                                                     $     34,479    $      40,130   $     23,640

  Noncash investing and financing activities -
    Capital lease obligations incurred                               $     14,297     $     14,605   $      1,973

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
          (a)  Basis of Consolidation -

       IES   Utilities  Inc.  (Utilities)  is  a  wholly-owned
subsidiary   of   IES   Industries  Inc.  (Industries).    The
Consolidated  Financial  Statements include  the  accounts  of
Utilities and its consolidated subsidiaries (collectively  the
Company).  All subsidiaries for which Utilities owns  directly
or indirectly more than 50% of the voting stock, which are IES
Ventures  Inc. and IES Midland Development Inc., are  included
as consolidated subsidiaries.  Both of these subsidiaries were
formed  in  December 1994 and had no operations in 1994.   All
significant intercompany balances and transactions  have  been
eliminated from the Consolidated Financial Statements.

      Investments  for which the Company has at  least  a  20%
interest  are  accounted  for  under  the  equity  method   of
accounting.  These investments are stated at acquisition cost,
increased   or   decreased  for  the   Company's   equity   in
undistributed  net  income  or  loss,  which  is  included  in
"Interest  expense  and  other - Miscellaneous,  net"  in  the
Consolidated Statements of Income.

      Certain prior period amounts have been reclassified on a
basis consistent with the 1994 presentation.

     (b)  Regulation -

      Utilities is subject to regulation by the Iowa Utilities
Board  (IUB)  and  the  Federal Energy  Regulatory  Commission
(FERC).   Utilities' consolidated subsidiaries are not subject
to regulation by the IUB or the FERC.

     (c)  Regulatory Assets -

      Utilities  is subject to the provisions of Statement  of
Financial  Accounting Standards No. 71,  "Accounting  for  the
Effects  of  Certain  Types  of Regulation"  (SFAS  71).   The
regulatory   assets  represent  probable  future  revenue   to
Utilities  associated  with certain incurred  costs  as  these
costs  are  recovered  through the rate  making  process.   At
December   31,   regulatory  assets  as   reflected   in   the
Consolidated  Balance Sheets were comprised of  the  following
items:

                                                      1994       1993
                                                       (in millions)
                                                          
Deferred income taxes (Note 1(d))                   $  90.1   $  88.6
Environmental liabilities (Note 11(f))                 43.8      25.4
Energy efficiency programs (Note 3(b))                 34.7      18.5
Employee pension and benefit costs (Note 7)            25.0      14.1
FERC Order No. 636 transition costs (Note 11(h))        8.0       5.0
Unamortized loss on reacquired debt                     6.1       6.4
Cancelled plant costs                                   2.4       3.3
Other                                                   3.0       1.5
                                                      213.1     162.8
Classified as "Current assets - regulatory assets"     20.1      14.2
Classified as "Other assets - regulatory assets"    $ 193.0   $ 148.6

      Refer to the individual footnotes referenced above for a
further  discussion of certain items reflected  in  regulatory
assets.

     (d)  Income Taxes -

      The  Company follows the liability method of  accounting
for deferred income taxes, which requires the establishment of
deferred tax liabilities and assets, as appropriate,  for  all
temporary  differences between the tax  basis  of  assets  and
liabilities   and  the  amounts  reported  in  the   financial
statements.   Deferred  taxes  are  recorded  using  currently
enacted tax rates.

      Except  as  noted  below, income  tax  expense  includes
provisions  for deferred taxes to reflect the tax  effects  of
temporary differences between the time when certain costs  are
recorded  in the accounts and when they are deducted  for  tax
return  purposes.   As  temporary  differences  reverse,   the
related  accumulated  deferred income taxes  are  reversed  to
income.   Investment  tax  credits  for  Utilities  have  been
deferred  and  are subsequently credited to  income  over  the
average lives of the related property.

      Consistent  with  rate making practices  for  Utilities,
deferred  tax  expense is not recorded for  certain  temporary
differences (primarily related to utility property, plant  and
equipment).  Accordingly, Utilities has recorded deferred  tax
liabilities and regulatory assets, as identified in Note 1(c).

     (e)  Temporary Cash Investments -

      Temporary  cash investments are stated  at  cost,  which
approximates market value, and are considered cash equivalents
for   the  Consolidated  Statements  of  Cash  Flows.    These
investments  consist  of short-term liquid  investments  which
have  maturities  of  less  than 90  days  from  the  date  of
acquisition.

       (f)   Depreciation  of  Utility  Property,  Plant   and
             Equipment -

      The  average rates of depreciation for electric and  gas
properties   of   Utilities,  including   Utilities'   nuclear
generating  station,  the Duane Arnold Energy  Center  (DAEC),
which  is  being  depreciated over  a  36-year  life  using  a
remaining  life  method, consistent with current  rate  making
practices, were as follows:

                        1994       1993        1992
                                                     
        Electric        3.6%       3.5%        3.5%
        Gas             3.8%       3.5%        3.0%

     (g)  Decommissioning of the DAEC -

      Included  in Utilities' proposed electric rate  increase
discussed  in Note 3(a) is a proposal to increase  the  annual
recovery  of  anticipated costs to decommission  the  DAEC  to
approximately  $9 million annually from the current  level  of
$5.5   million.   Decommissioning  expense  is   included   in
"Depreciation and amortization" in the Consolidated Statements
of   Income   and  the  cumulative  amount  is   included   in
"Accumulated depreciation" in the Consolidated Balance  Sheets
to  the extent recovered through rates.  The proposal is based
on the following assumptions: 1) cost to decommission the DAEC
of  $252.7  million  in  1993 dollars, based  on  the  Nuclear
Regulatory Commission (NRC) minimum formula (which exceeds the
amount  in the current site-specific study completed in 1994);
2)  inflation  of  4.91%  annually  to  the  year  2014,  when
decommissioning   is  expected  to  begin;   3)   the   prompt
dismantling and removal method of decommissioning; 4)  monthly
funding  of  all future collections into external trust  funds
and funded on a tax-qualified basis to the extent possible; 5)
an   average  after-tax  return  of  6.82%  for  all  external
investments; and 6) collection of the costs on a straight-line
basis,    in    real    terms,    through    2014.     Current
levels  of rate recovery: 1) do not recognize estimated future
inflation for the entire period prior to commencement  of  the
decommissioning process; 2) assume that decommissioning begins
in  2010;  and  3)  provide recovery on a straight-line  basis
without considering the effects of inflation.  At December 31,
1994,   Utilities  had  $33.8  million  invested  in  external
decommissioning  trust funds as indicated in the  Consolidated
Balance  Sheets,  and  also  had an  internal  decommissioning
reserve of $21.7 million recorded as accumulated depreciation.
Earnings on the external trust funds, which were $1.0  million
in  1994,  are recorded as interest income and a corresponding
interest  expense  payable  to the  funds  is  recorded.   The
earnings accumulate in the external trust fund balances and in
accumulated depreciation on utility plant.

      See "Management's Discussion and Analysis of the Results
of  Operations  and Financial Condition" for a  discussion  of
industry issues raised by the staff of the SEC and a Financial
Accounting  Standards  Board  review  regarding  the  electric
utility  industry  method  of accounting  for  decommissioning
costs.

     (h)  Allowance for Funds Used During Construction -

      The  allowance for funds used during construction (AFC),
which  represents the cost during the construction  period  of
funds  used  for  construction  purposes,  is  capitalized  by
Utilities  as a component of the cost of utility  plant.   The
amount  of AFC applicable to debt funds and to other  (equity)
funds,  a  non-cash item, is computed in accordance  with  the
prescribed  FERC formula.  The aggregate gross rates  used  by
Utilities   for   1994-1992  were   9.3%,   5.7%   and   9.2%,
respectively.

     (i)  Operating Revenues -

      The  Company accrues revenues for services rendered  but
unbilled at month-end in order to more properly match revenues
with expenses.

     (j)  Adjustment Clauses -

      Utilities' tariffs provide for subsequent adjustments to
its electric and natural gas rates for changes in the cost  of
fuel  and  purchased  energy and in the cost  of  natural  gas
purchased for resale.  Changes in the under/over collection of
these  costs are reflected in "Fuel for production"  and  "Gas
purchased  for  resale"  in  the  Consolidated  Statements  of
Income.    The  cumulative  effects  are  reflected   in   the
Consolidated  Balance  Sheets as a current  asset  or  current
liability, pending automatic reflection in future billings  to
customers.

     (k)  Accumulated Refueling Outage Provision -

      The IUB allows Utilities to collect, as part of its base
revenues,  funds  to  offset other operating  and  maintenance
expenditures  incurred during refueling outages at  the  DAEC.
As  these  revenues  are collected, an  equivalent  amount  is
charged  to  other operating and maintenance expenses  with  a
corresponding credit to a reserve.  During a refueling outage,
the  reserve  is  reversed  to  offset  the  refueling  outage
expenditures.

