MIDAMERICAN ENERGY CO, 10-Q, 1999-05-17

MIDAMERICAN ENERGY CO
10-Q, 1999-05-17
ELECTRIC SERVICES

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

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
of the Securities Exchange Act of 1934

For the quarterly period ended MARCH 31, 1999
--------------

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

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

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

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

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

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

Preferred Stock, $3.30 Series, no par value
Preferred Stock, $3.75 Series, no par value
Preferred Stock, $3.90 Series, no par value
Preferred Stock, $4.20 Series, no par value
Preferred Stock, $4.35 Series, no par value
Preferred Stock, $4.40 Series, no par value
Preferred Stock, $4.80 Series, no par value
Preferred Stock, $5.25 Series, no par value
Preferred Stock, $7.80 Series, no par value
_____________________________________________________________________________

Title of each Class

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

As of April 30, 1999, all 70,980,203 outstanding shares of MidAmerican Energy
Company's voting stock was held by its parent company, MHC Inc.

<PAGE>

MIDAMERICAN ENERGY COMPANY
FORM 10-Q
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION PAGE NO.

ITEM 1. Financial Statements

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

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

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk...... 26

PART II. OTHER INFORMATION

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

ITEM 6. Exhibits and Reports on Form 8-K................................ 27

Signatures ................................................................ 29

Exhibit Index.............................................................. 30

-2-
<PAGE>

INDEPENDENT ACCOUNTANTS' REPORT

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

We have reviewed the accompanying consolidated balance sheet of MidAmerican
Energy Company and subsidiaries (the Company) as of March 31, 1999, and the
related consolidated statements of income and cash flows for the three month
period then ended. These financial statements are the responsibility of the
Company's management.

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

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

DELOITTE & TOUCHE LLP

Des Moines, Iowa
April 28, 1999

-3-

<PAGE>

MIDAMERICAN ENERGY COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS)

THREE MONTHS
ENDED MARCH 31
----------------------
1999 1998
--------- ---------
OPERATING REVENUES
Regulated electric .................... $ 262,128 $ 256,354
Regulated gas ......................... 170,778 173,200
Nonregulated .......................... 35,342 17,712
--------- ---------
468,248 447,266
--------- ---------
OPERATING EXPENSES
Regulated:
Cost of fuel, energy and capacity.... 50,986 45,757
Cost of gas sold .................... 96,858 105,321
Other operating expenses ............ 116,639 108,467
Maintenance ......................... 26,537 23,033
Depreciation and amortization ....... 49,691 44,191
Property and other taxes ............ 20,151 23,330
--------- ---------
360,862 350,099
--------- ---------
Nonregulated:
Cost of sales ....................... 34,099 15,961
Other ............................... 3,937 1,108
--------- ---------
38,036 17,069
--------- ---------
Total operating expenses .............. 398,898 367,168
--------- ---------

OPERATING INCOME ...................... 69,350 80,098
--------- ---------

NON-OPERATING INCOME
Interest and dividend income .......... 1,099 1,947
Other, net ............................ (2,041) (2,877)
--------- ---------
(942) (930)
--------- ---------

FIXED CHARGES
Interest on long-term debt ............ 16,489 17,553
Other interest expense ................ 5,412 3,168
Preferred dividends of subsidiary trust 1,995 1,995
Allowance for borrowed funds .......... (306) (754)
--------- ---------
23,590 21,962
--------- ---------

INCOME BEFORE INCOME TAXES ............ 44,818 57,206
INCOME TAXES .......................... 18,634 24,027
--------- ---------
NET INCOME ............................ 26,184 33,179
PREFERRED DIVIDENDS ................... 1,239 1,237
--------- ---------

EARNINGS ON COMMON STOCK .............. $ 24,945 $ 31,942
========= =========

The accompanying notes are an integral part of these statements.

-4-
<PAGE>
MIDAMERICAN ENERGY COMPANY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>

AS OF
-------------------------------------
MARCH 31 DECEMBER 31
----------------------- -----------
1999 1998 1998
---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
UTILITY PLANT
Electric ............................................. $4,272,431 $4,098,474 $4,258,061
Gas .................................................. 786,781 759,847 786,169
---------- ---------- ----------
5,059,212 4,858,321 5,044,230
Less accumulated depreciation and amortization ....... 2,467,571 2,314,918 2,428,954
---------- ---------- ----------
2,591,641 2,543,403 2,615,276
Construction work in progress ........................ 28,221 62,034 26,369
---------- ---------- ----------
2,619,862 2,605,437 2,641,645
---------- ---------- ----------

POWER PURCHASE CONTRACT .............................. 142,132 167,215 144,875
---------- ---------- ----------
CURRENT ASSETS
Cash and cash equivalents ............................ 15,140 29,650 5,370
Receivables .......................................... 139,274 140,476 168,764
Inventories .......................................... 65,021 39,039 92,745
Other ................................................ 34,095 4,322 32,126
---------- ---------- ----------
253,530 213,487 299,005
---------- ---------- ----------

INVESTMENTS AND NONREGULATED PROPERTY, NET ........... 202,754 141,479 183,279
---------- ---------- ----------
REGULATORY ASSETS .................................... 292,274 324,894 305,489
---------- ---------- ----------
OTHER ASSETS ......................................... 31,343 9,019 11,237
---------- ---------- ----------

TOTAL ASSETS ......................................... $3,541,895 $3,461,531 $3,585,530
========== ========== ==========

CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common shareholder's equity .......................... $ 960,423 $ 989,085 $ 972,278
MidAmerican preferred securities, not subject to
mandatory redemption .............................. 31,759 31,761 31,759
Preferred securities, subject to mandatory redemption:
MidAmerican preferred securities .................. 50,000 50,000 50,000
MidAmerican-obligated preferred securities of
subsidiary trust holding solely MidAmerican
junior subordinated debentures ................. 100,000 100,000 100,000
Long-term debt (excluding current portion) ........... 760,178 919,815 870,069
---------- ---------- ----------
1,902,360 2,090,661 2,024,106
---------- ---------- ----------
CURRENT LIABILITIES
Notes payable ........................................ 191,595 115,102 206,221
Current portion of long-term debt .................... 170,763 49,837 60,897
Current portion of power purchase contract ........... 15,034 14,361 15,034
Accounts payable ..................................... 138,211 129,198 159,420
Taxes accrued ........................................ 97,004 101,818 106,132
Interest accrued ..................................... 13,957 14,181 13,473
Other ................................................ 39,459 20,298 35,405
---------- ---------- ----------
666,023 444,795 596,582
---------- ---------- ----------
OTHER LIABILITIES
Power purchase contract .............................. 68,093 83,143 68,093
Deferred income taxes ................................ 583,405 591,341 584,675
Investment tax credit ................................ 76,005 81,700 77,421
Other ................................................ 246,009 169,891 234,653
---------- ---------- ----------
973,512 926,075 964,842
---------- ---------- ----------

TOTAL CAPITALIZATION AND LIABILITIES ................. $3,541,895 $3,461,531 $3,585,530
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

-5-

<PAGE>

MIDAMERICAN ENERGY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)

THREE MONTHS
ENDED MARCH 31
---------------------
1999 1998
-------- ---------
<S> <C> <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................. $ 26,184 $ 33,179
Adjustments to reconcile net income to net cash provided:
Depreciation and amortization .......................... 51,422 47,774
Net decrease in deferred income taxes and
investment tax credit, net ......................... (2,863) (2,925)
Amortization of other assets ........................... 10,164 9,165
Impact of changes in working capital ................... 19,446 93,230
Other .................................................. (22,001) (928)
-------- ---------
Net cash provided .................................. 82,352 179,495
-------- ---------

NET CASH FLOWS FROM INVESTING ACTIVITIES
Utility construction expenditures .......................... (25,841) (24,686)
Quad Cities Nuclear Power Station decommissioning trust fund (2,813) (2,813)
Nonregulated capital expenditures .......................... (584) (19,966)
Other investing activities, net ............................ (639) 667
-------- ---------
Net cash used .......................................... (29,877) (46,798)
-------- ---------

NET CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid ............................................. (37,945) (29,838)
Retirement of long-term debt, including reacquisition cost . (134) (75,126)
Reacquisition of preferred shares .......................... - (3)
Cash inflow of accounts receivable securitization .......... 10,000 -
Net decrease in notes payable .............................. (14,626) (7,398)
-------- ---------
Net cash used .......................................... (42,705) (112,365)
-------- ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS .................. 9,770 20,332
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ........... 5,370 9,318
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................. $ 15,140 $ 29,650
======== =========

ADDITIONAL CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized .................. $ 21,461 $ 27,303
======== =========
Income taxes paid .......................................... $ - $ 84
======== =========
</TABLE>

The accompanying notes are an integral part of these statements.

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

A. GENERAL:

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

MidAmerican is a public utility with electric and natural gas operations
and is the principal subsidiary of MHC Inc. (MHC). MHC is a wholly owned
indirect subsidiary of MidAmerican Energy Holdings Company. The current
corporate structure is the result of a merger transaction completed on March 12,
1999, involving MHC (formerly MidAmerican Energy Holdings Company) and CalEnergy
Company, Inc. (CalEnergy). CalEnergy, through a reincorporation transaction, was
renamed MidAmerican Energy Holdings Company (Holdings). Holdings is an exempt
public utility holding company headquartered in Des Moines, Iowa.

B. ENVIRONMENTAL MATTERS:

(1) MANUFACTURED GAS PLANT FACILITIES -

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

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

MidAmerican's estimate of probable remediation costs for the sites
discussed above as of March 31, 1999, was $24 million. This estimate has been
recorded as a liability and a regulatory asset for future recovery. The Illinois
Commerce Commission (ICC) has approved the use of a tariff rider which permits
recovery of the actual costs of litigation, investigation and remediation
relating to former MGP sites. MidAmerican's present rates in Iowa provide for a
fixed annual recovery of MGP costs. MidAmerican intends to pursue recovery of
the remediation costs from other PRPs and its insurance carriers.

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

-7-
<PAGE>

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

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

(2) CLEAN AIR ACT -

Following recommendations provided by the Ozone Transport Assessment Group,
the EPA, in November 1997, issued a Notice of Proposed Rulemaking which
identified 22 states and the District of Columbia as making a significant
contribution to nonattainment of the ozone standard in downwind states in the
eastern half of the United States. In September 1998, the EPA issued its final
rules in this proceeding. Iowa is not subject to the emissions reduction
requirements in the final rules, and, as such, MidAmerican's facilities are not
currently subject to additional emissions reductions as a result of this
initiative.

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

The impact of the new standards on MidAmerican will depend on the
attainment status of the areas surrounding MidAmerican's operations and
MidAmerican's relative contribution to the nonattainment status. The attainment
status of areas in the state of Iowa will not be known for two to three years.
However, if MidAmerican's operations are determined to contribute to
nonattainment, the installation of additional control equipment, such as
scrubbers and/or selective catalytic reduction, on MidAmerican's units could be
required. The cost to install such equipment could be significant. MidAmerican
will continue to follow the attainment status of the areas in which it operates
and evaluate the potential impact of the status of these areas on MidAmerican
under the new regulations.

C. RATE MATTERS:

(1) ELECTRIC -

In Iowa, prices for electric residential customers were reduced $5.0
million annually on June 1, 1998. The decrease was the last of three for Iowa
residential customers as a result of a 1997 settlement agreement.

-8-
<PAGE>

Electric prices for Iowa industrial customers were reduced by $6 million
annually and electric prices for Iowa commercial customers were reduced by $4
million annually through several steps from mid-1997 to the end of 1998. The
reductions were achieved through a retail access pilot project, negotiated
individual electric contracts and a $1.5 million tariffed rate reduction for
certain non-contract commercial customers.

The negotiated electric contracts have differing terms and conditions as
well as prices. The contracts range in length from five to ten years, and some
have price renegotiation and early termination provisions exercisable by either
party. The vast majority of the contracts are for terms of seven years or less,
although, some large customers have agreed to 10-year contracts. Prices are set
as fixed prices; however, many contracts allow for potential price adjustments
with respect to environmental costs, government imposed public purpose programs,
tax changes, and transition costs. While the contract prices are fixed (except
for the potential adjustment elements), the costs MidAmerican incurs to fulfill
these contracts will vary. On an aggregate basis the annual revenues under
contract are approximately $180 million.

If MidAmerican's annual Iowa electric jurisdictional return on common
equity (ROE) exceeds 12%, then earnings above the 12% level will be shared
equally between customers and MidAmerican; if the ROE exceeds 14%, two-thirds of
MidAmerican's share of those earnings will be used for accelerated recovery of
certain regulatory assets. The 1997 pricing plan settlement agreement precludes
MidAmerican from filing for increased rates prior to 2001 unless the ROE falls
below 9%. Other parties signing the agreement are prohibited from filing for
reduced rates prior to 2001 unless the ROE after reflecting credits to
customers, exceeds 14%. On April 14, 1999, the Iowa Utilities Board (IUB)
approved, subject to additional refund, MidAmerican's ROE calculation and its
proposed $2.2 million refund to non-contract customers. MidAmerican has accrued
for this refund.

Under an Illinois restructuring law enacted in 1997, a similar sharing
mechanism is in place for MidAmerican's Illinois electric operations. Two-year
average ROE's greater than a two-year average benchmark will trigger an equal
sharing of earnings on the excess. The benchmark is a calculation of average
30-year Treasury Bond rates plus 5.5% for 1998 and 1999 and 6.5% for 2000
through 2004. The initial calculation, due March 31, 2000, will be based on 1998
and 1999 results.

(2) GAS -

In October 1998, MidAmerican made a filing with the IUB requesting a rate
increase for its Iowa retail gas customers. An interim rate increase of
approximately $6.7 million annually was approved by the IUB on January 22, 1999,
effective immediately. On April 23, 1999, the IUB issued an order approving a
settlement agreement between MidAmerican, the Iowa Office of Consumer Advocate
(OCA) and other parties which provides for an annual increase of $13.9 million.
MidAmerican anticipates the new rates will be implemented by June 1999.

In November 1998, MidAmerican filed with the South Dakota Public Utilities
Commission (SDPUC) requesting a rate increase for its South Dakota retail gas
customers. The SDPUC, on April 21, 1999, approved a rate increase of $2.4
million annually, effective May 1, 1999.

