UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q

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

         For Quarterly Period Ended June 30, 2002

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

         For The Transition Period From              to

                         Commission file number 1-14756.

                               AMEREN CORPORATION
             (Exact name of registrant as specified in its charter)

                    Missouri                                     43-1723446
         (State or other jurisdiction of                      (I.R.S. Employer
         incorporation or organization)                      Identification No.)


                 1901 Chouteau Avenue, St. Louis, Missouri 63103
              (Address of principal executive offices and Zip Code)


                         Registrant's telephone number,
                       including area code: (314) 621-3222

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.


                        Yes       X        .       No              .
                            ---------------          -------------


Shares outstanding of each of registrant's  classes of common stock as of August
9, 2002: Common Stock, $.01 par value - 144,946,829




                               AMEREN CORPORATION

                                      INDEX


                                                                        Page
                                                                        ----
PART I.       Financial Information

    ITEM 1.   Financial Statements (Unaudited)
              Consolidated Balance Sheet at June 30, 2002 and
              December 31, 2001.........................................  2
              Consolidated Statement of Income for the three and
              six months ended June 30, 2002 and 2001...................  3
              Consolidated Statement of Cash Flows for the
              six months ended June 30, 2002 and 2001...................  4
              Consolidated Statement of Common Stockholders' Equity
              for the three and six months ended June 30, 2002
              and 2001..................................................  5
              Notes to Consolidated Financial Statements................  6

    ITEM 2.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations....................... 14

    ITEM 3.   Quantitative and Qualitative Disclosures About
              Market Risk............................................... 23

PART II.      Other Information

    ITEM 1.   Legal Proceedings......................................... 26

    ITEM 4.   Submission of Matters to a Vote of Security Holders....... 27

    ITEM 5.   Other Information......................................... 27

    ITEM 6.   Exhibits and Reports on Form 8-K.......................... 28

SIGNATURE............................................................... 30


PART I.   FINANCIAL INFORMATION
ITEM 1.  Financial Statements


                                AMEREN CORPORATION
                            CONSOLIDATED BALANCE SHEET
                (Unaudited, in millions, except per share amounts)
                                                         June 30,   December 31,
                                                           2002        2001
                                                        ---------   ------------
                                                               
ASSETS:
Property and plant, at original cost:
   Electric                                               $ 14,093    $ 13,664
   Gas                                                         545         532
   Other                                                       143         105
                                                          --------    --------
                                                            14,781      14,301
   Less accumulated depreciation and amortization            6,708       6,535
                                                          --------    --------
                                                             8,073       7,766
Construction work in progress:
   Nuclear fuel in process                                     114          97
   Other                                                       437         564
                                                          --------    --------
         Total property and plant, net                       8,624       8,427
                                                          --------    --------
Investments and other assets:
   Investments                                                  38          39
   Nuclear decommissioning trust fund                          175         187
   Other                                                       160         114
                                                          --------    --------
         Total investments and other assets                    373         340
                                                          --------    --------
Current assets:
   Cash and cash equivalents                                   150          67
   Accounts receivable - trade (less allowance for
     doubtful accounts of $11 and $9, respectively)            272         218
   Unbilled revenue                                            233         171
   Other accounts and notes receivable                          29          71
   Materials and supplies, at average cost -
      Fossil fuel                                              133         159
      Other                                                    130         136
   Other                                                        29          41
                                                          --------    --------
         Total current assets                                  976         863
                                                          --------    --------
Regulatory assets:
   Deferred income taxes                                       579         604
   Other                                                       158         167
                                                          --------    --------
         Total regulatory assets                               737         771
                                                          --------    --------
Total Assets                                              $ 10,710    $ 10,401
                                                          ========    ========
CAPITAL AND LIABILITIES:
Capitalization:
   Common stock, $.01 par value, 400.0 shares
     authorized - shares outstanding of 144.8 and
     138.0, respectively                                  $      1    $      1
   Other paid-in capital, principally premium on
     common stock                                            1,826       1,614
   Retained earnings                                         1,725       1,733
   Accumulated other comprehensive income                        3           5
   Other                                                       (10)         (4)
                                                          --------    --------
      Total common stockholders' equity                      3,545       3,349
                                                          --------    --------
   Preferred stock not subject to mandatory redemption         235         235
   Long-term debt                                            3,509       2,835
                                                          --------    --------
         Total capitalization                                7,289       6,419
                                                          --------    --------
Minority interest in consolidated subsidiaries                  13           4
Current liabilities:
   Current maturities of long-term debt                        185         139
   Short-term debt                                               4         641
   Accounts and wages payable                                  253         392
   Accumulated deferred income taxes                            56          58
   Taxes accrued                                               239         132
   Other                                                       252         219
                                                          --------    --------
         Total current liabilities                             989       1,581
                                                          --------    --------
Accumulated deferred income taxes                            1,534       1,563
Accumulated deferred investment tax credits                    154         158
Regulatory liabilities                                         170         172
Other deferred credits and liabilities                         561         504
                                                          --------    --------
Total Capital and Liabilities                             $ 10,710    $ 10,401
                                                          ========    ========
See Notes to Consolidated Financial Statements.




                       AMEREN CORPORATION
                CONSOLIDATED STATEMENT OF INCOME
       (Unaudited, in millions, except per share amounts)

                                                         Three Months Ended    Six Months Ended
                                                               June 30,            June 30,
                                                         ------------------     ----------------
                                                           2002       2001       2002       2001
                                                                             
OPERATING REVENUES:
 Electric                                                $ 1,058    $ 1,026    $ 2,042    $ 1,861
 Gas                                                          47         29        172        215
 Other                                                         6          2         12          5
                                                         --------   --------   --------   --------
   Total operating revenues                                1,111      1,057      2,226      2,081
                                                         --------   --------   --------   --------
OPERATING EXPENSES:
 Operations
  Fuel and purchased power                                   326        366        766        669
  Gas                                                         27         15        112        151
  Other                                                      203        179        385        345
                                                         --------   --------   --------   --------
                                                             556        560      1,263      1,165
 Maintenance                                                 103        130        187        218
 Depreciation and amortization                               106        101        213        199
 Income taxes                                                 73         61        111        110
 Other taxes                                                  69         60        137        128
                                                         --------   --------   --------   --------
   Total operating expenses                                  907        912      1,911      1,820
                                                         --------   --------   --------   --------

OPERATING INCOME                                             204        145        315        261

OTHER INCOME AND (DEDUCTIONS):
 Allowance for equity funds used during construction           -          2          2          4
 Miscellaneous, net -
  Miscellaneous income                                         5          2          8          4
  Miscellaneous expense                                      (39)        (5)       (43)        (8)
                                                         --------   --------   --------   --------
   Total other income and (deductions)                       (34)        (1)       (33)         -
                                                         --------   --------   --------   --------

INTEREST CHARGES AND PREFERRED DIVIDENDS:
 Interest                                                     53         48        105         98
 Allowance for borrowed funds used during construction        (1)        (2)        (3)        (3)
 Preferred dividends of subsidiaries                           3          3          6          6
                                                         --------   --------   --------   --------
   Net interest charges and preferred dividends               55         49        108        101
                                                         --------   --------   --------   --------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE                                      115         95        174        160

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
   PRINCIPLE, NET OF INCOME TAXES                              -          -          -         (7)
                                                         --------   --------   --------   --------

NET INCOME                                               $   115    $    95    $   174    $   153
                                                         ========   ========   ========   ========

EARNINGS PER COMMON SHARE - BASIC AND DILUTED:
 Income before cumulative effect of change
    in accounting principle                              $  0.80    $  0.69    $  1.22    $  1.17
 Cumulative effect of change in accounting
    principle, net of income taxes                          --         --         --        (0.05)
                                                         --------   --------   --------   --------
 Earnings per Common Share - Basic and Diluted           $  0.80    $  0.69    $  1.22    $  1.12
                                                         ========   ========   ========   ========

AVERAGE COMMON SHARES OUTSTANDING                          144.4      137.2      142.1      137.2

See Notes to Consolidated Financial Statements.

                                       3



                             AMEREN CORPORATION
                    CONSOLIDATED STATEMENT OF CASH FLOWS
                          (Unaudited, in millions)

                                                           Six Months Ended
                                                                June 30,
                                                           ----------------
                                                             2002     2001
                                                              
Cash Flows From Operating:
   Net income                                               $ 174    $ 153
   Adjustments to reconcile net income to net cash
    provided by operating activities:
      Cumulative effect of change in accounting principle       -        7
      Depreciation and amortization                           213      199
      Amortization of nuclear fuel                             16       12
      Amortization of debt issuance costs and
        premium/discounts                                       4        3
      Allowance for funds used during construction             (5)      (7)
      Deferred income taxes, net                               (6)      12
      Deferred investment tax credits, net                     (4)      (2)
      Other                                                     -      (12)
      Changes in assets and liabilities:
         Receivables, net                                     (74)      (7)
         Materials and supplies                                32      (41)
         Accounts and wages payable                          (139)    (148)
         Taxes accrued                                        107       78
         Assets, other                                        (12)     (12)
         Liabilities, other                                    40      (23)
                                                            ------   ------
Net cash provided by operating activities                     346      212
                                                            ------   ------

Cash Flows From Investing:
   Construction expenditures                                 (401)    (539)
   Allowance for funds used during construction                 5        7
   Nuclear fuel expenditures                                  (16)     (12)
   Other                                                        1        -
                                                            ------   ------
Net cash used in investing activities                        (411)    (544)
                                                            ------   ------

Cash Flows From Financing:
   Dividends on common stock                                 (182)    (174)
   Capital issuance costs                                     (23)       -
   Redemptions:
      Nuclear fuel lease                                        -      (64)
      Short-term debt                                        (637)       -
      Long-term debt                                           (5)     (25)
   Issuances:
      Common stock                                            269        -
      Nuclear fuel lease                                        6        2
      Short-term debt                                           -      244
      Long-term debt                                          720      296
                                                            ------   ------
Net cash provided by financing activities                     148      279
                                                            ------   ------
Net change in cash and cash equivalents                        83      (53)
Cash and cash equivalents at beginning of year                 67      126
                                                            ------   ------
Cash and cash equivalents at end of period                  $ 150    $  73
                                                            ======   ======

Cash paid during the periods:
   Interest                                                 $  99    $  95
   Income taxes, net                                           77       67

See Notes to Consolidated Financial Statements.


                                       4




                           AMEREN CORPORATION
          CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY
                        (Unaudited, in millions)

                                                           Three Months Ended    Six Months Ended
                                                                June 30,             June 30,
                                                           -------------------   ------------------
                                                             2002       2001       2002       2001
                                                                               
Common stock                                               $     1    $     1    $     1    $     1

Other paid-in capital
   Beginning balance                                         1,804      1,581      1,614      1,581
   Shares issued (less issuance costs of
    $ -, $ -, $9, and $ -, respectively)                        23          -        260          -
   Contracted stock purchase payment obligations                 -          -        (46)         -
   Employee stock awards                                        (1)         -         (2)         -
                                                           --------   --------   --------   --------
                                                             1,826      1,581      1,826      1,581
                                                           --------   --------   --------   --------

Retained earnings
   Beginning balance                                         1,701      1,585      1,733      1,614
   Net income                                                  115         95        174        153
   Dividends                                                   (91)       (87)      (182)      (174)
                                                           --------   --------   --------   --------
                                                             1,725      1,593      1,725      1,593
                                                           --------   --------   --------   --------

Accumulated other comprehensive income
   Beginning balance                                             -         (4)         5          -
   Change in current period (see below)                          3         (2)        (2)        (6)
                                                           --------   --------   --------   --------
                                                                 3         (6)         3         (6)
                                                           --------   --------   --------   --------
Other
   Beginning balance                                           (10)        (5)        (4)         -
   Restricted stock compensation awards                          -          -         (7)        (5)
   Compensation amortized and mark-to-market adjustments         -          -          1          -
                                                           --------    -------   --------   --------
                                                               (10)        (5)       (10)        (5)
                                                           --------    -------   --------   --------

Total common stockholders' equity                          $ 3,545    $ 3,164    $ 3,545    $ 3,164
                                                           ========   ========   ========   ========

Comprehensive income, net of taxes
   Net income                                              $   115    $    95    $   174    $   153
   Unrealized net gain/(loss) on derivative hedging
     instruments (net of income taxes of $1, $(2),
     $1 and $(2), respectively)                                  2         (4)         1         (3)
   Reclassification adjustments for gains/losses
     included in net income (net of income taxes of
     $ -, $1, $(2) and $6, respectively)                         1          2         (3)         8
   Cumulative effect of accounting change, net of
    income taxes of $(7)                                         -          -          -        (11)
                                                           --------   --------   --------   --------
           Total comprehensive income, net of taxes        $   118    $    93    $   172    $   147
                                                           ========   ========   ========   ========


Common stock shares at beginning of period                   144.2      137.2      138.0      137.2
   Shares issued for financing purposes                          -          -        5.8          -
   Shares issued for dividend reinvestment and stock
   purchase plan and 401K plans                                0.6          -        1.0          -
                                                           --------   --------   --------   --------
Common stock shares at end of period                         144.8      137.2      144.8      137.2
                                                           ========   ========   ========   ========

See Notes to Consolidated Financial Statements.

                                       5

AMEREN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2002


NOTE 1 - Summary of Significant Accounting Policies

Basis of Presentation

     Our financial  statements  reflect all  adjustments  (which include normal,
recurring adjustments) necessary, in our opinion, for a fair presentation of the
interim  results.  These  statements  should  be read in  conjunction  with  the
financial statements and the notes thereto included in our 2001 Annual Report on
Form 10-K.

     When we  refer  to  Ameren,  our,  we or us,  we are  referring  to  Ameren
Corporation on a consolidated basis. In certain circumstances,  our subsidiaries
are  specifically  referenced  in order to  distinguish  among  their  different
business  activities.  All dollar  amounts  are in  millions,  unless  otherwise
indicated.

Earnings  Per Share

     There was no  difference  between the basic and diluted  earnings per share
amounts for the three and six month  periods  ended June 30, 2002 and 2001.  The
reconciling  item in each of the periods was assumed  stock option  conversions,
which  increased the number of shares  outstanding  in the diluted  earnings per
share  calculation  by 355,420  shares for the three  months ended June 30, 2002
(2001 - 401,938) and 353,607 shares for the six months ended June 30, 2002 (2001
- 366,650).

Accounting Changes

     In January 2001,  we adopted  Statement of Financial  Accounting  Standards
(SFAS) No. 133, "Accounting for Derivative  Instruments and Hedging Activities."
The  impact  of that  adoption  resulted  in a  cumulative  effect  charge of $7
million,  after  taxes,  to  the  income  statement,  and  a  cumulative  effect
adjustment of $11 million after taxes to Accumulated Other Comprehensive  Income
(OCI), which reduced common stockholders' equity.

     On January 1, 2002, we adopted SFAS No. 141,  "Business  Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS 141 requires business
combinations to be accounted for under the purchase method of accounting,  which
requires  one  party  in the  transaction  to be  identified  as  the  acquiring
enterprise  and for that party to allocate the purchase  price to the assets and
liabilities  of the acquired  enterprise  based on fair market  value.  SFAS 142
requires  goodwill  and  indefinite  lived  intangible  assets  recorded  in the
financial statements to be tested for impairment at least annually,  rather than
amortized over a fixed period,  with  impairment  losses  recorded in the income
statement.  SFAS  141 and SFAS 142 did not  have  any  effect  on our  financial
position,  results of operations or liquidity  upon  adoption.  SFAS No. 141 and
SFAS No. 142 will be utilized for our acquisition of CILCORP Inc. and AES Medina
Valley (No. 4), L.L.C. See Note 7 - "CILCORP Acquisition."

     In July 2001, SFAS No. 143,  "Accounting for Asset Retirement  Obligations"
was issued.  SFAS 143 requires an entity to record a liability and corresponding
asset  representing the present value of legal  obligations  associated with the
retirement of tangible,  long-lived assets.  SFAS 143 is effective for Ameren on
January 1, 2003.  At this time,  we are  assessing the impact of SFAS 143 on our
financial position, results of operations and liquidity upon adoption.  However,
as a result of this new standard we expect significant increases to our reported
assets and liabilities,  including those resulting from  obligations  associated
with  our  Callaway  nuclear  plant's   decommissioning   costs  and  associated
regulatory  rate cost  recovery  at our  regulated  subsidiary,  Union  Electric
Company, known as AmerenUE.

     On January 1, 2002 we adopted SFAS No. 144,  "Accounting for the Impairment
or Disposal of Long-Lived  Assets." SFAS 144 addresses the financial  accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." SFAS 144 retains the guidance  related to calculating
and  recording  impairment  losses,  but adds  guidance  on the  accounting  for
discontinued  operations,  previously


                                       6


accounted  for under  Accounting  Principles  Board  Opinion No. 30. We evaluate
long-lived  assets  for  impairment  when  events or  changes  in  circumstances
indicate  that the  carrying  value of such assets may not be  recoverable.  The
determination  of whether  impairment  has  occurred  is based on an estimate of
undiscounted  cash  flows  attributable  to the  assets,  as  compared  with the
carrying  value of the assets.  If impairment  has  occurred,  the amount of the
impairment  recognized is determined by estimating  the fair value of the assets
and  recording a provision  for loss if the  carrying  value is greater than the
fair value. SFAS 144 did not have any effect on our financial position,  results
of operations or liquidity upon adoption.

     Historically,  our  accounting  practice was to present all settled  energy
purchase or sale contracts  within our power risk management  program on a gross
basis in Operating  Revenues - Electric and in Operating Expenses - Operations -
Fuel and Purchased Power in our income statement.  This means that revenues were
recorded  for  the  notional   amount  of  the  power  sale   contracts  with  a
corresponding  charge  to  income  for the  cost of the  energy  that  has  been
generated  or for the notional  amount of a purchased  power  contract.  In June
2002,  the  Emerging  Issues Task Force (or EITF)  reached a consensus  in Issue
02-03,  "Accounting for Contracts Involved in Energy Trading and Risk Management
Activities," that certain energy contracts should be shown on a net basis in the
income  statement.  The  consensus  on this  issue is  applicable  to  financial
statements for periods ending after July 15, 2002, with a requirement to conform
prior  periods  to this  presentation.  As a  result  of the  EITF's  accounting
guidance and other  factors that exist within our industry,  beginning  with the
period  ending  September 30, 2002,  we will change our  accounting  practice to
present, on a net basis in our income statement,  all contracts within our power
risk management  program that have been net settled.  All prior periods included
in our  prospective  financial  statements  will be reclassified to reflect this
change in accounting  practice.  We are still in the process of  evaluating  the
impact of this change to our income  statement,  but our revenues and  operating
expenses will be reduced in future  periods with no impact on our earnings.  See
Note 3 - "Derivative Financial Instruments" for additional information.

Interchange Revenues

     Interchange  revenues  included in Operating  Revenues - Electric were $174
million for the three months ended June 30, 2002 (2001 - $211  million) and $476
million for the six months ended June 30, 2002 (2001 - $391 million).

Purchased Power

     Purchased  power  included in  Operating  Expenses,  Operations  - Fuel and
Purchased  Power was $158 million for the three months ended June 30, 2002 (2001
- $225  million) and $441 million for the six months ended June 30, 2002 (2001 -
$375 million).