(2)  ACQUISITION  OF  IOWA  SERVICE  TERRITORY  OF  UNION
     ELECTRIC COMPANY:

     Effective December 31, 1992, Utilities purchased the Iowa
distribution  system  and a portion of the  Iowa  transmission
facilities  of  Union Electric Company (UE) for  approximately
$65  million  in  cash.  The net book value  of  the  acquired
assets  was  approximately $35 million and the amount  of  the
purchase price in excess of the book value (approximately  $30
million)  has been recorded as an acquisition adjustment.  The
acquisition adjustment is being amortized over the life of the
property and the amortization is included in "Interest expense
and other - Miscellaneous, net" in the Consolidated Statements
of  Income.   Recovery of the acquisition  adjustment  through
rates  has been requested in Utilities' current electric  rate
filing, which is discussed in Note 3(a).  See Note 11(b) for a
discussion  of the purchase power contracts between  Utilities
and UE associated with this acquisition.

(3)  RATE MATTERS:
     (a)  1994 Electric Rate Case -

      In 1994, Utilities applied to the IUB for an increase in
retail  electric rates of approximately $26 million  annually,
or   5.2%.    Utilities'   proposal   includes   approximately
$12 million in annual revenue requirement related to increased
recovery   levels   of   depreciation  expense   and   nuclear
decommissioning  expense.  To the extent these  proposals  are
approved by the IUB, corresponding increases in expense  would
be  recorded and there would be no effect on net  income.   No
interim increase was requested.

     The Office of Consumer Advocate (OCA) filed a petition in
connection with this proceeding to reduce the rates for retail
electric  service by approximately $27 million or  5.5%.   The
primary   differences  between  the  amount  of  the  increase
requested  by Utilities and the decrease proposed by  the  OCA
are: 1) a 13.9% return on common equity requested by Utilities
compared  to 11.1% proposed by the OCA; 2) OCA's rejection  of
Utilities'    proposal    to    increase    collections    for
decommissioning  the  DAEC; 3) OCA's rejection  of  Utilities'
proposal to increase depreciation rates; 4) OCA's proposal  to
reject  most  of Utilities' request to recover an  acquisition
adjustment associated with its acquisition of the Iowa service
territory  of  UE;  and 5) an adjustment to  test  year  sales
levels proposed by the OCA.  If a rate reduction is ultimately
ordered  by  the  IUB, the reduction would be  effective  from
October  22,  1994, and revenues collected  beyond  that  date
would  be  subject  to refund to the extent of  the  reduction
approved  by  the  IUB,  if any.  As  of  December  31,  1994,
Utilities'   revenues  collected  subject   to   refund   were
approximately $5 million.

      Intervenors in the proceeding also submitted filings  in
October   1994.   These  parties,  which  primarily  represent
individual  or  groups  of  customers,  generally  object   to
particular elements of the price increase and Utilities' price
design  proposals.   Those intervenors that  quantified  their
positions have generally argued for a price decrease, but none
as large as that proposed by the OCA.

     Utilities expects to receive an order from the IUB in May
1995.

     (b)  1994 Energy Efficiency Cost Recovery Filing -

     The IUB has adopted rules that mandate Utilities to spend
2% of electric and 1.5% of gas gross retail operating revenues
for  energy efficiency programs.  Under provisions of the  IUB
rules,  in  August  1994, Utilities applied  to  the  IUB  for
recovery of approximately $23 million and $13 million for  the
electric  and  gas  programs, respectively, related  to  costs
incurred  through  1993 for such programs.   The  $36  million
total  for  the  electric  and gas programs  is  comprised  of
$21   million  of  direct  expenditures  and  carrying   costs
(recorded as a "Regulatory asset" in the Consolidated  Balance
Sheets, including $3.6 million as current), $7 million  for  a
return  on  the  expenditures over  the  recovery  period  and
$8  million for a reward based on a sharing of the benefits of
such programs.

      In  October  1994,  the OCA and  an  intervenor  in  the
proceeding  filed  their  direct  testimony.   The   principal
difference   between  Utilities  and  the  other  parties   is
approximately $7 million in the reward calculation.   Hearings
in  the  proceeding were held in January 1995.   Any  increase
approved  by  the  IUB is not expected to be effective  before
April 1995, and recovery will be over a four-year period  with
a  return allowed on the unrecovered portion over the recovery
period.

(4)   LEASES:

      Utilities has a capital lease covering its 70% undivided
interest  in  nuclear  fuel purchased for  the  DAEC.   Future
purchases  of fuel may also be added to the fuel lease.   This
lease  provides for annual one-year extensions  and  Utilities
intends  to  exercise  such  extensions  through  the   DAEC's
operating  life. Interest costs under the lease are  based  on
commercial  paper costs incurred by the lessor.  Utilities  is
responsible  for the payment of taxes, maintenance,  operating
cost, risk of loss and insurance relating to the leased fuel.

      The  lessor has an $80 million credit agreement  with  a
bank   supporting  the  nuclear  fuel  lease.   The  agreement
continues  on  a  year-to-year  basis,  unless  either   party
provides at least a three-year notice of termination; no  such
notice of termination has been provided by either party.

      Annual  nuclear fuel lease expenses include the cost  of
fuel,  based  on  the  quantity  of  heat  produced  for   the
generation  of  electric energy, plus  the  lessor's  interest
costs  related  to  fuel  in  the reactor  and  administrative
expenses.   These expenses (included in "Fuel for  production"
in  the Consolidated Statements of Income) for 1994-1992  were
$17.8 million, $12.4 million and $12.9 million, respectively.

       The  Company's  operating  lease  rental  expenses  for
1994-1992  were $9.8 million, $8.4 million and  $6.8  million,
respectively.

      The Company's future minimum lease payments by year  are
as follows:

                                           Capital       Operating
        Year                                Lease          Leases
                                               (in thousands)
                                                         
        1995                                 $ 15,634      $   7,023
        1996                                   15,653          6,987
        1997                                   12,942          4,591
        1998                                    6,394          3,317
        1999                                    4,176          2,544
        2000 - 2002                             1,267           -
                                               56,066      $  24,462
        Less:  Amount representing interest     6,335          
        Present value of net minimum                     
            capital lease payments           $ 49,731         

(5)  UTILITY ACCOUNTS RECEIVABLE:

       Customer   accounts   receivable,  including   unbilled
revenues,  arise  primarily from the sale of  electricity  and
natural  gas.  At December 31, 1994, Utilities was  serving  a
diversified  base  of residential, commercial  and  industrial
customers  consisting  of approximately 330,000  electric  and
173,000 gas customers.

     Utilities has entered into an agreement, which expires in
1999,  with  a  financial institution to  sell,  with  limited
recourse,   an  undivided  fractional  interest   of   up   to
$65  million  in its pool of utility accounts receivable.   At
December 31, 1994, $54 million was sold under the agreement.

(6)   INCOME TAXES:

      The components of Federal and state income taxes for the
years ended December 31, were as follows:

                                 1994          1993         1992
                                          (in millions)
                                                       
Current tax expense             $ 38.4       $  27.5      $ 23.2
Deferred tax expense               2.2          15.4         0.3
Amortization and adjustment                            
  of investment tax credits       (2.6)         (4.9)       (2.8)
                                $ 38.0       $  38.0      $ 20.7

      The  overall effective income tax rates shown below  for
the  years ended December 31, were computed by dividing  total
income tax expense by income before income taxes.

                                                  1994       1993       1992
                                                                     
Statutory Federal income tax rate                 35.0%      35.0%      34.0%
Add (deduct):                                                        
    State income taxes, net of Federal benefits    6.1        5.8        5.6
    Effect of property related temporary                             
        differences for which deferred taxes                         
        are not provided under rate making
        principles                                 3.2        1.5        0.5
    Amortization of investment tax credits        (2.7)      (2.5)      (4.2)
    Reversal through tariffs of deferred                             
        taxes provided at rates in excess of                         
        the current statutory Federal income
        tax rate                                  (1.5)      (1.7)      (2.7)
    Adjustment of prior period taxes              (1.9)      (2.0)      (2.0)
    Other items, net                               0.1       (0.3)       0.2
Overall effective income tax rate                 38.3%      35.8%      31.4%

      The accumulated deferred income taxes as set forth below
in  the Consolidated Balance Sheets at December 31, arise from
the following temporary differences:

                                           1994         1993
                                             (in millions)
                                            
  Property related                        $ 276       $ 272
  Investment tax credit related             (28)        (30)
  Decommissioning related                   (13)        (12)
  Other                                       6           7
                                          $ 241       $ 237

(7)  BENEFIT PLANS:
     (a)  Pension Plans -

     The Company has one contributory and two non-contributory
retirement  plans that, collectively, cover substantially  all
of  its employees.  Plan benefits are generally based on years
of service and compensation during the employees' latter years
of  employment.   Payments  made from  the  pension  funds  to
retired   employees  and  beneficiaries  during  1994  totaled
$9.7 million.