D. ACCOUNTING FOR THE EFFECTS OF CERTAIN TYPES OF REGULATION:

MidAmerican's utility operations are subject to the regulation of the IUB,
the ICC, the SDPUC, and the Federal Energy Regulatory Commission (FERC).
MidAmerican's accounting policies and the accompanying Consolidated Financial
Statements conform to generally accepted accounting principles applicable to
rate-regulated enterprises and reflect the effects of the ratemaking process.

-9-
<PAGE>

Statement of Financial Accounting Standards (SFAS) No. 71 sets forth
accounting principles for operations that are regulated and meet certain
criteria. For operations that meet the criteria, SFAS 71 allows, among other
things, the deferral of costs that would otherwise be expensed when incurred. A
possible consequence of the changes in the utility industry is the discontinued
applicability of SFAS 71. The majority of MidAmerican's electric and gas utility
operations currently meet the criteria of SFAS 71, but its applicability is
periodically reexamined. On December 16, 1997, MidAmerican's generation
operations serving Illinois were no longer subject to the provisions of SFAS 71
due to passage of industry restructuring legislation in Illinois. Thus in 1997,
MidAmerican was required to write off the regulatory assets and liabilities from
its balance sheet related to its Illinois generation operations. The net amount
of such write-offs was not material. If other portions of its utility operations
no longer meet the criteria of SFAS 71, MidAmerican could be required to write
off the related regulatory assets and liabilities from its balance sheet and
thus, a material adjustment to earnings in that period could result.

E. MIDAMERICAN-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES:

The MidAmerican Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust Holding Solely MidAmerican Junior Subordinated Debentures
included in the Consolidated Balance Sheets were issued by MidAmerican Energy
Financing I (the Trust), a wholly-owned statutory business trust of MidAmerican.
The sole assets of the Trust are $103.1 million of MidAmerican 7.98% Series A
Debentures due 2045.

F. SEGMENT INFORMATION:

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

The following tables provide certain MidAmerican information on an
operating segment basis (in thousands):

Three Months
Ended March 31
------------------------
1999 1998
-------- --------
Electric:
Revenues............................ $262,128 $256,354
Operating income.................... 44,362 53,646
Gas:
Revenues............................ 170,778 173,200
Operating income.................... 27,682 25,372
Nonregulated and other (a):
Revenues............................ 35,342 17,712
Operating income (loss)............. (2,694) 1,080

-10-

<PAGE>

March 31 December 31
--------------------------
1999 1998 1998
---------- ---------- -----------
Total Assets:
Electric................... $2,908,822 $2,830,942 $2,897,657
Gas ...................... 614,435 589,539 672,072
Nonregulated and other (a). 18,638 41,050 15,801

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

G. OTHER COMPREHENSIVE INCOME:

For the three months ended March 31, 1999 and 1998, there were no
differences between MidAmerican's comprehensive income and earnings on common
stock.

-11-
<PAGE>

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

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

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

The current corporate structure is the result of the merger transaction
completed on March 12, 1999, involving MHC (formerly MidAmerican Energy Holdings
Company) and CalEnergy Company, Inc. (CalEnergy). CalEnergy, through a
reincorporation transaction, was renamed MidAmerican Energy Holdings Company
(Holdings). Holdings is an exempt public utility holding company headquartered
in Des Moines.

FORWARD-LOOKING STATEMENTS

From time to time, MidAmerican may make forward-looking statements within
the meaning of the federal securities laws that involve judgments, assumptions
and other uncertainties beyond its control. These forward-looking statements may
include, among others, statements concerning revenue and cost trends, cost
recovery, cost reduction strategies and anticipated outcomes, pricing
strategies, changes in the utility industry, planned capital expenditures,
financing needs and availability, statements of MidAmerican's expectations,
beliefs, future plans and strategies, anticipated events or trends and similar
comments concerning matters that are not historical facts. Investors and other
users of the forward-looking statements are cautioned that such statements are
not a guarantee of future performance of MidAmerican and that such
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed in, or implied
by, such statements. Some, but not all, of the risks and uncertainties include
weather effects on sales and revenues, fuel prices, fuel transportation,
competitive factors, general economic conditions in MidAmerican's service
territory, interest rates, inflation and federal and state regulatory actions.

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

EARNINGS DISCUSSION

MidAmerican's earnings on common stock for the first quarter of 1999 were
$24.9 million compared to $31.9 million for the first quarter of 1998. Below is
a list of some of the significant factors contributing to the change in
earnings. The amounts represent the variance between the respective periods.
Therefore, a factor that had a negative impact on earnings in both periods, but
which had less of a negative impact in the 1999 period than in the 1998 period,
would be displayed as a positive factor for comparison purposes.

For purposes of the following table, expenses related to amortization of
deferred energy efficiency costs, ongoing energy efficiency costs and certain
Cooper Nuclear Station (Cooper) costs are netted against the related recovery.
As a result, the "O&M expenses" line below does not reflect the impact of these
expenses, and the net effect of the revenues and expenses is included in the
amounts on the "Other factors" line under gross margin.

The discussions that follow address the listed items and other variations.

-12-
<PAGE>

Approximate Earnings Variances
Three Months Ended March 31,
1999 vs 1998
(In millions)
Variation in gross margin due to -
Weather effect.................................... $1.8
Customer growth & other sales growth.............. 2.1
Off-system sales margin & other Iowa energy costs. 5.8
Electric retail prices............................ (3.8)
Gas retail prices................................. 0.9
Other factors..................................... (2.1)
O&M expenses......................................... (7.7)
Depreciation & amortization.......................... (3.2)
Property and other taxes............................. 1.9
Utility nonregulated operating activities............ (2.0)

REGULATED GROSS MARGIN

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

Three Months
Ended March 31
------------------
1999 1998
------ ------
(In millions)
Operating revenues.................... $262 $256
Cost of fuel, energy and capacity..... 51 46
---- ----
Electric gross margin............... $211 $210
==== ====

MidAmerican's electric gross margin for the first quarter of 1999 was
relatively unchanged from the first quarter of 1998. The impact of various
factors affecting electric margin are discussed in the following paragraphs.

A decrease in revenues from energy efficiency cost recovery accounted for a
$1.8 million decrease in revenues and margin. Approximately $9.5 million of
MidAmerican's 1999 quarterly electric revenues were from the recovery of energy
efficiency program costs compared to $11.3 million in the first quarter of 1998.
Collection of deferred energy efficiency costs decreased in the 1999 quarter
compared to the first quarter of 1998 due to the completion of one of the
recovery periods. Changes in revenues from energy efficiency cost recovery are
substantially offset by corresponding changes in other operating expenses. Refer
to the discussion under "Energy Efficiency" in the OPERATING ACTIVITIES AND
OTHER MATTERS section of MD&A for further discussion.

Temperatures during the three months ended March 31, 1999, were warmer than
normal but colder than the first quarter of 1998. Compared to normal,
temperatures resulted in a $4 million reduction of the 1999 three-month electric
margin, while temperatures in the first quarter of 1998 reduced electric margin
in that period by $5 million. Thus, compared to the 1998 quarter, colder
temperatures improved margin for the 1999 quarter by approximately $1 million.
Moderate growth in the number of customers increased electric margin by $2.0
million. In total, retail sales of electricity increased 1.4%.

Electric margin in the first quarter of 1999 reflects MidAmerican's strong
performance in the off-system market relative to the 1998 quarter. Margins on
off-system sales, which account for most of MidAmerican's sales for resale,
contributed $6.1 million more to gross margin in the first quarter of 1999

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<PAGE>

than in the same period in 1998. Related sales volumes increased 16.9% compared
to the 1998 period due in part to the availability of Quad Cities Nuclear Power
Station (Quad Cities Station) in 1999.

Revenues and gross margin for the three months ended March 31, 1999,
reflect price reductions which were not in effect, or were only partially in
effect, in the first quarter of 1998. In June 1998, prices for Iowa residential
customers were reduced $5 million annually. Since July 1997, MidAmerican has
reduced prices a total of approximately $10 million annually for its Iowa
commercial and industrial customers through negotiated contracts and a tariffed
rate reduction. These reductions were only partially in effect in the first
quarter of 1998. Prices for Illinois customers were reduced $0.9 million in
August 1998 related to Illinois utility industry restructuring. MidAmerican also
recorded a $3.9 million refund accrual for a revenue sharing arrangement in
Iowa. Refer to "Rate Matters: Electric" in the OPERATING ACTIVITIES AND OTHER
MATTERS section of MD&A for a discussion of revenue sharing. The combined effect
of price reductions and the revenue sharing accrual decreased revenues and
electric margin by $6.4 million for the first quarter of 1999 compared to the
first quarter of 1998.

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

Three Months
Ended March 31
----------------
1999 1998
---- ----
(In millions)
Operating revenues........... $171 $173
Cost of gas sold............. 97 105
---- ----
Gas gross margin........... $ 74 $ 68
==== ====

MidAmerican's regulated gas revenues include purchase gas adjustment
clauses (PGAs) through which MidAmerican is allowed to recover the cost of gas
sold from most of its gas utility customers. Consequently, fluctuations in the
cost of gas sold do not affect gross margin or net income because revenues
reflect comparable fluctuations in revenues from PGAs. A decrease in the
per-unit cost of gas for the first quarter of 1999 compared to the first quarter
of 1998 reduced revenues and cost of gas sold by approximately $12 million.

On January 22, 1999, the IUB approved a $6.7 million annual interim
increase in gas rates for Iowa retail customers. The increase contributed
approximately $1.5 million to the comparative increase in gas margin for the
first quarter of 1999.

Recovery of gas energy efficiency costs decreased from $4.4 million in the
first quarter of 1998 to $4.1 million in the first quarter of 1999. Again,
changes in revenues from energy efficiency cost recovery are substantially
offset by corresponding changes in other operating expenses.

Temperatures in the first quarter of 1999 were 10% warmer than normal,
resulting in a $6 million decrease in gas gross margin for the period, while
temperatures in the first quarter of 1998 were 15% warmer than normal, resulting
in an $8 million decrease in gas gross margin. Comparing the two quarters, gas
margin increased approximately $2 million in the first quarter of 1999 due to
the effects of weather. Customer growth resulted in a $1.0 million improvement
in gas margin in the 1999 quarter. Other sales factors also contributed to the
increase in gas margin for the first quarter of 1999. In total, retail sales of
natural gas in the first quarter of 1999 increased 3.0% compared to the 1998
quarter.

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<PAGE>

UTILITY OPERATING EXPENSES

Utility other operating expenses increased $8.2 million for the first
quarter of 1999 compared to the first quarter of 1998. Increased expenses in
1999 for information technology, consulting services and the amount and timing
of certain employee incentive costs were major causes of the increase. The
increase in information technology costs was due in part to year 2000
preparation and support for various new systems.

As mentioned in the gross margin discussions, the recovery of one phase of
deferred energy efficiency costs is complete, and accordingly, the costs for
that phase have been fully amortized to expense. As a result, energy efficiency
costs decreased $1.8 million in the first quarter of 1999 compared to the first
quarter of 1998.

Maintenance expenses increased $3.5 million in the 1999 quarter compared to
the same period in 1998 due to the timing of generating plant maintenance and
increased electric distribution maintenance due in part to increased tree
trimming expense.

Depreciation and amortization expense increased in the first quarter of
1999 compared to the first quarter of 1998 due to an increase in utility plant
and a $3.5 million regulatory accrual relating to the Illinois electric
restructuring legislation.

Property and other taxes decreased $3.2 million compared to the three
months ended March 31, 1998. MidAmerican's Iowa property tax decreased for the
first quarter of 1999 due to reduced assessed values. Deregulation of the
Illinois electric utility industry resulted in changes in the way certain taxes
are assessed in Illinois. The changes resulted in a decrease in MidAmerican's
tax expense for the first quarter of 1999 compared to the 1998 period. One of
the taxes is now assessed directly on the energy consumer instead of through the
utility. Accordingly, MidAmerican's electric revenues reflect an equal reduction
in the 1999 quarter for this tax collection change.

NONREGULATED OPERATING REVENUES AND OPERATING EXPENSES

MidAmerican's income statements now reflect its nonregulated operations in
the determination of Operating Income. Previously, these activities were
reflected in Other, Net on the Consolidated Statements of Income. All prior year
amounts have been reclassified to be consistent with the current year's
presentation.

Revenues and Cost of Sales -

Revenues from wholesale natural gas marketing operations increased $17.3
million for the first quarter of 1999 compared to the same period in 1998 due to
an increase in related sales volumes of 12 million MMBtus (192%). The increase
in sales volumes is due primarily to gas marketing contracts previously serviced
by a nonregulated affiliate of MidAmerican that started being renewed as
MidAmerican contracts in May 1998. A decrease in the average price per unit,
reflective of a lower cost of gas per unit, partially offset the effect of
increased sales. Cost of sales related to natural gas marketing for the 1999
period reflects the increase in sales and the decrease in the average cost of
gas per unit. Total gross margin (total price less cost of gas) on nonregulated
natural gas sales decreased $0.7 million compared to the first quarter of 1998.
The decrease was due to lower than anticipated gas prices in part of the quarter
and lower than anticipated sales volumes due in part to mild weather.

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<PAGE>

Other Nonregulated Operating Expenses -

Other nonregulated operating expenses increased in the first quarter of
1999 compared to the first quarter of 1998 due to costs of initiatives for new
nonregulated products and services.

NON-OPERATING INCOME AND INTEREST EXPENSE

Interest and Dividend Income -

Interest income decreased in the 1999 quarter compared to the 1998 quarter
due to a decrease in temporary cash investments and the note receivable related
to the sale of MidAmerican's accounts receivable.

Other, Net -

Other, Net reflects the discount on sold accounts receivable, net of a fee
for servicing the accounts. The net discount was recorded as an expense in
Other, Net in the amount of $2.9 million and $1.7 million for the first quarter
of 1999 and 1998, respectively.

Fixed Charges -

The decrease in interest on long-term debt is due to long-term debt
maturities and refinancing in 1998. Other interest expense increased due
primarily to an increase in commercial paper outstanding.

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

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

As reflected on the Consolidated Statements of Cash Flows, MidAmerican's
net cash provided from operating activities was $82 million and $179 million the
first three months of 1999 and 1998, respectively.