Excise Taxes

     Excise taxes on Missouri  electric and gas, and Illinois gas customer bills
are imposed on us and are recorded gross in Operating  Revenues and Other Taxes.
Excise taxes applicable to Illinois  electric  customer bills are imposed on the
consumer and are recorded as tax collections  payable.  Excise taxes recorded in
Operating  Revenues  and Other Taxes for the three and six months ended June 30,
2002 were $30 million  (2001- $26 million) and $56 million (2001 - $53 million),
respectively.


NOTE 2 - Rate and Regulatory Matters

Missouri Electric

     From July 1, 1995 through June 30, 2001, our subsidiary, AmerenUE, operated
under  experimental  alternative  regulation plans in Missouri that provided for
the  sharing of  earnings  with  customers  if our  regulatory  return on equity
exceeded defined threshold  levels.  After AmerenUE's  experimental  alternative
regulation plan for its Missouri retail electric customers expired, the Missouri
Public  Service  Commission  (MoPSC)  Staff filed an excess  earnings  complaint
against  AmerenUE  with the MoPSC in July 2001.  In March 2002,  the MoPSC Staff
filed a  recommendation  that  AmerenUE  reduce  its  annual  Missouri  electric
revenues by $246 million to $285 million.  The MoPSC Staff's  recommendation was
based on a return to

                                       7



traditional cost of service ratemaking, a lowered return on
equity,  a  reduction  in our  depreciation  rates  and  other  cost of  service
adjustments.  In May 2002, we filed  testimony  supporting a rate increase of at
least $150 million and proposed a new alternative  regulation plan that included
a rate decrease.

     On July 16, 2002, AmerenUE, the MoPSC Staff and all of the other parties to
the proceeding submitted to the MoPSC a stipulation and agreement resolving this
case.  On July 24,  2002,  the  MoPSC  held a  hearing  on the  stipulation  and
agreement.  On July 25, 2002, the MoPSC approved the  stipulation and agreement,
and on August 4,  2002,  it became  effective.  The  stipulation  and  agreement
includes the following principal features:

     o    the phase-in of $110 million of electric rate reductions through April
          2004, $50 million of which is  retroactively  effective as of April 1,
          2002, $30 million of which will become effective on April 1, 2003, and
          $30 million of which will become effective on April 1, 2004,
     o    a rate moratorium  providing for no requests for changes in AmerenUE's
          electric rates as established by the stipulation and agreement  before
          January  1, 2006 and no  resulting  changes in rates  before  June 30,
          2006, subject to certain statutory and other exceptions,
     o    a commitment to contribute as early as September  2002, $14 million to
          programs  for  low  income  energy   assistance  and   weatherization,
          promotion of energy efficiency and economic  development in AmerenUE's
          service  territory,  with  additional  payments  of  $3  million  made
          annually on June 30, 2003 through June 30, 2006,
     o    a commitment to make $2.25 billion to $2.75 billion in critical energy
          infrastructure investments from January 1, 2002 through June 30, 2006,
          including, among other things, the addition of more than 700 megawatts
          of new generation  capacity and the replacement of steam generators at
          AmerenUE's  nuclear power plant.  The 700 megawatts of new  generation
          includes  240  megawatts  already  added this year and may include the
          transfer at book value to AmerenUE of generation assets from our other
          non-regulated  subsidiaries.   The  amount  of  energy  infrastructure
          investment   through  June  2006  described  in  the  stipulation  and
          agreement is consistent with our previously-disclosed  estimate of the
          construction expenditures we expect to make over the same time period,
     o    an annual reduction in AmerenUE's  depreciation  rates by $20 million,
          retroactive  to April 1, 2002,  based on an updated  analysis of asset
          values, service lives and accumulated depreciation levels, and
     o    a one-time  credit of $40  million to be paid to our  Missouri  retail
          electric customers as early as August 2002 for settlement of the final
          sharing period under the alternative regulation plan that expired June
          30,  2001.  At June 30,  2002,  we had  accrued $40 million in Current
          Liabilities - Other.

     In total,  the  stipulation  and  agreement is estimated to reduce 2002 net
earnings by $32 million,  or 22 cents per share. Net earnings are expected to be
reduced in 2002 due to the rate  reduction  ($26  million,  net of taxes,  or 18
cents per share, including $8 million, net of taxes, or 6 cents per share in the
quarter ended June 30,  2002),  the expensing in the quarter ended June 30, 2002
of the entire obligation to fund certain programs ($15 million, net of taxes, or
10 cents per share),  offset, in part, by the reduction in depreciation  expense
($9  million,  net of taxes,  6 cents per share,  including  $3 million,  net of
taxes,  or 2 cents per share in the quarter ended June 30,  2002).  Net earnings
were reduced by $20 million, or 14 cents per share in the quarter ended June 30,
2002 due to the stipulation  and agreement.  We expect earnings to be reduced by
$9 million  (6 cents per  share) in the third  quarter of 2002 and $3 million (2
cents per share) in the fourth quarter of 2002.

     In order to  satisfy  AmerenUE's  regulatory  load  requirements  for 2001,
AmerenUE  purchased,  under a one year  contract,  450 megawatts of capacity and
energy  from  another  of  our  subsidiaries,   AmerenEnergy  Marketing  Company
(Marketing  Company) (the 2001  Marketing  Company - AmerenUE  agreement).  This
agreement was entered into through a competitive  bidding  process and reflected
market-based  rates.  For  2002,  AmerenUE  similarly  entered  into a one  year
contract  with  Marketing  Company for the purchase of 200 megawatts of capacity
and  energy  (the 2002  Marketing  Company - AmerenUE  agreement).  For the four
summer months of 2002, AmerenUE also entered into contracts with two other power
suppliers for an aggregate 200 megawatts of additional capacity and energy.

     In May 2001,  the MoPSC filed a complaint  with the Securities and Exchange
Commission  (SEC) relating to the 2001 Marketing  Company - AmerenUE  agreement.
The  complaint  requested an  investigation  into the  contractual  relationship
between  AmerenUE,   Marketing  Company  and  AmerenEnergy   Generating  Company
(Generating Company), also our subsidiary,  in the context of the

                                       8



2001 Marketing Company - AmerenUE  agreement and requests that the SEC find that
such relationship violates a provision of the Public Utility Holding Company Act
of 1935 (or PUHCA),  which requires state utility  commission  approval of power
sales contracts  between an electric utility company and an affiliated  electric
wholesale  generator,  like  Generating  Company.  We believe  that the  MoPSC's
approval  of the power  sales  agreement  under  PUHCA is not  required  because
Generating  Company  is not a party to the  agreement.  As a  remedy,  the MoPSC
proposes  that the SEC require  AmerenUE to contract  directly  with  Generating
Company and submit such  contract to the MoPSC for review.  On May 9, 2002,  the
MoPSC filed a similar  complaint  with the SEC  relating  to the 2002  Marketing
Company - AmerenUE agreement. The SEC is investigating these matters. Also, with
respect to the 2002 Marketing Company - AmerenUE agreement, on May 31, 2002, the
Federal Energy Regulatory  Commission (FERC) accepted the agreement,  subject to
refund,  and  scheduled  the  matter  for a January  2003  hearing to assess the
appropriateness  of the rates  charged.  At this time,  management  is unable to
predict the outcome of these  proceedings  or the ultimate  impact on our future
financial position, results of operations or liquidity.

Illinois

     In December 1997, the Electric  Service Customer Choice and Rate Relief Law
of  1997  (the  Illinois  Law)  was  enacted   providing  for  electric  utility
restructuring  in Illinois.  This  legislation  introduced  competition into the
retail supply of electric  energy in Illinois.  Illinois  residential  customers
were  offered  choice in  suppliers on May 1, 2002.  Industrial  and  commercial
customers were previously offered this choice.

     The Illinois Law contained a provision  freezing  retail  bundled  electric
rates through  January 1, 2005. In 2002,  legislation was passed and signed into
law that extended the rate freeze period  through  January 1, 2007. The offering
of choice to our  industrial  and  commercial  customers  has not had a material
adverse  effect on our  business  and we do not expect the offering of choice to
our  residential  customers,  or the  extension  of the rate  freeze,  to have a
material adverse effect on our business.

Federal - Regional Transmission Organizations

     In December  1999,  the FERC issued  Order 2000  requiring  all  utilities,
subject to FERC  jurisdiction,  to state their intentions for joining a regional
transmission  organization  (RTO). RTOs are independent  organizations that will
functionally  control the  transmission  assets of utilities in order to improve
the  wholesale  power market.  Since January 2001,  we, along with several other
utilities, were seeking approval from the FERC to participate in an RTO known as
the Alliance  RTO. We had  previously  been a member of the Midwest  Independent
System  Operator  (MISO) and recorded a pretax charge to earnings in 2000 of $25
million ($15  million  after taxes) for an exit fee and other costs when we left
that  organization.  We felt the  for-profit  Alliance  RTO  business  model was
superior to the  not-for-profit  MISO business model and provided us with a more
equitable return on our transmission assets.

     In late 2001,  the FERC issued an order that  rejected the formation of the
Alliance RTO and ordered the Alliance RTO  companies and the MISO to discuss how
the Alliance RTO business model could be accommodated  within the MISO. On April
25,  2002,  after the Alliance  RTO and MISO failed to reach an  agreement,  and
after a series of filings by the two  parties  with the FERC,  the FERC issued a
declaratory  order  setting forth the division of  responsibilities  between the
MISO and National Grid (the managing member of the  transmission  company formed
by the  Alliance  companies)  and  approved  the  rate  design  and the  revenue
distribution  methodology proposed by the Alliance companies.  However, the FERC
denied a request by the Alliance companies and National Grid to purchase certain
services from the MISO at incremental cost rather than MISO's full tariff rates.
The FERC also  ordered  the MISO to return  the exit fee paid by Ameren to leave
the MISO, provided Ameren returns to the MISO and agrees to pay its proportional
share of the startup and ongoing operational expenses of the MISO. Moreover, the
FERC  required  the  Alliance  companies  to select  the RTO in which  they will
participate within thirty days of the order.

     Since  the  April  2002  FERC  order,  Ameren  made  filings  with the FERC
indicating that it would return to the MISO and that membership would be through
a new independent  transmission company,  GridAmerica LLC, that was agreed to be
formed by our  subsidiaries,  Central Illinois Public Service Company,  known as
AmerenCIPS,  and AmerenUE,  and  subsidiaries  of  FirstEnergy  Corporation  and
NiSource  Inc.  If the FERC  approves  the  definitive  agreements  establishing
GridAmerica,  National Grid

                                       9


will  serve  as  the  managing   member  of  GridAmerica  and  will  manage  the
transmission assets of the three companies and participate in the MISO on behalf
of GridAmerica.  Other Alliance RTO companies announced their intentions to join
the  Pennsylvania  - Jersey - Maryland  (PJM) RTO. On July 25, 2002,  the Ameren
companies filed a motion with the FERC requesting that it condition the approval
of the choices of other  Illinois  utilities to join the PJM RTO on MISO and PJM
entering into an agreement  addressing  important  reliability and  rate-barrier
issues.  On July 31, 2002,  the FERC issued an order  accepting the formation of
GridAmerica  as an  independent  transmission  company under the MISO subject to
further  compliance  filings  ordered by the FERC. The FERC also issued an order
accepting the elections made by the other Illinois utilities to join the PJM RTO
on the  condition  PJM and MISO  immediately  begin a  process  to  address  the
reliability and rate-barrier  issues raised by us and other market  participants
in previous filings.

     Until the  reliability and  rate-barrier  issues are resolved as ordered by
the FERC,  and the  tariffs and other  material  terms of our  participation  in
GridAmerica,  and  GridAmerica's  participation  in the MISO,  are finalized and
approved by the FERC, we are unable to predict  whether we will in fact become a
member of GridAmerica or MISO, or the impact that on-going RTO developments will
have on our financial condition, results of operation or liquidity.


NOTE 3 - Derivative Financial Instruments

     We utilize derivatives  principally to manage the risk of changes in market
prices  for  natural  gas,  fuel,   electricity  and  emission  credits.   Price
fluctuations in natural gas, fuel and electricity cause:

     o    an unrealized  appreciation or depreciation of our firm commitments to
          purchase  or sell  when  purchase  or  sales  prices  under  the  firm
          commitment are compared with current commodity prices;
     o    market values of fuel and natural gas  inventories or purchased  power
          to differ from the cost of those commodities in inventory or under the
          firm commitment; and
     o    actual cash outlays for the purchase of these commodities,  in certain
          circumstances, to differ from anticipated cash outlays.

     The  derivatives  that we use to hedge  these  risks are  dictated  by risk
management  policies and include forward contracts,  futures contracts,  options
and swaps. We continually  assess our supply and delivery  commitment  positions
against  forward  market  prices and internal  forecasts of forward  prices.  We
actively  manage  our  exposure  to power  price  risk  through  our power  risk
management  program carried out under our risk  management  guidelines to modify
our exposure to market,  credit and  operational  risk by entering  into various
offsetting  transactions.  In general,  we believe these  transactions  serve to
reduce price risk for us.

     In  addition,  we may  purchase  additional  megawatts,  again  within risk
management  guidelines,   in  anticipation  of  future  price  changes.  Certain
derivative  contracts we enter into on a regular basis as part of our power risk
management  program do not qualify for hedge  accounting or the normal purchase,
normal sale exception under SFAS 133. Accordingly,  these contracts are recorded
at fair value with  changes in the fair value  charged or credited to the income
statement in the period in which the change occurred. Contracts we enter into as
part of our power risk  management  program  may be  settled by either  physical
delivery  or net  settled  with  the  counterparty.  See  Note 1 -  "Summary  of
Significant Accounting Policies."

     As of June 30,  2002,  we recorded the fair value of  derivative  financial
instrument  assets  of $29  million  in  Other  Assets  and the  fair  value  of
derivative  financial  instrument  liabilities  of $29 million in Other Deferred
Credits and Liabilities.

Cash Flow Hedges

     We  routinely   enter  into  forward   purchase  and  sales  contracts  for
electricity  based  on  forecasted  levels  of  economic   generation  and  load
requirements.  The relative balance between load and economic  generation varies
throughout the year. The contracts  typically cover a period of twelve months or
less.  The  purpose  of these  contracts  is to  hedge  against  possible  price
fluctuations  in the spot market for the period covered under the contracts.  We
formally  document all  relationships  between  hedging  instruments

                                       10



and hedged  items,  as well as our risk  management  objective  and strategy for
undertaking  various hedge transactions.  The mark-to-market  value of cash flow
hedges will  continue to fluctuate  with changes in market prices up to contract
expiration.

     The pretax net gain or loss on power forward derivative instruments,  which
represented the impact of discontinued cash flow hedges, the ineffective portion
of cash flow hedges, as well as the reversal of amounts  previously  recorded in
OCI due to transactions going to delivery or settlement,  was approximately a $1
million loss for the three months and a $1 million gain for the six months ended
June 30,  2002.  For the three and six  months  ended June 30,  2001,  the above
related amounts were a $10 million loss and $0 million, respectively.

     As of June 30, 2002, we had hedged a portion of the price exposure  related
to the relative  balance  between load and economic  generation for the upcoming
twelve  month  period.  The  mark-to-market  value  accumulated  in OCI  for the
effective  portion  of hedges of  electricity  price  exposure  is a net loss of
approximately $6 million ($4 million, net of taxes).

     As of June 30, 2002, a gain of approximately $6 million ($3 million, net of
taxes) associated with interest rate swaps was included in OCI. The swaps were a
partial  hedge of the  interest  rate on debt that was issued in June 2002.  The
swaps  covered the first ten years of debt that has a 30-year  maturity  and the
gain in OCI is being amortized over a ten-year period beginning in June 2002.

     We also hold a call  option for coal  deliverable  in 2004 with a supplier.
This option to purchase  coal expires  October  2003.  As of June 30, 2002,  the
mark-to-market  gain  accumulated  in OCI was $5  million  ($3  million,  net of
taxes).  The final value of the option will be recognized as a reduction in fuel
costs as the hedged coal is burned.

Other Derivatives

     We enter into option transactions to manage our positions in sulfur dioxide
allowances,  coal, heating oil, and electricity.  Most of these transactions are
treated as non-hedge  transactions  under SFAS 133. The net change in the market
value of sulfur  dioxide  options is recorded as  Operating  Revenues - Electric
Revenues,  while the net change in the market  value of coal,  heating  oil, and
electricity  options is recorded as  Operating  Expense -  Operations - Fuel and
Purchased Power in the income statement.  The net change in the market values of
sulfur dioxide options, coal, heating oil, and electricity options was a gain of
$2 million ($1  million,  net of taxes) for the three months ended June 30, 2002
and a gain of $3 million  ($2  million,  net of taxes) for the six months  ended
June 30,  2002.  For the three and six  months  ended June 30,  2001,  the above
related  items  were a loss of $2  million  ($1  million,  net of taxes)  and $0
million, respectively.


NOTE 4 - Debt and Equity Financings

     In January 2002, Ameren  Corporation issued $100 million of 5.70% notes due
February 1, 2007.  The net proceeds were used to reduce  short-term  borrowings.
Interest  is  payable  semi-annually  on  February  1 and August 1 of each year,
beginning  August 1,  2002.  In March  2002,  Ameren  Corporation  entered  into
interest rate swaps  effectively  converting the interest rate  associated  with
these notes to three month LIBOR plus 43 basis  points.  At June 30,  2002,  the
effective interest rate for these notes was 2.338%.

     In March  2002,  Ameren  Corporation  issued  $345  million  of  adjustable
conversion-rate   equity  security  units  and  $227  million  of  common  stock
(5,000,000  shares at  $39.50  per share and  750,000  shares,  pursuant  to the
exercise of an option granted to the  underwriters,  at $38.865 per share).  The
$25 adjustable conversion-rate equity security units each consisted of an Ameren
Corporation  senior unsecured note with a principal amount of $25 and a contract
to  purchase,  for $25, a fraction of a share of Ameren  common stock on May 15,
2005.  The  senior  unsecured  notes were  recorded  at their fair value of $345
million  and will  mature on May 15,  2007.  Total  distributions  on the equity
security  units  will be at an annual  rate of 9.75%,  consisting  of  quarterly
interest  payments on the senior  unsecured  notes at the initial annual rate of
5.20% and adjustment  payments under the stock purchase  contracts at the annual
rate of 4.55%. The stock purchase  contracts require holders to purchase between
8.7 million and 7.4 million shares of Ameren common stock on May 15, 2005 at the
market  price at that  time,  subject to a minimum  share  price of


                                       11



$39.50 and a maximum of $46.61. The stock purchase contracts include a pledge of
the senior unsecured notes as collateral for the stock purchase obligation.  The
interest  rate on the  outstanding  senior  unsecured  notes is subject to being
reset by a  remarketing  agent for quarterly  payments  after May 15, 2005 until
maturity.  We recorded the net present value of the  contracted  stock  purchase
adjustment  payments of $46 million as an increase in Other Deferred Credits and
Liabilities to reflect our obligation and a decrease in Other Paid-in Capital to
reflect the fair value of the stock  purchase  contract.  The  liability for the
contracted stock purchase  adjustment  payments will be reduced as such payments
are made through May 15, 2005. We used the net proceeds from these  offerings to
repay our short-term indebtedness and for general corporate purposes.