      The  Company's policy is to fund the pension cost at  an
amount  that is at least equal to the minimum funding  require-
ments mandated by the Employee Retirement Income Security  Act
(ERISA)  and  that does not exceed the maximum tax  deductible
amount for the year.

       Pursuant   to  the  provisions  of  SFAS  71,   certain
adjustments  to Utilities' pension provision are necessary  to
reflect  the accounting for pension costs allowed in its  most
recent rate cases.

      The  components of the pension provision for  the  years
ended December 31, were as follows:
 
                                                1994       1993       1992
                                                      (in thousands)
                                                                   
Service cost                              $   5,786    $   4,275   $   4,439
Interest cost on projected
  benefit obligation                         11,265       11,131       9,999
Assumed return on plans' assets             (12,426)     (12,177)    (11,640)
Amortization of unrecognized gain              (180)        (763)       (135)
Amortization of prior service cost            1,335        1,195         938
Amortization of unrecognized plans'                                
    assets as of January 1, 1987               (329)        (384)       (382)
Pension cost                                  5,451        3,277       3,219
Adjustment to funding level                  (5,340)      (2,867)        301
Total pension costs paid to the Trustees  $     111    $     410   $   3,520
                                                                   
Actual return on plans' assets            $    (101)   $  12,718   $   8,861

     A reconciliation of the funded status of the plans to the
amounts  recognized  in  the Consolidated  Balance  Sheets  at
December 31, is presented below:
                                                             1994        1993
                                                              (in thousands)
                                                                      
Fair market value of plans' assets                      $ 165,267    $ 174,133
Actuarial present value of benefits rendered to date -                
  Accumulated benefits based on compensation to                     
    date, including vested benefits of $96,968,000
    and $100,905,000, respectively                       107,017       110,676
  Additional benefits based on estimated
    future salary levels                                  39,565        42,938
Projected benefit obligation                             146,582       153,614
Plans' assets in excess of projected benefit obligation   18,685        20,519
Remaining unrecognized net asset existing at                          
  January 1, 1987, being amortized over 20 years          (3,792)       (4,109)
Unrecognized prior service cost                           17,991        16,708
Unrecognized net gain                                    (33,942)      (28,830)
Prepaid (accrued) pension cost recognized in the                      
  Consolidated Balance Sheets                           $ (1,058)    $   4,288
                                                                      
Assumed rate of return, all plans                           8.00%         8.00%
Weighted average discount rate of projected benefit                   
  obligation, all plans                                     8.25%         7.50%
Range of assumed rates of increase in future                          
  compensation levels for the plans                    4.00-5.75%    4.00-5.75%

     (b)  Other Postemployment Benefit Plans -

       The  Company  provides  certain  benefits  to  retirees
(primarily  health care benefits).  Through 1992, the  Company
expensed  such costs as benefits were paid ($2.2  million  for
1992), which was consistent with rate making practices at that
time.

      Effective January 1, 1993, the Company adopted SFAS 106,
which   requires   the  accrual  of  the  expected   cost   of
postretirement  benefits  other  than  pensions   during   the
employees'  years  of  service.  The  IUB  has  adopted  rules
stating that postretirement benefits other than pensions  will
be  included in Utilities' rates pursuant to the provisions of
SFAS  106.   The  rules  permit  Utilities  to  amortize   the
transition obligation as of January 1, 1993, over 20 years and
require  that all amounts collected are to be funded  into  an
external  trust to pay benefits as they become due.  Beginning
in  1993, the gas portion of these costs is being recovered in
Utilities'  gas rates, and is funded in external trust  funds.
The  IUB  has  adopted a rule that permits a deferral  of  the
incremental electric SFAS 106 costs until the earlier of:   1)
an  order in an electric rate case, or  2) December 31,  1995.
Accordingly, pursuant to the provisions of SFAS 71,  Utilities
had  deferred $5.6 million of such costs at December 31, 1994.
Utilities  has  requested  recovery  of  these  costs  in  the
electric rate case discussed in Note 3(a).

      The  components of postretirement benefit costs for  the
years ended December 31, were as follows:
                                                  1994         1993
                                                    (in thousands)
                                                        
Service cost                                    $ 1,785      $ 1,685
Interest cost on accumulated postretirement                           
  benefit obligation                              3,175        3,247
Actual return on plan assets                        (47)         -
Amortization of transition obligation                   
  existing at January 1, 1993                     2,024        2,024
Amortization of unrecognized asset loss             (13)         -
Amortization of unrecognized gain                    (4)         -
Amortization of prior service cost                   19          -
Postretirement benefit costs                      6,939        6,956
Less:  Deferred postretirement benefit costs      2,732        2,858
Net postretirement benefit costs                $ 4,207      $ 4,098

     A reconciliation of the funded status of the plans to the
amounts  recognized  in  the Consolidated  Balance  Sheets  at
December 31, is presented below:
                                                      1994         1993
                                                        (in thousands)
                                                           
Fair market value of plans' assets                $   1,127    $   1,171
Accumulated postretirement benefit obligation -                        
    Active employees not yet eligible                18,216       18,325
    Active employees eligible                         5,119        4,130
    Retirees                                         18,161       20,140
Total accumulated postretirement benefit                   
    obligation                                       41,496       42,595
Accumulated postretirement benefit obligation                        
    in excess of plans' assets                      (40,369)     (41,424)
Unrecognized transition obligation                   36,439       38,463
Unrecognized net gain                                (5,358)      (1,167)
Unrecognized prior service cost                         170          -
Accrued postretirement benefit cost in the                 
    Consolidated Balance Sheets                   $  (9,118)   $  (4,128)
                                                           
Assumed rate of return                                 8.00%        8.00%
Weighted average discount rate of                          
    accumulated postretirement benefit
    obligation                                         8.25%        7.50%
Medical trend on paid charges:                             
    Initial trend rate                                11.00%       12.00%
    Ultimate trend rate                                6.50%        6.50%

      The assumed medical trend rates are critical assumptions
in determining the service cost and accumulated postretirement
benefit obligation related to postretirement benefit costs.  A
1%  change  in  the  medical trend rates,  holding  all  other
assumptions constant, would have changed the 1994 service cost
by  $1.0  million  (20%)  and  the accumulated  postretirement
benefit  obligation  at  December 31, 1994,  by  $6.6  million
(16%).

     On January 1, 1994, the Company adopted the provisions of
SFAS 112, "Employers' Accounting for Postemployment Benefits,"
and  its  adoption  did  not have a  material  effect  on  the
Company's financial position or results of operations.

(8)  PREFERRED AND PREFERENCE STOCK:

      Utilities  has  466,406 shares of  Cumulative  Preferred
Stock,   $50   par   value,   authorized   for   issuance   at
December 31, 1994, of which the 6.10%, 4.80% and 4.30%  Series
had   100,000,   146,406  and  120,000  shares,  respectively,
outstanding at both December 31, 1994 and 1993.  These  shares
are  redeemable at the option of Utilities upon 30 days notice
at  $51.00,  $50.25  and $51.00 per share, respectively,  plus
accrued  dividends.  In addition, there are 700,000 shares  of
Utilities   Cumulative  Preference  Stock  ($100  par   value)
authorized  for  issuance, of which none were  outstanding  at
December 31, 1994.

(9)  DEBT:
     (a)  Long-Term Debt -

      Utilities'  Indentures and Deeds of Trust  securing  its
First  Mortgage  Bonds constitute direct first mortgage  liens
upon  substantially  all  tangible  public  utility  property.
Utilities' Indenture and Deed of Trust securing its Collateral
Trust  Bonds  constitutes a second lien on  substantially  all
tangible  public utility property while First  Mortgage  Bonds
remain outstanding.

      Total sinking fund requirements, which Utilities intends
to  meet  by pledging additional property under the  terms  of
Utilities'  Indentures and Deeds of Trust, and debt maturities
for 1995-1999 are as follows:

                                        Debt Maturities
                                        (in thousands)
                                                                       
Debt Issue               1995      1996       1997       1998       1999

  Sinking fund                                                                  
   requirements       $    780  $    630  $     550   $     550  $     550
  Pollution control        140       140        140         140        140
  Series W              50,000         -          -           -          -
  Series X              50,000         -          -           -          -
  Series J                   -    15,000          -           -          -
  6-1/8% Series              -         -      8,000           -          -
  Series Z                   -         -          -           -     50,000
Total               $  100,920  $ 15,770  $   8,690   $     690  $  50,690

     The Company intends to refinance the majority of the debt
maturities with long-term securities.