INVESTING ACTIVITIES AND PLANS

Utility Construction Expenditures -

MidAmerican's primary need for capital is utility construction
expenditures. For the first three months of 1999, utility construction
expenditures totaled $26 million, including allowance for funds used during
construction (AFUDC) and Quad Cities Station nuclear fuel purchases. All such
expenditures were met with cash generated from utility operations, net of
dividends.

Forecasted utility construction expenditures, including AFUDC, for 1999 are
$179 million and $720 million for 2000 through 2003. Capital expenditure needs
are reviewed regularly by MidAmerican's management and may change significantly
as a result of such reviews. MidAmerican presently expects that all utility
construction expenditures for the next five years will be met with cash
generated from utility operations, net of dividends. The actual level of cash
generated from utility operations is affected by, among other things, economic
conditions in the utility service territory, weather and federal and state
regulatory actions.

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<PAGE>

Nuclear Decommissioning -

Each owner of a nuclear facility is required to set aside funds to provide
for the cost of decommissioning its nuclear facility. In general,
decommissioning of a nuclear facility means to safely remove the facility from
service and restore the property to a condition allowing unrestricted use by the
operator. Based on information presently available, MidAmerican expects to
contribute approximately $42 million during the period 1999 through 2003 to an
external trust established for the investment of funds for decommissioning the
Quad Cities Station. Approximately 60% of the trust's funds are now invested in
domestic corporate debt and common equity securities. The remainder is invested
in investment grade municipal and U.S. Treasury bonds.

In addition, MidAmerican makes payments to Nebraska Public Power District
(NPPD) related to decommissioning Cooper. These payments are reflected in other
operating expenses in the Consolidated Statements of Income. NPPD estimates call
for MidAmerican to pay approximately $57 million to NPPD for Cooper
decommissioning during the period 1999 through 2003. NPPD invests the funds
predominately in U.S. Treasury Bonds. MidAmerican's obligation for Cooper
decommissioning may be affected by the actual plant shutdown date and the status
of the power purchase contract at that time. In July 1997, NPPD filed a lawsuit
in United States District Court for the District of Nebraska naming MidAmerican
as the defendant and seeking a declaration of MidAmerican's rights and
obligations in connection with Cooper nuclear decommissioning funding.

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

FINANCING ACTIVITIES, PLANS AND AVAILABILITY

MidAmerican currently has authority from the FERC to issue short-term debt
in the form of commercial paper and bank notes aggregating $400 million. As of
March 31, 1999, MidAmerican had a $250 million revolving credit facility
agreement and a $5 million bank line of credit. MidAmerican's commercial paper
borrowings are supported by the revolving credit facility and the line of
credit. MidAmerican also has a revolving credit facility which is dedicated to
providing liquidity for its obligations under outstanding pollution control
revenue bonds that are periodically remarketed.

In 1997, MidAmerican entered into a revolving agreement, which expires in
2002, to sell all of its right, title and interest in the majority of its billed
accounts receivable to MidAmerican Energy Funding Corporation (Funding Corp.), a
special purpose entity established to purchase accounts receivable from
MidAmerican. Funding Corp. in turn sold receivable interests to outside
investors. In consideration for the sale, MidAmerican received $70 million in
cash and the remaining balance in the form of a subordinated note from Funding
Corp. In the fourth quarter of 1998, the revolving balance was reduced to $60
million due to a decline in accounts receivable available for sale, but returned
to $70 million in the first quarter of 1999. The agreement is structured as a
true sale, as determined by Statement of Financial Accounting Standards (SFAS)
No. 125, under which the creditors of Funding Corp. will be entitled to be
satisfied out of the assets of Funding Corp. prior to any value being returned
to MidAmerican or its creditors. Therefore, the accounts receivable sold are not
reflected on MidAmerican's Consolidated Balance Sheets. As of March 31, 1999,
$112.3 million of accounts receivable, net of reserves, were sold under the
agreement.

MidAmerican has authorization from the FERC to issue up to $500 million
in various forms of long-term debt. MidAmerican will also need authorization
from the ICC prior to issuing any securities. If 90% or more of the proceeds
from a securities issuance are used for refinancing purposes, MidAmerican need
only provide the ICC with an "informational statement" prior to the issuance
which sets forth the

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<PAGE>

type, amount and use of the proceeds of the securities to be issued. If less
than 90% of the proceeds are used for refinancing, MidAmerican must file a
comprehensive application seeking authorization prior to issuance. The ICC is
required to hold a hearing before issuing its authorization.

OPERATING ACTIVITIES AND OTHER MATTERS

Industry Evolution -

The utility industry continues to evolve into an increasingly competitive
environment. In virtually every region of the country, legislative and
regulatory actions are being taken which result in customers having more choices
in their energy decisions.

In the electric industry, the traditional vertical integration of
generation, delivery and marketing is being unbundled, with the generation and
marketing functions being deregulated. For local gas distribution businesses,
the supply, local delivery and marketing functions are similarly being separated
and opened to competitors for all classes of customers. While retail electric
competition is presently not permitted in Iowa, MidAmerican's primary
market,legislation to do so was introduced in the Iowa legislature in the last
session. Deregulation of the gas supply function related to small volume
customers is also being considered by the IUB. MidAmerican is actively
participating in the legislative and regulatory processes shaping the new
environment in which its businesses will operate.

The generation and retail portions of MidAmerican's electric business will
be most affected by competition. The introduction of competition in the
wholesale market has resulted in a proliferation of power marketers and a
substantial increase in market activity. As retail choice evolves, competition
from other traditional utilities, power marketers and -customer-owned generation
could put pressure on utility margins.

During the transition to full competition, increased volatility in the
marketplace can be expected. Although MidAmerican has sufficient low cost
generation for its retail electric needs, recent wholesale market volatility
underscores the increased risk and opportunity associated with the energy
business as it transitions to competition.

Legislative and Regulatory Evolution -

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

The law required a 15% electric rate reduction for all Illinois residential
customers in 1998. To satisfy its obligation, MidAmerican received credit for
its 1996 and 1997 Illinois rate reductions, totaling $15.5 million, and reduced
rates an additional $0.9 million annually, effective August 1, 1998. MidAmerican
is exempted from the requirement to join an independent system operator (ISO) or
to form an in-state ISO.

In addition, the law provides for Illinois earnings above a certain level
of ROE to be shared equally between customers and MidAmerican beginning in April
2000. MidAmerican's ROE level will be based on a rolling two-year average, with
the first determination being based on an average of 1998 and 1999. The ROE
level at which MidAmerican will be required to share earnings is a multi-step
calculation of average 30-year Treasury Bond rates plus 5.50% for 1998 and 1999
and 6.50% for 2000 through 2004. If the resulting average Treasury Bond rate
were equal to the December 1998 30-year Treasury Bond rate, the

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<PAGE>

ROE level above which sharing must occur would be approximately 10.6%. The law
allows MidAmerican to mitigate the sharing of earnings above the threshold ROE
through accelerating depreciation or other non-cash methods that would reduce
MidAmerican's earnings. MidAmerican continues to evaluate its strategy regarding
the sharing mechanism.

The law also addresses charges to customers for transition costs based on a
lost-revenue approach. These transition fees, designed to help utilities recover
stranded costs, will end December 31, 2006, subject to possible extension.
MidAmerican continues its involvement in proceedings which detail the new
competitive environment and to evaluate the impact of the law on its operations
and the opportunities the law presents.

In Iowa, a replacement of the prior utility property tax system, which was
supported by MidAmerican, went into effect on January 1, 1999. The replacement
tax is primarily a consumption-based tax on the user of energy and assures
stability in tax collections as the industry is deregulated in Iowa. With
resolution of the utility property tax issue, MidAmerican is pursuing the
adoption of electric utility industry restructuring legislation. Progress was
made during the 1999 Iowa legislative session, and MidAmerican continues working
toward adoption of new legislation in a future session.

Residential and Commercial Pilot Project -

On August 21, 1998, the IUB issued an Order approving MidAmerican's
proposal to allow at least 15,000 Iowa families and 2,000 small businesses to
have the opportunity to select among competing electricity providers. The
two-year pilot program will allow participating retail customers in the selected
test area to choose among several electricity providers, including MidAmerican,
and to have that energy delivered by MidAmerican. Customer enrollment is
currently allowed and the pilot could begin in the second quarter of 1999.
Businesses in the test area will be eligible for the program if their annual
peak demand is less than four megawatts. New suppliers participating in the
program will have to be certified by the IUB and meet specified requirements.

Accounting Effects of Industry Restructuring -

A possible consequence of competition in the utility industry is that SFAS
71 may no longer apply. SFAS 71 sets forth accounting principles for operations
that are regulated and meet certain criteria. For operations that meet the
criteria, SFAS 71 allows, among other things, the deferral of costs that would
otherwise be expensed when incurred. A majority of MidAmerican's electric and
gas utility operations currently meet the criteria required by SFAS 71, but its
applicability is periodically reexamined. On December 16, 1997, MidAmerican's
generation operations serving Illinois were no longer subject to the provisions
of SFAS 71 due to passage of industry restructuring legislation in Illinois.
Thus, in 1997 MidAmerican was required to write off the regulatory assets and
liabilities from its balance sheet related to its Illinois generation
operations. The net amount of such write-offs was not material. If other
portions of its utility operations no longer meet the criteria of SFAS 71,
MidAmerican could be required to write off the related regulatory assets and
liabilities from its balance sheet, and thus, a material adjustment to earnings
in that period could result. As of March 31, 1999, MidAmerican had $292 million
of regulatory assets on its Consolidated Balance Sheet.

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<PAGE>

Energy Efficiency -

MidAmerican's regulatory assets as of March 31, 1999, included $64.9
million of deferred energy efficiency costs. Based on the current level of
recovery, MidAmerican expects to recover these costs by the end of 2001.
MidAmerican is also allowed to recover its ongoing energy efficiency costs on a
current basis. Recovery of these costs is being collected from customers based
on projected annual costs of $16.8 million, which may be adjusted annually.
Amortization of the deferred energy efficiency costs and current expenditures
for energy efficiency costs will be reflected in other operating expenses over
the related periods of recovery. The total of such costs for the years 1999,
2000 and 2001 is estimated to be $43 million, $40 million and $35 million,
respectively.

Rate Matters: Electric -

If MidAmerican's annual Iowa electric jurisdictional ROE exceeds 12%, then
earnings above the 12% level will be shared equally between customers and
MidAmerican; if the ROE exceeds 14%, then two-thirds of MidAmerican's share of
those earnings will be used for accelerated recovery of certain regulatory
assets. A 1997 pricing plan settlement agreement precludes MidAmerican from
filing for increased rates prior to 2001 unless the ROE falls below 9%. Other
parties signing the agreement are prohibited from filing for reduced rates prior
to 2001 unless the ROE, after reflecting credits to customers, exceeds 14%. On
April 14, 1999, the IUB approved, subject to additional refund, MidAmerican's
ROE calculation and its proposed $2.2 million refund to non-contract customers.
MidAmerican has accrued for this refund. The agreement also eliminated
MidAmerican's energy adjustment clause, and, as a result, the cost of fuel is
not directly passed on to customers.

Rate Matters: Gas -

In October 1998, MidAmerican made a filing with the IUB requesting a rate
increase for its Iowa retail gas customers. An interim rate increase of
approximately $6.7 million annually was approved by the IUB on January 22, 1999,
effective immediately. On April 23, 1999, the IUB issued an order approving a
settlement agreement between MidAmerican, the OCA and other parties which
provides for an annual increase of $13.9 million. MidAmerican anticipates the
new rates will be implemented by June 1999.

In November 1998, MidAmerican filed with the South Dakota Public Utilities
Commission (SDPUC) requesting a rate increase for its South Dakota retail gas
customers. The SDPUC in April 1999 approved a rate increase of $2.4 million
annually, effective May 1, 1999.

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<PAGE>

Environmental Matters -

The EPA and state environmental agencies have determined that contaminated
wastes remaining at certain decommissioned MGP facilities may pose a threat to
the public health or the environment if such contaminants are in sufficient
quantities and at such concentrations as to warrant remedial action.

MidAmerican is evaluating 27 properties which were, at one time, sites of
gas manufacturing plants in which it may be a PRP. The purpose of these
evaluations is to determine whether waste materials are present, whether such
materials constitute an environmental or health risk, and whether MidAmerican
has any responsibility for remedial action. MidAmerican's estimate of probable
remediation costs for these sites as of March 31, 1999, was $24 million. This
estimate has been recorded as a liability and a regulatory asset for future
recovery through the regulatory process. Refer to Note B (1) of Notes for
further discussion of MidAmerican's environmental activities related to MGP
sites and cost recovery.

Following recommendations provided by the Ozone Transport Assessment Group,
the EPA, in November 1997, issued a Notice of Proposed Rulemaking which
identified 22 states and the District of Columbia as making significant
contribution to nonattainment of the ozone standard in downwind states in the
eastern half of the United States. In September 1998, the EPA issued its final
rules in this proceeding. Iowa is not subject to the emissions reduction
requirements in the final rules, and, as such, MidAmerican's facilities are not
currently subject to additional emissions reductions as a result of this
initiative.

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

In December 1997, negotiators from more than 150 nations met in Kyoto,
Japan to negotiate an international agreement designed to address global climate
change impacts by attempting to reduce so-called greenhouse gas emissions. Some
scientists contend that these gases build up in the Earth's atmosphere and cause
global temperatures to rise. The primary target of these emissions is carbon
dioxide (CO2) which is formed by, among other things, the combustion of fossil
fuels. The agreement currently calls for the United States to reduce its
emissions of CO2 and other greenhouse gases to 7 percent below 1990 levels in
the 2008-2012 time frame. The United States became a signatory to the agreement
on November 12, 1998. In order for the agreement to become binding upon the
United States, ratification by the U.S. Senate is necessary. The cost to the
utility industry in general, and to MidAmerican, of reducing its CO2 emissions
levels by 7 percent below 1990 levels would depend on available technology at
the time, but could be material.

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Quad Cities Nuclear Power Station -

Quad Cities Station is operated by, and 75% owned by, Commonwealth Edison
Company (ComEd). In January 1998, ComEd was informed by the Nuclear Regulatory
Commission (NRC) that the performance of Quad Cities Station was trending
adversely. During outages at Units 1 and 2 in the first five months of 1998,
ComEd worked extensively with the NRC regarding its concerns. In a July 1998
meeting, ComEd was informed by the NRC that while the adverse trend at Quad
Cities Station appears to have been stopped, the operating time of the units
since their restarts in May and June 1998 was not sufficient for the NRC to make
a final determination of the trend status of Quad Cities Station. The NRC senior
managers met again in April 1999 and briefed the NRC commissioners on May 6,
1999. As a result, Quad Cities Station is now classified in the NRC's Routine
Oversight category for nuclear power plants, which is the best of the NRC's
three categories. Other than a refueling outage on one unit and a scheduled
surveillance outage required by technical specifications, the Quad Cities
Station units have remained in full operation since their restarts in May and
June 1998.