     In June 2002,  AmerenEnergy Generating Company issued $275 million of 7.95%
Senior Notes due June 1, 2032.  Interest is payable  semi-annually on June 1 and
December 1 of each year, beginning December 1, 2002. We received net proceeds of
$271 million,  after debt  discount and  underwriters'  fees,  that were used to
reduce short-term borrowings and for general corporate purposes.

     In July 2002, Ameren entered into new credit agreements for $400 million in
revolving credit facilities to be used for general corporate purposes, including
support of our  commercial  paper  programs.  The $400 million in new facilities
includes a $270 million  364-day  revolving  credit  facility and a $130 million
3-year  revolving  credit  facility.  The  3-year  facility  has a  $50  million
sub-limit  for the  issuance of letters of credit.  These new credit  facilities
replaced AmerenUE's existing $300 million revolving credit facility which was to
mature August 15, 2002. At June 30, 2002, all of such  borrowing  capacity under
this AmerenUE facility was available.

     Amortization of debt issuance costs and  premium/discount for the three and
six months ending June 30, 2002 of $2 million (2001 - $2 million) and $4 million
(2001 - $3 million) were included in interest expense in the income statement.


NOTE 5 - Miscellaneous, Net

     Miscellaneous,  net for the three and six months  ended  June 30,  2002 and
     2001 consisted of the following:

                                               Three Months   Six Months
                                             -----------------------------------
                                              2002   2001    2002   2001
                                             -----------------------------------
Miscellaneous income:
   Interest and dividend income              $  2    $  -    $  2   $  1
   Gain on disposition of property              3       1       3      1
   Other                                        -       1       3      2
                                             -----------------------------------
Total miscellaneous income                   $  5    $  2    $  8   $  4
                                             -----------------------------------

   Minority interest in subsidiary           $(10)   $ (1)   $(11)   $ (2)
   Loss on disposition of property              -      (2)      -      (2)
   Donations                                  (26)      -     (26)     (1)
   Other                                       (3)     (2)     (6)     (3)
                                             -----------------------------------
Total miscellaneous expense                  $(39)   $ (5)   $(43)   $ (8)
                                             -----------------------------------

                                       12



NOTE 6 - Segment Information

     Segment  information  for the three and six months  ended June 30, 2002 and
     2001 was as follows:

--------------------------------------------------------------------------------
                                            Utility         Intercompany
                                          Operations  Other   Revenues    Total
--------------------------------------------------------------------------------
     Three months ended June 30, 2002:

Revenues                                    $1,179   $  106   $ (174)    $1,111
Net income                                     101       14        -        115
--------------------------------------------------------------------------------
     Three months ended June 30, 2001:

Revenues                                    $1,180   $   59   $ (182)    $1,057
Net income                                      98       (3)       -         95
--------------------------------------------------------------------------------
     Six months ended June 30, 2002:

Revenues                                    $2,415   $  175   $ (364)    $2,226
Net income                                     159       15        -        174
--------------------------------------------------------------------------------
     Six months ended June 30, 2001:

Revenues                                    $2,333   $  133   $ (385)    $2,081
Net income                                     152        1        -        153
--------------------------------------------------------------------------------

     Ameren Services Company, who provides shared support services to us and our
subsidiaries, allocates administrative support services to each segment based on
various factors, such as headcount, number of customers, and total assets.


NOTE 7 - CILCORP Acquisition

     On April 28, 2002, we entered into an agreement with The AES Corporation to
purchase  all of the  outstanding  stock of CILCORP  Inc.  CILCORP is the parent
company of Peoria-based Central Illinois Light Company, which operates as CILCO.
We also agreed to acquire AES Medina  Valley (No. 4),  L.L.C.  which  indirectly
owns a 40 megawatt,  gas-fired  electric  generation  plant.  The total purchase
price is  approximately  $1.4  billion,  subject to  adjustment  for  changes in
CILCORP's working capital, and includes the assumption of CILCORP and AES Medina
Valley  debt at closing,  estimated  at  approximately  $900  million,  with the
balance  of the  purchase  price in cash.  We  expect to  finance a  significant
portion of the cash  component of the purchase price through the issuance of new
common equity.

     The purchase  will  include  CILCORP's  regulated  natural gas and electric
businesses  in Illinois  serving  approximately  205,000 and 200,000  customers,
respectively,  of which approximately  150,000 are combination  electric and gas
customers.  In addition,  the purchase includes approximately 1,200 megawatts of
largely  coal-fired  generating  capacity,  most  of  which  is  expected  to be
non-regulated by closing.

     Upon  completion  of the  acquisition,  expected by March 2003,  CILCO will
become  an  Ameren  subsidiary,  but will  remain a  separate  utility  company,
operating  as  AmerenCILCO.  The  transaction  is subject to the approval of the
Illinois Commerce  Commission,  the SEC, the FERC, the expiration of the waiting
period under the Hart-Scott-Rodino  Act, the Federal  Communications  Commission
and other customary closing conditions.

     For the period  ended  December  31,  2001,  CILCORP  had  revenues of $815
million,  operating  income of $126  million,  and net  income  from  continuing
operations of $28 million,  and as of December 31, 2001
had total assets of $1.8 billion.

                                       13


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

OVERVIEW

     Ameren Corporation is a holding company registered under the Public Utility
Holding Company Act of 1935 (PUHCA).  Our principal  business is the generation,
transmission  and  distribution of electricity,  and the distribution of natural
gas to  residential,  commercial,  industrial and wholesale users in the central
United States. Our primary subsidiaries are as follows:


o    Union Electric  Company,  which operates a regulated  electric  generation,
     transmission  and  distribution  business,  and  a  regulated  natural  gas
     distribution business in Missouri and Illinois as AmerenUE.
o    Central  Illinois  Public  Service  Company,  which  operates  a  regulated
     electric and natural gas transmission and distribution business in Illinois
     as AmerenCIPS.
o    AmerenEnergy  Resources  Company  (Resources  Company),  which  consists of
     non-regulated  operations.  Subsidiaries  include  AmerenEnergy  Generating
     Company  (Generating  Company)  that  operates our  non-regulated  electric
     generation  in  Missouri  and  Illinois,   AmerenEnergy  Marketing  Company
     (Marketing  Company),  which markets  power for periods over one year,  and
     AmerenEnergy  Fuels and Services  Company,  which procures fuel and manages
     the related risks for our affiliated companies.
o    AmerenEnergy,  Inc.  (AmerenEnergy)  which serves as a power  marketing and
     risk  management  agent for our affiliated  companies for  transactions  of
     primarily less than one year.
o    Electric Energy, Inc. (EEI), which owns and/or operates electric generation
     and transmission  facilities in Illinois.  We have a 60% ownership interest
     in EEI and consolidate it for financial reporting purposes.
o    Ameren Services  Company,  which provides shared support services to us and
     our subsidiaries.

     You should read the following discussion and analysis in conjunction with:
o    The  financial  statements  and related  notes  included in this  Quarterly
     Report on Form 10-Q.
o    The audited financial statements and related notes that are incorporated by
     reference  from our Annual Report to  Stockholders  in our Annual Report on
     Form 10-K for the period ended December 31, 2001.
o    Management's  Discussion and Analysis of Financial Condition and Results of
     Operations  that is  incorporated  by reference  from our Annual  Report to
     Stockholders  in our  Annual  Report  on Form  10-K  for the  period  ended
     December 31, 2001.

     When we  refer  to  Ameren,  our,  we or us,  we are  referring  to  Ameren
Corporation on a consolidated basis. In certain circumstances,  our subsidiaries
are  specifically  referenced  in order to  distinguish  among  their  different
business  activities.  All dollar  amounts  are in  millions,  unless  otherwise
indicated.

     Our results of  operations  and  financial  position  are  impacted by many
factors,  including  both  controllable  and  uncontrollable  factors.  Weather,
economic  conditions,  and the  actions  of key  customers  or  competitors  can
significantly impact the demand for our services.  Our results are also impacted
by seasonal  fluctuations caused by winter heating, and summer cooling,  demand.
With  approximately  80% of our revenues  subject to regulation by various state
and federal agencies,  decisions by regulators can have a material impact on the
price we charge for our services.  We principally utilize coal, nuclear fuel and
natural gas in our  operations.  The prices for these  commodities can fluctuate
significantly  due to the world  economic and  political  environment,  weather,
production  levels  and  many  other  factors.  We do  not  have  fuel  recovery
mechanisms in Missouri and Illinois, but do have gas cost recovery mechanisms in
each state.  We employ  various risk  management  strategies  in order to try to
reduce our exposure to commodity risks and other risks inherent in our business.
The reliability of our power plants, and transmission and distribution  systems,
and the level of operating and administrative  costs, and capital investment are
key  factors  that we seek to  control  in  order to  optimize  our  results  of
operations, cash flows and financial
position.

                                       14



RESULTS OF OPERATIONS

Summary

     Our net income increased 21% to $115 million, or 80 cents per share, in the
second  quarter of 2002 from $95 million,  or 69 cents per share,  in the second
quarter of 2001.  Earnings for the six months ended June 30, 2002,  totaled $174
million, or $1.22 per share,  compared to the year-ago earnings of $153 million,
or $1.12 per share.  The increase in both periods was primarily due to favorable
weather  conditions (second quarter - 12 cents per share; year to date - 3 cents
per share), increased sales of emission credits, including EEI (second quarter -
10 cents per share;  year to date - 16 cents per share),  and lack of a Callaway
nuclear plant  refueling  outage to date in 2002 (second  quarter - 12 cents per
share; year to date - 14 cents per share). These increases were partially offset
by the impact of the  settlement  of our  Missouri  electric  rate case  (second
quarter and year to date - 14 cents per share) (see  below),  a reduction  of an
accrual in 2001 (second quarter - 10 cents per share; year to date - 4 cents per
share) for expected  customer  sharing  credits under the Missouri  experimental
alternative  regulation  plan that  expired in June 2001 (see Note 2 - "Rate and
Regulatory Matters" to our consolidated  financial  statements) and a decline in
industrial  sales due to the continued  soft  economy.  In January 2001, we also
recorded a charge of $7 million, or five cents per share, due to the adoption of
Statement of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting  for
Derivative Instruments and Hedging Activities."

Recent Developments

Missouri Electric Rate Case

     From July 1, 1995 through June 30, 2001, our subsidiary, AmerenUE, operated
under  experimental  alternative  regulation plans in Missouri that provided for
the  sharing of  earnings  with  customers  if our  regulatory  return on equity
exceeded defined threshold  levels.  After AmerenUE's  experimental  alternative
regulation plan for its Missouri retail electric customers expired, the Missouri
Public  Service  Commission  (MoPSC)  Staff filed an excess  earnings  complaint
against  AmerenUE  with the MoPSC in July 2001.  In March 2002,  the MoPSC Staff
filed a  recommendation  that  AmerenUE  reduce  its  annual  Missouri  electric
revenues by $246 million to $285 million.  The MoPSC Staff's  recommendation was
based on a return to traditional cost of service ratemaking, a lowered return on
equity,  a  reduction  in our  depreciation  rates  and  other  cost of  service
adjustments.  In May 2002, we filed  testimony  supporting a rate increase of at
least $150 million and proposed a new alternative  regulation plan that included
a rate decrease.

     On July 16, 2002, AmerenUE, the MoPSC Staff and all of the other parties to
the proceeding submitted to the MoPSC a stipulation and agreement resolving this
case.  On July 24,  2002,  the  MoPSC  held a  hearing  on the  stipulation  and
agreement.  On July 25, 2002, the MoPSC approved the  stipulation and agreement,
and on August 4,  2002,  it became  effective.  The  stipulation  and  agreement
includes the following principal features:

o    the  phase-in of $110 million of electric  rate  reductions  through  April
     2004, $50 million of which is retroactively  effective as of April 1, 2002,
     $30  million  of which will  become  effective  on April 1,  2003,  and $30
     million  of  which  will  become  effective  on  April  1,  2004,  o a rate
     moratorium  providing  for no requests for changes in  AmerenUE's  electric
     rates as established  by the  stipulation  and agreement  before January 1,
     2006 and no resulting  changes in rates  before June 30,  2006,  subject to
     certain  statutory  and other  exceptions,  o a commitment to contribute as
     early as  September  2002,  $14 million to programs  for low income  energy
     assistance and weatherization,  promotion of energy efficiency and economic
     development in AmerenUE's service territory, with additional payments of $3
     million  made  annually  on June  30,  2003  through  June  30,  2006,  o a
     commitment  to make $2.25  billion  to $2.75  billion  in  critical  energy
     infrastructure  investments  from  January 1, 2002  through  June 30, 2006,
     including,  among other things,  the addition of more than 700 megawatts of
     new  generation  capacity  and  the  replacement  of  steam  generators  at
     AmerenUE's  nuclear  power  plant.  The  700  megawatts  of new  generation
     includes 240 megawatts already added this year and may include the transfer
     at book value to AmerenUE of generation assets from our other non-regulated
     subsidiaries,

                                       15


o    an  annual  reduction  in  AmerenUE's  depreciation  rates by $20  million,
     retroactive to April 1, 2002 based on an updated  analysis of asset values,
     service lives and accumulated depreciation levels, and
o    a one-time credit of $40 million to be paid to our Missouri retail electric
     customers  as early as August  2002 for  settlement  of the  final  sharing
     period under the alternative regulation plan that expired June 30, 2001. At
     June 30, 2002, we had accrued $40 million in Current Liabilities - Other.

     In total,  the  stipulation  and  agreement is estimated to reduce 2002 net
earnings by $32 million,  or 22 cents per share. Net earnings are expected to be
reduced in 2002 due to the rate  reduction  ($26  million,  net of taxes,  or 18
cents per share, including $8 million, net of taxes, or 6 cents per share in the
quarter ended,  June 30, 2002), the expensing in the quarter ended June 30, 2002
of the entire obligation to fund certain programs ($15 million, net of taxes, or
10 cents per share),  offset, in part, by the reduction in depreciation  expense
($9  million,  net of taxes,  6 cents per share,  including  $3 million,  net of
taxes,  or 2 cents per share in the quarter ended June 30,  2002).  Net earnings
were reduced by $20 million, or 14 cents per share in the quarter ended June 30,
2002 due to the stipulation  and agreement.  We expect earnings to be reduced by
$9 million  (6 cents per  share) in the third  quarter of 2002 and $3 million (2
cents per share) in the fourth quarter of 2002.

CILCORP Acquisition

     On April 28, 2002, we entered into an agreement with The AES Corporation to
purchase  all of the  outstanding  stock of CILCORP  Inc.  CILCORP is the parent
company of Peoria-based Central Illinois Light Company, which operates as CILCO.
We also agreed to acquire AES Medina  Valley (No. 4),  L.L.C.  which  indirectly
owns a 40 megawatt,  gas-fired  electric  generation  plant.  The total purchase
price is  approximately  $1.4  billion,  subject to  adjustment  for  changes in
CILCORP's working capital, and includes the assumption of CILCORP and AES Medina
Valley  debt at closing,  estimated  at  approximately  $900  million,  with the
balance  of the  purchase  price in cash.  We  expect to  finance a  significant
portion of the cash  component of the purchase price through the issuance of new
common equity.

     The purchase  will  include  CILCORP's  regulated  natural gas and electric
businesses  in Illinois  serving  approximately  205,000 and 200,000  customers,
respectively,  of which approximately  150,000 are combination  electric and gas
customers.  In addition,  the purchase includes approximately 1,200 megawatts of
largely  coal-fired  generating  capacity,  most  of  which  is  expected  to be
non-regulated by closing.

     Upon  completion  of the  acquisition,  expected by March 2003,  CILCO will
become  an  Ameren  subsidiary,  but will  remain a  separate  utility  company,
operating  as  AmerenCILCO.  The  transaction  is subject to the approval of the
Illinois Commerce Commission,  the Securities and Exchange Commission (SEC), the
Federal  Energy  Regulatory  Commission  (FERC),  the  expiration of the waiting
period under the Hart-Scott-Rodino  Act, the Federal  Communications  Commission
and other customary closing conditions.

     For the period  ended  December  31,  2001,  CILCORP  had  revenues of $815
million,  operating  income of $126  million,  and net  income  from  continuing
operations of $28 million,  and as of December 31, 2001 had total assets of $1.8
billion.  Synergies from the  acquisition  are expected to make the  transaction
accretive to earnings  per share in the first full year of  operation  after the
transaction is consummated.

     In April 2002, as a result of our then pending Missouri  electric  earnings
complaint  case and the  CILCORP  transaction  and related  assumption  of debt,
credit  rating  agencies  placed  Ameren  Corporation's  debt  under  review for
possible  downgrade  or  negative  credit  watch.  Standard & Poor's  placed the
ratings of AmerenUE and AmerenCIPS  debt on negative credit watch and placed the
ratings of Generating Company's debt on positive credit watch. However, Standard
& Poor's  stated  they  expect the  corporate  credit  ratings of Ameren and its
subsidiaries  to be in the  "A"  rating  category  following  completion  of the
acquisition.  Moody's  Investor  Service  stated  they  envisioned  a one  notch
downgrade  of  Ameren's  issuer,  senior  unsecured  debt and  commercial  paper
ratings.  Ameren's  corporate  credit  rating is A+ at Standard & Poor's and its
issuer rating is A2 at Moody's.  In July, AmerenUE settled its electric earnings
complaint  case. The rating agencies have not changed the assignment of negative
watch,  review for possible  downgrade or negative outlook to any of the ratings
nor have the ratings themselves  changed.  Any adverse change in Ameren's or our
subsidiaries' ratings may reduce our access to capital and/or increase the costs
of borrowings resulting in a negative impact on earnings.


                                       16


Electric Operations

     The following table  represents the favorable  (unfavorable)  variation for
the three and six months ended June 30, 2002 from the comparable period in 2001:

--------------------------------------------------------------------------------
                                                 Three Months   Six Months
--------------------------------------------------------------------------------
Operating Revenues:
   Effect of abnormal weather (estimate)             $  27       $  11
   Growth and other (estimate)                          28          56
   Rate reductions                                     (13)        (13)
   Credit to customers                                 (25)        (10)
   Interchange revenues                                (37)         85
   EEI                                                  52          52
--------------------------------------------------------------------------------
                                                        32         181
                                                     ---------------------------
Fuel and Purchased Power:
   Fuel:
     Generation                                      $ (24)      $ (22)
     Price                                               8           8
     Generation efficiencies and other                   1           1
   Purchased power                                      67         (66)
   EEI                                                 (12)        (18)
--------------------------------------------------------------------------------
                                                        40         (97)
--------------------------------------------------------------------------------
Change in electric margin                            $  72       $  84
--------------------------------------------------------------------------------

     Electric margin increased $72 million for the three months, and $84 million
for the six  months  ended  June 30,  2002  compared  to the  year-ago  periods,
primarily due to more favorable weather conditions,  increased sales of emission
credits,  lack of a Callaway nuclear plant refueling outage to date in 2002, and
lower fuel costs.  Weather-sensitive  residential  electric  kilowatt-hour sales
increased  by 11% in the  second  quarter  and 2% for  the  year  to  date,  and
commercial  electric  kilowatt-hour  sales increased by 2% in the quarter and 1%
for the year to date.  Industrial  sales were 8% lower in the second quarter and
7% lower in the first half of 2002 as  compared to 2001 due to the impact of the
soft  economy.  Revenues were reduced by $13 million in the three and six months
ended June 30, 2002 due to the  settlement  of the Missouri  electric rate case.
Revenues in 2001 were  increased  by $25  million in the second  quarter and $10
million in the first six months due to a reduction  in the accrual for  expected
customer sharing credits under the Missouri experimental  alternative regulation
plan that expired in June 2001.  Purchased  power was also reduced in the second
quarter  of 2002  due to the lack of a  Callaway  refueling.  Another  refueling
outage at Callaway is scheduled this fall which is estimated to reduce  earnings
by 10 cents per share. For the first six months of 2002,  interchange  sales and
related  purchased  power  increased  due to an increase in  interchange  sales.
However, we realized lower margins on these sales compared to the prior year due
to lower wholesale electricity prices.  Contribution to electric margin from EEI
increased in the second quarter and first six months of 2002  principally due to
the sale of $38 million in emission credits.