     (b)  Short-Term Debt -

      At  December  31, 1994, the Company had  bank  lines  of
credit  aggregating $67.7 million, of which  $37  million  was
being  used  to  support  commercial paper  (weighted  average
interest  rate  of 6.13%) and $7.7 million was being  used  to
support  certain  pollution control  obligations.   Commitment
fees  are  paid  to  maintain these lines  and  there  are  no
conditions  which  restrict the unused lines  of  credit.   In
addition  to  the  above, Utilities has an uncommitted  credit
facility with a financial institution whereby it can borrow up
to  $40 million. Rates are set at the time of borrowing and no
fees    are    paid   to   maintain   this    facility.     At
December  31,  1994,  there  were  no  borrowings  under  this
facility.  Utilities also has a letter of credit in the amount
of  $3.4 million supporting two of its variable rate pollution
control obligations.

(10) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS:

      The  estimated  fair values of financial instruments  at
December  31,  1994,  and  the  basis  upon  which  they  were
estimated are as follows:

     (a)  Current Assets and Current Liabilities -

      The  carrying amount approximates fair value because  of
the short maturity of such financial instruments.

     (b)  Nuclear Decommissioning Trust Funds -

      The  carrying amount represents the fair value of  these
trust  funds, as reported by the trustee.  On January 1, 1994,
the   Company  adopted  SFAS  115,  "Accounting  for   Certain
Investments  in  Debt and Equity Securities."  This  standard,
which  applies  to  Utilities' nuclear  decommissioning  trust
funds,  requires  that unrealized gains  and  losses  on  such
investments  be  included  in the  reported  balance  of  such
investments. At December 31, 1994, the balance of the "Nuclear
decommissioning  trust  funds" as shown  in  the  Consolidated
Balance  Sheets included $0.8 million of unrealized losses  on
the  investments  held  in the trust funds.   The  accumulated
reserve   for   decommissioning  costs  was  adjusted   by   a
corresponding  amount and there was no effect  on  net  income
from adopting this standard.

     (c)  Cumulative Preferred Stock of Utilities -

      The  estimated fair value of this stock of $10.2 million
is based upon the market yield of similar securities.

     (d)  Long-Term Debt -

      The  carrying amount of long-term debt was $483  million
compared  to  estimated  fair  value  of  $459  million.   The
estimated  fair value of long-term debt is based  upon  quoted
market prices.

      Since  Utilities is subject to regulation, any gains  or
losses  related to the difference between the carrying  amount
and  the  fair  value  of  financial instruments  may  not  be
realized by the Company's parent.

(11) COMMITMENTS AND CONTINGENCIES:
     (a)  Construction Program -

       The  Company's  construction  and  acquisition  program
anticipates  expenditures of approximately  $163  million  for
1995, and additional expenditures of approximately $13 million
for mandated energy efficiency programs. The energy efficiency
expenditures  will  be  deferred  pursuant  to  IUB  rules  as
discussed in Note 3(b). Substantial commitments have been made
in connection with all such expenditures.

     (b)  Purchase Power Contracts -

      In  connection with the acquisition of the UE properties
discussed  in  Note 2, Utilities is purchasing power  from  UE
under  a  firm  capacity contract with a 1995  requirement  of
100  Mw  of  delivered capacity declining to 60  Mw  in  1997.
Utilities  will  also  purchase an additional  annual  maximum
interruptible  capacity of up to 54 Mw of 25 Hz  power,  which
extends  through  1998  and  will continue  thereafter  unless
either  party gives a three-year notice of cancellation.   The
costs  of capacity purchases for these contracts are reflected
in "Purchased power" in the Consolidated Statements of Income.

      Utilities has a contract to purchase capacity of  50  Mw
from the City of Muscatine for the period May 1, 1995, through
October  31,  1995.   Utilities  has  also  entered  into   an
agreement  with Basin Electric Power Cooperative  to  purchase
capacity of 50 Mw, 75 Mw, 100 Mw and 100 Mw during the  annual
six-month  summer  season  for the years  1996  through  1999,
respectively.

      Total capacity charges under all existing contracts will
approximate  $16.3  million,  $14.3  million,  $12.3  million,
$4.7  million  and  $3.4  million  for  the  years  1995-1999,
respectively.

     (c)  Coal Contract Commitments -

      Utilities  has entered into coal supply contracts  which
expire  between 1996 and 2001 for its fossil-fueled generating
stations.    At   December  31,  1994,  the  contracts   cover
approximately  $199  million of coal  over  the  life  of  the
contracts, which includes $50 million expected to be  incurred
in 1995.  Utilities expects to supplement these coal contracts
with  spot market purchases to fulfill its future fossil  fuel
needs.

      (d)  Information Technology Services -

      The Company entered into an agreement, expiring in 2004,
with Electronic Data Systems Corporation (EDS) for information
technology  services.   The contract is subject  to  declining
termination  fees.   The  Company's  anticipated  expenditures
under the agreement for 1995 are estimated to be approximately
$9.1  million.  Future costs under the agreement are  variable
and  are  dependent  upon  the Company's  level  of  usage  of
technological services from EDS.

     (e)  Nuclear Insurance Programs -

      The  Price-Anderson Amendments Act of  1988  (1988  Act)
provides Utilities with the benefit of $8.9 billion of  public
liability coverage consisting of $200 million of insurance and
$8.7  billion  of potential retroactive assessments  from  the
owners  of nuclear power plants.  Based upon its ownership  of
the  DAEC,  under the 1988 Act, Utilities could be assessed  a
maximum  of $79.3 million per nuclear incident, with a maximum
of  $10  million per year (of which Utilities'  70%  ownership
portion  would  be approximately $55 million and  $7  million,
respectively)  if  losses relating to the  incidents  exceeded
$200  million.   These limits are subject to  adjustments  for
inflation in future years.

      Utilities  is  a  member of Nuclear  Electric  Insurance
Limited (NEIL), which provides insurance coverage for the cost
of  certain property losses at nuclear generating stations and
for  the  cost  of  replacement power during certain  outages.
Companies  insured  through NEIL are  subject  to  retroactive
premium  adjustments  if  losses  exceed  accumulated  reserve
funds.    NEIL's  accumulated  reserve  funds  are   currently
sufficient to more than cover its exposure in the event  of  a
single incident under the property damage or replacement power
coverages.   However, Utilities could be assessed  annually  a
maximum  of  $8.5  million  for certain  property  losses  and
$0.7  million for replacement power if NEIL's losses  relating
to   accidents   exceeded  its  accumulated   reserve   funds.
Utilities  is  not aware of any losses that  it  believes  are
likely to result in an assessment.

     (f)  Environmental Liabilities -

      The  Company  has recorded environmental liabilities  of
approximately $43 million, including $5.4 million  as  current
liabilities,  in its Consolidated Balance Sheets  at  December
31, 1994.  The significant items are discussed below.

          Former Manufactured Gas Plant (FMGP) Sites

      Utilities  has  been named as a Potentially  Responsible
Party (PRP) by either the Iowa Department of Natural Resources
(IDNR), the Minnesota Pollution Control Agency (MPCA)  or  the
United  States Environmental Protection Agency  (EPA)  for  28
FMGP sites.  Utilities believes that it is not responsible for
two  of  the  sites  for which it has been designated  a  PRP.
Utilities has another FMGP site for which it has not yet  been
formally  designated as a PRP.  Utilities is working  pursuant
to  the requirements of the IDNR, MPCA and EPA to investigate,
mitigate,  prevent and remediate, where necessary,  damage  to
property, including damage to natural resources, at and around
the  remaining 27 sites in order to protect public health  and
the  environment.  In addition, Utilities has recently  become
aware that two additional sites may exist, but it has not  yet
been able to determine if any liability may exist.

      Utilities  has completed the remediation of three  sites
and   is   in  various  stages  of  the  investigation  and/or
remediation processes for 22 sites.  The investigation process
is scheduled to begin in 1995 or 1996 for the two other sites.
In 1994, Utilities received updated investigation reports on a
number  of  sites, which, at some sites, indicated  a  greater
volume  of contaminated soil, surface and ground water needing
treatment, and a greater volume of substances requiring higher
cost  incineration, than was anticipated in  prior  estimates.
It is possible that future cost estimates will be greater than
the  current  estimates as the investigation process  proceeds
and as additional facts become known.

      Utilities has recorded environmental liabilities related
to  the  FMGP sites of $31 million (including $4.3 million  as
current liabilities) at December 31, 1994.  These amounts  are
based  upon Utilities' best current estimate of the amount  to
be  incurred for investigation and remediation costs for those
sites   where  the  investigation  process  has  been  or   is
substantially   completed.   For   those   sites   where   the
investigation is in its earlier stages or has not started, the
liability represents the minimum of the estimated cost  range.
All  investigations are expected to be completed by  1999  and
site-specific remediations, based on recommendations from  the
IDNR,  MPCA   and EPA, are anticipated to be completed  within
three years after the completion of the investigations of each
site. Utilities may be required to monitor these sites for a
number of years upon completion of remediation, as is the case
with the three sites for which remediation has been completed.