Generating Capability -

In July 1998, customer usage of electricity caused an hourly peak demand of
3,643 MW on MidAmerican's energy system. MidAmerican's previous record peak
demand was 3,553 MW set in 1995. MidAmerican is interconnected with certain Iowa
and neighboring utilities and is involved in an electric power pooling agreement
known as Mid-Continent Area Power Pool (MAPP). Each MAPP participant is required
to maintain for emergency purposes a net generating capability reserve of at
least 15% above its system peak demand. MidAmerican's reserve margin for 1998
was approximately 20%.

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

ACTIVITIES REGARDING YEAR 2000 DATE ISSUES

The following discussion of year 2000 issues describes MidAmerican's plans
to address technical problems relating to calculations, manipulations, storage
and other uses of date-sensitive data which could cause some computer-controlled
systems, applications and processes (hereinafter referred to as "Systems") to
incorrectly process critical financial and operational information, or stop
processing altogether. The discussion contains by necessity many forward-looking
statements. MidAmerican wishes to avail itself of the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995, and in order to do so
includes the following meaningful cautionary statements with regard to the
forward looking statements of its year 2000 plans. MidAmerican's intentions,
expectations, and predictions relating to its year 2000 efforts are subject to
risks and uncertainties that could cause actual results to differ materially
from those expressed in, or implied by, such statements. Such risks and
uncertainties include, among others, the effects of weather, federal and state
regulatory actions, and other matters, many of which are beyond MidAmerican's
control. In addition, MidAmerican claims the full protections established by the
Year 2000 Information and Readiness Disclosure Act for Year 2000 Statements and
Year 2000 Readiness Disclosure.

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<PAGE>

Project Description -

MidAmerican has undertaken an extensive ongoing project to address its
information technology (IT) and non-IT (including embedded technology) Systems
potentially affected by the year 2000 date change. MidAmerican's approach is
based on a five-phase project methodology - inventory, assessment, planning,
resolution and implementation - designed to result in the identification and
evaluation of potential problems, and remediation of MidAmerican's Systems.
MidAmerican generally defines the five phases as follows:

1. Inventory Phase - The purpose of the inventory phase is to identify and
document Systems used by MidAmerican that may have a date-sensitive function.

2. Assessment Phase - The purpose of the assessment phase is to collect
information about inventoried Systems, including the business and technical
context in which individual Systems operate, to make an informed judgment
concerning an appropriate plan to mitigate year 2000 related risks.

3. Planning Phase - The purpose of the planning phase is to develop
strategic and tactical plans for Systems that require replacement, repairs,
upgrades or other appropriate actions (collectively referred to as "remedial
actions").

4. Resolution Phase - The purpose of the resolution phase is to execute the
plan developed during the preceding phases. Testing of Systems and/or components
of Systems, as well as any preceding or subsequent remedial action, is commenced
during this phase.

5. Implementation Phase - The purpose of the implementation phase is to
examine the Systems to determine whether they will function adequately in a
production environment and to perform follow-up administrative tasks as required
to develop appropriate documentation in support of year 2000 readiness.

MidAmerican's preparedness goal is to ensure high- and medium-priority
Systems are suitable for continued use into the year 2000 and will correctly
perform all critical functions that require accurate processing of
date-sensitive data ("year 2000 ready" or "year 2000 readiness") by June 30,
1999. MidAmerican classifies all Systems ranging from low-to high-priority based
on their importance to carrying out MidAmerican's business mission. System
priority is based on potential impacts resulting from year 2000 problems on
public and employee safety, prolonged and widespread service outages, long-term
shareholder value, and ability to comply with regulatory requirements. In the
case of low-priority Systems, year 2000 readiness may be delayed beyond January
1, 2000, or perhaps indefinitely. MidAmerican plans to use the last six months
of 1999 to perform post-implementation testing, address selected lower priority
Systems and conduct preparedness exercises.

Vendors, customers and other third parties may affect MidAmerican's ability
to achieve year 2000 readiness. Because service reliability and financial
stability are dependent on MidAmerican's supply chain, a concerted effort is
being made to investigate important third parties to assess their ability to
continue to supply products or services to, or purchase products or services
from, MidAmerican.

State of Readiness -

Due to factors such as the overlapping nature of the project phases and the
varying degree of complexity of the Systems being addressed, it is difficult to
accurately determine the status of completion of a particular phase of the
project at any given point in time. MidAmerican uses three methods to measure
the status of project completion:

1. As an entity with public utility operations, MidAmerican must comply
with certain year 2000 regulatory requirements imposed by the North
American Electric Reliability Council (NERC).

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<PAGE>

NERC reporting data is limited primarily to Systems that are directly
associated with transmission grid stability. The transmission grid
consists of the interconnected transmission systems of North American
utilities. Reporting categories include nuclear generation,
non-nuclear generation, Energy Management Systems and Supervisory
Control and Data Acquisition (SCADA) system, telecommunications
systems, substation controls and system protection, and IT business
information systems. Pursuant to NERC requirements, MidAmerican's
March compliance filing shows MidAmerican has completed 100% of
inventory provisions, 97% of assessment conditions (the remaining 3%
relates to finalizing phase-end sign-off documentation and completion
of assessment on some products that had not been implemented to
production as of the reporting date), and 86% of remediation/testing
requirements (phases 3-5).

2. A "checklist" approach is used to monitor the completion status of
each System that is unique to a given organizational group. For
example, identical substation meters may be located in several
individual substations, but the meter is counted as only one System.
All Systems are viewed as equivalent, regardless of priority, in the
checklist approach. Systems are categorized as complete or not
complete, without regard to percentage of completion of the System in
total or percentage of completion of any particular phase of the
project. As of April 15, 1999, there were 5,547 separate Systems in
MidAmerican's inventory. Of these, 4,865, or 88%, had been completed.

3. MidAmerican's internally developed measure is more sensitive and is
based on business risk/priority, weighted tasks and weighted phases.
Only high- and medium-risk/priority Systems are included in the status
of completion calculation. The data related to Systems that could
impact grid stability pertains only to those Systems that directly
affect MidAmerican's customers. Also, progress toward completion is
measured. As of April 15, 1999, MidAmerican as a whole is generally in
the resolution phase. Percentage of completion for six areas of
business operations is a follows:

A. IT - Applications: 85% complete
B. IT - Operations & Infrastructure: 91% complete
C. Generation: 90% complete
D. Energy Delivery: 93% complete
E. Retail: 71% complete
F. Corporate Services (excluding IT): 66% complete

The investigation of supply chain issues consists of documenting the nature
of business relationships in correspondence, surveys and meetings with third
parties and making determinations regarding their year 2000 readiness status
based on the responses received. MidAmerican has initiated contact with vendors
and business partners it considers to represent a significant financial or
operational risk if they were to experience year 2000 problems. In addition,
interconnected utilities and wholesale customers, as well as high-volume retail
customers, have been contacted for the purpose of reviewing the status of their
year 2000 readiness efforts. To date, information made available to MidAmerican
has not been uniform in terms of quality and quantity. Although none of the
information has suggested that the year 2000 readiness efforts of these vendors,
business partners and customers have been inadequate, MidAmerican intends to
maintain ongoing communications with some third parties through the last half of
1999. MidAmerican will also continue monitoring information about specific
products in MidAmerican's inventory.

Costs -

As of March 31, 1999 approximately $7.5 million in operating expenses have
been incurred to carry out year 2000 activities. It is anticipated that up to
$7.5 million in additional operating expenses and capital costs will need to be
incurred to complete the project. Although additional unforeseen costs may be
incurred, at this time MidAmerican has not become aware of any material costs
which may arise in order to

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<PAGE>

achieve year 2000 readiness. Future progress toward achievement of year 2000
readiness could change this outlook.

MidAmerican has renovated or replaced several high-priority Systems (e.g.,
management information, materials management information, work management
information, customer service, electric outage management, meter control and
inventory, and others) to gain enhanced functionalities. For example, the
development and installation of a new customer service system (CSS) and related
applications was an outcome of the merger which created MidAmerican in July of
1995. Although potential year 2000 problems existing in the predecessor
companies' CSS products were recognized, the decision to implement the new CSS
was primarily in response to integration difficulties and the need for
additional application functionalities. The costs of these renovations and
replacements are not reported herein as their development and installation was
not driven by year 2000 concerns.

Contingency Plans -

A contingency plan identifying credible worst-case scenarios is being
developed. The contingency plan is comprised of both mitigation and recovery
aspects. Mitigation entails planning to reduce the impact of unresolved year
2000 problems, and recovery entails planning to restore services in the event
that year 2000 problems occur. The first draft of MidAmerican's contingency plan
is completed, and the schedule calls for finalizing the plan by June 30, 1999.

Although a number of factors come into play in defining reasonably likely
worst case scenarios, the loss of voice and data communications, volatile load
patterns, and inability to control generation and/or return generation units to
service are viewed as the most serious threats. The relative seriousness of
these threats is based on recognition that the occurrence of any of these types
of problems could have an immediate and significant effect on service
reliability and financial performance.

MidAmerican participated in a contingency planning drill coordinated by
NERC on April 9, 1999. The drill focused on managing problems resulting from a
simulated partial loss of voice and data communications services. MidAmerican
also plans to participate in a second NERC-coordinated drill, which has been
scheduled to take place on September 8-9, 1999. It is likely that additional
drills will be conducted at MidAmerican's own discretion, as well.

Risks -

Despite the comprehensive nature of MidAmerican's year 2000 project and the
results the project is designed to produce, MidAmerican may experience random,
widespread and simultaneous failures in its generation, distribution and Systems
during year 2000 transition periods. Contingency plans for any known or
reasonably anticipated risk of interruption to the generation or distribution of
energy are being developed to plan for resources needed to be put in place to
reduce the potential outage period to a minimum. Although the impact on future
operations and revenues is unknown, failure of MidAmerican's Systems to perform
because of year 2000 implications could result in operating problems and costs
material to MidAmerican.

Although management believes the project will be completed sufficiently in
advance of January 1, 2000, unforeseen and other factors could cause delays in
the project, the results of which may have a material effect on MidAmerican's
results of operations. In addition, there is no assurance that MidAmerican will
not be affected by year 2000 problems experienced by third parties.

ACCOUNTING ISSUES

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
133, "Accounting for Derivative Instruments and Hedging Activities" effective
for fiscal years beginning after June 15, 1999.

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<PAGE>

SFAS 133 requires an entity to recognize all of its derivatives as either assets
or liabilities in its statement of financial position and measure those
instruments at fair value. If certain conditions are met, such instruments may
be designated as hedges. Changes in the value of hedge instruments would not
impact earnings, except to the extent that the instrument is not perfectly
effective as a hedge. An entity that elects to apply hedge accounting is
required to establish at the inception of the hedge the method it will use in
assessing the effectiveness of the derivative. The Company has not yet
determined the impact of this accounting standard.

In November 1998, the Emerging Issues Task Force (EITF) of the FASB
released EITF Issue No. 98-10, "Accounting for Contracts Involved in Energy
Trading and Risk Management Activities," effective for fiscal years beginning
after December 15, 1998. In this issue, the EITF provides guidance on how
contracts for energy commodities are to be accounted for on a company's income
statement. Current accounting practice varies throughout the energy industry.
Historically, a "settlement" basis of accounting has been used, meaning the
earnings impact of energy contracts was recognized when such contracts were
physically settled. As these type of contracts become more complicated or as the
operation of the group conducting these activities takes on more characteristics
of a trading function, the EITF has concluded that such contracts must be
recorded at fair value, and the net change in value recorded in income. The EITF
outlines a number of indicators to consider in determining whether an operation
is engaged in "trading activities." Presently, MidAmerican's energy contract
operation does not meet the EITF's definition of "trading", and hence it
continues to use settlement accounting. However, if the nature of MidAmerican's
operation changes, there may need to be a transition to fair value accounting.

PART I.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- - ------- ----------------------------------------------------------

As of March 31, 1999, MidAmerican's financial positions related to
financial instruments and assets that are sensitive to changes in interest rates
or commodity price changes have not changed materially since December 31, 1998.
Refer to MidAmerican's 1998 Annual Report on Form 10-K under Item 7A for the
applicable information as of December 31, 1998.

PART II - OTHER INFORMATION

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

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

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

For information relating to MidAmerican's Environmental Matters, reference
is made to Part I, Note B of Notes to Consolidated Financial Statements.

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

On July 23, 1997, NPPD filed a Complaint, in the United States District
Court for the District of Nebraska, naming MidAmerican as the defendant and
seeking declaratory judgment as to three issues under the parties' long-term
power purchase agreement for Cooper capacity and energy. More specifically, NPPD
seeks a declaratory judgment in the following respects: (1) that MidAmerican is
obligated to pay 50% of all costs and expenses associated with decommissioning
Cooper, and that in the event NPPD continues to operate Cooper after expiration
of the power purchase agreement (September 2004), MidAmerican is not entitled to
reimbursement of any decommissioning funds it has paid to date or will pay in
the future; (2) that the current method of allocating transition costs as a part
of the decommissioning cost

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<PAGE>

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

MidAmerican filed its answer and contingent counterclaims. The contingent
counterclaims filed by MidAmerican are generally as follows: (1) that
MidAmerican has no duty under the power purchase agreement to reimburse or pay
50% of the decommissioning costs unless certain conditions occur; (2) that NPPD
has the duty to repay all amounts that MidAmerican has prefunded for
decommissioning in the event NPPD operates the plant after the term of the power
purchase agreement; (3) that NPPD is equitably estopped from continuing to
operate the plant after the term of the power purchase agreement; (4) that NPPD
has granted MidAmerican an option to continue taking 50% of the power from the
plant; (5) that the term "monthly power costs" as defined in the power purchase
agreement does not include costs and expenses associated with decommissioning
the plant; (6) that MidAmerican has no duty to pay for nuclear fuel, O&M
projects or capital improvements that have useful lives after the term of the
power purchase agreement; (7) that transition costs are not included in any
decommissioning costs and expenses; (8) that NPPD has breached its duty to
MidAmerican in making investments of certain funds; (9) that reserves in certain
accounts are excessive and should be refunded to MidAmerican; and (10) that NPPD
must credit MidAmerican for certain payments by MidAmerican for low-level
radioactive waste disposal.