Gas Operations

     Due to favorable weather  conditions,  our gas margins increased $6 million
in the  second  quarter  of 2002 as  compared  to the same  period  in 2001 with
revenues increasing by $18 million and costs increasing by $12 million. However,
the warmer winter weather in 2002,  which has a more  significant  impact on gas
sales, offset the benefit of the favorable second quarter 2002 weather resulting
in margins for the first six months of 2002 being $4 million  below the year-ago
period. Gas revenues decreased $43 million,  and gas costs decreased $39 million
in the first six months of 2002 as compared to the year-ago period primarily due
to lower natural gas prices and the warmer winter.

Other Operating Expenses

     Other operations related to operating expenses increased $24 million in the
second  quarter and $40 million in the first half of 2002  compared to the prior
year  periods,  primarily  due to higher  employee  benefit costs related to the
investment performance of pension plan assets and increasing healthcare costs.

                                       17



     Maintenance  expenses  decreased $27 million in the second  quarter of 2002
and $31  million  in the first six  months of 2002,  compared  to the prior year
periods,  primarily  due to the lack of a Callaway  refueling  outage to date in
2002 and decreased coal power plant maintenance.

     Depreciation and amortization  expenses  increased $5 million in the second
quarter of 2002 and $14 million in the first six months of 2002, compared to the
year-ago periods,  primarily due to an increase in depreciable  property related
to investment in our coal and combustion  turbine  electric  generating  plants,
partially  offset by a  reduction  of  depreciation  rates  based on an  updated
analysis of asset values, service lives and accumulated  depreciation levels and
agreed to in the stipulation and agreement associated with the Missouri electric
rate case.

     Income tax expense  increased $12 million in the second quarter of 2002 and
$1 million in the first six months of 2002,  compared to the  year-ago  periods,
primarily due to a higher pretax income.

     Other taxes expense  increased $9 million in the second quarter of 2002 and
$9 million in the first six months of 2002,  compared to the  year-ago  periods,
primarily due to higher gross receipts taxes  resulting from increased  electric
sales in 2002 and adjustments related to property tax rates in the prior year.

Other Income and Deductions

     Other income and deductions  decreased $33 million in the second quarter of
2002 and $33  million  in the first six  months  of 2002,  compared  to the same
periods last year,  primarily due to the commitment to fund certain  programs as
part of the settlement of the Missouri electric rate case ($26 million),  and an
increase in the minority interest related to EEI's higher contribution. See Note
5 - "Miscellaneous, net" to our consolidated financial statements.

Interest

     Interest expense  increased $5 million in the second quarter of 2002 and $7
million  in the first six  months of 2002,  compared  to the  year-ago  periods,
primarily  due to  AmerenCIPS'  issuance of $150 million of 6.625% notes in June
2001, Generating Company's issuance of $275 million of 7.95% notes in June 2002,
and our issuances of $150 million of floating rate notes in December 2001,  $100
million of 5.70%  notes in January  2002,  and $345  million of equity  security
units in March 2002 (in total $10  million  for the  quarter and $16 million for
year-to-date).  A significant  amount of the proceeds  from these  offerings was
used to repay lower cost short-term  borrowings.  These increases were partially
offset by lower interest rates on AmerenCIPS' variable rate  environmental debt
obligations,  as well as lower  interest  expense  associated  with a  decreased
balance under  AmerenUE's  nuclear fuel lease and commercial  paper (in total $5
million for the quarter and $9 million for year-to date).


LIQUIDITY AND CAPITAL RESOURCES

Operating

     Our cash flows provided by operating  activities  increased $134 million to
$346 million for the six months  ended June 30,  2002,  compared to the year-ago
period.  Cash  flow  from  operations  increased  principally  due to  increased
earnings ($20  million) and a net decrease in materials  and supplies  primarily
associated  with decreased coal  inventories  ($42 million) and gas storage ($26
million).  Materials  and supplies were higher than normal at December 31, 2001,
due to the warm winter and  anticipation  of a potential coal supply  disruption
that ultimately did not occur.

     The tariff-based gross margins of our utility operating  companies continue
to be our principal  source of cash from operating  activities.  Our diversified
retail  customer mix of  residential,  commercial and  industrial  classes and a
commodity  mix of gas and  electric  service  provide a  reasonably  predictable
source of cash  flows.  We plan to utilize  short-term  debt to  support  normal
operations and other temporary capital requirements. Ameren is authorized by the
SEC under PUHCA to have up to an aggregate $2.8 billion of short-term  unsecured
debt instruments  outstanding at any one time.  Short-term borrowings consist of
commercial paper  (maturities  generally within 1 to 45 days) and bank loans. At
June 30,  2002,  Ameren


                                       18



had bank credit  agreements,  expiring at various  dates  between 2002 and 2003,
that supported  commercial paper programs  totaling $830 million,  of which $400
million was for the use by us and any of our wholly-owned subsidiaries,  and the
remaining  $430 million was for the use of our regulated  subsidiaries.  At June
30, 2002,  all $830 million of such borrowing  capacity was available,  of which
$430 million was available for the use of our  regulated  subsidiaries.  At June
30, 2002, we had committed bank lines of credit aggregating $25 million,  all of
which were unused and available at such date.

     In July 2002, Ameren entered into new credit agreements for $400 million in
revolving credit facilities to be used for general corporate purposes, including
support of our  commercial  paper  programs.  The $400 million in new facilities
includes a $270 million  364-day  revolving  credit  facility and a $130 million
3-year  revolving  credit  facility.  The  3-year  facility  has a  $50  million
sub-limit  for the  issuance of letters of credit.  These new credit  facilities
replaced  AmerenUE's existing $300 million revolving credit facility that was in
place as of June 30, 2002 with a maturity of August 15, 2002.  Therefore,  as of
July 31, 2002, Ameren had committed bank credit agreements,  expiring at various
dates between 2002 and 2005 totaling $930 million.  A portion of this  liquidity
supports  commercial paper programs totaling $830 million, of which $400 million
is for the use by us and our wholly-owned  subsidiaries,  and the remaining $430
million is for the use of our regulated subsidiaries. The remaining $100 million
of committed  credit is  available  for the use by us and our  subsidiaries.  We
expect to replace these bank credit  agreements  prior to their maturity.  These
bank  facilities make available  interim  financing at various rates of interest
based on LIBOR, the bank certificate of deposit rate or other options.

     AmerenUE  also has a lease  agreement  that  provides for the  financing of
nuclear fuel. At June 30, 2002,  the maximum amount that could be financed under
the agreement was $120 million. At June 30, 2002, $70 million was financed under
the lease.

     Our financial  agreements  include customary default  provisions that could
impact the continued  availability  of credit or result in the  acceleration  of
repayment.  These  events  include  bankruptcy,  defaults  in  payment  of other
indebtedness, certain judgments that are not paid or insured, or failure to meet
or maintain  covenants.  At June 30, 2002,  Ameren and its subsidiaries  were in
compliance with these provisions.

Investing

     Our net cash used in investing activities was $411 million in the first six
months of 2002  compared to $544 million in the first six months of 2001. In the
first six months of 2002,  construction  expenditures  were $113 million (2001 -
$250  million)  in  our  non-regulated  operations,  primarily  related  to  the
construction of combustion  turbine  generating  units, and $288 million (2001 -
$289 million) in our regulated operations, primarily related to various upgrades
at our  coal  power  plants  and  further  construction  of  combustion  turbine
generating  units.  In the second  quarter of 2002,  we placed into  service 240
megawatts of combustion  turbine electric  generation  capacity in our regulated
operations.  Regulated  capital  expenditures  are expected to approximate  $600
million and non-regulated  capital expenditures are expected to approximate $200
million in 2002.

     As a part of the  settlement of the Missouri  electric  earnings  complaint
case (see Note 2 - "Rate and Regulatory  Matters" to our consolidated  financial
statements),  AmerenUE  committed  to making $2.25  billion to $2.75  billion in
infrastructure  investments  from January 1, 2002  through June 30, 2006.  These
investments include, among other things, the addition of more than 700 megawatts
of new generation capacity and the replacement of steam generators at AmerenUE's
Callaway nuclear power plant.  The 700 megawatts of new generation  includes 240
megawatts  already added this year and may include the transfer at book value to
AmerenUE of generation  assets from our other  non-regulated  subsidiaries.  The
amount of energy  infrastructure  investment  through June 2006 described in the
stipulation and agreement is consistent with our  previously-disclosed  estimate
of the construction expenditures we expect to make over the same time period.

     Due to expected increased demand and the need to maintain appropriate power
reserve margins,  Ameren believes it will need additional generating capacity in
the future.  We have an equipment  supply agreement in place at AmerenUE for the
addition  of two  combustion  turbine  generating  units with a total  installed
capacity of 330  megawatts.  These units will replace the existing  Venice steam
plant generating
                                       19



units  which are  expected  to be  retired  in 2003.  Noncancelable  reservation
commitment  fees paid of $22 million  will be applied to our total cost of these
megawatts pursuant to the agreement.

     Ameren continually reviews its generation portfolio and expected electrical
needs, and as a result, we could modify our plan for generation asset purchases,
which  could  include  the timing of when  certain  assets  will be added to, or
removed from our portfolio, the type of generation asset technology that will be
employed, or whether capacity may be purchased,  among other things. Any changes
that Ameren may plan to make for future  generating needs could result in losses
being incurred, which could be material.

Financing

     Our cash flows provided by financing activities totaled $148 million in the
first six months of 2002,  compared to $279 million in the year-ago period.  Our
principal financing activities for the period included the issuance of long-term
debt, equity security units and common stock, partially offset by the redemption
of short-term debt and the payment of dividends.

     In January 2002, Ameren  Corporation issued $100 million of 5.70% notes due
February 1, 2007.  The net proceeds were used to reduce  short-term  borrowings.
Interest  is  payable  semi-annually  on  February  1 and August 1 of each year,
beginning  August 1,  2002.  In March  2002,  Ameren  Corporation  entered  into
interest rate swaps  effectively  converting the interest rate  associated  with
these notes to three month LIBOR plus 43 basis  points.  At June 30,  2002,  the
effective interest rate for these notes was 2.338%.

     In March  2002,  Ameren  Corporation  issued  $345  million  of  adjustable
conversion-rate   equity  security  units  and  $227  million  of  common  stock
(5,000,000  shares at  $39.50  per share and  750,000  shares,  pursuant  to the
exercise of an option granted to the  underwriters,  at $38.865 per share).  The
$25 adjustable conversion-rate equity security units each consisted of an Ameren
Corporation  senior unsecured note with a principal amount of $25 and a contract
to  purchase,  for $25, a fraction of a share of Ameren  common stock on May 15,
2005.  The  senior  unsecured  notes were  recorded  at their fair value of $345
million  and will  mature on May 15,  2007.  Total  distributions  on the equity
security  units  will be at an annual  rate of 9.75%,  consisting  of  quarterly
interest  payments on the senior  unsecured  notes at the initial annual rate of
5.20% and adjustment  payments under the stock purchase  contracts at the annual
rate of 4.55%. The stock purchase  contracts require holders to purchase between
8.7 million and 7.4 million shares of Ameren common stock on May 15, 2005 at the
market  price at that  time,  subject to a minimum  share  price of $39.50 and a
maximum of $46.61.  The stock purchase  contracts include a pledge of the senior
unsecured  notes as collateral for the stock purchase  obligation.  The interest
rate on the  outstanding  senior  unsecured notes is subject to being reset by a
remarketing agent for quarterly  payments after May 15, 2005 until maturity.  We
recorded the net present value of the contracted stock purchase  payments of $46
million as an increase in Other Deferred  Credits and Liabilities to reflect our
obligation and a decrease in Other Paid-in  Capital to reflect the fair value of
the stock purchase  contract.  We used the net proceeds from these  offerings to
repay our short-term indebtedness and for general corporate purposes.

     In May 2002, AmerenUE filed a shelf registration  statement with the SEC on
Form S-3 that upon its  effectiveness  will allow the offering from time to time
of up to $750  million of various  forms of long-term  debt and trust  preferred
securities  to refinance  existing  debt and  preferred  stock,  and for general
corporate  purposes,  including  the  repayment of  short-term  debt incurred to
finance construction expenditures and other working capital needs.

     In June 2002, Ameren Corporation filed a shelf registration  statement with
the SEC on Form S-3 that upon its  effectiveness  will allow the  offering  from
time to time of up to $1.5  billion of  various  forms of  securities  including
long-term  debt,  trust  preferred  and equity  securities  to  finance  ongoing
construction and maintenance programs, to redeem,  repurchase,  repay, or retire
outstanding  debt,  to finance  strategic  investments,  including  our  pending
acquisition of CILCORP Inc., and for general corporate purposes.

     In June 2002,  Generating Company issued $275 million of 7.95% Senior Notes
due June 1, 2032. Interest is payable  semi-annually on June 1 and December 1 of
each year, beginning December 1, 2002. We received net proceeds of $271 million,
after debt discount and underwriters'  fees, that were used to reduce short-term
borrowings and for general corporate purposes.


                                       20



     On April 23, 2002, our Board of Directors declared a quarterly common stock
dividend of 63.5 cents per share that was paid on June 28, 2002 to  shareholders
of record on June 10, 2002.

     In the  ordinary  course of business,  we evaluate  several  strategies  to
enhance our financial position,  earnings,  and liquidity.  These strategies may
include potential acquisitions,  divestitures,  opportunities to reduce costs or
increase  revenues,  and  other  strategic  initiatives  in  order  to  increase
shareholder  value. We are unable to predict which, if any, of these initiatives
will be executed, as well as the impact these initiatives may have on our future
financial position, results of operations or liquidity.


Electric Industry Restructuring

Illinois

     See Note 2 - "Rate and Regulatory  Matters" to our  consolidated  financial
statements.


Federal - Regional Transmission Organizations

     See Note 2 - "Rate and Regulatory  Matters" to our  consolidated  financial
statements.


ACCOUNTING MATTERS

Critical Accounting Policies

     Preparation  of  the  financial   statements  and  related  disclosures  in
compliance  with  generally   accepted   accounting   principles   requires  the
application of appropriate  technical accounting rules and guidance,  as well as
the use of estimates.  Our  application  of these  policies  involves  judgments
regarding many factors, which, in and of themselves, could materially impact the
financial  statements  and  disclosures.  A future change in the  assumptions or
judgments applied in determining the following matters, among others, could have
a material  impact on future  financial  results.  In the table  below,  we have
outlined  those  accounting   policies  that  we  believe  are  most  difficult,
subjective or complex:



Accounting Policy                                  Uncertainties Affecting Application
-----------------                                  -----------------------------------

Regulatory Mechanisms & Cost Recovery
                                                 
     We defer costs as regulatory assets in          o  Regulatory environment, external regulatory
     accordance with SFAS 71 and make                   decisions and requirements
     investments that we assume we will be able      o  Anticipated future regulatory decisions and
     to collect in future rates                         their impact
                                                     o  Impact of deregulation and competition on
                                                        ratemaking process and ability to recover costs

     Basis for Judgment
     We determine that costs are recoverable  based on previous rulings by state
     regulatory  authorities in jurisdictions where we operate, or other factors
     that lead us to believe that cost recovery is probable.


Nuclear Plant Decommissioning Costs

     In our rates and earnings we assume the         o  Estimates of future decommissioning costs
     Department of Energy will develop a             o  Availability of facilities for waste disposal
     permanent storage site for spent nuclear        o  Approved methods for waste disposal and
     fuel, the Callaway plant will have a useful        decommissioning
     life of 40 years and estimated costs to         o  Useful lives of nuclear power plants
     dismantle the plant are accurate.  See Note
     12 to our consolidated financial statements
     for the year ended December 31, 2001.


                                       21




     Basis for Judgment
     We  determine  that  decommissioning  costs  are  reasonable,   or  require
     adjustment, based on third party decommissioning studies that are completed
     every three years,  the  evaluation of our  facilities by our engineers and
     the monitoring of industry trends.

Environmental Costs

     We accrue for all know environmental            o  Extent of contamination
     contamination where remediation can be          o  Responsible party determination
     reasonably estimated, but some of our           o  Approved methods for cleanup
     operations have existed for over 100 years      o  Present and future legislation and governmental
     and previous contamination may be                  regulations and standards
     unknown to us.                                  o  Results of ongoing research and development
                                                        regarding environmental impacts

     Basis for Judgment
     We determine the proper amounts to accrue for  environmental  contamination
     based on  internal  and third  party  estimates  of  clean-up  costs in the
     context  of  current   remediation   regulation   standards  and  available
     technology.

Unbilled Revenue

     At the end of each period, we estimate,         o  Projecting customer energy usage
     based on expected usage, the amount of          o  Estimating impacts of weather and other
     revenue to record for services that have           usage-affecting factors for the unbilled period
     been provided to customers, but not billed.
     This period can be up to one month.

     Basis for Judgment
     We determine  the proper  amount of unbilled  revenue to accrue each period
     based on the  volume of energy  delivered  as valued by a model of  billing
     cycles and  historical  usage  rates and growth by  customer  class for our
     service  area,  as adjusted for the modeled  impact of seasonal and weather
     variations based on historical results.


Benefit Plan Accounting

     Based on actuarial calculations, we accrue      o  Future rate of return on pension and other plan
     costs of providing future employee benefits        assets
     in accordance with SFAS 87, 106 and             o  Interest rates used in valuing benefit
     112. See Note 9 to our consolidated                obligations
     financial statements for the year ended         o  Healthcare cost trend rates
     December 31, 2001.


     Basis for Judgment
     We  utilize  a third  party  consultant  to  assist  us in  evaluating  and
     recording  the proper  amount for future  employee  benefits.  Our ultimate
     selection of the discount rate,  healthcare trend rate and expected rate of
     return on  pension  assets is based on our  review  of  available  current,
     historical and projected rates, as applicable.

                                       22




Derivative Financial Instruments
                                                 
     We record all derivatives at their fair         o  Market conditions in the energy industry, especially
     market value in accordance with SFAS               the effects of price volatility on contractual
     133. The identification and classification         commodity commitments
     of a derivative, and the fair value of such     o  Regulatory and political environments and
     derivative must be determined.  See Note 3           requirements
     to our consolidated financial statements for    o  Fair value estimations on longer term contracts
     the year ended December 31, 2001 and
     Note 3 - "Derivative Financial
     Instruments" to our consolidated financial
     statements.