     Utilities has begun pursuing coverage for investigation,
mitigation, prevention, remediation and monitoring costs from
its insurance carriers and is investigating the potential for
third party cost sharing for FMGP investigation and clean-up
costs.  The amount of shared costs, if any, cannot be
reasonably determined and, accordingly, no potential sharing
has been recorded at December 31, 1994.  Regulatory assets of
$31.0 million have been recorded in the Consolidated Balance
Sheets, which reflect the future recovery that is being
provided through Utilities' rates.  Considering the rate
treatment allowed by the IUB, management believes that the
clean-up costs incurred by Utilities for these FMGP sites will
not have a material adverse effect on its financial position
or results of operations.

          National Energy Policy Act of 1992

     The National Energy Policy Act of 1992 requires owners of
nuclear  power  plants  to  pay a special  assessment  into  a
"Uranium Enrichment Decontamination and Decommissioning Fund."
The assessment is based upon prior nuclear fuel purchases and,
for the DAEC, averages $1.4 million annually through 2007,  of
which  Utilities'  70%  share is $1.0 million.   Utilities  is
recovering  the costs associated with this assessment  through
its electric fuel adjustment clauses over the period the costs
are  assessed.  Utilities' 70% share of the future assessment,
$12.0  million  payable through 2007, has been recorded  as  a
liability   in  the  Consolidated  Balance  Sheets,  including
$0.8  million included in "Current liabilities - Environmental
liabilities,"  with  a  related  regulatory  asset   for   the
unrecovered amount.

     (g)  Clean Air Act -

      The  Clean Air Act Amendments Act of 1990 (Act) requires
emission  reductions of sulfur dioxide and nitrogen oxides  to
achieve reductions of atmospheric chemicals believed to  cause
acid  rain.  The provisions of the Act will be implemented  in
two  phases  with  Phase I affecting two of  Utilities'  units
beginning  in 1995 and Phase II affecting all units  beginning
in  the  year 2000.  Utilities is in the process of completing
the modifications necessary to meet the Phase I requirements.

     Utilities expects to meet the requirements of Phase II by
switching   to   lower  sulfur  fuels  and   through   capital
expenditures  primarily related to fuel burning equipment  and
boiler    modifications.     Utilities    estimates    capital
expenditures   at   approximately  $22.5  million,   including
$4.4 million in 1995, in order to meet the requirements of the
Act.

     (h)  FERC Order No. 636 -

     The FERC issued Order No. 636 (Order 636) in 1992.  Order
636, as modified on rehearing: 1) requires Utilities' pipeline
suppliers to unbundle their services so that gas supplies  are
obtained   separately   from   transportation   service,   and
transportation and storage services are operated and billed as
separate  and  distinct  services; 2)  requires  the  pipeline
suppliers  to  offer "no notice" transportation service  under
which  firm  transporters  (such  as  Utilities)  can  receive
delivery of gas up to their contractual capacity level on  any
day  without prior scheduling; 3) allows pipelines to  abandon
long-term  (one year or more) transportation service  provided
to a customer under an expiring contract whenever the customer
fails  to  match the highest rate and longest term (up  to  20
years)  offered  to  the pipeline by other customers  for  the
particular  capacity; and 4) provides for  a  mechanism  under
which  pipelines  can  recover prudently  incurred  transition
costs  associated  with the restructuring process.   Utilities
has  enhanced  access to competitively priced gas  supply  and
more   flexible  transportation  services  as  a   result   of
Order 636.  However, under Order 636, Utilities is required to
pay  certain  transition  costs incurred  and  billed  by  its
pipeline suppliers.

      Utilities'  three pipeline suppliers have  made  filings
with  the FERC to begin collecting their respective transition
costs,  and additional filings are expected.  Utilities  began
paying  the  transition costs in 1993, and,  at  December  31,
1994,  has  recorded  a liability of $8.0  million  for  those
transition  costs that have been incurred by the pipelines  to
date,  including  $3.0 million expected to be  billed  through
1995.   Utilities is currently recovering the transition costs
from  its  customers  through  its  Purchased  Gas  Adjustment
Clauses as such costs are billed by the pipelines.  Transition
costs,  in  addition  to  the  recorded  liability,  that  may
ultimately   be   charged  to  Utilities   could   approximate
$10  million.   The ultimate level of costs to  be  billed  to
Utilities depends on the pipelines' filings with the FERC  and
other  future  events, including the market price  of  natural
gas.   However, Utilities believes any transition  costs  that
the  FERC  would allow the pipelines to collect from Utilities
would  be  recovered from its customers, based upon regulatory
treatment of these costs currently and similar past  costs  by
the   IUB.    Accordingly,  regulatory  assets,   in   amounts
corresponding to the recorded liabilities, have been  recorded
to reflect the anticipated recovery.

(12) JOINTLY-OWNED ELECTRIC UTILITY PLANT:

       Under  joint  ownership  agreements  with  other   Iowa
utilities,  Utilities  has undivided  ownership  interests  in
jointly-owned   electric  generating  stations   and   related
transmission  facilities.  Each of the  respective  owners  is
responsible   for  the  financing  of  its  portion   of   the
construction  costs.  Kilowatt-hour generation  and  operating
expenses are divided on the same basis as ownership with  each
owner  reflecting  its respective costs in its  Statements  of
Income.  Information relative to Utilities' ownership interest
in these facilities at December 31, 1994 is as follows:

                                           Ottumwa     Neal
                                  DAEC     Unit 1     Unit 3
                                       ($ in millions)
                                                      
Utility plant in service        $ 490.8   $  187.9    $  55.5
Accumulated depreciation        $ 242.4   $   80.6    $  25.7
Construction work in progress   $   5.3   $    -      $   1.3
Plant capacity - Mw                 515        716        515
Percent ownership                    70%        48%        28%
In-service date                    1974       1981       1975

 (13)     SEGMENTS OF BUSINESS:

      The  principal business segments of the Company are  the
generation,  transmission, distribution and sale  of  electric
energy and the purchase, distribution and sale of natural  gas
by  Utilities.  Certain financial information relating to  the
Company's significant segments of business is presented below:

                                         Year Ended December 31
                                     1994         1993           1992
                                             (in thousands)
Operating results:                                                     
  Revenues -                                                           
    Electric                          $   537,327  $   550,521   $   462,999
    Gas                                   139,033      154,318       139,455
                                                                       
  Operating income -                                                   
    Electric                              125,487      128,994        90,891
    Gas                                     8,135       13,750         8,367
                                                                       
Other information:                                                     
  Depreciation and amortization -                                        
    Electric                               68,640       63,832        59,707
    Gas                                     6,214        5,186         4,024
                                                                       
  Construction and acquisition
  expenditures -
    Electric                               99,543       84,720       154,902
    Gas                                    12,719       12,582        17,308
                                                                       
  Assets -                                                             
    Identifiable assets -                                              
      Electric                          1,347,024    1,288,505     1,226,614
      Gas                                 186,911      164,773       141,801
                                        1,533,935    1,453,278     1,368,415
    Other corporate assets                111,433       93,700        72,476
                                                                       
        Total consolidated assets    $  1,645,368  $ 1,546,978  $  1,440,891
MANAGEMENT'S DISCUSSION AND ANALYSIS
     OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION

      The following discussion analyzes significant changes in
the  components of net income and financial condition from the
prior  periods  for  IES Utilities Inc.  (Utilities)  and  its
consolidated    subsidiaries   (the   Company).     Utilities'
consolidated subsidiaries, IES Ventures Inc. and  IES  Midland
Development  Inc., were formed in December  1994  and  had  no
operations in 1994.

                     RESULTS OF OPERATIONS

      The  Company's  net income available  for  common  stock
decreased $6.8 million during 1994 and increased $23.5 million
during  1993.  The 1994 results were affected by  milder  than
normal  weather, particularly during the summer  months.   The
1993  results  reflect  Utilities'  acquisition  of  the  Iowa
service territory of Union Electric Company (UE) (as discussed
in  Note  2 of the Notes to Consolidated Financial Statements)
and  a  return to more normal weather conditions in Utilities'
service  territory from that experienced in  1992.   The  1992
results  were  adversely  affected by  extremely  cool  summer
weather and a mild winter in Utilities' service territory.

      The  Company's operating income decreased  $7.7  million
during  1994 and increased $43.0 million during 1993.  Reasons
for the changes in the results of operations are explained  in
the following discussion.