MidAmerican and NPPD are currently involved in discovery. The trial in this
case is presently scheduled for November 1999. MidAmerican is vigorously
defending and pursuing its interest in this proceeding.

North Star Steel Company
- - ------------------------

On December 8, 1997, North Star Steel Company (NSS), a retail MidAmerican
electric customer, filed a Complaint in the United States District Court for the
Southern District of Iowa naming MHC and MidAmerican as defendants. The
Complaint alleges that MidAmerican's refusal to allow NSS to obtain retail
electric service from an unspecified alternative energy company amounts to a
violation of federal antitrust laws. NSS sought to recover an unspecified level
of damages, and to require MidAmerican to provide retail wheeling service so
that NSS could obtain electricity from an unnamed supplier. On June 23, 1998,
the District Court issued an Order Granting Summary Judgment in favor of
MidAmerican. On July 20, 1998, NSS appealed that decision to the United States
Court of Appeals for the Eighth Circuit. That appeal is currently pending.

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

(A) EXHIBITS

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

Exhibit 10.1 - MidAmerican Energy Company Combined Midwest
Resources/Iowa Resources Restated Deferred Compensation Plan Board of
Directors

Exhibit 10.2 - MidAmerican Energy Company Restated Executive Deferred
Compensation Plan.

Exhibit 12 - Computation of ratios of earnings to fixed charges and
computation of ratios of earnings to fixed charges plus preferred
dividend requirements.

Exhibit 15 - Awareness Letter of Independent Accountants

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

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<PAGE>

(B) REPORTS ON FORM 8-K

On March 12, 1999, MidAmerican filed a current report on Form 8-K, dated
March 12, 1999. The report included the following information:

Item 1. Changes in Control of the Registrant - Discussed the merger
transaction between MidAmerican's parent company and CalEnergy, whereby
MidAmerican became a wholly owned indirect subsidiary of CalEnergy, which was
renamed MidAmerican Energy Holdings Company.

Item 4. Changes in Registrant's Certifying Accountant - As a result of the
merger, Deloitte & Touche LLP now serves as MidAmerican's independent
accountants.

Exhibits included a letter from PricewaterhouseCoopers LLP regarding the
change in independent accountants and a news release dated March 12, 1999.

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<PAGE>

SIGNATURES

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

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

Date May 17, 1999 /s/ Patrick J. Goodman
---------------- -------------------------------------------------
Patrick J. Goodman
Senior Vice President and Chief Financial Officer

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<PAGE>

EXHIBIT INDEX

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

10.1 MidAmerican Energy Company Combined Midwest Resources/Iowa Resources
Restated Deferred Compensation Plan Board of Directors

10.2 MidAmerican Energy Company Restated Executive Deferred Compensation
Plan.

12 Computation of ratios of earnings to fixed charges and computation of
ratios of earnings to fixed charges plus preferred dividend
requirements.

15 Awareness Letter of Independent Accountants

27 Financial Data Schedules (for electronic filing only).

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MIDAMERICAN ENERGY COMPANY

COMBINED

MIDWEST RESOURCES/IOWA RESOURCES

RESTATED DEFERRED COMPENSATION PLAN

BOARD OF DIRECTORS

ARTICLE I
ESTABLISHMENT AND PURPOSE

1.1 BACKGROUND OF PLAN. MidAmerican Energy Company presently maintains two
deferred compensation plans for prior members of the Boards of Directors of
Midwest Resources Inc. and Iowa Resources Inc. This restated Plan shall replace
those two plans if the Merger, as defined in Section 1.4 below closes in 1999,
and shall replace those plans as of the closing date of the Merger. This Plan
shall be maintained as an unfunded plan of deferred compensation for
Participants.

1.2 PURPOSE OF PLAN. The purpose of this Plan is to consolidate the Predecessor
Plans into one Plan if the Merger closes in 1999.

1.3 APPLICABILITY OF PLAN. The provisions of this Plan are applicable to
individuals who have account balances in the Predecessor Plans as of the closing
date of the Merger.

1.4 MERGER OF PREDECESSOR PLANS. For ease of administration, and in recognition
of the need to change earnings credit and method of valuation in the Predecessor
Plans in light of the anticipated acquisition of MidAmerican Energy Holdings
Company by CalEnergy Company, Inc. (through a merger of a subsidiary of
CalEnergy with and into MidAmerican Energy Holdings Company ("Merger")), the
accounts under the Predecessor Plans are hereby merged into the Plan, effective
as of the date of closing of the Merger.

ARTICLE 2
DEFINITIONS

Whenever used in this Plan, the following terms shall have the meanings set
forth below unless otherwise expressly provided. When the defined meaning is
intended, the term is capitalized. The definition of any term in the singular
shall also include the plural, whichever is appropriate in the context.

2.1 ACCOUNT. Account means the bookkeeping account maintained for each
Participant that represents the Participant's total interest under the Plan as
of any Valuation Date. It shall also consist of any accounts transferred from
Predecessor Plans. A Participant shall have a fully vested and nonforfeitable
interest at all times in his or her Account.

-1-

<PAGE>

2.2 BENEFICIARY. Beneficiary means the person or persons designated by the
Participant to receive any benefits payable from the Participant's Account after
his or her death. Each Participant shall designate his or her Beneficiary (or
change this designation) at a time and in a manner specified by the Committee.
If no person is designated as a Beneficiary, if a designation is revoked, or if
no designated Beneficiary survives the Participant, the Beneficiary shall be the
Participant's estate.

2.3 CODE. Code means the Internal Revenue Code of 1986, as amended, or as it
may be amended from time to time. A reference to a particular section of the
Code shall also include the regulations promulgated under such section.

2.4 COMMITTEE. Committee means the Compensation Committee established by the
Board of Directors of MidAmerican Energy Holdings Company.

2.5 COMPANY. Company means MidAmerican Energy Company.

2.6 INVESTMENT FUND. Investment Fund means an investment benchmark or fund
designated by the Committee as an investment medium for the hypothetical
investment of a Participant's Account. There shall be a choice between the S&P
500 Stock Index Benchmark, the Lehman Brothers Aggregate Bond Index Benchmark
and the Stable Fund Fixed Rate Benchmark. The Committee shall have the
discretion to establish and terminate investment benchmarks or funds as it may
deem appropriate.

(a) S&P 500 Stock Index Benchmark means the S&P 500 Stock Index Value as
published by Standard and Poor as of the end of each business day,
including dividends reinvested.

(b) Lehman Brothers Aggregate Bond Index Benchmark means the Aggregate
Bond Index Value as published by Lehman Brothers as of the end of each
business day.

(c) Stable Fund Fixed Rate Benchmark shall be an account in which the
credits in the account do not fluctuate in value, and the values in
the account are credited with an annual interest rate, compounded
annually. The annual interest rate shall be set for each calendar year
based on the one-year U.S. Treasury Bill rate on October 15 in the
prior year (or the previous business day if October 15 is not a
business day), except that for 1999, the rate shall be 4.3%.

2.7 PARTICIPANT. Participant means an individual with an account balance under
this Plan.

-2-

<PAGE>

2.8 PLAN. Subsequent to the closing date of the Merger, Plan means this
MidAmerican Energy Company Combined Midwest Resources/Iowa Resources Restated
Deferred Compensation Plan - Board of Directors, as it may be amended from time
to time.

2.9 PLAN YEAR. Plan Year means the calendar year.

2.10 PREDECESSOR PLAN. The following plans shall be considered a Predecessor
Plan:

(a) Midwest Resources Inc./Iowa Resources Inc. and Subsidiaries Board of
Directors Deferred Compensation Plan Revised and Amended

(b) Deferred Compensation Plan for Board of Directors of Midwest Resources
Inc. and Subsidiaries

2.11 VALUATION DATE. Valuation Date means the last business day of each
calendar year and any other date that the Committee selects in its sole
discretion for the revaluation and adjustment of Accounts.

ARTICLE 3
PARTICIPATION

3.1 PARTICIPATION. A Participant with an Account under the Plan as of the
closing date of the Merger shall continue to be a Participant under the Plan
until all amounts have been distributed from his or her Account.

ARTICLE 4
DEFERRAL ELECTIONS

4.1 NO DEFERRALS. No new deferrals are permitted under this Plan.

-3-
<PAGE>

ARTICLE 5
PARTICIPANTS' ACCOUNTS

5.1 INVESTMENT CHANGES FOR PREDECESSOR PLANS. With respect to account balances
in a Predecessor Plan, if the valuation of any account is dependent upon the
book value or fair market value of MidAmerican Energy Holdings Company common
stock, or if earnings on an account are determined by the dividend rate on
MidAmerican Energy Holdings Company common stock (other than a rate that has
been fixed as of a certain date and is not subject to further change), each
Participant who has such an account balance shall file an election form with the
Committee prior to, or within fifteen (15) days after, the closing date of the
Merger, designating, in 1 percent increments, the Investment Funds in which such
account are deemed to be invested. To the extent the value of an account, as of
the closing date of the Merger, is based on the value of MidAmerican Energy
Holdings Company common stock, the value of each stock unit in any such account
shall be deemed to be $27.15, plus any dividend paid to shareholders of
MidAmerican Energy Holdings Company common stock through the closing date of the
Merger. In any account based on a fixed value with crediting of interest only,
but which varies in the interest rate credited from time to time, interest on
the account shall be credited through date of closing of the Merger. Amounts
converted to the Investment Funds as of the closing date of the Merger shall be
converted based on the Investment Fund benchmark values on the date of closing.
As to any Participant's Account transferred from a Predecessor Plan with a fixed
value and fixed interest rate credited to the account (i.e. debentures under the
former Iowa Resources Inc. Board of Directors deferred compensation plan), the
Participant's Account shall continue to reflect such fixed value and shall
continue to be credited with the fixed interest rate, unless the Participant
elects to have his or her account value related to such fixed investment
converted to one or more of the Investment Funds pursuant to the procedure set
forth above within the time frame specified above.

5.2 CHANGES IN INVESTMENTS. A Participant may change the hypothetical
investment allocation in his or her account no more than once during any
calendar quarter by filing an appropriate form with the Committee (or its
designated administrative representative) specifying the change to be made. The
change shall be processed within five (5) business days of receipt of the change
request by the Committee.

5.3 VALUATION OF ACCOUNTS.

(a) ALLOCATION OF EARNINGS AND LOSSES. A Participant's Account shall be
adjusted as of each Valuation Date to reflect any gains or losses that
would have been credited or debited to the Account if it had actually
been invested in the manner described in section 5.1. Accounts where
an investment change request has been received between these dates
will be credited or charged for any investment gains or losses since
the last Valuation Date through the effective date of the investment
change.

(b) CHARGES AGAINST ACCOUNT. Any payments made to a Participant or
Beneficiary under Article 6 shall be charged against the Participant's
Account.

5.4 FINANCING. The benefits under this Plan shall be paid out of the general
assets of the Company, except to the extent they are paid from the assets of a
grantor trust established by the Company to pay these benefits.

-4-

<PAGE>

5.5 UNSECURED INTEREST. No Participant shall have any interest whatsoever in
any specific asset of the Company. To the extent that any person acquires a
right to receive payments under this Plan, this right shall be no greater than
the right of any unsecured general creditor of the Company.

5.6 NONTRANSFERABILITY. In no event shall the Company make any payments under
this Plan to any assignee or creditor of a Participant or Beneficiary. Prior to
the time of payment hereunder, no Participant or Beneficiary shall have any
right by way of anticipation or otherwise to assign or otherwise dispose of any
interest under this Plan, nor shall rights be assigned or transferred by
operation of law.

ARTICLE 6
PAYMENT OF ACCOUNTS

6.1 CONDITIONS ON RIGHT TO RECEIVE PAYMENT. A Participant shall not be
entitled to payment of any deferred compensation from his or her account until
the time elected by the Participant as set forth on the written deferral
election form previously filed with the Corporate Secretary of the Company under
the Predecessor Plan, or until his or her death or permanent disability,
whichever occurs first. An election shall not be changed except by approval of
the Board of Directors of the Company. If annual installments were selected,
each annual installment shall not be less than an amount equal to the value of
the account at the beginning of the Plan Year in which distribution is to be
made divided by the life expectancy of the Participant at the beginning of such
Plan Year (or the joint life expectancy of the Participant and spouse if the
Participant is married). Each annual installment shall be made within fifteen
(15) days following the first day of each Plan Year. If an election was made to
receive a lump sum payment, payment shall be made within fifteen (15) days
following the first day of the Plan Year in which payment is to be made, and the
amount of the lump sum payment shall be equal to the value of the account as of
December 31 of the preceding Plan Year. Payment of a lump sum amount or any
annual installment shall be made in cash.

-5-
<PAGE>

6.2 CHANGE IN ELECTION UNDER PREDECESSOR PLAN. Except as provided below, with
respect to elections filed for deferred amounts under a Predecessor Plan, such
election as to method and timing of payment shall continue to be applicable to
the accounts transferred from a Predecessor Plan. A Participant may file a
revised election with respect to the account transferred from a Predecessor
Plan. The revised election form shall specify the new timing and method of
payout (either lump sum or annual installments). If the new election serves to
accelerate the payout of a lump sum or to elect a lump sum payment where annual
installments had been previously elected, and if the new lump sum election is
for payment to occur within three years of the date of closing of the Merger,
the value of the account shall be reduced by 6% as of the new date elected for
payout. If the new election form does not accelerate payments to within three
years following the date of closing of the Merger, no reduction shall be made in
the value of the account to be paid. A change may be made with respect to
revising the timing of payout of substantially equal annual installments as long
as the final annual payment does not occur any earlier than January 1, 2002. Any
new elections as to timing or method of payout must be made within fifteen (15)
days following the closing date of the Merger.

6.3 PAYMENT IN THE EVENT OF DEATH. In the event of the death of a Participant
occurring either before the commencement of payment or before the full balance
of the Participant's account has been paid, the unpaid balance in the Account
shall be paid in a lump sum to the Participant's designated beneficiary or
estate, payment shall be made within thirty (30) days following the date of
death. The value of the Account shall be based upon the value of the Investment
Funds in his or her account on the date of death (or on the preceding business
day, if date of death is not a business day).