     Basis for Judgment
     We determine whether a transaction is a derivative versus a normal purchase
     or sale based on historical practice and our intention at the time we enter
     a  transaction.  We utilize  actively  quoted  prices,  prices  provided by
     external sources,  and prices based on internal models, and other valuation
     methods  to  determine  the  fair  market  value  of  derivative  financial
     instruments.

Impact of Future Accounting Pronouncements

     See  Note  1  -  "Summary  of  Significant   Accounting  Policies"  to  our
consolidated financial statements.


ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk

     Market risk  represents the risk of changes in value of a physical asset or
a financial instrument, derivative or non-derivative,  caused by fluctuations in
market variables (e.g.,  interest rates, etc.). The following  discussion of our
risk management  activities includes  "forward-looking"  statements that involve
risks and  uncertainties.  Actual  results  could differ  materially  from those
projected  in the  "forward-looking"  statements.  We  handle  market  risks  in
accordance with  established  policies,  which may include entering into various
derivative  transactions.  In the normal course of business,  we also face risks
that are  either  non-financial  or  non-quantifiable.  Such  risks  principally
include  business,  legal,  and operational  risk and are not represented in the
following analysis.

     Our risk management objective is to optimize our physical generating assets
within prudent risk parameters.  Our risk management  policies are set by a Risk
Management  Steering  Committee,  which  is  comprised  of  senior-level  Ameren
officers.

Interest Rate Risk

     We are exposed to market risk through changes in interest rates  associated
with the  issuance  of both  long-term  and  short-term  variable-rate  debt and
fixed-rate debt, commercial paper,  auction-rate long-term debt and auction-rate
preferred  stock. We manage our interest rate exposure by controlling the amount
of these  instruments we hold within our total  capitalization  portfolio and by
monitoring the effects of market changes in interest rates.

     Utilizing  our  debt  outstanding  at June  30,  2002,  if  interest  rates
increased by 1%, our annual interest  expense would increase by approximately $8
million and net income would  decrease by  approximately  $5 million.  The model
does not consider the effects of the reduced level of potential overall economic
activity that would exist in such an environment.  In the event of a significant
change in  interest  rates,  management  would  likely  take  actions to further
mitigate our exposure to this market risk.  However,  due to the  uncertainty of
the  specific  actions  that  would be taken and  their  possible  effects,  the
sensitivity analysis assumes no change in our financial structure.


                                       23


Fuel Price Risk

     100% of the required 2002 supply of coal for our coal power plants has been
acquired at fixed prices.  As such, we have minimal coal price risk for 2002. In
addition,  approximately 70% of our coal requirements from 2003 through 2006 are
covered by contracts.

Fair Value of Contracts

     We utilize derivatives  principally to manage the risk of changes in market
prices  for  natural  gas,  fuel,   electricity  and  emission  credits.   Price
fluctuations in natural gas, fuel and electricity cause:

     o    an unrealized  appreciation or depreciation of our firm commitments to
          purchase  or sell  when  purchase  or  sales  prices  under  the  firm
          commitment are compared with current commodity prices;
     o    market values of fuel and natural gas  inventories or purchased  power
          to differ from the cost of those  commodities in inventory  under firm
          commitment; and
     o    actual cash  outlays for the purchase of these  commodities  to differ
          from anticipated cash outlays.

     The  derivatives  that we use to hedge  these  risks are  dictated  by risk
management  policies and include forward contracts,  futures contracts,  options
and swaps. We continually  assess our supply and delivery  commitment  positions
against forward market prices and internally  forecast forward prices and modify
our exposure to market,  credit and  operational  risk by entering  into various
offsetting  transactions.  In general,  these  transactions  serve to reduce our
price risk. See Note 3 - "Derivative Financial  Instruments" to our consolidated
financial statements for additional information.

     The following  summarizes changes in the fair value of all contracts marked
to market during the three and six months ended June 30, 2002:


-------------------------------------------------------------------------------------------------------------
                                                                                       Three         Six
                                                                                       months       months
-------------------------------------------------------------------------------------------------------------
                                                                                            
Fair value of contracts at beginning of period, net                                   $  (5)       $  (1)
   Contracts which were realized or otherwise settled during the three and six           (8)          (8)
     months ended June 30, 2002
   Changes in fair values attributable to changes in valuation techniques and             -            -
   assumptions
   Fair value of new contracts entered into during the three and six months ended         -            1
   June 30, 2002
   Other changes in fair value                                                           13            8
--------------------------------------------------------------------------------------------------------------
Fair value of contracts outstanding at June 30, 2002, net                             $   -        $   -
--------------------------------------------------------------------------------------------------------------


     Maturities of contracts as of June 30, 2002 were as follows:



--------------------------------------------------------------------------------------------------------------
                                        Maturity                                Maturity in
                                       less than      Maturity      Maturity    excess of 5    Total fair
Sources of fair value                    1 year      1-3 years     4-5 years       years       value (a)
--------------------------------------------------------------------------------------------------------------
                                                                               
Prices actively quoted                    $  -        $ (2)        $  -          $   -         $  (2)
Prices provided by other external
   sources (b)                               -           -            -              -             -
Prices based on models and other
   valuation methods (c)                    (1)          4           (1)             -             2
--------------------------------------------------------------------------------------------------------------
Total                                     $ (1)       $  2         $ (1)         $   -         $   -
--------------------------------------------------------------------------------------------------------------


(a)  Contracts  of  approximately  50%  were  with  non-investment-grade   rated
     counterparties.
(b)  Principally power forward values based on NYMEX prices for over-the-counter
     contracts.
(c)  Principally  coal and sulfur dioxide option values based on a Black-Scholes
     model that includes information from external sources and our estimates.

                                       24



SAFE HARBOR STATEMENT

     Statements made in this report which are not based on historical facts, are
"forward-looking"  and, accordingly,  involve risks and uncertainties that could
cause actual results to differ  materially from those  discussed.  Although such
"forward-looking"  statements  have  been  made in good  faith  and are based on
reasonable assumptions,  there is no assurance that the expected results will be
achieved.  These statements include (without limitation) statements as to future
expectations,  beliefs, plans, strategies,  objectives,  events,  conditions and
financial  performance.  In connection with the "Safe Harbor"  provisions of the
Private  Securities  Litigation  Reform  Act  of  1995,  we are  providing  this
cautionary  statement  to identify  important  factors  that could cause  actual
results to differ materially from those anticipated.  The following factors,  in
addition to those discussed elsewhere in this report and in the Annual Report on
Form 10-K for the year ended  December 31, 2001,  and in  subsequent  securities
filings,  could cause results to differ materially from management  expectations
as suggested by such "forward-looking" statements:

o    the effects of the  stipulation  and  agreement  relating  to the  AmerenUE
     excess  earnings  complaint case and other  regulatory  actions,  including
     changes in regulatory policy;
o    changes in laws and other  governmental  actions,  including  monetary  and
     fiscal policies;
o    the impact on us of current  regulations  related  to the  opportunity  for
     customers to choose alternative energy suppliers in Illinois;
o    the  effects of  increased  competition  in the future due to,  among other
     things,  deregulation  of certain aspects of our business at both the state
     and federal levels;
o    the  effects of  participation  in a FERC  approved  Regional  Transmission
     Organization  (RTO),  including  activities  associated  with  the  Midwest
     Independent System Operator;
o    availability  and  future  market  prices  for  fuel and  purchased  power,
     electricity, and natural gas, including the use of financial and derivative
     instruments and volatility of changes in market prices;
o    average rates for electricity in the Midwest;
o    business and economic conditions;
o    the impact of the adoption of new accounting standards;
o    interest rates and the availability of capital;
o    actions of rating agencies and the effects of such actions;
o    weather conditions;
o    generation plant construction, installation, and performance;
o    the  effects  of  strategic   initiatives,   including   acquisitions   and
     divestitures;
o    operation of nuclear power facilities and decommissioning costs;
o    the impact of current environmental regulations on utilities and generating
     companies and the  expectation  that more  stringent  requirements  will be
     introduced over time,  which could  potentially  have a negative  financial
     effect;
o    future wages and employee benefits costs;
o    disruptions  of the capital  markets or other  events  making our access to
     necessary capital more difficult or costly;
o    competition from other generating  facilities including new facilities that
     may be developed in the future;
o    delays in receipt of regulatory approvals for the acquisition of CILCORP or
     unexpected adverse conditions or terms of those approvals;
o    difficulties in integrating CILCO with Ameren's other businesses;
o    changes in the coal markets,  environmental  laws or  regulations  or other
     factors  adversely  impacting  synergy  assumptions in connection  with the
     CILCORP acquisition;
o    cost and availability of transmission  capacity for the energy generated by
     our  generating  facilities  or  required to satisfy  energy  sales made by
     Ameren; and
o    legal and administrative proceedings.

                                       25


PART II.  OTHER INFORMATION

ITEM 1.  Legal Proceedings

     On  April  26,  2002,  our  subsidiary,   AmerenEnergy  Generating  Company
(Generating   Company)   received  a  notice  of  violation  from  the  Illinois
Environmental  Protection Agency (IEPA) concerning the alleged improper disposal
of bottom ash and slag materials  originally from Generating  Company's  Coffeen
power  plant  and sold to an  off-site  facility.  Generating  Company  sold the
material to an  independent  third party who in turn resold the material to U.S.
Minerals  for  use in the  manufacture  of  building  materials  and  industrial
abrasives.  We believe  that the notice of  violation  is without  merit and the
Generating  Company's  sale  and/or  use  of  coal  combustion   by-products  is
specifically  authorized under the Illinois  Environmental  Protection Act. IEPA
also  issued a notice  of  violation  to U.S.  Minerals  alleging  the  improper
handling, storage and disposal of the coal combustion materials. We believe that
the final  disposition of this matter will not have a material adverse effect on
our financial position, results or operation or liquidity.

     On July 30, 2002, the Illinois Attorney General's Office advised us that it
would be commencing an enforcement  action concerning an inactive waste disposal
site near  Coffeen,  Illinois,  which is the  location  of a  disposal  facility
permitted  by the IEPA to receive  fly ash from the  Coffeen  power  plant.  The
Illinois  Attorney  General also  notified the disposal  facility's  current and
former  owners as to the  proposed  enforcement  action.  The  Attorney  General
advised  that it may  initiate  an action  under  CERCLA to  recover  past costs
incurred  at the site  ($322,000)  and to obtain a  declaratory  judgment  as to
liability for future costs. Neither AmerenEnergy  Generating Company (Generating
Company),  the current  owner of the Coffeen power plant,  nor Central  Illinois
Public  Service  Company,  (AmerenCIPS),  the prior owner of the  Coffeen  power
plant, owned or operated the disposal facility. We believe that this matter will
not have a material adverse effect on Ameren's  financial  position,  results of
operations or liquidity.

     Reference  is  made  to  Item  1.   Business  -  Rates  and   Regulation  -
Environmental Matters in Part I of our Form 10-K for the year-ended December 31,
2001 for a  discussion  of the lawsuit  filed in the Circuit  Court of Christian
County, Illinois by Steven and Tina Brannan against our subsidiaries, AmerenCIPS
and Generating Company,  and us. This lawsuit alleged that AmerenCIPS and others
were negligent in the manner in which AmerenCIPS' manufactured gas plant site in
Taylorville, Illinois, was remediated, therefore wrongfully causing the death of
the  Brannan's  minor son. On July 3, 2002, a settlement  agreement  was entered
into with the Brannans  which fully  released our  subsidiaries  and us from all
liabilities  claimed in the lawsuit in  consideration  for payment of an amount,
the  disclosure  of which is  restricted  by a  confidentiality  agreement.  The
settlement  will not have a material  adverse effect on our financial  position,
results of operations or liquidity.

     Reference is made to Item 3. Legal  Proceedings  in Part I of our Form 10-K
for the year-ended December 31, 2001 and to Item 1. Legal Proceedings in Part II
of our Form 10-Q for the quarterly  period ended March 31, 2002 for a discussion
of a number  of  lawsuits  that  name our  subsidiaries,  AmerenCIPS  and  Union
Electric Company, operating as AmerenUE, and us (which we refer to as the Ameren
companies),  along with numerous  other  parties,  as defendants  that have been
filed by plaintiffs  claiming varying degrees of injury from asbestos  exposure.
Since the filing of our Form 10-Q for the quarterly period ended March 31, 2002,
thirty-four  additional  lawsuits have been filed against the Ameren  companies.
These lawsuits,  like the previous cases, were mostly filed in the Circuit Court
of Madison County, Illinois, involve a large number of total defendants and seek
unspecified damages in excess of $50,000,  which, if proved,  typically would be
shared  among the named  defendants.  Also  since  our first  quarter  Form 10-Q
filing,  a settlement has been reached in one lawsuit for a monetary  amount not
material to the Ameren companies and in one case, the Ameren companies have been
voluntarily dismissed.

     To date, a total of seventy-six  asbestos-related  lawsuits have been filed
against the Ameren  companies,  of which  sixty-two  are pending,  ten have been
settled and four have been dismissed.  We believe that the final  disposition of
these  proceedings  will not have a  material  adverse  effect on our  financial
position, results of operations or liquidity.

                                       26



ITEM 4.  Submission of Matters To a Vote of Security Holders

     At our annual meeting of stockholders held on April 23, 2002, the following
matters were  presented to the meeting for a vote and the results of such voting
are as follows:

Item (1)  Election of Directors.
                                                                 Non-Voted
          Name                        For         Withheld       Brokers
          ----                        ---         --------       -----------
          William E. Cornelius    113,736,614     2,528,807          0
          Clifford L. Greenwalt   113,618,313     2,647,108          0
          Thomas A. Hays          113,816,089     2,449,332          0
          Thomas H. Jacobsen      113,324,703     2,940,718          0
          Richard A. Liddy        113,190,052     3,075,369          0
          Gordon R. Lohman        113,805,800     2,459,621          0
          Richard A. Lumpkin      113,233,864     3,031,557          0
          John Peters MacCarthy   113,838,311     2,427,109          0
          Hanne M. Merriman       113,823,430     2,441,991          0
          Paul L. Miller, Jr      113,357,081     2,908,339          0
          Charles W. Mueller      113,885,096     2,380,325          0
          Harvey Saligman         113,265,201     3,000,220          0
          James W. Wogsland       113,086,015     3,179,405          0

Item (2) Stockholder Proposal Relating to a Financial Assessment of the Costs of
Decommissioning the Callaway Nuclear Plant.

                                                                 Non-Voted
                For            Against         Abstain           Brokers
                ---            -------         -------           -----------

             6,462,086      106,876,678       3,931,442          19,620,928

      Broker shares included in the quorum but not voting on the item.


ITEM 5.  Other Information

     Mr. Thomas H. Jacobsen, a Director of Ameren Corporation,  died on July 20,
2002.  No decision  has been made as to who,  if anyone,  will be  appointed  to
replace Mr. Jacobsen.

     Any stockholder  proposal  intended for inclusion in the proxy material for
our 2003 annual meeting of  stockholders  must be received by us by November 15,
2002.

     In  addition,  under  our  By-Laws,  stockholders  who  intend  to submit a
proposal in person at an annual meeting, or who intend to nominate a director at
a meeting,  must provide  advance  written  notice  along with other  prescribed
information. In general, such notice must be received by our Secretary not later
than 60 nor earlier than 90 days prior to the first anniversary of the preceding
year's annual  meeting.  For our 2003 annual  meeting of  stockholders,  written
notice of any  in-person  stockholder  proposal or director  nomination  must be
received not later than February 22, 2003 or earlier than January 23, 2003.

     The Audit  Committee  of the Board of  Directors of Ameren has approved our
independent accountants, PriceWaterhouseCoopers,  to perform the following audit
and non-audit services:

o    Audits required by the federal, state or local government rules
o    Audits of employee pension and benefits plans
o    Income tax accounting and consulting projects
o    Comfort  letters and  consents  required to complete  SEC filings and issue
     securities
o    Consultation  on responses to  accounting  inquiries by regulatory or other
     bodies
o    Audit of AmerenEnergy earnings before interest and taxes statement
o    Review of stock transfer agent and registrar internal controls


                                       27


o    Review of risk management internal controls
o    Consultation on the accounting for corporate events and transactions
o    Assistance with preparation of testimony for regulatory filings

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

          (a)(i) Exhibits.

             10.1 - Memorandum  of  Understanding  dated  May 24,  2002  between
                    Ameren   Services   Company,   as  agent  for  AmerenUE  and
                    AmerenCIPS,  and the Midwest Independent Transmission System
                    Operator, Inc. (MISO).

             10.2 - Participation  Agreement  dated as of July 3,  2002,  by and
                    among MISO, Ameren Services  Company,  as agent for AmerenUE
                    and  AmerenCIPS,   FirstEnergy   Corporation  on  behalf  of
                    American   Transmission  Systems,   Incorporated,   Northern
                    Indiana Public Service Company and National Grid.

             99.1 - Statement of Principal  Executive  Officer required by SEC
                    Order No.  4-460 (not filed as a part of this Report on Form
                    10-Q).

             99.2 - Statement of  Principal  Financial  Officer  required by SEC
                    Order No.  4-460 (not filed as a part of this Report on Form
                    10-Q).

             99.3   Certificate of Chief Executive  Officer  required by Section
                    906 of the  Sarbanes-Oxley  Act of 2002 (not filed as a part
                    of this Report on Form 10-Q).

             99.4   Certificate of Chief Financial  Officer  required by Section
                    906 of the  Sarbanes-Oxley  Act of 2002 (not filed as a part
                    of this Report on Form 10-Q).


          (a)(ii) Exhibits Incorporated by Reference.

             4.1 -  Third  Supplemental  Indenture  dated as of June 1,  2002 to
                    Indenture  dated as of  November  1, 2000 from  AmerenEnergy
                    Generating  Company  to The  Bank of New  York,  as  Trustee
                    relating to AmerenEnergy  Generating  Company's 7.95% Senior
                    Notes,  Series E due 2032  (including as exhibit the form of
                    Note) (June 30, 2002  AmerenEnergy  Generating  Company Form
                    10-Q, Exhibit 4.1).

              4.2 - Registration  Rights  Agreement,  dated June 6, 2002,  among
                    AmerenEnergy  Generating  Company and the Initial Purchasers
                    relating to AmerenEnergy  Generating  Company's 7.95% Senior
                    Notes,  Series  E  due  2032  (June  30,  2002  AmerenEnergy
                    Generating Company Form 10-Q, Exhibit 4.2).

             99.5   Stipulation  and  Agreement  dated July 15, 2002 in Missouri
                    Public  Service   Commission   (MoPSC)  Case  No.  EC-2002-1
                    (earnings   complaint  case  against  AmerenUE)  (File  Nos.
                    333-87506 and 333-87506-01, Exhibit 99.1).

          (b) Reports on Form 8-K. Ameren  Corporation filed reports on Form 8-K
          as follows:  (i) dated April 29, 2002  incorporating  a press  release
          announcing  the  signing  of  a  definitive  agreement  with  The  AES
          Corporation  for the purchase of the common  stock of its  subsidiary,
          CILCORP  Inc.;  (ii) dated May 28, 2002  relating  to the  decision of
          AmerenCIPS and AmerenUE to rejoin the MISO;  (iii) dated July 12, 2002
          incorporating  a press release  stating that an agreement in principle
          had been  reached in the  earnings  complaint  case filed by the MoPSC
          staff against AmerenUE; (iv) dated July 16, 2002 incorporating a press
          release  outlining the details of the settlement  reached in the MoPSC
          earnings  complaint case; and (v) dated July 25,  2002 incorporating a
          press  release  stating  that the MoPSC had  approved  the  settlement
          reached in the earnings complaint case.