                       ELECTRIC REVENUES

      Electric  revenues and Kwh sales for Utilities increased
or (decreased) as compared with the prior year as follows:
 
                                                1994       1993
                                                ($ in millions)
                                         
Electric revenues                             $ (13.2)   $ 87.5
                                         
Electric sales (excluding off-system sales):
    Residential and Rural                        (1.4%)    17.1%
    Commercial                                   3.4%      17.4%
    Industrial                                   9.3%      40.6%
Total                                            4.3%      24.9%

     The 1994 Kwh sales were adversely affected by milder than
normal  weather, particularly during the summer  months.   The
largest  effect  of  weather was on sales to  residential  and
rural  customers.  Under normal weather conditions, 1994 sales
would  have  been  flat and total sales (excluding  off-system
sales)  would  have increased 4.8%, compared  to  1993  actual
sales.    The  growth  in  commercial  and  industrial   sales
continues to reflect the underlying strength of the economy as
several  major  industrial expansions  in  Utilities'  service
territory were announced in 1994.

       The  1993  sales  increases  are  attributable  to  the
acquisition  of the UE territory and a return to  more  normal
weather   conditions.   After  adjusting  for   these   items,
underlying  total electric sales (excluding off-system  sales)
increased  6% in 1993, which reflects the economic  growth  in
the industrial and commercial customer base.

      Utilities'  electric tariffs include  energy  adjustment
clauses (EAC) that are designed to currently recover the costs
of  fuel and the energy portion of purchased power billings to
customers.   See  Note  1(j)  of  the  Notes  to  Consolidated
Financial Statements for discussion of the EAC.

       The   decrease  in  the  1994  electric   revenues   is
attributable  to lower fuel costs collected through  the  EAC,
lower  off-system sales to other utilities and the  effect  of
the mix of sales between lower margin industrial customers and
higher  margin  residential  and rural  customers.   Increased
total sales (excluding off-system sales) partially offset  the
effects of the above items.  The increase in electric revenues
for  1993  is  primarily  because  of  the  higher  sales  and
increased recovery of fuel costs through the EAC.

      See  Note  3(a)  of the Notes to Consolidated  Financial
Statements  for a discussion of Utilities' 1994 electric  rate
case.

                         GAS REVENUES

      Utilities'  gas revenues decreased $15.3 million  during
1994  and  increased $14.9 million during 1993.  Gas sales  in
therms (including transported volumes), which also reflect the
effects of weather, decreased 2.7% in 1994 and increased  5.3%
in  1993.   Adjusting  for the effects of weather,  gas  sales
decreased 1.8% and 1.5% in 1994 and 1993, respectively.

      Utilities' gas tariffs include purchased gas  adjustment
clauses (PGA) that are designed to currently recover the  cost
of  gas  sold.   See  Note 1(j) of the Notes  to  Consolidated
Financial Statements for discussion of the PGA.

      Utilities'  gas  revenues decreased  in  1994  primarily
because of lower gas costs recovered through the PGA and, to a
lesser  extent, the effect of the lower sales.   Gas  revenues
increased in 1993 substantially because of increased costs  of
gas  recovered  through  the  PGA,  the  effect  of  gas  rate
increases  that  became effective in September  1992  and  the
sales increase.

                        OTHER REVENUES

      Other  revenues increased $0.1 million and $1.1  million
during 1994 and 1993, respectively, primarily due to increased
steam sales.

                      OPERATING EXPENSES

      Despite an increase in the amount of Kwh generation from
a year ago, fuel for production decreased $1.8 million in 1994
largely because of lower average fuel prices and the effect of
lower fuel cost recoveries through the EAC, which are included
in  fuel  for production. Generation at Utilities'  generating
stations  increased because of the increase  in  electric  Kwh
sales  and  because  of increased availability  of  Utilities'
nuclear  generating  station, the Duane Arnold  Energy  Center
(DAEC), which was down for part of 1993 because of a scheduled
refueling  outage.  There were refueling outages in  1993  and
1992,  but  no  such  outage  in 1994.   Fuel  for  production
increased   $14.3  million  in  1993  because   of   increased
availability of Utilities' fossil-fueled generating  stations,
which  experienced extended maintenance outages in  1992,  and
because of increased sales.

      Purchased power decreased $24.7 million in 1994  because
of  lower  off-system  sales  to  other  utilities,  increased
generation   at   Utilities'  generating  stations   and   the
expiration, in April 1993, of a purchase power agreement  with
the  City  of  Muscatine.   Purchased  power  increased  $18.7
million   in  1993,  of  which  approximately  $14.7   million
represents   increased  energy  purchases  and   approximately
$4.0  million  is  a  net increase in capacity  charges.   The
increase  in energy purchases is because of the increased  Kwh
sales.   The  increased capacity costs reflect  the  contracts
associated  with the acquisition of the UE service  territory,
partially  offset  by  the expiration of  the  purchase  power
agreement with the City of Muscatine.  (See Note 11(b) of  the
Notes to Consolidated Financial Statements).

      Gas purchased for resale decreased $13.8 million in 1994
because  of  lower gas costs and lower gas sales at Utilities.
Gas  purchased for resale increased $7.5 million  during  1993
primarily because of increased per unit gas costs at Utilities
and the increased sales.

      Other operating expenses increased $9.1 million and $3.6
million  in 1994 and 1993, respectively. The 1994 increase  is
primarily  attributable to increases  in  labor  and  benefits
costs, nuclear operating costs, former manufactured gas  plant
(FMGP)  clean-up  costs and information  technology  costs  at
Utilities.    The  1993  increase  is  primarily  because   of
increased labor and benefits costs and higher electric and gas
transmission and distribution costs, partially offset by lower
non-labor costs at the DAEC.

      Maintenance  expenses increased $3.3  million  and  $6.6
million  during 1994 and 1993, respectively. The 1994 increase
is  primarily because of increased labor costs and maintenance
at   the  DAEC,  partially  offset  by  lower  maintenance  at
Utilities'  fossil-fueled  generating  stations.    The   1993
increase  is  primarily  because of increased  maintenance  at
Utilities' fossil-fueled generating stations and the DAEC.

     Depreciation and amortization increased during both years
because of increases in utility plant in service and, in 1993,
the acquisition of the UE territory on December 31, 1992.   An
increase  in  the  average gas utility  property  depreciation
rate,  resulting  from  an  updated depreciation  study,  also
contributed   to   the   1993  increase.    Depreciation   and
amortization expenses for all years include $5.5  million  for
the DAEC decommissioning provision, which is collected through
rates.

     The staff of the Securities and Exchange Commission (SEC)
has questioned certain of the current accounting practices  of
the  electric  utility  industry  regarding  the  recognition,
measurement  and classification of decommissioning  costs  for
nuclear  generating  stations in the financial  statements  of
electric  utilities.   In  response to  these  questions,  the
Financial Accounting Standards Board has agreed to review  the
accounting  for removal costs, including decommissioning.   If
current  electric  utility industry accounting  practices  for
such  decommissioning are changed:  (1) annual provisions  for
decommissioning  could increase, (2) the  estimated  cost  for
decommissioning could be recorded as a liability  rather  than
as  accumulated depreciation, and (3) trust fund  income  from
the  external  decommissioning trusts  could  be  reported  as
investment   income   rather   than   as   a   reduction    to
decommissioning  expense.   If  such  changes  are   required,
Utilities  believes that there would not be an adverse  effect
on  its  financial position or results of operations based  on
current rate making practices.  (See Note 1(g) of the Notes to
Consolidated   Financial  Statements  for  a   discussion   of
Utilities'  proposal  for collection of decommissioning  costs
included in its current rate filing).

      Taxes other than income taxes increased $1.2 million and
$4.5  million  during  1994  and 1993,  respectively,  largely
because  of  increased property taxes.  The 1993  increase  is
related,  in  part,  to  the acquisition  of  the  UE  service
territory.

                  INTEREST EXPENSE AND OTHER

      Interest expense increased $1.4 million and $0.5 million
during  1994 and 1993, respectively, primarily because  of  an
increase  in  the  average  amount  of  debt  outstanding.   A
reduction  in  the average interest rate in 1993 substantially
offset the effect of the higher average outstanding debt.  The
lower  average  interest  rate  reflects  the  refinancing  of
certain  long-term debt issues at lower rates and  lower  cost
short-term borrowings outstanding for interim periods  between
the  redemption  of  certain long-term  debt  series  and  the
issuance of their long-term replacements.

      Federal and state income taxes were constant in 1994 and
increased  $17.2  million in 1993. A decrease in income before
income taxes in 1994 was offset by a higher effective income
tax rate (see Note 6 of the Notes to Consolidated Financial
Statements). The 1993 increase  results from  an increase in
taxable income and an increase of  1%  in the  Federal  statutory
income tax rate. Adjustments  of  $1.5 million, recorded in the
second quarter of 1992, to previously recorded tax reserves also
affected the comparability of  1993 with the prior period.

                         OTHER MATTERS

      The National Energy Policy Act of 1992 addresses several
matters  designed  to  promote  competition  in  the  electric
wholesale  power  generation market, including  mandated  open
access   to  the  electric  transmission  system  and  greater
encouragement    of   independent   power    production    and
cogeneration.  Although various states throughout the  country
are   currently   exploring   the  possibility   of   expanded
competition in the retail electric energy market, there is  no
significant activity underway in Iowa.