ARTICLE 7
GENERAL PROVISIONS

7.1 GENERAL PROVISIONS.

(a) UNFUNDED PLAN.

(i) This Plan is intended to be an unfunded plan maintained primarily
to provide benefits to a "select group of management or highly
compensated employees" within the meaning of Section 201, 301 and
401 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and as amended from time to time or any
successor thereto, and, therefore, is further intended to be
exempt from the provisions of Parts 2, 3 and 4 of Title I of
ERISA. Accordingly, the Compensation Committee may terminate the
Plan for any or all Participants in order to achieve and maintain
this intended result, provided that previously accrued benefits
hereunder shall not be reduced or otherwise adversely affected
without the written consent of the affected Participants.

-6-
<PAGE>

(ii) The obligations hereunder shall at all times be unsecured and
payments with respect to any benefits hereunder shall be paid out
of the general operating revenue of the Company. A trust may be
established to provide for the payment of benefits to
Participants hereunder as long as the assets of such trust are
subject to the claims of general creditors of the Company with
respect to the deferrals (and earnings thereon, if applicable).

(b) WITHHOLDING. The Company shall have the right to require Participants
to remit to the Company an amount sufficient to satisfy Federal, state
and local tax withholding requirements, or to deduct from any or all
payments made pursuant to the Plan amounts sufficient to satisfy such
withholding tax requirements.

(d) NON-ALIENATION OF BENEFITS. No right or benefit under this Plan shall
be subject to anticipation, alienation, sale, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell,
assign, pledge, encumber, or charge the same shall be void. No right
or benefit hereunder shall in any manner be liable for or subject to
the debts, contracts, liabilities, or claims of the person entitled to
such benefit. If any Participant or designated beneficiary hereunder
should become bankrupt or attempt to anticipate, alienate, sell,
assign, pledge, encumber, or charge any right or benefit hereunder,
then such right or benefit shall, in the discretion of the
Compensation Committee, cease, and in such event, the Company may hold
or apply the same or any part thereof for the benefit of the
Participant or the designated beneficiary, his or her spouse,
children, or other dependents, or any of them, in such manner and in
such proportion as the Compensation Committee may deem proper.

(e) SUCCESSORS. All obligations of the Company under the Plan shall be
binding upon and inure to the benefit of any successor to the Company,
whether the existence of such successor is the direct or indirect
result of a merger or reorganization involving the Company or the
purchase or other acquisition, of all or substantially all of the
business or assets of the Company.

(f) AMENDMENT OR TERMINATION OF PLAN.

(i) The Board of Directors of the Company reserves the right at any
time and from time to time to amend, suspend or terminate the
Plan without the consent of any Participant or other person
claiming a right under the Plan.

-7-
<PAGE>

(ii) Any amendment or termination of this Plan shall not adversely
affect the rights of Participants or designated beneficiaries to
payments of amounts credited to Participants in their Account at
the time of such amendment or termination.

(g) SEPARABILITY. If any term or provision of this Plan as presently in
effect or as amended from time to time, or the application thereof to
any payments or circumstances, shall to any extent be invalid or
unenforceable, the remainder of the Plan, and the application of such
term or provision to payments or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby,
and each term or provision of the Plan shall be valid and enforced to
the fullest extent permitted by law.

(h) CONSTRUCTION. The provisions of this Plan shall be construed,
administered and enforced according to the laws of the State of Iowa.

(i) TITLES. The titles of the Articles and Sections herein are included
for convenience of reference only and shall not be construed as part
of this Plan, or have any effect upon the meaning of the provisions
hereof.

(j) IMPOSSIBILITY OF ACTION. In case it becomes impossible for the
Company to perform any act under this Plan, that act shall be
preformed which in the judgment of the Company will most nearly carry
out the intent and purposes of this Plan. All parties concerned shall
be bound by any such acts performed under such conditions.

(k) AUTHORIZED OFFICERS. Whenever the Company under the terms of the Plan
is permitted and required to perform any act or matter or thing, it
shall be done and performed by a duly authorized officer of the
Company.

-8-

MIDAMERICAN ENERGY COMPANY

RESTATED EXECUTIVE

DEFERRED COMPENSATION PLAN

ARTICLE I
ESTABLISHMENT AND PURPOSE

1.1 BACKGROUND OF PLAN. MidAmerican Energy Company presently maintains a
deferred compensation plan for selected employees and also maintains certain
deferred compensation plans of predecessor employers. This Plan shall replace
those arrangements, effective January 1, 1999, and is known as the MidAmerican
Energy Company Restated Executive Deferred Compensation Plan (the "Plan").

The Plan shall be maintained as an unfunded plan of deferred compensation for a
select group of management or highly compensated employees. The Plan, therefore,
is intended to be exempt from the participation, vesting, funding, and fiduciary
requirements of Title I of the Employee Retirement Income Security Act of 1974.

1.2 PURPOSE OF PLAN. The purpose of this Plan is to provide certain employees
with an additional way to defer portions of their compensation. The plan is also
intended to provide Participants with an effective means of deferring all or a
portion of short-term incentive bonus payments they are entitled to receive.

1.3 APPLICABILITY OF PLAN. The provisions of this Plan are applicable to
Employees who are employed by an Employer on or after January 1, 1999, and, with
respect to amounts deferred under any Predecessor Plan, are applicable to
participants who still have account balances under any such Plan.

1.4 MERGER OF PREDECESSOR PLANS. For ease of administration, and in recognition
of the need to change earnings credit and method of valuation in the Predecessor
Plans in light of the anticipated acquisition of MidAmerican Energy Holdings
Company by CalEnergy Company, Inc. (through a merger of a subsidiary of
CalEnergy with and into MidAmerican Energy Holdings Company ("Merger")), each
Predecessor Plan is hereby merged into the Plan, effective January 1, 1999.

ARTICLE 2
DEFINITIONS

2.1 ACCOUNT. Account means the bookkeeping account maintained for each
Participant that represents the Participant's total interest under the Plan as
of any Valuation Date. An Account shall consist of the sum of deferrals of
Salary and Bonus credited pursuant to section 4.1, and any gains and losses
credited on these amounts. It shall also consist of any accounts transferred
from Predecessor Plans. A Participant shall have a fully vested and
nonforfeitable interest at all times in his or her Account.

-1-
<PAGE>

2.2 AFFILIATE. Affiliate means any corporation, association, joint venture,
proprietorship or partnership while it is connected with the Company through
stock ownership, common control, membership in an affiliated service group, or
otherwise within the meaning of Code section 414(b), (c), (m) and (o).

2.3 BENEFICIARY. Beneficiary means the person or persons designated by the
Participant to receive any benefits payable from the Participant's Account after
his or her death. Each Participant shall designate his or her Beneficiary (or
change this designation) at a time and in a manner specified by the Committee.
If no person is designated as a Beneficiary, if a designation is revoked, or if
no designated Beneficiary survives the Participant, the Beneficiary shall be the
Participant's estate.

2.4 BONUS. Bonus means the cash portion of the Participant's short-term
incentive bonus award payable to a Participant on account of services performed
by the Participant.

2.5 CODE. Code means the Internal Revenue Code of 1986, as amended, or as it
may be amended from time to time. A reference to a particular section of the
Code shall also include the regulations promulgated under such section.

2.6 COMMITTEE. Committee means the Compensation Committee established by the
Board of Directors of the Company.

2.7 COMPANY. Company means MidAmerican Energy Company.

2.8 EMPLOYEE. Employee means any person who is employed by an Employer.

2.9 EMPLOYER. Employer means the Company and any Affiliate that elects to
become a party to the Plan with the approval of the Company.

2.10 INVESTMENT FUND. Investment Fund means an investment benchmark or fund
designated by the Committee as an investment medium for the hypothetical
investment of a Participant's Account. As of January 1, 1999, there shall be a
choice between the S&P 500 Stock Index Benchmark, the Lehman Brothers Aggregate
Bond Index Benchmark and the Stable Fund Fixed Rate Benchmark. The Committee
shall have the discretion to establish and terminate investment benchmarks or
funds as it may deem appropriate.

-2-
<PAGE>

(a) S&P 500 Stock Index Benchmark means the S&P 500 Stock Index Value as
published by Standard and Poor as of the end of each business day,
including dividends reinvested.

(b) Lehman Brothers Aggregate Bond Index Benchmark means the Aggregate
Bond Index Value as published by Lehman Brothers as of the end of each
business day.

2.11 PARTICIPANT. Participant means an Employee who has met and continues to
meet the eligibility requirements described in section 3.1 and who has elected
to defer amounts under the Plan. It also means any person with an account
balance under this Plan.

2.12 PLAN. Plan means this MidAmerican Energy Company Restated Executive
Deferred Compensation Plan, as it may be amended from time to time.

2.13 PLAN YEAR. Plan Year means the calendar year.

2.14 PREDECESSOR PLAN. The following plans shall individually be considered a
Predecessor Plan and collectively shall be considered the Predecessor Plans:

(a) MidAmerican Energy Company Deferred Compensation Plan - Executives

(b) Deferred Compensation Plan for Executives of Midwest Resources Inc.
and Subsidiaries

(c) Midwest Resources Inc. - Iowa Resources Inc. and Subsidiaries -
Executive Incentive Compensation Plan Revised and Amended (1/29/92
latest revision). (This Plan consists of both the Iowa Resources Inc.
Executive Incentive Plan in existence prior to the merger of Iowa
Resources Inc. and Midwest Energy Company and the Midwest Resources
Inc. Executive Incentive Plan after such merger.)

(d) Midwest Power Systems 1993 Key Executive Incentive Compensation Plan

(e) Midwest Resources Inc. - Iowa Resources Inc. and Subsidiaries -
Executive Deferred Compensation Plan Revised and Amended

(f) Non-Cash Bonus Award Plan for Executives of Midwest Resources Inc.

-3-
<PAGE>

2.15 RETIREMENT DATE. The date the Participant chooses as his or her retirement
date under the terms of the Company's cash balance defined benefit plan, or
successor plan, which can be either the normal retirement date or an early
retirement date under such plan.

2.16 SALARY. Salary means the Participant's regular basic wage from the
Employer, exclusive of any Bonus, and determined before reduction for amounts
deferred pursuant to the Plan, and before reduction for any salary reduction
contributions made on the Participant's behalf under a plan maintained by the
Company or an Affiliate under Code section 125 or 401(k).

2.17 TERMINATED FOR CAUSE. Terminated for Cause means the Participant was
terminated by an Employer because the Participant:

(a) committed an act of fraud, embezzlement, theft or other criminal
act(s) constituting a felony;

(b) was grossly negligent in the performance of any or all material terms
of his or her employment for reasons other than the Employee's death,
disability, retirement and the Employee failed to cure any defect in
performance within 10 days of receiving written notice regarding such
defect;

(c) committed an act of gross misconduct in the performance of his or her
duties or is guilty of any conduct which, in the reasonable opinion of
the Committee, brings the Participant, the Company or any Affiliate
into serious disrepute; or

(d) breached the terms of an employment agreement in effect between the
Participant and Employer.

2.18 VALUATION DATE. Valuation Date means the last business day of each
calendar year and any other date that the Committee selects in its sole
discretion for the revaluation and adjustment of Accounts.

ARTICLE 3
ELIGIBILITY AND PARTICIPATION

3.1 ELIGIBILITY. An Employee shall be eligible to participate in this Plan if
he or she is a member of a select group of management or highly compensated
employees who is approved for participation by the Committee. Participants with
account balances in any Predecessor Plan shall automatically be either an active
or inactive Participant in this Plan, depending on whether they are an employee
of an Employer as of January 1, 1999, in which case he or she is an active
Participant, or if not an employee of an Employer on such date, then he or she
is an inactive Participant.

-4-
<PAGE>

3.2 PARTICIPATION.

(a) COMMENCEMENT OF PARTICIPATION. An Employee who has satisfied the
eligibility requirements of section 3.1 may enroll in the Plan by
making the elections described in this Plan. This enrollment shall be
effective as of the first day of any Plan Year after the Employee
satisfies these eligibility requirements, provided that he or she is
still eligible to participate under section 3.1.

(b) DURATION OF PARTICIPATION. A Participant shall continue to be an
active Participant until he or she ceases to meet the eligibility
requirements under section 3.1. Thereafter, he or she shall be an
inactive Participant and shall retain all the rights described under
this Plan, except the right to elect any further deferrals of Bonus or
Salary until he or she again becomes an active Participant.

ARTICLE 4
DEFERRAL ELECTIONS

4.1 AMOUNT OF DEFERRAL. Prior to the beginning of each Plan Year, a
Participant may elect to defer up to --

(a) 50 percent (in increments of 1 percent) of the Salary that would
otherwise be payable to the Participant during the Plan Year; and

(b) 100 percent (in increments of 1 percent) of the Bonus that would
otherwise be payable to the Participant during the Plan Year.

Each deferral of Salary and/or Bonus shall be credited to the Participant's
Account as of the business day on which the cash would have otherwise been paid.
If the closing of the Merger occurs in 1999, the deferral election filed for
1999 shall terminate with respect to Salary payable after such date unless the
Company affirmatively elects to continue this Plan for new deferrals after such
date.

4.2 CHANGE OR REVOCATION OF DEFERRAL. After the beginning of a Plan Year, a
Participant may not increase, decrease or revoke the amount of Salary or Bonus
deferred for that Plan Year under section 4.1.

-5-
<PAGE>

ARTICLE 5
PARTICIPANTS' ACCOUNTS

5.1 INVESTMENT OF ACCOUNTS. With respect to each deferral election a
Participant makes under Section 4.1, the Participant shall elect in writing to
hypothetically deem to have the deferrals made on his or her behalf invested in
any one or more of the Investment Funds in 1 percent increments. The account
value for each amount deferred shall be determined based on the Investment
Fund's value on the date the amount deferred would have otherwise been payable
to the Participant.