                                       28



   Note:  Reports of Central  Illinois Public Service Company on Forms 8-K, 10-Q
          and 10-K are on file with the SEC under File Number 1-3672.

          Reports of Union  Electric  Company on Forms 8-K, 10-Q and 10-K are on
          file with the SEC under File Number 1-2967.

          Reports of AmerenEnergy Generating Company on Forms 8-K, 10-Q and 10-K
          are on file with the SEC under the File Number 333-56594.

                                       29




                                    SIGNATURE

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.

                                          AMEREN CORPORATION
                                          (Registrant)

                                          By   /s/ Martin J. Lyons
                                             ------------------------------
                                                   Martin J. Lyons
                                                     Controller
                                             (Principal Accounting Officer)
Date:  August 14, 2002


                                       30



                                                                   Exhibit 10.1

                           Memorandum of Understanding

     This Memorandum of  Understanding is entered into this 24th day of May 2002
between  Ameren  Services  Company  ("  Ameren  Services"),  as agent  for Union
Electric  Company,  d/b/a AmerenUE and Central  Illinois Public Service Company,
d/b/a AmerenCIPS, and the Midwest Independent Transmission System Operator, Inc.
("MISO").  Ameren  Services and MISO may  individually be referred to below as a
"Party" or collectively as "Parties".

                                   Witnesseth:

     Whereas Union Electric  Company and Central Illinois Public Service Company
(collectively,  the "Ameren Operating  Companies") are wholly owned subsidiaries
of Ameren Corporation  ("Ameren"),  a multi-state public utility holding company
system; and

     Whereas  Ameren  Services,  as agent for the  Ameren  Operating  Companies,
operates the  transmission  facilities  of the Ameren  Operating  Companies as a
single system pursuant to Ameren Services' Open Access Transmission Tariff; and

     Whereas the  transmission  facilities  operated by Ameren  Services are not
currently  under  the  operational   control  of  a  Federal  Energy  Regulatory
Commission ("FERC") approved Regional Transmission Organization ("RTO"); and

     Whereas  MISO  is a FERC  approved  RTO  with  an  open  architecture  that
accommodates  various  forms  of  participation  in its  organization  including
independent transmission companies; and



     Whereas  Ameren  Services,  as agent for the  Ameren  Operating  Companies,
desires to pursue participation in the MISO in a manner that maximizes the value
of the transmission assets that Ameren Services operates; and

     Whereas the Parties have entered into negotiations to develop  arrangements
that would allow Ameren Services to participate  either as a transmission  owner
within MISO or as a member of an independent  transmission  company within MISO;
and

     Whereas  the  Parties  desire to set forth the  principles  and  conditions
governing Ameren Services' proposed participation in MISO.

     Now therefore, the Parties agree as follows:

     1.   For purposes of this  Memorandum of  Understanding,  the  transmission
          facilities  proposed to be transferred to MISO's  operational  control
          include  all  transmission  facilities  owned by the Ameren  Operating
          Companies within the control area operated by Ameren Services.

     2.   Ameren  Services,  on behalf of the Ameren Operating  Companies,  will
          apply for membership in MISO as an individual  transmission  owner or,
          as part of an Independent  Transmission  Company,  under Appendix I of
          the MISO Agreement.  Such Independent  Transmission Company may be the
          Alliance  Gridco.  Ameren  Services will apply for such  membership in
          MISO  within   thirty  days  of  execution  of  this   Memorandum   of
          Understanding.  If Ameren  Services  assumes  membership in MISO as an
          individual   transmission   owner,  Ameren  Services  may  nonetheless
          transfer the transmission facilities of the Ameren Operating Companies
          to an Independent  Transmission  Company operating under Appendix I of
          the  MISO  Agreement  at  any  time.   Ameren   Services'  rights  and
          obligations under this Memorandum of Understanding  will apply whether
          Ameren Services joins MISO as an individual  transmission  owner or as

                                       2


          part  of  an  Independent   Transmission  Company,   except  that  the
          withdrawal provisions for an individual transmission owner would apply
          if Ameren  Services  joins and remains as an  individual  transmission
          owner.

     3.   Ameren  Services  will remain in MISO  through at least  December  31,
          2004,  but has the right to withdraw from MISO at anytime  thereafter,
          subject to the required  regulatory  approvals.  Except as provided in
          paragraphs  6 and 7, Ameren  Services  will  provide MISO with no less
          than twelve months written notice of its intent to withdraw from MISO.
          While Ameren Services will not be responsible for an exit fee in order
          to withdraw, Ameren Services will remain responsible for all financial
          obligations  it incurs under the  applicable  MISO  agreements and the
          MISO Open Access  Transmission Tariff (MISO Tariff) before the date of
          its withdrawal.  It is the intent of the Parties that Ameren Services'
          financial  obligations  to the MISO upon its departure will be limited
          to (i) any unamortized Ameren Services  integration costs as described
          in  paragraph 8,  (ii)  any  unamortized  Alliance  RTO  and  Alliance
          Participants  Administrative and Start-Up Activities Company LLC costs
          described in paragraph  12,  (iii) should the Offer of  Settlement  in
          Docket No. ERO2-111-000  concerning the Schedule 10 to the MISO Tariff
          (MISO  Schedule  10)  be  approved  by  the  FERC,   Ameren  Services'
          proportional   share  of  any  unamortized   settlement   credits  and
          associated  financing  costs that were applicable in a month when load
          served within the Ameren Services zone was paying the MISO Schedule 10
          charges  and the  settlement  credits  were in force,  and (iv) Ameren
          Services load ratio share of any  unamortized  amounts  resulting from
          the payment pursuant to paragraph 14.

     4.   MISO will make no assessment or other allocation to Ameren Services or
          other MISO transmission owners or Independent  Transmission  Companies
          of capital  costs  associated  with the  integration  of the Southwest
          Power Pool,  its  transmission  owners or members into MISO. The costs
          associated with such integration will be recovered under MISO Schedule
          10.

                                        3


     5.   MISO will make no assessment or other allocation to Ameren Services or
          other MISO transmission owners or Independent  Transmission  Companies
          of capital costs associated with the development and implementation of
          a standard market design.  The MISO will file with the FERC a proposal
          for deferring and recovering costs associated with the development and
          implementation   of  a  standard   market   design   from  all  market
          participants  through a user based  transaction  mechanism  similar to
          MISO  Schedule  10;  provided  however,  MISO  will not make such FERC
          filing  until  after  MISO has first  presented  the  proposal  to its
          stakeholders for review and comment.

     6.   If ownership of all or a substantial  portion of the Ameren  Operating
          Companies  transmission  facilities  is changed as a result of a sale,
          merger,  or  acquisition  involving a party other than an affiliate of
          the Ameren  Operating  Companies,  then the new owner may withdraw the
          applicable Ameren Operating  Companies'  transmission  facilities from
          MISO at any time following thirty days written notice to MISO, subject
          to applicable regulatory approvals.

     7.   Subject to FERC  approval,  Ameren  Services,  on behalf of the Ameren
          Operating  Companies,  will have the right to withdraw  from MISO upon
          thirty  days  written  notice  if  any  MISO  transmission  owners  or
          Independent  Transmission  Companies withdraw from MISO and either: a)
          the transmission  facilities of the Ameren Operating  Companies are no
          longer directly interconnected with a remaining MISO member; or, b) in
          Ameren   Services  sole   discretion,   a  material   portion  of  the
          transmission  facilities under MISO's operational  control are removed
          by the withdrawing member or members.

     8.   MISO  and  Ameren   Services   will  incur  costs  to  integrate   the
          transmission  facilities of the Ameren Operating  Companies into MISO.
          MISO and  Ameren  Services  will agree  upon an  integration  plan and
          budget prior to any  integration  expenditures  being made.  MISO will
          reimburse Ameren Services for its integration costs upon completion of
          the integration  plan  activities.  MISO will recover its costs,  both

                                       4


          those  directly  incurred  and  those  incurred  to  reimburse  Ameren
          Services,  exclusively from MISO Schedule 10 revenues. Ameren Services
          will not have to pay the MISO  membership  application  fee because of
          Ameren's existing MISO membership status. Ameren Services,  the Ameren
          Operating Companies,  Ameren's affiliate companies or their customers,
          as applicable, will pay the MISO Schedule 10 charge applicable to load
          served within the Ameren Services zone.

     9.   MISO will support the use of the existing  Ameren Services Open Access
          Transmission  Tariff  ("OATT") rates and rate design within the Ameren
          Services zone, and will permit Ameren  Services,  at Ameren  Services'
          option to  convert  its  existing  OATT rate for  network  integration
          transmission  service  within  the Ameren  Services  zone to a formula
          based  rate.  MISO  will  support  the use of  Ameren  Services'  rate
          structure for operations  within MISO to the greatest extent possible.
          Ameren  Services  reserves the right to proffer,  individually or with
          other companies,  the Alliance rate design endorsed by the FERC in its
          April 25, 2002 Order On Petition For Declaratory  Order in Docket Nos.
          EL02-65-000 et al (hereinafter the "April 25th Order").

     10.  MISO will also support the recovery of Ameren  Services' lost revenues
          resulting from the  elimination of multiple  zonal  transmission  rate
          charges and  corresponding  revenue  allocation in a manner consistent
          with the April 25th Order.

     11.  MISO  will  either  discount  its  total  charges  for  Drive-Out  and
          Drive-Through  Service or make a Section 205 application with the FERC
          to lower the cap on its total charges for Drive-Out and  Drive-Through
          Service.   The  new  cap  on  its  total  charges  for  Drive-Out  and
          Drive-Through Service, whether achieved by discount or filing, will be
          formulated  to provide  flexibility  for the MISO to maximize  revenue
          while minimizing the charges applied to this service.

     12.  MISO will make a Section 205 application  with the FERC to provide for
          the recovery,  through MISO Schedule 10, of all prudent costs incurred

                                       5


          by the Ameren  Operating  Companies for Alliance RTO  development  and
          start-up   activities,   including  costs  of  establishing   Alliance
          Participants Administrative and Start-Up Activities Company LLC.

     13.  The Parties  acknowledge that  implementation  of these principles and
          conditions  may be subject to the approval of regulatory  authorities.
          MISO  and  Ameren  Services  agree to  cooperate  in  negotiating  and
          executing any  agreements  necessary to reflect the provisions of this
          Memorandum of  Understanding  so that  applications  for all necessary
          regulatory  approvals  can be  filed  as soon as  possible.  It is the
          objective  of MISO and Ameren  Services  that  Ameren  Services  begin
          operations  under MISO no later than four months after  receipt of the
          last regulatory approval.

     14.  Within 60 days  after  final  order  from FERC is  received  accepting
          Ameren Services  participation  in MISO on terms  consistent with this
          Memorandum of Understanding, the MISO agrees to pay to Ameren Services
          the $18 million paid to the MISO pursuant to the Settlement  Agreement
          reached in Docket  No.ER01-123-002  plus interest and less credits, if
          any,  actually  received by Ameren Services or its affiliates  through
          Schedule 10A. The interest  rate will be determined  monthly using the
          average monthly rate the MISO earned on investments  from the time the
          monies were received by the MISO until the date of the repayment.

     15.  In the event that a regulatory  authority  materially  modifies any of
          the terms and conditions of Ameren  Services'  participation  in MISO,
          including  its rights  under this  Memorandum  of  Understanding,  the
          Parties  agree to negotiate  in good faith to establish  new terms and
          conditions  that place the Parties in the same  position as  bargained
          for herein.  In the event that the Parties  cannot  reach an agreement
          within  thirty  days  of  the  regulatory  action  on  new  terms  and
          conditions,  or the new  terms  and  conditions  are not  subsequently
          approved by the regulatory authority, Ameren Services may withdraw its
          application to join MISO upon thirty days written notice.


                                       6


     16.  All  discussions  and  information  exchanged under this Memorandum of
          Understanding  are  confidential.   No  information  provided  by  the
          disclosing  Party to the other Party may be disclosed to third parties
          without the consent of the disclosing  Party.  No Party will issue any
          press release or make any public disclosure concerning this Memorandum
          of Understanding without the consent of the other Party.


AGREED TO this 24th day of May 2002 by the undersigned representatives of Ameren
Services and MISO.

Midwest Independent Transmission                 Ameren Services Company
Incorporated                                     as agent for
                                                 Union Electric Company d/b/a
                                                 AmerenUE and
                                                 Central Illinois Public Service
                                                 Company d/b/a AmerenCIPS


/s/ James P. Torgerson                           /s/ David A. Whiteley
------------------------------------------       ----------------------------
By:  James P. Torgerson                          By: David A. Whiteley
Title: President & Chief Executive Officer       Title: Senior Vice President


                                       7

                                                                   Exhibit 10.2

                             PARTICIPATION AGREEMENT

                                  by and among

             MIDWEST INDEPENDENT TRANSMISSION SYSTEM OPERATOR, INC.,

                             AMEREN SERVICES COMPANY
                                  as agent for
                    Union Electric Company d/b/a AmerenUE and
            Central Illinois Public Service Company d/b/a AmerenCIPS,

                                FIRSTENERGY CORP.
                                  on behalf of
                  American Transmission Systems, Incorporated,

                     NORTHERN INDIANA PUBLIC SERVICE COMPANY

                                       and

                                NATIONAL GRID USA


                            Dated as of July 3, 2002






                                     ANNEXES

               A       Definitions
               B       Notice Information

                                    EXHIBITS

               A       GridAmerica Letter of Intent and Term Sheet
               B       Form of Appendix I ITC Agreement





     This  PARTICIPATION  AGREEMENT dated as of July 3, 2002 is made and entered
into by and among MIDWEST INDEPENDENT  TRANSMISSION  SYSTEM OPERATOR,  INC. (the
"Midwest ISO"),  AMEREN SERVICES COMPANY, a Missouri  corporation,  as agent for
Union  Electric  Company  d/b/a  AmerenUE and Central  Illinois  Public  Service
Company d/b/a AmerenCIPS,  FIRSTENERGY CORP., an Ohio corporation,  on behalf of
American  Transmission  Systems,  Incorporated,  NORTHERN INDIANA PUBLIC SERVICE
COMPANY, an Indiana corporation, (each of the foregoing companies is referred to
herein  as a  "GridAmerica  Company"  and,  collectively,  as  the  "GridAmerica
Companies") and NATIONAL GRID USA, a Delaware corporation ("National Grid").

                                    RECITALS

     WHEREAS,  on April 25, 2002, the United States  Federal  Energy  Regulatory
Commission  (together with any successor agency, the "FERC" or the "Commission")
issued an order in Docket No.  EL02-65 (99 FERC 61, 105 (2002)  encouraging  the
formation of an independent transmission company ("ITC") within the Midwest ISO;

     WHEREAS,  the  Midwest  ISO  is  a  FERC  approved  regional   transmission
organization  ("RTO") with an open architecture that accommodates  various forms
of ITC in its operation;

     WHEREAS,  the  GridAmerica  Companies  wish to comply  with Order No.  2000
through the formation of an ITC within the Midwest ISO;

     WHEREAS, the GridAmerica Companies and National Grid ("National Grid") have
executed  that certain  letter of intent dated June 20, 2002, a copy of which is
annexed   hereto  as  Exhibit  A,  regarding  the  formation  and  operation  of
GridAmerica LLC ("GridAmerica") as an ITC within the Midwest ISO;

     WHEREAS,  GridAmerica  will  sign  Operation  Agreements  with  each of the
GridAmerica  Companies that will provide  GridAmerica with functional control of
the transmission  facilities of the GridAmerica Companies that are not currently
under the operational control of a FERC approved RTO; and

     WHEREAS,  the Midwest ISO, the GridAmerica  Companies and National Grid now
desire to enter into this Agreement in order to evidence their desire to execute
and deliver the Appendix I ITC Agreement,  a copy of which is attached hereto as
Exhibit B (the "ITC Agreement"), and to consummate the transactions contemplated
hereby and thereby and to evidence  their  respective  obligations  as set forth
herein.

     NOW,  THEREFORE,  in  consideration  of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the Parties hereby
agree as follows:



                                    ARTICLE I
                                     CLOSING

      Section 1.01 Closing.

     (a) The closing of the  transactions  contemplated  by this  Agreement (the
"Closing") will take place at such place as the parties  mutually agree at 10:00
A.M.  local time, on a date (the  "Closing  Date") within five (5) Business Days
after the date on which all of the conditions precedent set forth in Article III
of this Agreement have been satisfied or waived in accordance  with the terms of
Article III, or at such other place and time as the Parties mutually agree.

     (b) At the  Closing:  (i) the ITC  Agreement  and  such  other  agreements,
instruments,  certifications  and  documents as may be necessary or desirable to
effectuate  the  transactions   contemplated  by  this  Agreement  and  the  ITC
Agreement,  shall be duly  executed and delivered by and to each of the intended
parties thereto and GridAmerica shall complete the transfer  functional  control
of the transmission  facilities of the GridAmerica  Companies to the Midwest ISO
as  contemplated  by the ITC agreement;  (ii) in  consideration  for the Midwest
ISO's ability to have  unrestricted  use of the capital assets  developed by the
Alliance  Participants   Administrative  and  Start-up  Activities  Company  LLC
("BridgeCo"),  the  Midwest ISO shall make (x) a one-time  payment  equal to the
amount  contributed  by the  GridAmerica  Companies  and the other  Midwest  ISO
members to BridgeCo to develop these assets and the costs incurred  hereafter to
finish such development and (y) a one-time  payment to each GridAmerica  Company
to  reimburse  such  GridAmerica  Company  the  costs  incurred  by  it  in  the
development  of Alliance  RTO,  such  unrestricted  use and  payments to be made
pursuant to an agreement  which shall be mutually  acceptable to the Parties and
which  agreement shall be executed and delivered no later than the Closing Date;
and (iii) the Midwest ISO shall refund to Ameren Service Company, with interest,
the $18,000,000  payment made by Ameren to leave the Midwest ISO pursuant to the
terms of the settlement approved in Illinois Power Co., 95 FERC 61,183, order on
reh'g, 96 FERC 61,206 (2001).  ca Company to reimburse such GridAmerica  Company
the costs incurred by it in the  development of Alliance RTO, such  unrestricted
use and  payments to be made  pursuant to an  agreement  which shall be mutually
acceptable to the Parties and which agreement shall be executed and delivered no
later than the Closing  Date;  and (iii) the Midwest ISO shall  refund to Ameren
Service Company, with interest,  the $18,000,000 payment made by Ameren to leave
the Midwest ISO  pursuant  to the terms of the  settlement  approved in Illinois
Power Co., 95 FERC 61,183, order on reh'g, 96 FERC 61,206 (2001) .

     Section 1.02  Further Assurances.

     Upon the request of a Party, each other Party shall execute and deliver, or
shall  cause its  respective  Affiliate(s)  to execute and  deliver,  such other
agreements,  instruments,  certifications or other documents and shall take, and
cause its Affiliates to take,  such other action as may be reasonably  necessary
and desirable to implement the  transactions  contemplated  to be implemented at
the Closing.