      The Company cannot predict the long-term consequences of
these  competitive  issues  on its results  of  operations  or
financial condition.  The Company's strategy for dealing  with
these  emerging  issues includes seeking growth opportunities,
continuing  to  offer quality customer service, on-going  cost
reductions   and  productivity  enhancements.    The   Company
recently initiated a major project to review and redesign  its
business  processes  with  the  primary  goals  being  reduced
operating  costs,  increased efficiency and enhanced  customer
service.

                LIQUIDITY AND CAPITAL RESOURCES

       The   Company's  capital  requirements  are   primarily
attributable to its construction programs, debt maturities and
sinking  fund  requirements.  The Company's pre-tax  ratio  of
earnings  to  fixed charges was 3.39, 3.64 and 2.71  in  1994-
1992,  respectively.   In  1994,  cash  flows  from  operating
activities were $195 million.  These funds were primarily used
for  construction  and  acquisition expenditures,  for  energy
efficiency program costs mandated by the Iowa Utilities  Board
(IUB) and to pay dividends.

      The Company anticipates that future capital requirements
will  be  met  by cash generated from operations and  external
financing.   The  level of cash generated from  operations  is
partially  dependent  upon  economic  conditions,  legislative
activities, environmental matters and timely rate  relief  for
Utilities.   (See Notes 3 and 11 of the Notes to  Consolidated
Financial Statements).

     Access to the long-term and short-term capital and credit
markets   is   necessary  for  obtaining   funds   externally.
Utilities' debt ratings are as follows:

                            Moody's       Standard & Poor's
                                         
      Long-term debt          A1                  A
      Short-term debt         P1                 A1

      Utilities'  liquidity  and  capital  resources  will  be
affected  by  environmental and legislative issues,  including
the ultimate disposition of remediation issues surrounding the
FMGP  issue, the Clean Air Act as amended, the National Energy
Policy  Act  of 1992 and Federal Energy Regulatory  Commission
(FERC)  Order  636, as discussed in Note 11 of  the  Notes  to
Consolidated  Financial  Statements.   Consistent  with   rate
making  principles  of the IUB, management believes  that  the
costs  incurred for the above matters will not have a material
adverse  effect  on  the  financial  position  or  results  of
operations of the Company.

      The  IUB  has  adopted rules which require Utilities  to
spend  2%  of electric and 1.5% of gas gross retail  operating
revenues  annually  for  energy efficiency  programs.   Energy
efficiency  costs in excess of the amount in the  most  recent
electric  and gas rate cases are being recorded as  regulatory
assets  by  Utilities.  At December 31,  1994,  Utilities  had
$35  million  of  such  costs recorded as  regulatory  assets.
Under  provisions of the IUB rules, Utilities made its initial
filing  for  recovery of the costs in August 1994.   See  Note
3(b)  of the Notes to Consolidated Financial Statements for  a
discussion of the filing.

             CONSTRUCTION AND ACQUISITION PROGRAM

       The  Company's  construction  and  acquisition  program
anticipates  expenditures of approximately  $163  million  for
1995,  of which approximately 32% represents expenditures  for
electric   transmission  and  distribution   facilities,   23%
represents   fossil-fueled   generation   expenditures,    15%
represents  expenditures for steam distribution plant  and  9%
represents nuclear generation expenditures.  The remaining 21%
represents    miscellaneous   electric,   gas   and    general
expenditures.   In  addition to the  $163  million,  Utilities
anticipates  expenditures of $13 million  in  connection  with
mandated  energy efficiency programs. Substantial  commitments
have been made in connection with all such expenditures.

      The  Company's  levels of construction  and  acquisition
expenditures  are projected to be $167 million in  1996,  $146
million  in  1997, $170 million in 1998 and  $182  million  in
1999.   It is estimated that approximately 80% of construction
expenditures   will  be  provided  by  cash   from   operating
activities  (after  payment of dividends)  for  the  five-year
period 1995-1999.

      Capital  expenditure and investment and financing  plans
are  subject  to  continual review  and  change.  The  capital
expenditure   and   investment   programs   may   be   revised
significantly  as  a  result of many considerations  including
changes in economic conditions, variations in actual sales and
load   growth   compared   to   forecasts,   requirements   of
environmental,  nuclear  and  other  regulatory   authorities,
acquisition  opportunities,  the  availability  of   alternate
energy  and  purchased power sources, the  ability  to  obtain
adequate  and  timely rate relief, escalations in construction
costs and conservation and energy efficiency programs.

                      LONG-TERM FINANCING

     Other than Utilities' periodic sinking fund requirements,
which   Utilities  intends  to  meet  by  pledging  additional
property,  approximately $174 million of long-term  debt  will
mature  prior  to December 31, 1999.  The Company  intends  to
refinance  the majority of the debt maturities with  long-term
securities.

      In  order  to provide an up-to-date instrument  for  the
issuance  of  bonds, notes or other evidence of  indebtedness,
Utilities has entered into an Indenture of Mortgage  and  Deed
of  Trust dated September 1, 1993 (New Mortgage).  The lien of
the  New  Mortgage  is subordinate to the lien  of  Utilities'
first mortgages until such time as all bonds issued under  the
first   mortgages  have  been  retired  and   such   mortgages
satisfied.   The  New Mortgage provides for  the  issuance  of
Collateral Trust Bonds upon the basis of, among other  things,
First  Mortgage Bonds being issued by Utilities.  Accordingly,
to  the extent that Utilities issues Collateral Trust Bonds on
the  basis  of First Mortgage Bonds, it must comply  with  the
requirements  for the issuance of First Mortgage  Bonds  under
Utilities'  first  mortgages.  Under  the  terms  of  the  New
Mortgage, Utilities has covenanted not to issue any additional
First  Mortgage  Bonds  under its first  mortgages  except  to
provide the basis for issuance of Collateral Trust Bonds.

      The  Indentures pursuant to which Utilities issues First
Mortgage  Bonds  constitute direct first mortgage  liens  upon
substantially all tangible public utility property and contain
covenants which restrict the amount of additional bonds  which
may  be issued.  At December 31, 1994, such restrictions would
have  allowed  Utilities to issue $320 million  of  additional
First Mortgage Bonds.  Utilities has received authority   from
the  FERC  to  issue  $250 million of long-term  debt  and  is
currently  authorized  by  the SEC to  issue  $50  million  of
long-term  debt  under  an  existing  registration  statement.
Utilities  expects  to replace two series  of  First  Mortgage
Bonds that mature in 1995 with other long-term securities.

      The Articles of Incorporation of Utilities authorize and
limit  the aggregate amount of additional shares of Cumulative
Preferred Stock and Cumulative Preference Stock which  may  be
issued.  At December 31, 1994, Utilities could have issued  an
additional 700,000 shares of Cumulative Preference  Stock  and
100,000 additional shares of Cumulative Preferred Stock.

      The Company's capitalization ratios at December 31, 1994
and 1993, were as follows:

               Long-term debt          48%
               Preferred stock          2
               Common equity           50
                                      100%

               The  1994 ratios include $100 million  of
        Utilities' First Mortgage Bonds maturing in 1995
        that  are  classified as a current liability  in
        the  Consolidated Balance Sheets, but which  are
        expected   to   be  refinanced  with   long-term
        securities.

                     SHORT-TERM FINANCING

      For  interim financing, Utilities is authorized  by  the
FERC  to issue, through 1996, up to $200 million of short-term
notes.   In addition to providing for ongoing working  capital
needs,  this  availability  of short-term  financing  provides
Utilities flexibility in the issuance of long-term securities.
At  December  31,  1994, Utilities had outstanding  short-term
borrowings of $55.5 million, including $18.5 million of  notes
payable to associated companies.

     Utilities has an agreement, which expires in 1999, with a
financial  institution  to  sell, with  limited  recourse,  an
undivided fractional interest of up to $65 million in its pool
of   utility  accounts  receivable.   At  December  31,  1994,
Utilities had sold $54 million under the agreement.

      At  December  31, 1994, the Company had  bank  lines  of
credit  aggregating $67.7 million, of which  $37  million  was
being  used  to  support  commercial paper  (weighted  average
interest  rate  of 6.13%) and $7.7 million was being  used  to
support  certain  pollution control  obligations.   Commitment
fees  are  paid  to  maintain these lines  and  there  are  no
conditions  which  restrict the unused lines  of  credit.   In
addition  to  the  above, Utilities has an uncommitted  credit
facility with a financial institution whereby it can borrow up
to $40 million.  Rates are set at the time of borrowing and no
fees    are    paid   to   maintain   this    facility.     At
December  31,  1994,  there  were  no  borrowings  under  this
facility.  Utilities also has a letter of credit in the amount
of  $3.4 million supporting two of its variable rate pollution
control obligations.