5.2 INVESTMENT CHANGES FOR PREDECESSOR PLANS. With respect to account balances
in each Predecessor Plan, if the valuation of any account is dependent upon the
book value or fair market value of MidAmerican Energy Holdings Company common
stock, or if earnings on an account are determined by the dividend rate on
MidAmerican Energy Holdings Company common stock (other than a rate that has
been fixed as of a certain date and is not subject to further change), each
Participant who has such an account balance shall file an election form with the
Committee prior to the closing date of the Merger, designating, pursuant to the
procedures in section 5.1, the Investment Funds in which such account is deemed
to be invested. To the extent the value of an account, as of the closing date of
the Merger, is based on the value of MidAmerican Energy Holdings Company common
stock, the value of each stock unit in any such account shall be deemed to be
$27.15, plus any dividend paid to shareholders of MidAmerican Energy Holdings
Company common stock through the closing date of the Merger. In any account
based on a fixed value with crediting of interest only, but which varies in the
interest rate credited from time to time, interest on the account shall be
credited through date of closing of the Merger. Amounts converted to the
Investment Funds as of the closing date of the Merger shall be converted based
on the Investment Fund benchmark values on the date of closing. As to any
Participant's account transferred from a Predecessor Plan with a fixed value and
fixed interest rate credited to the account (i.e. debentures under the Iowa
Resources Inc. Executive Deferred Compensation Plan), the Participant's account
balance shall continue to reflect such fixed value and shall continue to be
credited with the fixed interest rate, unless the Participant elects to have his
or her account value related to such fixed investment converted to one or more
of the Investment Funds pursuant to the procedure set forth above within the
time frame specified above.

-6-
<PAGE>

5.3 CONTINGENCY OF MERGER. In the event the Merger does not take place, then
with respect to amounts deferred for 1999, such amounts shall be reconverted, as
of January 1, 1999, to the forms of deemed investments as existed in the
MidAmerican Energy Company Executive Deferred Compensation Plan prior to the
establishment of this Plan. In addition, with respect to investment changes for
Predecessor Plans as provided in Section 5.2, in the event the Merger does not
take place, the provisions of Section 5.2 shall become null and void and the
account balances transferred to this Plan from the Predecessor Plans shall
continue in the same form and deemed investments as in the Predecessor Plans.
However, all other provisions of this Plan, including, but not limited to
payment provisions in Article 6, shall apply to such accounts.

5.4 CHANGES IN INVESTMENTS. A Participant may change the hypothetical
investment allocation in his or her account no more than once during any
calendar quarter by filing an appropriate form with the Committee (or its
designated administrative representative) specifying the change to be made. The
change shall be processed within five (5) business days of receipt of the change
request by the Committee.

5.5 VALUATION OF ACCOUNTS.

(b) CHARGES AGAINST ACCOUNT. Any payments made to a Participant or
Beneficiary under Article 6 shall be charged against the Participant's
Account.

5.6 FINANCING. The benefits under this Plan shall be paid out of the general
assets of the Employer, except to the extent they are paid from the assets of a
grantor trust established by an Employer to pay these benefits.

5.7 UNSECURED INTEREST. No Participant shall have any interest whatsoever in
any specific asset of the Employer. To the extent that any person acquires a
right to receive payments under this Plan, this right shall be no greater than
the right of any unsecured general creditor of the Employer.

5.8 NONTRANSFERABILITY. In no event shall an Employer make any payments under
this Plan to any assignee or creditor of a Participant or Beneficiary. Prior to
the time of payment hereunder, no Participant or Beneficiary shall have any
right by way of anticipation or otherwise to assign or otherwise dispose of any
interest under this Plan, nor shall rights be assigned or transferred by
operation of law.

-7-
<PAGE>

ARTICLE 6
PAYMENT OF ACCOUNTS

6.1 PAYMENTS TO PARTICIPANTS.

(a) RETIREES IN PAY STATUS UNDER PREDECESSOR PLANS. Those Participants in
pay status under any Predecessor Plan or Plans shall continue to be
paid for the remaining term as originally approved by the Committee.

(b) PARTICIPANTS RETIRING BEFORE JANUARY 1, 2001. With respect to any
Participant whose Retirement Date is after December 31, 1998, but
before January 1, 2001, the following shall be applicable with respect
to payment of benefits:

(1) At the election of the Committee, upon consultation with the
Participant, payment shall be made in a lump sum or in annual
installments. The Committee's decision shall be made as soon as
practical prior to or immediately following Retirement Date. The
Committee's decision shall also specify the year of payment in the
case of a lump sum payment or the year of the first payment in the
case of annual installments.

(2) If annual installments are selected, each annual installment shall
be not less than an amount equal to the value of the account at the
beginning of the Plan Year in which distribution is to be made divided
by the life expectancy of the Participant at the beginning of such
Plan Year (or the joint life expectancy of the Participant and spouse
if the Participant is married). Each annual installment payment shall
be made within fifteen (15) days following the first day of each Plan
Year.

(3) If an election is made to receive a lump sum payment, payment
shall be made within fifteen (15) days following the first day of the
Plan Year in which payment is to be made, and the amount of the lump
sum payment shall be equal to the value of the account as of December
31 of the preceding Plan Year.

(4) In the event of the death of a Participant occurring either before
the commencement of payment or before the full balance of the
Participant's account has been paid, the unpaid balance of Deferred
Compensation shall be paid in a lump sum to the Participant's
designated beneficiary or estate. Payment shall be made within thirty
(30) days following the date of death.

(5) All payments shall be made in cash and no payments shall be made
prior to retirement.

-8-

<PAGE>

(c) PARTICIPANTS RETIRING AFTER DECEMBER 31, 2000. With respect to any
Participant whose Retirement Date is after December 31, 2000, the
following shall be applicable with respect to payment of benefits:

(1) The Participant may file an election with the Committee as to the
method and timing of benefits at any time (including during
employment), but no later than 30 days following his or her Retirement
Date, specifying the method (lump sum or substantially equal annual
installments over a period not exceeding the life expectancy of the
Participant or the joint life expectancy of the Participant and his or
her designated beneficiary) and the timing of payments (specifying the
Plan Year for receipt of lump sum or Plan Year of first installment
payment); provided however the lump sum payment or the first
installment payment cannot be any later than the Plan Year following
the year in which the Participant turns age 70 1/2. An election may be
changed at any time prior to Retirement Date (subject to the rules
below) by filing a new election with the Committee.

(2) The first annual payment or the lump sum payment cannot be any
earlier than the January following the third anniversary of the date
of the Participant's most recent election filed with the Committee.

(3) If termination of employment does not occur until after the date
selected by the Participant for a lump sum payment or the date of the
first annual payment, payment will be postponed until the January
following termination of employment.

(4) If a Participant has not filed an election as of thirty (30) days
following Retirement Date, payment will be made in ten (10) annual
installments beginning in the Plan Year following the year in which
the Participant reaches age sixty-five (65), or in a lump sum in the
Plan year following age 65 if the account value is less than $100,000
as of his or her Retirement Date.

(5) If annual installments are selected, each annual installment shall
be not less than an amount equal to the value of the account at the
beginning of the Plan Year in which distribution is to be made divided
by the life expectancy of the Participant at the beginning of such
Plan Year (or the joint life expectancy of the Participant and spouse
if the Participant is married). Each annual installment payment shall
be made within fifteen (15) days following the first day of each Plan
Year.

(6) If an election is made to receive a lump sum payment, payment
shall be made within fifteen (15) days following the first day of the
Plan Year in which payment is to be made, and the amount of the lump
sum payment shall be equal to the value of the account as of December
31 of the preceding Plan Year.

-9-
<PAGE>

(7) In the event of the death of a Participant occurring either before
the commencement of payment or before the full balance of the
Participant's account has been paid, the unpaid balance of Deferred
Compensation shall be paid in a lump sum to the Participant's
designated beneficiary or estate. Payment shall be made within thirty
(30) days following the date of death.

(8) All payments shall be made in cash.

6.2 PAYMENTS AFTER TERMINATION OF EMPLOYMENT BUT PRIOR TO RETIREMENT. No
payments shall be made after termination of employment but prior to the
Participant's Retirement Date except as follows:

(a) Pursuant to a valid election form filed with the Committee under
subsection 6.1(c)(1) above;

(b) Pursuant to an unforeseen hardship as approved by the Committee under
the guidelines in section 6.3 below; or

(c) In the case of Termination for Cause payment shall be made in a lump
sum in January following termination of employment.

6.3 IN-SERVICE WITHDRAWAL.

(a) Generally, a Participant may not receive a distribution from the
Participant's Account prior to the applicable distribution date under
section 6.1. However, the Committee may, in its sole and absolute
discretion, allow a Participant to withdraw all or part of his or her
Account in the event of an unforeseen financial hardship. The amount
withdrawn may not exceed the amount needed to satisfy the financial
hardship, less all amounts that are reasonably available from other
sources.

(b) For purposes of this section, a "financial hardship" is an
unforeseeable emergency resulting from a sudden and unexpected illness
of the Participant or a dependent, loss of the Participant's property
due to casualty, or other similar circumstances arising from events
that are beyond the Participant's control.

6.4 LUMP SUM PAYMENT AFTER ANNUAL INSTALLMENTS BEGIN. Once annual payments
begin to a Participant, payments may not be accelerated except in the
case of an unforeseen financial hardship as approved by the Committee
pursuant to the guidelines in section 6.3 above.

-10-

<PAGE>
ARTICLE 7
ADMINISTRATION

7.1 ADMINISTRATION. The Plan shall be administered by the Committee. A
majority of the members of the Committee at the time in office shall constitute
a quorum for the transaction of business. All resolutions and other actions
taken by the Committee at any meeting shall be by a majority vote of those
present at the meeting. Upon the unanimous concurrence in writing of all
Committee members, action of the Committee may be taken other than at a meeting.

The Committee shall have all powers necessary or appropriate to carry out the
provisions of the Plan. It may, from time to time, establish rules for the
administration of the Plan and the transaction of the Plan's business. The
Committee may designate one or more employees of the Company to carry out the
day to day administration of the Plan.

The Committee shall have the exclusive right to make any finding of fact
necessary or appropriate for any purpose under the Plan including, but not
limited to, the determination of eligibility for and amount of any benefit.

The Committee shall have the exclusive right to interpret the terms and
provisions of the Plan and to determine any and all questions arising under the
Plan or in connection with its administration, including, without limitation,
the right to remedy or resolve possible ambiguities, inconsistencies, or
omissions by general rule or particular decision, all in its sole and absolute
discretion.

All findings of fact, determinations, interpretations and decisions of the
Committee shall be conclusive and binding upon all persons having or claiming to
have any interest or right under the Plan and shall be given the maximum
possible deference allowed by law.

7.2 APPEALS FROM DENIAL OF CLAIMS. If any claim for benefits under the Plan
is wholly or partially denied, the claimant shall be given notice in writing of
the denial. This notice shall be in writing, within a reasonable period of time
after receipt of the claim by the Committee. This period shall not exceed 90
days after receipt of the claim, except that if special circumstances require an
extension of time, written notice of the extension shall be furnished to the
claimant and an additional 90 days will be considered reasonable.

This notice shall be written in a manner calculated to be understood by the
claimant and shall set forth the following information:

(a) the specific reasons for the denial;

(b) specific reference to the Plan provisions on which the denial is
based;

-11-

<PAGE>
(c) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why this
material or information is necessary;

(d) an explanation that a full and fair review by the Committee of the
decision denying the claim may be requested by the claimant or an
authorized representative by filing with the Committee, within 60 days
after the notice has been received, a written request for the review;
and

(e) if this request is so filed, an explanation that the claimant or an
authorized representative may review pertinent documents and submit
issues and comments in writing within the same 60-day period specified
in subsection (d).

The decision of the Committee upon review shall be made promptly, and not later
than 60 days after the Committee's receipt of the request for review, unless
special circumstances require an extension of time for processing. In this case
the claimant shall be so notified, and a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for review.
If the claim is denied, wholly or in part, the claimant shall be given a copy of
the decision promptly. The decision shall be in writing, shall include specific
reasons for the denial, shall include specific references to the pertinent Plan
provisions on which the denial is based, and shall be written in a manner
calculated to be understood by the claimant.

7.3 TAX WITHHOLDING. The Employer or the trustee under any grantor trust
established to pay benefits may withhold from any payment under this Plan any
federal, state or local taxes required by law to be withheld with respect to the
payment and any sum the Employer or trustee may reasonably estimate as necessary
to cover any taxes for which they may be liable and that may be assessed with
regard to the payment. With respect to any FICA/Medicare taxes on deferred
amounts which may be due prior to payment of benefits hereunder, the Employer
may withhold the Participant's share of such taxes from other income due the
Participant by the Employer.

7.4 EXPENSES. All expenses incurred in the administration of the Plan shall be
paid by the Employers.

-12-
<PAGE>

ARTICLE 8
ADOPTION OF THE PLAN BY AFFILIATE;
AMENDMENT AND TERMINATION OF THE PLAN

8.1 ADOPTION OF THE PLAN BY AFFILIATE. An Affiliate may adopt the Plan by
appropriate action of its board of directors or authorized officers or
representatives, subject to the approval of the Company's board of directors.

8.2 AMENDMENT AND TERMINATION. The Company hereby reserves the right to
amend, modify or terminate the Plan at any time, and for any reason, by action
of its board of directors. However, no amendment or termination shall adversely
affect benefits accrued prior to the date of the amendment or termination.

ARTICLE 9
MISCELLANEOUS PROVISIONS

9.1 NO CONTRACT OF EMPLOYMENT. Nothing contained in the Plan shall be
construed to give any Participant the right to be retained in the service of an
Employer or to interfere with the right of an Employer to discharge a
Participant at any time.

9.2 SEVERABILITY. If any provision of this Plan shall be held illegal or
invalid, the illegality or invalidity shall not affect its remaining parts. The
Plan shall be construed and enforced as if it did not contain the illegal or
invalid provision.

9.3 SUCCESSORS. All obligations of the Company under the Plan shall be binding
upon and inure to the benefit of any successor to the Company, whether the
existence of such successor is the direct or indirect result of a merger or
reorganization involving the Company or the purchase or other acquisition, of
all or substantially all of the business or assets of the Company.

9.4 APPLICABLE LAW. Except to the extent preempted by applicable federal law,
this Plan shall be governed by and construed in accordance with the laws of the
State of Iowa.

IN WITNESS WHEREOF, MidAmerican Energy Company has caused this instrument to be
executed by its duly authorized officer effective as of the 12th day of
March, 1999.