                                   ARTICLE II
                            COVENANTS OF THE PARTIES

     Section 2.01  Covenants of GridAmerica Companies.

     Each GridAmerica Company covenants to the Midwest ISO and National Grid and
each of the other  GridAmerica  Companies  that, at all times from and after the
date hereof until the Closing  Date,  it shall comply with each of the following
covenants.

     (a) Required Consents.

     It shall:  (i) take  commercially  reasonable  steps  necessary and proceed
diligently  and in good faith to obtain all  Required  Consents  required  to be
obtained by it to consummate the transactions  contemplated hereby; (ii) provide
information  which may be requested by  Governmental  Authorities  in connection
therewith;  and (iii)  cooperate with the Midwest ISO and National Grid and each
other GridAmerica Company in obtaining all Required Consents required of each of
them to consummate the transactions contemplated hereby. It shall provide prompt
notification  to the Midwest ISO and  National  Grid and each other  GridAmerica
Company when any Required  Consent  referred to in clause (i) above is obtained,
taken,  made or given,  as  applicable,  and shall  advise the  Midwest  ISO and
National  Grid and each  other  GridAmerica  Company of any  material,  written,
non-confidential  communications  (and, upon request and unless  confidential or
precluded by Law, provide copies of any such material  communications  which are
in writing) with any Governmental Authority regarding such Required Consents.

     (b) Fulfillment of Conditions.

     It further covenants that it shall exercise commercially reasonable efforts
and proceed  diligently  and in good faith to satisfy the  conditions to Closing
set forth in Article III upon which the Midwest ISO, National Grid and the other
GridAmerica  Companies are entitled to rely and which  conditions are within its
control to satisfy,  including  taking,  and causing each of its  Affiliates  to
take, all reasonable  steps necessary or desirable to proceed  diligently and in
good  faith  to  satisfy  its  obligations   contained  in  this  Agreement  and
refraining,  and causing  each of its  Affiliates  to  refrain,  from taking any
action that could reasonably be expected to result in the non-fulfillment of any
such obligation.

     Section 2.02 Covenants of National Grid.

     National  Grid  covenants to the Midwest ISO and each  GridAmerica  Company
that,  at all times from and after the date hereof  until the Closing  Date,  it
shall comply with each of the following covenants.

     (a) Required Consents.

     It shall:  (i) take  commercially  reasonable  steps  necessary and proceed
diligently  and in good faith to obtain all  Required  Consents  required  to be
obtained by it to consummate the transactions  contemplated hereby; (ii) provide
information  which may be requested by  Governmental  Authorities  in connection
therewith; and (iii) cooperate with the Midwest ISO and each GridAmerica Company
in obtaining all Required  Consents  required of each of them to consummate  the



transactions  contemplated  hereby. It shall provide prompt  notification to the
Midwest ISO and each  GridAmerica  Company when any Required Consent referred to
in clause (i) above is obtained, taken, made or given, as applicable,  and shall
advise the Midwest ISO and each  GridAmerica  Company of any material,  written,
nonconfidential  communications  (and,  upon request and unless  confidential or
precluded by Law, provide copies of any such material  communications  which are
in writing) with any Governmental Authority regarding such Required Consents.

     (b) Formation and Business of Initial Member and Company.

     Upon the  fulfillment of the conditions set forth in Section 3.02, it shall
form GridAmerica and cause  GridAmerica to execute and deliver the ITC Agreement
and such other agreements,  instruments,  certifications and documents as may be
necessary and desirable to effectuate the  transactions  contemplated by the ITC
Agreement as contemplated by Article I.

     (c) Fulfillment of Conditions.

     It shall exercise  commercially  reasonable  efforts and proceed diligently
and in good faith to satisfy the  conditions to Closing set forth in Article III
upon which the Midwest ISO and the  GridAmerica  Companies  are entitled to rely
and which conditions are within its control to satisfy,  including  taking,  and
causing  each of its  Affiliates  to take,  all  reasonable  steps  necessary or
desirable  to proceed  diligently  and in good faith to satisfy its  obligations
contained in this Agreement and  refraining,  and causing each of its Affiliates
to refrain,  from taking any action that could  reasonably be expected to result
in the non-fulfillment of any such obligation.

     Section 2.03 Covenants of the Midwest ISO.

     The Midwest ISO  covenants  to  National  Grid and each of the  GridAmerica
Companies  that,  at all times from and after the date hereof  until the Closing
Date, it shall comply with each of the following covenants.

     (a) Required Consents.

     It shall:  (i) take  commercially  reasonable  steps  necessary and proceed
diligently  and in good faith to obtain all  Required  Consents  required  to be
obtained by it to consummate the transactions  contemplated hereby; (ii) provide
information  which may be requested by  Governmental  Authorities  in connection
therewith;  and (iii) cooperate with National Grid and each GridAmerica  Company
in obtaining all Required  Consents  required of each of them to consummate  the
transactions  contemplated  hereby.  It shall  provide  prompt  notification  to
National Grid and each GridAmerica Company when any Required Consent referred to
in clause (i) above is obtained, taken, made or given, as applicable,  and shall
advise  National Grid and each  GridAmerica  Company of any  material,  written,
non-confidential  communications  (and, upon request and unless  confidential or
precluded by Law, provide copies of any such material  communications  which are
in writing) with any Governmental Authority regarding such Required Consents.



     (b) Fulfillment of Conditions.

     It further covenants that it shall exercise commercially reasonable efforts
and proceed  diligently  and in good faith to satisfy the  conditions to Closing
set forth in Article III upon which National Grid and the GridAmerica  Companies
are  entitled  to rely and which  conditions  are within its control to satisfy,
including  taking,  and causing each of its  Affiliates to take,  all reasonable
steps necessary or desirable to proceed  diligently and in good faith to satisfy
its obligations contained in this Agreement and refraining,  and causing each of
its  Affiliates  to refrain,  from taking any action  that could  reasonably  be
expected to result in the non-fulfillment of any such obligation.


                                  ARTICLE III
                         CONDITIONS PRECEDENT TO CLOSING

     Section 3.01 Conditions Precedent to Obligations of GridAmerica Companies.

     The obligation of each  GridAmerica  Company to enter into the transactions
to take place at the Closing is subject to the  satisfaction,  or waiver by such
GridAmerica Company, of each of the following conditions precedent:

     (a) Performance.

     The Midwest ISO, National Grid and each of the other GridAmerica  Companies
shall have performed and complied,  in all material  respects,  with each of its
covenants set forth in this Agreement to be so performed and complied with by it
at or prior to the Closing.

     (b) Orders and Laws.

     There  shall  not be in  effect  on  the  Closing  Date  any  Order  or Law
restraining,   enjoining  or  otherwise   prohibiting   or  making  illegal  the
consummation  of the  transactions  contemplated  by  this  Agreement,  the  ITC
Agreement or the ITC Documents,  and there shall not be pending or threatened on
the Closing Date any  Proceeding  in,  before or by any  Governmental  Authority
which could  reasonably  be expected to result in the issuance of any such Order
or to prohibit any of such transactions.

     (c) Required Consents.

     The Commission  shall have issued a Final Order which is an Approval Order,
and all other Required  Consents  (including  Required  Consents to be obtained,
made or given by any federal or state Governmental  Authorities) shall: (i) have
been duly  obtained,  made or given;  (ii) be in form and substance  which would
not, in its reasonable judgment, and when considered in light of the Final Order
and all other  Required  Consents  (A) cause it to fail to realize any  material
benefit which it reasonably  anticipates from the  transactions  contemplated by
the  ITC  Agreement  and the ITC  Documents  or (B)  impose  any  conditions  or
requirements  which could  reasonably be expected to have a material and adverse
effect  on its  or any of its  Affiliates'  current  or  planned  operations  or
business activities or its or their prospects; (iii) be in full force and effect
and any waiting periods with respect thereto shall have expired; and (iv) not be



subject to any Proceeding  which, if determined  adversely,  could result in the
loss, amendment or conditioning thereof.

     (d) Effectiveness of ITC Documents.

     The  ITC  Documents,  including  all  schedules,  exhibits  and  appendices
thereto, shall have been completed,  in form and substance reasonably acceptable
to such GridAmerica Company, and such ITC Documents shall have been executed and
delivered  by each  of the  intended  parties  thereto  and  shall  have  become
effective.

     (e) Formation of GridAmerica and Transfer of Functional Control.

     GridAmerica  shall  have been  formed and shall  have  acquired  functional
control of the  transmission  facilities of the GridAmerica  Companies which are
the subject of the ITC Agreement.

     Section 3.02 Conditions Precedent to Obligations of National Grid.

     The  obligation  of National  Grid to enter into the  transactions  to take
place at the Closing is subject to the satisfaction, or waiver by National Grid,
of each of the following conditions precedent:

     (a) Performance.

     The Midwest  ISO and each  GridAmerica  Company  shall have  performed  and
complied, in all material respects, with each of its covenants set forth in this
Agreement to be so performed and complied with by it at or prior to the Closing.

     (b) Orders and Laws.

     There  shall  not be in  effect  on  the  Closing  Date  any  Order  or Law
restraining,   enjoining  or  otherwise   prohibiting   or  making  illegal  the
consummation  of the  transactions  contemplated  by  this  Agreement,  the  ITC
Agreement or the ITC Documents,  and there shall not be pending or threatened on
the Closing Date any  Proceeding  in,  before or by any  Governmental  Authority
which could  reasonably  be expected to result in the issuance of any such Order
or to prohibit any of such transactions.

     (c) Required Consents.

     The Commission  shall have issued a Final Order which is an Approval Order,
and all other Required  Consents  (including  Required  Consents to be obtained,
made or given by any federal or state Governmental  Authorities) shall: (i) have
been duly  obtained,  made or given;  (ii) be in form and substance  which would
not, in its reasonable judgment, and when considered in light of the Final Order
and all other  Required  Consents  (A) cause it to fail to realize any  material
benefit which it reasonably  anticipates from the  transactions  contemplated by
the  ITC  Agreement  and the ITC  Documents  or (B)  impose  any  conditions  or
requirements  which could  reasonably be expected to have a material and adverse
effect  on its  or any of its  Affiliates'  current  or  planned  operations  or
business activities or its or their prospects; (iii) be in full force and effect



and any waiting periods with respect thereto shall have expired; and (iv) not be
subject to any Proceeding  which, if determined  adversely,  could result in the
loss, amendment or conditioning thereof.

     (d) Effectiveness of ITC Documents.

     The  ITC  Documents,  including  all  schedules,  exhibits  and  appendices
thereto, shall have been completed,  in form and substance reasonably acceptable
to National Grid, and such ITC Documents  shall have been executed and delivered
by each of the intended parties thereto and shall have become effective.

     (e) Formation of GridAmerica and Transfer of Functional Control.

     GridAmerica  shall  have been  formed and shall  have  acquired  functional
control of the  transmission  facilities of the GridAmerica  Companies which are
the subject of the ITC Agreement.

     Section 3.03 Conditions Precedent to Obligations of the Midwest ISO.

     The  obligation of the Midwest ISO to enter into the  transactions  to take
place at the  Closing is subject to the  satisfaction,  or waiver by the Midwest
ISO, of each of the following conditions precedent:

     (a)  Performance.

     National  Grid  and each  GridAmerica  Company  shall  have  performed  and
complied, in all material respects, with each of its covenants set forth in this
Agreement to be so performed and complied with by it at or prior to the Closing.

     (b)  Orders and Laws.

     There  shall  not be in  effect  on  the  Closing  Date  any  Order  or Law
restraining,   enjoining  or  otherwise   prohibiting   or  making  illegal  the
consummation  of the  transactions  contemplated  by  this  Agreement,  the  ITC
Agreement  or the ITC  Documents  but  only,  in the case of the ITC  Documents,
insofar as the ITC Documents purport to alter or otherwise modify the rights and
obligations  of the  Midwest  ISO as set forth in the ITC  Agreement,  and there
shall not be pending or threatened on the Closing Date any Proceeding in, before
or by any Governmental Authority which could reasonably be expected to result in
the issuance of any such Order or to prohibit any of such transactions.

     (c)  Required Consents.

     The Commission  shall have issued a Final Order which is an Approval Order,
and all other Required  Consents  (including  Required  Consents to be obtained,
made or given by any federal or state Governmental  Authorities) shall: (i) have
been duly  obtained,  made or given;  (ii) be in form and substance  which would
not, in its reasonable judgment, and when considered in light of the Final Order
and all other  Required  Consents  (A) cause it to fail to realize any  material
benefit which it reasonably  anticipates from the  transactions  contemplated by



the the ITC  Agreement  or the ITC  Documents  but only,  in the case of the ITC
Documents, insofar as the ITC Documents purport to alter or otherwise modify the
rights and  obligations  of the Midwest ISO as set forth in the ITC Agreement or
(B) impose any conditions or requirements  which could reasonably be expected to
have a material and adverse effect on its or any of its  Affiliates'  current or
planned operations or business activities or its or their prospects; (iii) be in
full force and effect and any waiting  periods with respect  thereto  shall have
expired;  and  (iv)  not be  subject  to any  Proceeding  which,  if  determined
adversely, could result in the loss, amendment or conditioning thereof.

     (d)  Effectiveness of ITC Documents.

     The  ITC  Documents,  including  all  schedules,  exhibits  and  appendices
thereto, shall have been completed,  and insofar as the ITC Documents purport to
alter or otherwise  modify the rights and  obligations of the Midwest ISO as set
forth in the ITC Agreement, shall be in form and substance reasonably acceptable
to the  Midwest  ISO,  and such ITC  Documents  shall  have  been  executed  and
delivered  by each  of the  intended  parties  thereto  and  shall  have  become
effective.

     (e)  Formation of GridAmerica and Transfer of Functional Control.

     GridAmerica  shall  have been  formed and shall  have  acquired  functional
control of the  transmission  facilities of the GridAmerica  Companies which are
the subject of the ITC Agreement.

     Section 3.04 Limitations.

     Notwithstanding  anything to the contrary set forth in Sections 3.01,  3.02
and 3.03, no Party shall be relieved of its obligations under this Agreement due
to the failure of any condition if such failure is based on such Party's failure
to perform in accordance with the terms of this Agreement.

                                   ARTICLE IV
                             TERMINATION; WITHDRAWAL

     Section 4.01 Termination.

     This Agreement may be terminated prior to Closing:

     (a) by written agreement executed by each of the Parties;

     (b) by National Grid, upon written notice to each of the other Parties,  if
the  Closing  shall not have  occurred  on or before  December  31, 2002 and the
failure to achieve Closing is not caused by its failure to perform in accordance
with the terms of this Agreement; or

     (c) by National Grid upon issuance by the Commission of a Final Order which
is not  an  Approval  Order,  provided  that  National  Grid  serves  notice  of
termination  to the other  Parties no later than 20 days after  issuance of such
Final Order.



     Section 4.02 Effect of Termination.

     If this  Agreement  is  terminated  pursuant  to  Section  4.01,  it  shall
forthwith  become null and void and there shall be no liability or obligation on
the  part  of  any  Party  (or  any of  their  respective  officers,  directors,
employees,   agents  or  other  representatives  or  Affiliates),   except  that
notwithstanding  any other  provisions in this  Agreement to the contrary,  upon
termination of this Agreement  pursuant to Section 4.01,  each Party will remain
liable to each other Party for any willful breach of this Agreement  existing at
the time of such termination,  and each Party may seek such remedies,  including
damages and reasonable  fees and expenses of attorneys,  against any other Party
with  respect to any such  breach as are  provided in this  Agreement  or as are
otherwise available at Law or in equity,  including the right to demand specific
performance.

     Section 4.03 Withdrawal.

     At any time prior to  Closing,  any  GridAmerica  Company  may, in its sole
discretion,  withdraw as a Party to this Agreement by delivering  written notice
(a "Withdrawal  Notice") to each other Party under the following  circumstances:
(i) within  thirty  (30) days after the  issuance by the  Commission  of a Final
Order which is not an Approval  Order;  (ii) within  fifteen (15) days after its
receipt of a Withdrawal  Notice issued  pursuant to clause (i) hereof by another
GridAmerica  Company;  (iii) if the Closing shall not have occurred on or before
December  31,  2002,  and the  failure to achieve  Closing is not caused by such
GridAmerica  Company's  failure to perform in accordance  with the terms of this
Agreement;  or (iv) if, prior to December 31, 2002,  it enters into a definitive
agreement, subject to customary terms and conditions,  pursuant to which it will
be acquired by or merged with another company or it is obligated to transfer all
or substantially all of its transmission facilities which are the subject of the
ITC Agreement, in each case whether by merger, consolidation,  sale of assets or
otherwise  to any  Person or Persons  other than one or more of its  Affiliates,
another  GridAmerica  Company or National Grid. Upon its withdrawal  pursuant to
this  Section  4.03,  a  GridAmerica  Company  shall  cease to have any  rights,
obligations  or  liabilities   under  this  Agreement  (other  than  rights  and
obligations as set forth in this Section 4.03 and liabilities that existed prior
to the date of withdrawal).

     Section 4.04 Exclusion of Consequential Damages.

     Notwithstanding  anything  contained in this Agreement to the contrary,  no
Party shall be liable to any other Party for indirect, consequential, special or
punitive  damages on  account of any  Proceeding  brought  hereunder  or related
hereto.

                                   ARTICLE V
                                  MISCELLANEOUS

     Section 5.01 Notices.

     Every  notice,  request,  or other  statement  to be made or delivered to a
Party   pursuant  to  this   Agreement   shall  be  directed  to  such   Party's
representative  at the address or  facsimile  number for such Party set forth on
Annex B or to such other address or facsimile  number as the Party may designate
by written  notice to each other  Party from time to time.  All notices or other
communications required or permitted to be given pursuant to this Agreement must
be in writing  and will be  considered  as properly  given if sent by  facsimile
transmission  (with  confirmation  notice  sent by  first  class  mail,  postage



prepaid),  by reputable  nationwide  overnight  delivery service that guarantees
next Business Day delivery, by personal delivery,  or, if mailed from within the
United States, by first class United States mail, postage prepaid, registered or
certified with return receipt requested.  Any notice hereunder will be deemed to
have been duly given: (i) on the date personally delivered;  (ii) when received,
if sent by  certified  or  registered  mail,  postage  prepaid,  return  receipt
requested  or if  sent  by  overnight  delivery  service;  or  (iii)  if sent by
facsimile  transmission,  on the date sent, provided confirmation notice is sent
by first-class mail, postage prepaid promptly thereafter.

     Section 5.02 Entire Agreement.

     This  Agreement   constitutes  the  entire   agreement  among  the  Parties
pertaining to the subject  matter hereof and  supersedes  all prior  agreements,
representations  and  understandings,  written or oral,  pertaining  thereto but
excluding  that  certain  Non-Disclosure  Agreement  dated as of June  20,  2002
between the Midwest ISO, the GridAmerica Companies and National Grid USA Service
Company, Inc.

     Section 5.03 Expenses.

     Except as otherwise  expressly provided in this Agreement,  each Party will
pay its own costs and  expenses  incurred in  connection  with the  negotiation,
execution and closing of this Agreement.

     Section 5.03 Several Obligations.