                     ENVIRONMENTAL MATTERS

      Utilities  has  been named as a Potentially  Responsible
Party (PRP) by either the Iowa Department of Natural Resources
(IDNR), the Minnesota Pollution Control Agency (MPCA)  or  the
United  States Environmental Protection Agency  (EPA)  for  28
FMGP sites.  Utilities believes that it is not responsible for
two  of  the  sites  for which it has been designated  a  PRP.
Utilities has another FMGP site for which it has not yet  been
formally  designated as a PRP.  Utilities is working  pursuant
to  the requirements of the IDNR, MPCA and EPA to investigate,
mitigate,  prevent and remediate, where necessary,  damage  to
property, including damage to natural resources, at and around
the  remaining 27 sites in order to protect public health  and
the  environment.  In addition, Utilities has recently  become
aware that two additional sites may exist, but it has not  yet
been able to determine if any liability may exist.

      Utilities  has completed the remediation of three  sites
and   is   in  various  stages  of  the  investigation  and/or
remediation processes for 22 sites.  The investigation process
is scheduled to begin in 1995 or 1996 for the two other sites.
In 1994, Utilities received updated investigation reports on a
number  of  sites, which, at some sites, indicated  a  greater
volume  of contaminated soil, surface and ground water needing
treatment, and a greater volume of substances requiring higher
cost  incineration, than was anticipated in  prior  estimates.
It is possible that future cost estimates will be greater than
the  current  estimates as the investigation process  proceeds
and as additional facts become known.

      Utilities has recorded environmental liabilities related
to  the  FMGP sites of $31 million (including $4.3 million  as
current liabilities) at December 31, 1994.  These amounts  are
based  upon Utilities' best current estimate of the amount  to
be  incurred for investigation and remediation costs for those
sites   where  the  investigation  process  has  been  or   is
substantially   completed.   For   those   sites   where   the
investigation is in its earlier stages or has not started, the
liability represents the minimum of the estimated cost  range.
All  investigations are expected to be completed by  1999  and
site-specific remediations, based on recommendations from  the
IDNR,  MPCA  and  EPA, are anticipated to be completed  within
three years after the completion of the investigations of each
site.  Utilities may be required to monitor these sites for  a
number of years upon completion of remediation, as is the case
with the three sites for which remediation has been completed.

      Utilities has begun pursuing coverage for investigation,
mitigation, prevention, remediation and monitoring costs  from
its  insurance carriers and is investigating the potential for
third  party cost sharing for FMGP investigation and  clean-up
costs.   The  amount  of shared costs,  if  any,  can  not  be
reasonably  determined and, accordingly, no potential  sharing
has been recorded at December 31, 1994.  Regulatory assets  of
$31.0  million have been recorded in the Consolidated  Balance
Sheets,  which  reflect  the future  recovery  that  is  being
provided  through  Utilities'  rates.   Considering  the  rate
treatment  allowed  by the IUB, management believes  that  the
clean-up costs incurred by Utilities for these FMGP sites will
not  have  a material adverse effect on its financial position
or results of operations.

      The  Clean Air Act Amendments Act of 1990 (Act) requires
emission  reductions of sulfur dioxide and nitrogen oxides  to
achieve reductions of atmospheric chemicals believed to  cause
acid  rain.  The provisions of the Act will be implemented  in
two  phases  with  Phase I affecting two of  Utilities'  units
beginning  in 1995 and Phase II affecting all units  beginning
in  the  year 2000.  Utilities is in the process of completing
the modifications necessary to meet the Phase I requirements.

     Utilities expects to meet the requirements of Phase II by
switching   to   lower  sulfur  fuels  and   through   capital
expenditures  primarily related to fuel burning equipment  and
boiler    modifications.     Utilities    estimates    capital
expenditures  at approximately $22.5 million,  including  $4.4
million in 1995, in order to meet the requirements of the Act.

     The National Energy Policy Act of 1992 requires owners of
nuclear  power  plants  to  pay a special  assessment  into  a
"Uranium Enrichment Decontamination and Decommissioning Fund."
The assessment is based upon prior nuclear fuel purchases and,
for the DAEC, averages $1.4 million annually through 2007,  of
which  Utilities'  70%  share is $1.0 million.   Utilities  is
recovering  the costs associated with this assessment  through
its electric fuel adjustment clauses over the period the costs
are  assessed.  Utilities' 70% share of the future assessment,
$12.0  million  payable through 2007, has been recorded  as  a
liability   in  the  Consolidated  Balance  Sheets,  including
$0.8  million included in "Current liabilities - Environmental
liabilities,"  with  a  related  regulatory  asset   for   the
unrecovered amount.

       The   Nuclear   Waste  Policy  Act  of  1982   assigned
responsibility  to  the U.S. Department  of  Energy  (DOE)  to
establish  a  facility for the ultimate  disposition  of  high
level  waste and spent nuclear fuel and authorized the DOE  to
enter  into  contracts with parties for the disposal  of  such
material  beginning in January 1998.  Utilities  entered  into
such a contract and has made the agreed payments to DOE.   The
DOE,  however,  has  experienced  significant  delays  in  its
efforts  and material acceptance is now expected to  occur  no
earlier  than 2010.  Utilities has been storing spent  nuclear
fuel  on-site  since plant operations began in  1974  and  has
current  on-site  capability to store spent fuel  until  2002.
Utilities  is  aggressively reviewing options  for  additional
spent nuclear fuel storage capability, including expanding on-
site  storage, pursuing other off-site storage and  supporting
legislation to resolve the lack of progress by the DOE.

      The Low-Level Radioactive Waste Policy Amendments Act of
1985 mandated that each state must take responsibility for the
storage  of  low-level radioactive waste produced  within  its
borders.   The State of Iowa has joined the Midwest Interstate
Low-Level  Radioactive  Waste  Compact  Commission  (Compact),
which is planning a storage facility to be located in Ohio  to
store waste generated by the Compact's six member states.   At
December   31,   1994,   Utilities  has   prepaid   costs   of
approximately $1 million  to the Compact  for the building  of
such  a  facility.  Currently, Utilities is storing  its  low-
level  radioactive waste generated at the DAEC  on-site  until
new  disposal  arrangements are finalized  among  the  Compact
members. A  Compact disposal facility is anticipated to be  in
operation   in  approximately  ten  years.   On-site   storage
capability  currently exists for low-level  radioactive  waste
expected to be generated until the Compact facility is able to
accept waste materials.

      The  possibility that exposure to electric and  magnetic
fields  emanating from power lines, household  appliances  and
other  electric  sources may result in adverse health  effects
has  been  the  subject of increased public, governmental  and
media attention.  A considerable amount of scientific research
has  been  conducted on this topic without definitive results.
Research   is  continuing  in  order  to  resolve   scientific
uncertainties.

                     EFFECTS OF INFLATION

      Under  the  rate  making principles  prescribed  by  the
regulatory commissions to which Utilities is subject, only the
historical  cost  of  plant  is  recoverable  in  revenues  as
depreciation.  As a result, Utilities has experienced economic
losses equivalent to the current year's impact of inflation on
utility plant.

     In addition, the regulatory process imposes a substantial
time lag between the time when operating and capital costs are
incurred  and  when  they are recovered.  Utilities  does  not
expect  the effects of inflation at current levels to  have  a
significant effect on its results of operations.
Selected Consolidated Quarterly Financial Data (unaudited)

      The following unaudited consolidated quarterly data,  in
the  opinion of the Company, includes adjustments,  which  are
normal  and  recurring  in  nature,  necessary  for  the  fair
presentation  of  the  results  of  operations  and  financial
position.   The  quarterly amounts were affected  by  seasonal
weather conditions.  In addition, increased operating expenses
in  the fourth quarter of 1994 affected the comparability   of
the fourth quarter amounts.
 

                                              Quarter Ended
                              March        June     September     December
                                31          30          30           31
                                             (in thousands)
1994                                                            
  Operating revenues       $ 192,013   $  148,019  $  179,477  $   165,857
  Operating income            34,248       24,777      51,777       24,789
  Net income                  14,944        9,255      25,733       11,278
  Net income available
    for common stock          14,715        9,026      25,504       11,051
                                                                
1993                                                            
  Operating revenues       $ 193,785   $  148,919  $  187,392  $   183,654
  Operating income            32,974       24,523      54,497       31,335
  Net income                  14,423       10,491      26,214       16,842
  Net income available                                                   
    for common stock          14,194       10,262      25,985       16,615

      Prior period operating income figures have been restated
on  a  basis consistent with the current presentation  as  the
income  statement  format  was revised  as  a  result  of  the
formation   in   December   1994  of  Utilities'   non-utility
subsidiaries,  IES  Ventures Inc. and IES Midland  Development
Inc.