MIDAMERICAN ENERGY COMPANY

By: /s/ S. J. Bright
--------------------

Its: Chairman, President and Chief Executive Officer
-----------------------------------------------

-13-

EXHIBIT 12
MIDAMERICAN ENERGY COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
PLUS PREFERRED STOCK DIVIDEND REQUIREMENTS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>

Twelve Months Ended Twelve Months Ended
March 31, 1999 December 31, 1998
-------------------------------- -------------------------------
Supplemental (a) Supplemental (a)
-------------------- ---------------------
As As
Adjustment Adjusted Adjustment Adjusted
---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations ...................... $108,598 $ -- $108,598 $115,593 $ -- $115,593
-------- -------- -------- -------- ------- --------

Add (Deduct):
Total income taxes ..................................... 70,649 -- 70,649 76,042 -- 76,042
Interest on long-term debt ............................. 69,129 2,772 71,901 70,193 2,931 73,124
Other interest charges ................................. 16,372 -- 16,372 14,128 -- 14,128
Preferred stock dividends of subsidiary trust .......... 7,980 -- 7,980 7,980 -- 7,980
Interest on leases ..................................... 203 -- 203 212 -- 212
-------- -------- -------- --------- ------- --------
164,333 2,772 167,105 168,555 2,931 171,486
-------- -------- -------- --------- ------- --------

Earnings available for fixed charges ............... 272,931 2,772 275,703 284,148 2,931 287,079
-------- -------- -------- --------- ------- --------

Fixed Charges:
Interest on long-term debt ............................. 69,129 2,772 71,901 70,193 2,931 73,124
Other interest charges ................................. 16,372 -- 16,372 14,128 -- 14,128
Preferred stock dividends of subsidiary trust .......... 7,980 -- 7,980 7,980 -- 7,980
Interest on leases ..................................... 203 -- 203 212 -- 212
-------- -------- -------- --------- ------- --------
Total fixed charges ................................ 93,684 2,772 96,456 92,513 2,931 95,444
-------- -------- -------- --------- ------- --------

Ratio of earnings to fixed charges ..................... 2.91 -- 2.86 3.07 -- 3.01
======== ======== ======== ========= ======= ========

Preferred stock dividends .............................. $ 4,954 $ -- $ 4,954 $ 4,952 $ -- $ 4,952
Ratio of net income before income taxes to net income .. 1.6506 -- 1.6506 1.6578 -- 1.6578
-------- -------- -------- --------- ------- --------
Preferred stock dividend requirements before income tax 8,177 -- 8,177 8,209 -- 8,209
-------- -------- -------- --------- ------- --------
Fixed charges plus preferred stock dividend requirements 101,861 2,772 104,633 100,722 2,931 103,653
-------- -------- -------- --------- ------- --------

Ratio of earnings to fixed charges plus preferred stock
dividend requirements (pre-income tax basis) ......... 2.68 -- 2.63 2.82 -- 2.77
======== ======== ======== ========= ======== ========
</TABLE>

Note: (a) Amounts in the supplemental columns are to reflect the Company's
portion of the net interest component of payments to Nebraska Public Power
District under a long-term purchase agreement for one-half of the plant capacity
from Cooper Nuclear Station.

-1-
<PAGE>

Twelve Months Ended Twelve Months Ended
December 31, 1997 December 31,1996
-------------------------------- -------------------------------
Supplemental (a) Supplemental (a)
---------------------- ------------------
As As
Adjustment Adjusted Adjustment Adjusted
---------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations ...................... $125,941 $ -- $125,941 $165,132 $ -- $165,132
-------- -------- -------- -------- -------- --------

Add (Deduct):
Total income taxes ..................................... 76,317 -- 76,317 112,927 -- 112,927
Interest on long-term debt ............................. 78,120 3,760 81,880 79,434 3,615 83,049
Other interest charges ................................. 10,027 -- 10,027 10,842 -- 10,842
Preferred stock dividends of subsidiary trust .......... 7,980 -- 7,980 288 -- 288
Interest on leases ..................................... 268 -- 268 375 -- 375
-------- -------- -------- -------- -------- --------
172,712 3,760 176,472 203,866 3,615 207,481
-------- -------- -------- -------- -------- --------

Earnings available for fixed charges ............... 298,653 3,760 302,413 368,998 3,615 372,613
-------- -------- -------- -------- -------- --------

Fixed Charges:
Interest on long-term debt ............................. 78,120 3,760 81,880 79,434 3,615 83,049
Other interest charges ................................. 10,027 -- 10,027 10,842 -- 10,842
Preferred stock dividends of subsidiary trust .......... 7,980 -- 7,980 288 -- 288
Interest on leases ..................................... 268 -- 268 375 -- 375
-------- -------- -------- -------- -------- --------
Total fixed charges ................................ 96,395 3,760 100,155 90,939 3,615 94,554
-------- -------- -------- -------- -------- --------

Ratio of earnings to fixed charges ..................... 3.10 -- 3.02 4.06 -- 3.94
======== ======== ======== ======== ======== ========

Preferred stock dividends .............................. $ 6,488 $ -- $ 6,488 $ 10,401 $ -- $ 10,401
Ratio of net income before income taxes to net income .. 1.6060 -- 1.6060 1.6839 -- 1.6839
-------- -------- -------- -------- -------- --------
Preferred stock dividend requirements before income tax 10,420 -- 10,420 17,514 -- 17,514
-------- -------- -------- -------- -------- --------
Fixed charges plus preferred stock dividend requirements 106,815 3,760 110,575 108,453 3,615 112,068
-------- -------- -------- -------- -------- --------

Ratio of earnings to fixed charges plus preferred stock
dividend requirements (pre-income tax basis) ......... 2.80 -- 2.73 3.40 -- 3.32
======== ======== ======== ======== ======== ========
</TABLE>

-2-

<PAGE>

Twelve Months Ended Twelve Months Ended
December 31,1995 December 31, 1994
------------------------------ -------------------------------
Supplemental (a) Supplemental (a)
--------------------- ---------------------
As As
Adjustment Adjusted Adjustment Adjusted
---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations ...................... $132,489 $ -- $132,489 $121,145 $ -- $121,145
-------- -------- -------- -------- -------- --------

Add (Deduct):
Total income taxes ..................................... 84,098 -- 84,098 66,759 -- 66,759
Interest on long-term debt ............................. 80,133 4,595 84,728 73,922 5,428 79,350
Other interest charges ................................. 9,396 -- 9,396 6,639 -- 6,639
Preferred stock dividends of subsidiary trust .......... -- -- -- -- -- --
Interest on leases ..................................... 1,088 -- 1,088 1,211 -- 1,211
-------- -------- -------- -------- -------- --------
174,715 4,595 179,310 148,531 5,428 153,959
-------- -------- -------- -------- -------- --------

Earnings available for fixed charges ............... 307,204 4,595 311,799 269,676 5,428 275,104
-------- -------- -------- -------- -------- --------

Fixed Charges:
Interest on long-term debt ............................. 80,133 4,595 84,728 73,922 5,428 79,350
Other interest charges ................................. 9,396 -- 9,396 6,639 -- 6,639
Preferred stock dividends of subsidiary trust .......... -- -- -- -- -- --
Interest on leases ..................................... 1,088 -- 1,088 1,211 -- 1,211
-------- -------- -------- -------- -------- --------
Total fixed charges ................................ 90,617 4,595 95,212 81,772 5,428 87,200
-------- -------- -------- -------- -------- --------

Ratio of earnings to fixed charges ..................... 3.39 -- 3.27 3.30 -- 3.15
======== ======== ======== ======== ======== ========

Preferred stock dividends .............................. $ 8,059 $ -- $ 8,059 $ 10,551 $ -- $ 10,551
Ratio of net income before income taxes to net income .. 1.6348 -- 1.6348 1.5511 -- 1.5511
-------- -------- -------- -------- -------- --------
Preferred stock dividend requirements before income tax 13,175 -- 13,175 16,366 -- 16,366
-------- -------- -------- -------- -------- --------
Fixed charges plus preferred stock dividend requirements 103,792 4,595 108,387 98,138 5,428 103,566
-------- -------- -------- -------- -------- --------

Ratio of earnings to fixed charges plus preferred stock
dividend requirements (pre-income tax basis) ......... 2.96 -- 2.88 2.75 -- 2.66
======== ======== ======== ======== ======== ========
</TABLE>

-3-

EXHIBIT 15

MidAmerican Energy Company
Des Moines, Iowa

We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited consolidated interim
financial information of MidAmerican Energy Company and subsidiaries for the
three month period ended March 31, 1999 as indicated in our report dated April
28, 1999; because we did not perform an audit, we expressed no opinion on that
information.

We are aware that our report referred to above, which is included in your
Quarterly report on Form 10-Q for the quarter ended March 31, 1999, is
incorporated by reference in Registration Statement No. 333-15387 on Form S-3.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of a Registration Statement
prepared or certified by an accountant or a report prepared or certified by an
accountant within the meaning of Sections 7 and 11 of that Act.

DELOITTE & TOUCHE LLP

Des Moines, Iowa
May 13, 1999

<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of MidAmerican Energy Company as of March 31, 1999,
and the related consolidated statements of income and cash flows for the three
months ended March 31, 1999, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000928576
<NAME> MIDAMERICAN ENERGY COMPANY
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,619,862
<OTHER-PROPERTY-AND-INVEST> 202,754
<TOTAL-CURRENT-ASSETS> 253,530
<TOTAL-DEFERRED-CHARGES> 292,274
<OTHER-ASSETS> 173,475
<TOTAL-ASSETS> 3,541,895
<COMMON> 560,562
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 399,861
<TOTAL-COMMON-STOCKHOLDERS-EQ> 960,423
150,000
31,759
<LONG-TERM-DEBT-NET> 760,178
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 191,595
<LONG-TERM-DEBT-CURRENT-PORT> 170,763
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,277,177
<TOT-CAPITALIZATION-AND-LIAB> 3,541,895
<GROSS-OPERATING-REVENUE> 468,248
<INCOME-TAX-EXPENSE> 18,634 <F1>
<OTHER-OPERATING-EXPENSES> 398,898
<TOTAL-OPERATING-EXPENSES> 398,898
<OPERATING-INCOME-LOSS> 69,350
<OTHER-INCOME-NET> (942)
<INCOME-BEFORE-INTEREST-EXPEN> 68,408
<TOTAL-INTEREST-EXPENSE> 23,590
<NET-INCOME> 26,184
1,239
<EARNINGS-AVAILABLE-FOR-COMM> 24,945
<COMMON-STOCK-DIVIDENDS> 36,706
<TOTAL-INTEREST-ON-BONDS> 16,489
<CASH-FLOW-OPERATIONS> 82,352
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>
INCOME-TAX-EXPENSE includes all income taxes and is excluded from Total
Operating Expenses above and on the Consolidated Statement of Income.
</FN>

</TABLE>

<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of MidAmerican Energy Company as of March 31, 1998,
and the related consolidated statements of income and cash flows for the three
months ended March 31, 1998, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<RESTATED>
<CIK> 0000928576
<NAME> MIDAMERICAN ENERGY COMPANY
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,605,437
<OTHER-PROPERTY-AND-INVEST> 141,479
<TOTAL-CURRENT-ASSETS> 213,487
<TOTAL-DEFERRED-CHARGES> 324,894
<OTHER-ASSETS> 176,234
<TOTAL-ASSETS> 3,461,531
<COMMON> 560,562
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 428,523
<TOTAL-COMMON-STOCKHOLDERS-EQ> 989,085
150,000
31,761
<LONG-TERM-DEBT-NET> 919,815
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 115,102
<LONG-TERM-DEBT-CURRENT-PORT> 49,837
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,205,931
<TOT-CAPITALIZATION-AND-LIAB> 3,461,531
<GROSS-OPERATING-REVENUE> 447,266
<INCOME-TAX-EXPENSE> 24,027 <F1>
<OTHER-OPERATING-EXPENSES> 367,168
<TOTAL-OPERATING-EXPENSES> 367,168
<OPERATING-INCOME-LOSS> 80,098
<OTHER-INCOME-NET> (930)
<INCOME-BEFORE-INTEREST-EXPEN> 79,168
<TOTAL-INTEREST-EXPENSE> 21,962
<NET-INCOME> 33,179
1,237
<EARNINGS-AVAILABLE-FOR-COMM> 31,942
<COMMON-STOCK-DIVIDENDS> 28,600
<TOTAL-INTEREST-ON-BONDS> 17,553
<CASH-FLOW-OPERATIONS> 179,495
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>
INCOME-TAX-EXPENSE includes all income taxes and is excluded from Total
Operating Expenses above and on the Consolidated Statement of Income.
</FN>

</TABLE>

<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of MidAmerican Energy Company as of December 31,
1998, and the related consolidated statements of income and cash flows for the
twelve months ended December 31, 1998, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<RESTATED>
<CIK> 0000928576
<NAME> MidAmerican Energy Company
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,641,645
<OTHER-PROPERTY-AND-INVEST> 183,279
<TOTAL-CURRENT-ASSETS> 299,005
<TOTAL-DEFERRED-CHARGES> 305,489
<OTHER-ASSETS> 156,112
<TOTAL-ASSETS> 3,585,530
<COMMON> 560,656
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 411,622
<TOTAL-COMMON-STOCKHOLDERS-EQ> 972,278
150,000
31,759
<LONG-TERM-DEBT-NET> 870,069
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 206,221
<LONG-TERM-DEBT-CURRENT-PORT> 60,897
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,294,306
<TOT-CAPITALIZATION-AND-LIAB> 3,585,530
<GROSS-OPERATING-REVENUE> 1,707,189
<INCOME-TAX-EXPENSE> 76,042 <F1>
<OTHER-OPERATING-EXPENSES> 1,426,269
<TOTAL-OPERATING-EXPENSES> 1,426,269
<OPERATING-INCOME-LOSS> 280,920
<OTHER-INCOME-NET> (361)
<INCOME-BEFORE-INTEREST-EXPEN> 280,559
<TOTAL-INTEREST-EXPENSE> 88,924
<NET-INCOME> 115,593
4,952
<EARNINGS-AVAILABLE-FOR-COMM> 110,641
<COMMON-STOCK-DIVIDENDS> 124,200
<TOTAL-INTEREST-ON-BONDS> 70,193
<CASH-FLOW-OPERATIONS> 381,007
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>
INCOME-TAX-EXPENSE includes all income taxes and is excluded from Total
Operating Expenses above and on the Consolidated Statement of Income.
</FN>

</TABLE>