     Each of the obligations of the  GridAmerica  Companies or any of them shall
be several and not joint and several.

     Section 5.04 Amendment; Waiver.

     No amendment to or modification of this Agreement shall be valid unless the
same shall be in writing and signed by the Parties and no waiver of or under any
provision of this  Agreement  shall be valid unless the same shall be in writing
and signed by the Party to be bound thereby.

     Section 5.05 No Third-Party Beneficiary.

     This  Agreement  is intended  to be solely for the benefit of the  Parties,
their successors and permitted  assignees,  and is not intended to and shall not
confer any rights or benefits on any Person not a signatory hereto.

     Section 5.06 No Assignment; Binding Effect.

     Neither this Agreement nor any right,  interest or obligation hereunder may
be assigned by any Party without the prior written  consent of each other Party,
and any attempt to do so will be void, except for assignments and transfers: (i)
by  operation  of Law;  or (ii) to any  Person  that  acquires  any  GridAmerica
Company's  transmission  facilities  which are the subject of the ITC Agreement.



Subject to the preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the Parties and their respective successors and
assigns.

     Section 5.07 Severability.

     Any provision of this Agreement that is prohibited or  unenforceable in any
jurisdiction  shall,  as to that  jurisdiction,  be ineffective to the extent of
that  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions  hereof or affecting the validity or enforceability of that provision
in any other jurisdiction.

     Section 5.08 Governing Law; Waiver of Jury Trial.

     THIS  AGREEMENT  SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE
LAWS OF THE STATE OF NEW YORK EXCLUDING ITS CHOICE OF LAW PRINCIPLES  THAT WOULD
REQUIRE  THE  LAW  OF  ANOTHER  JURISDICTION  TO  APPLY.  EACH  OF  THE  PARTIES
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY PROCEEDING  ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

     Section 5.09 Counterparts.

     This  Agreement  may be  executed in  counterparts,  each of which shall be
deemed an original,  but all of which together shall constitute one and the same
instrument,  notwithstanding  that all of the Parties are not signatories to the
original or to the same counterpart.

     Section 5.10 No Partnership.

     This  Agreement is not intended and shall not be construed,  interpreted or
applied  to  create a  partnership  or  joint  venture  among  all or any of the
Parties.

     Section 5.11 Definitions.

     Capitalized  terms not  otherwise  defined  herein  shall have the meanings
given in Annex A.

     Section 5.12 Interpretation.

     The following provisions shall be applied wherever appropriate herein:

     (a)  "herein,"   "hereby,"   "hereunder,"   "hereof,"  "hereto"  and  other
equivalent  words shall refer to this Agreement as an entirety and not solely to
the particular portion of this Agreement in which any such word is used;

     (b)  "including"  means  "including  without  limitation"  and is a term of
illustration and not of limitation;



     (c) all definitions set forth herein shall be deemed applicable whether the
words defined are used herein in the singular or the plural;

     (d) unless  otherwise  expressly  provided,  any term defined in Annex A by
reference  to any other  document  shall be deemed to be  amended  herein to the
extent that such term is  subsequently  amended in such document in an amendment
entered into in accordance with such document;

     (e)  wherever  used  herein,  any  pronoun or  pronouns  shall be deemed to
include both the singular and plural and to cover all genders;

     (f) neither this Agreement nor any other agreement,  document or instrument
referred to herein or executed and  delivered in  connection  herewith  shall be
construed against any Person as the principal draftsperson hereof or thereof;

     (g) the section headings appearing in this Agreement are inserted only as a
matter of  convenience  and in no way define,  limit,  construe or describe  the
scope or extent of such section, or in any way affect this Agreement;

     (h) any references herein to a particular Section,  Article, Annex, Exhibit
or Schedule means a Section or Article of, or an Annex,  Exhibit or Schedule to,
this Agreement unless another agreement is specified; and

     (i) the Annexes,  Exhibits and Schedules  attached hereto are  incorporated
herein by reference and shall be
considered part of this Agreement.



     IN WITNESS WHEREOF, this Agreement has been duly executed, acknowledged and
delivered by the duly authorized  representatives  of the Parties as of the date
first written above.


                                   MIDWEST TRANSMISSION SYSTEM OPERATOR, INC.


                                   By:    /s/ J. P. Torgerson
                                       ----------------------------
                                   Name:      J. P. Torgerson
                                          -------------------------
                                   Title:     President & CEO
                                          -------------------------




APPROVED this 3rd day of July, 2002.


AMEREN SERVICES COMPANY (on behalf of
Union Electric Company and
Central Illinois Public Service Company)



By:              /s/ David A. Whiteley
           ---------------------------------------------
Name:                David A. Whiteley
           ---------------------------------------------
Title:               Senior Vice President
           ---------------------------------------------
Address:             1901 Chouteau Avenue
           ---------------------------------------------
                     P. O. Box 66149, MC10
           ---------------------------------------------
                     St. Louis, MO  63166-6149
           ---------------------------------------------
Attention:
           ---------------------------------------------
Phone:               314-554-2942
           ---------------------------------------------
Facsimile:           314-554-3066
           ---------------------------------------------




APPROVED this 3rd day of July, 2002.


FirstEnergy Corp. (on behalf of American Transmission Systems, Inc.)


By:              /s/ Stanley F. Szwed
           ---------------------------------------------
Name:                Stanley F. Szwed
           ---------------------------------------------
Title:               Vice President, Transmission
           ---------------------------------------------
Address:             FirstEnergy Corp.
           ---------------------------------------------
                     76 South Main Street
           ---------------------------------------------
                     Akron, OH  44308
           ---------------------------------------------
Attention:
           ---------------------------------------------
Phone:               330-384-2454
           ---------------------------------------------
Facsimile:           330-384-4988
           ---------------------------------------------






APPROVED this 3rd day of July, 2002.


NORTHERN INDIANA PUBLIC SERVICE COMPANY



By:              /s/ Frank A. Venhuizen
           ---------------------------------------------
Name:                Frank A. Venhuizen
           ---------------------------------------------
Title:               Director, Electric Transmission
           ---------------------------------------------
                      & Market Services
           ---------------------------------------------
Address:             Northern Indiana Public Service Co.
           ---------------------------------------------
                     801 East 86th Avenue
           ---------------------------------------------
                     Merriville, Indiana  46410
           ---------------------------------------------
Attention:
           ---------------------------------------------
Phone:               219-647-5630
           ---------------------------------------------
Facsimile:           219-647-5663
           ---------------------------------------------




                                 NATIONAL GRID USA


                                 By: /s/ R. P. Sergel
                                    --------------------------------------
                                 Name:   R. P. Sergel
                                      ------------------------------------
                                 Title: President & Chief Executive Officer
                                       -----------------------------------




                                                                        ANNEX A
                                   DEFINITIONS
                                   -----------

     The following terms shall have the respective meanings set forth below when
used in this  Agreement  and  grammatical  variations  of such terms  shall have
correlative  meanings,  unless  otherwise  expressly  specified  herein  to  the
contrary.

     "Affiliate"  shall  mean,  with  respect to any  Person,  any other  Person
directly or indirectly  Controlling,  Controlled by or under common Control with
such Person.  As used in this  definition,  "Control" shall mean the possession,
directly or  indirectly,  of the power to direct or cause the  direction  of the
management or policies  (whether through  ownership of securities or partnership
or other ownership interests, by contract or otherwise); provided, however, that
in any event, any Person that owns, directly or indirectly,  securities having a
majority of the voting power for the  election of directors or other  members of
the governing  body of a corporation  or a majority of the  partnership or other
ownership interests (that carry voting power) of any other Person will be deemed
to Control such corporation or other Person.

     "Agreement" shall mean this Participation  Agreement, as it may be amended,
modified or otherwise supplemented, as in effect from time to time.

     "GridAmerica Company" shall have the meaning given in the preamble hereof.

     "Approval  Order" shall mean a Final Order that approves,  without material
modification or condition, the ITC Agreement and such of the ITC Documents as to
which the approval of the Commission is required under applicable law.

     "Business Day" shall mean any day other than Saturday,  Sunday or other day
on which banks are authorized or required to be closed in New York, New York.

     "Closing" shall have the meaning given in Section 1.01.

     "Closing Date" shall have the meaning given in Section 1.01.

     "Commission" shall have the meaning given in the recitals hereof.

     "Company" shall have the meaning given in the recitals hereof.

     "Consent" shall mean any authorization,  consent, opinion, order, approval,
license,  franchise,  ruling,  permit, tariff, rate,  certification,  exemption,
filing or registration from, by, or with any Governmental Authority,  any Person
or any governing body of any Person.

     "Entity" shall mean a corporation,  limited liability company, partnership,
limited partnership,  trust, firm, association or other organization which has a
legal  existence  under  the  Laws of its  jurisdiction  of  formation  which is
separate and apart from its owner or owners, and any Governmental Authority.

                                      A-1


     "Final Order" shall mean a final order issued by the  Commission  approving
the ITC  Agreement  and such of the ITC  Documents  as to which  approval of the
Commission  is  required  under  applicable  law which is no longer  subject  to
possible rehearing.

     "Governmental  Authority"  shall  mean a federal,  state,  local or foreign
governmental authority; a state, province,  commonwealth,  territory or district
thereof;  a  county  or  parish;  a  city,  town,  township,  village  or  other
municipality; a district, ward or other subdivision of any of the foregoing; any
executive,  legislative or other  governing  body of any of the  foregoing;  any
agency,  authority,  board,  department,  system, service,  office,  commission,
committee,  council or other  administrative  body of any of the foregoing;  any
court or other judicial body and any officer,  official or other  representative
of any of the foregoing.

     "ITC Agreement"  shall mean the Appendix I ITC Agreement by and between the
Midwest ISO and GridAmerica, a copy of which is annexed hereto as Exhibit B.

     "ITC Documents" shall mean such agreements, instruments, certifications and
documents  as may be  necessary  to evidence  the  obligations  of the  intended
parties  thereto to implement  the  transactions  contemplated  by the Letter of
Intent, including without limitation,  one or more operation agreements pursuant
to which each of the GridAmerica Companies transfers functional control over its
transmission   facilities  which  are  the  subject  of  the  ITC  Agreement  to
GridAmerica.

     "Law" shall mean any applicable  constitutional  provision,  statute,  act,
code, law, regulation,  rule, ordinance,  order, decree,  ruling,  proclamation,
resolution, judgment, decision, declaration, or interpretive or advisory opinion
of a Governmental Authority.

     "Letter of Intent"  shall mean that  letter  agreement  dated June 20, 2002
among National Grid, Ameren Corporation,  FirstEnergy Corp. and Northern Indiana
Public Service Company. Inc., a copy of which is annexed hereto as Exhibit A

     "National Grid" shall mean National Grid USA, a Delaware corporation.

     "Non-Disclosure  Agreement" shall mean the Non-Disclosure Agreement,  dated
as of June 20, 2002, by and among Midwest  Transmission  System Operator,  Inc.,
FirstEnergy  Corp.,  Ameren Services  Company,  Northern  Indiana Public Service
Company and National Grid USA.

     "Order" shall mean any writ, judgment,  decree, injunction or similar order
of any Governmental Authority (in each such case whether preliminary or final).

     "Party" shall mean any party from time to time to this Agreement.

     "Person" shall mean any natural person or Entity.

     "Proceeding"  shall  mean any  action,  suit,  proceeding,  arbitration  or
Governmental Authority investigation or audit.

     "Required  Consent"  shall mean,  collectively,  each  Consent that must be
obtained,  satisfied  or made to permit  the  consummation  of the  transactions
contemplated by this Agreement,  the ITC Agreement and the ITC Documents and the

                                      A-2


performance by each of the parties to the ITC Agreement and the ITC Documents of
their respective obligations thereunder,  but excluding any Consent which may be
required to perform an obligation  which,  by the terms of the ITC Agreement and
the  ITC  Transaction  Documents,  will  not  arise  and is not  required  to be
performed  except upon the happening of one or more  contingencies  specified in
the ITC Agreement and the ITC Documents.

     "Withdrawal Notice" shall have the meaning given in Section 4.03.


                                      A-3




                                                                       ANNEX B

                               NOTICE INFORMATION

Midwest Independent Transmission System Operator, Inc.

Midwest Independent Transmission System Operator, Inc.
701 City Center Drive
Carmel, IN 46032
Attn:    James P. Torgerson
         President and CEO
Fax:     317-249-5945



Ameren Services Company

Ameren Services Company
One Ameren Plaza
1901 Chouteau Avenue
St. Louis, MO 63103
Attn:    David A. Whiteley
         Senior Vice President
Fax:     314-554-3066

Ameren Services Company
One Ameren Plaza
1901 Chouteau Avenue
St. Louis, MO 63103
Attn:    Steven R. Sullivan
         General Counsel
Fax:     314-554-4014

                                      C-1





FirstEnergy Corp.

FirstEnergy Corp.
76 South Main Street
Akron, OH 44308
Attn: Stanley F. Szwed
Fax: 330-384-4988

Northern Indiana Public Service Company

Northern Indiana Public Service Company
801 E. 86th Avenue
Merrillville, IN 46410
Attn: Frank A. Venhuizen
Fax: 219-647-5630

National Grid USA

National Grid USA
25 Research Drive
Westborough, MA 01582
Attn: Nick Winser
      Senior Vice President
Fax:  508-366-5498
With a copy to:  Lawrence J. Reilly, Esq.
                 Senior Vice President and General Counsel
Fax: 508-389-2605



                                      C-2



                                                                  Exhibit 99.1

                              STATEMENT UNDER OATH
                         OF PRINCIPAL EXECUTIVE OFFICER
                        REGARDING FACTS AND CIRCUMSTANCES
                        RELATING TO EXCHANGE ACT FILINGS

I, Charles W. Mueller, principal executive officer of Ameren Corporation,  state
and attest that:

     (1)  To the  best of my  knowledge,  based  upon a  review  of the  covered
          reports  of  Ameren   Corporation,   and,   except  as   corrected  or
          supplemented in a subsequent covered report:

          o    no covered  report  contained  an untrue  statement of a material
               fact as of the end of the period  covered  by such  report (or in
               the case of a report on Form 8-K or definitive  proxy  materials,
               as of the date on which it was filed); and

          o    no covered  report  omitted to state a material fact necessary to
               make  the  statements  in the  covered  report,  in  light of the
               circumstances  under which they were made,  not  misleading as of
               the end of the period covered by such report (or in the case of a
               report on Form 8-K or definitive proxy materials,  as of the date
               on which it was filed).

     (2)  I have  reviewed the  contents of this  statement  with the  Company's
          audit committee.

     (3)  In this statement  under oath,  each of the following,  if filed on or
          before the date of this statement, is a "covered report":

          o    Annual Report on Form 10-K filed with the  Commission  for fiscal
               year ended December 31, 2001 of Ameren Corporation;

          o    all  reports  on Form  10-Q,  all  reports  on  Form  8-K and all
               definitive proxy materials of Ameren  Corporation  filed with the
               Commission  subsequent to the filing of the Form 10-K  identified
               above; and

          o    any amendments to any of the foregoing.



   /s/ C. W. Mueller
-------------------------------------------
Name:  Charles W. Mueller
       Chairman and Chief Executive Officer

Date:  8/14/02

Subscribed and sworn to before me this 14th day of August, 2002.

                                                 /s/ K. A. Bell
                                       ----------------------------------------
                                                    Notary Public
My Commission Expires:  10/13/02                     K. A. BELL
                                              Notary Public - Notary Seal
                                                STATE OF MISSOURI
                                                  St. Louis County
                                       My Commission Expires:  October 13, 2002



                                                                   Exhibit 99.2

                              STATEMENT UNDER OATH
                         OF PRINCIPAL FINANCIAL OFFICER
                        REGARDING FACTS AND CIRCUMSTANCES
                        RELATING TO EXCHANGE ACT FILINGS

I, Warner L. Baxter,  principal financial officer of Ameren  Corporation,  state
and attest that:

     (1)  To the  best of my  knowledge,  based  upon a  review  of the  covered
          reports  of  Ameren   Corporation,   and,   except  as   corrected  or
          supplemented in a subsequent covered report:

          o    no covered  report  contained  an untrue  statement of a material
               fact as of the end of the period  covered  by such  report (or in
               the case of a report on Form 8-K or definitive  proxy  materials,
               as of the date on which it was filed); and

          o    no covered  report  omitted to state a material fact necessary to
               make  the  statements  in the  covered  report,  in  light of the
               circumstances  under which they were made,  not  misleading as of
               the end of the period covered by such report (or in the case of a
               report on Form 8-K or definitive proxy materials,  as of the date
               on which it was filed).

     (2)  I have  reviewed the  contents of this  statement  with the  Company's
          audit committee.

     (3)  In this statement  under oath,  each of the following,  if filed on or
          before the date of this statement, is a "covered report":

          o    Annual Report on Form 10-K filed with the  Commission  for fiscal
               year ended December 31, 2001 of Ameren Corporation;

          o    all  reports  on Form  10-Q,  all  reports  on  Form  8-K and all
               definitive proxy materials of Ameren  Corporation  filed with the
               Commission  subsequent to the filing of the Form 10-K  identified
               above; and

          o    any amendments to any of the foregoing.



   /s/ Warner L. Baxter
-------------------------------------------
Name:  Warner L. Baxter
       Senior Vice President - Finance

Date:  8/14/02

Subscribed and sworn to before me this 14th day of August, 2002.

                                                  /s/ K. A. Bell
                                       ----------------------------------------
                                                   Notary Public
My Commission Expires:  10/13/02                     K. A. BELL
                                              Notary Public - Notary Seal
                                                STATE OF MISSOURI
                                                  St. Louis County
                                       My Commission Expires:  October 13, 2002




                                                                   Exhibit 99.3





                                   CERTIFICATE
                                 furnished under
                 Section 906 of the Sarbanes-Oxley Act of 2002.

     I,  Charles W.  Mueller,  chief  executive  officer of Ameren  Corporation,
hereby  certify that to the best of my  knowledge,  the  accompanying  Report of
Ameren  Corporation  on  Form 10-Q  for the  quarter  ended June 30,  2002 fully
complies  with the  requirements  of  Section  13(a) or 15(d) of the  Securities
Exchange  Act of 1934 and  that  information  contained  in such  Report  fairly
presents,  in all material  respects,  the  financial  condition  and results of
operations of Ameren Corporation.



                                  /s/ Charles W. Mueller
                                 -----------------------------
                                      Charles W. Mueller
                                      Chief Executive Officer

Date:  August 14, 2002



                                                                   Exhibit 99.4





                                   CERTIFICATE
                                 furnished under
                 Section 906 of the Sarbanes-Oxley Act of 2002.

     I, Warner L. Baxter, chief financial officer of Ameren Corporation,  hereby
certify  that to the best of my  knowledge,  the  accompanying  Report of Ameren
Corporation on Form 10-Q for the quarter ended June 30, 2002 fully complies with
the  requirements  of Section 13(a) or 15(d) of the  Securities  Exchange Act of
1934 and that  information  contained  in such Report  fairly  presents,  in all
material respects,  the financial  condition and results of operations of Ameren
Corporation.




                                  /s/ Warner L. Baxter
                                  ----------------------------
                                      Warner L. Baxter
                                      Chief Financial Officer

Date:  August 14, 2002