SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant /X/

Filed by a party other than the registrant / /

Check the appropriate box:

/ / Preliminary proxy statement

/X/ Definitive proxy statement

/ / Definitive additional materials

/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CIPSCO INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
CIPSCO INCORPORATED
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):

/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
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(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:
- --------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------

(3) Filing party:
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(4) Date filed:
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1Set forth the amount on which the filing fee is calculated and state how it was
determined.
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NOTICE OF ANNUAL MEETING

OF SHAREHOLDERS

-------------------------------------------------------------
[CIPSCO LOGO]

607 East Adams Street
Springfield, Illinois 62739
The annual meeting of shareholders of CIPSCO
Incorporated (the "Company") will be held at the Springfield
Hilton, Seventh and Adams Streets, Springfield, Illinois, on
April 27, 1994, at 10:00 AM, for the purpose of considering
and voting with respect to the following matters:

(1) the election of a Board of nine directors;

(2) the approval of the appointment by the Board of
Directors of Arthur Andersen & Co. as independent
public accountants for 1994;

(3) the transaction of such other business as may
properly come before the meeting; and

(4) the consideration, if presented at the meeting, of
shareholder proposals, as set forth in the attached
Proxy Statement.

Reference is made to the attached Proxy Statement for
further information with respect to the foregoing.

Only shareholders of the Company of record on its books
at the close of business on March 1, 1994, are entitled to
vote at the meeting. All such shareholders are urged to be
present in person, or represented by proxy, at the meeting.

A copy of the Company's Annual Report to Shareholders
for the year 1993 has been mailed to each shareholder of the
Company of record on its books.

By order of the Board of
Directors,

R. W. Jackson,
Senior Vice President and
Secretary

March 16, 1994

All shareholders, even if they plan to attend the
meeting in person, are urged to vote, date and sign their
proxies and return them to the Company in the enclosed
envelope as promptly as possible. The Board of Directors
encourages all shareholders to be represented at the meeting,
whether their shareholdings are small or large.
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CIPSCO INCORPORATED
607 East Adams Street
Springfield, Illinois 62739
217/523-3600

MARCH 16, 1994

PROXY STATEMENT RELATING TO
1994 ANNUAL MEETING OF SHAREHOLDERS

INTRODUCTION

GENERAL. The purposes of the meeting are set forth in the attached Notice.
The enclosed proxy relating to the meeting is solicited on behalf of the Board
of Directors of the Company and the cost of such solicitation will be borne by
the Company. Following the initial solicitation of proxies by mail beginning on
or about March 16, 1994, certain officers, directors and employees of the
Company may solicit proxies by correspondence, telephone, telegraph, telecopy,
other electronic means or in person, but without extra compensation. The Company
will pay to banks, brokers, nominees and other fiduciaries their reasonable
charges and expenses incurred in forwarding the proxy soliciting material to
their principals. In addition, Morrow & Co., Inc., New York, New York, has been
retained to assist the Company in the solicitation of proxies. Such solicitation
may be made by mail, telecommunication or in person. The estimated aggregate
cost of the services of Morrow & Co., Inc. for soliciting proxies for the
Company is $6,500.

THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH SHAREHOLDER ENTITLED TO
VOTE AT THE MEETING WHO MAKES A WRITTEN REQUEST THEREFOR, A COPY OF THE
COMPANY'S 1993 ANNUAL REPORT ON FORM 10-K (OTHER THAN CERTAIN EXHIBITS) AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES EXCHANGE
ACT OF 1934. WRITTEN REQUESTS FOR A COPY OF THE REPORT SHOULD BE DIRECTED TO
CORPORATE SECRETARY, CIPSCO INCORPORATED, 607 EAST ADAMS STREET, SPRINGFIELD,
ILLINOIS 62739.

HOLDING COMPANY. In 1990 the Company became the parent holding company of
Central Illinois Public Service Company ("CIPS").

VOTING. The voting securities of the Company outstanding on the record date
stated below consisted of 34,107,706 shares of Common Stock, without par value.

Only shareholders of record on the Company books at the close of business
on March 1, 1994, are entitled to notice of and to vote at the meeting. At such
meeting, each such shareholder is entitled to one vote, for each share of Common
Stock of the Company held, on each matter submitted to a vote at the meeting,
except that in the election of directors, each such shareholder is entitled to
vote cumulatively and therefore may give one nominee for election as many votes
as shall equal the number of directors to be elected multiplied by the number of
shares held by such shareholder, or may distribute such votes among any two or
more nominees. The proxies solicited herewith seek discretionary authority to
cast cumulative votes in the election of directors.

Any shareholder may vote his or her shares either in person or by duly
authorized proxy. The giving of a proxy by a shareholder will not affect the
right to vote shares if the shareholder attends the meeting and desires to vote
in person. Prior to the voting of a proxy, it may be revoked by the shareholder
by delivering written notice of revocation to the Secretary of the Company, by
executing
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a subsequent proxy or by voting in person at the meeting. All shares represented
by effective proxies on the enclosed form of proxy, received by the Company,
will be voted at the meeting (or any adjourned session thereof) in accordance
with the terms of such proxies.

A majority of the outstanding shares entitled to vote on a matter,
represented in person or by proxy, constitutes a quorum for consideration of
such matter at the meeting. If a quorum is present, the nine persons receiving
the greatest number of votes, based on cumulative voting, will be elected as
directors and the affirmative vote of the majority of the shares represented at
the meeting and entitled to vote on a matter will be sufficient to take action
on a matter that may properly come before the meeting (unless a higher vote is
required by law).

Abstentions will be counted in determining the quorum in attendance for all
matters and will be included in the total number of shares represented and
voting on a matter.

Broker non-votes will not be considered as represented at the meeting on
those matters for which no instructions from the shareholder have been given to
the broker. Accordingly, for any matter which requires the vote of a percentage
of shares represented at the meeting, broker non-votes will have no effect on
the outcome.

Each participant in the Company's Automatic Dividend Reinvestment and Stock
Purchase Plan (the "Reinvestment Plan") or the CIPS Employee Stock Ownership
Plan (the "ESOP"), Employee Long-Term Savings Plan, Employee Long-Term Savings
Plan-IUOE No. 148 or Employee Long-Term Savings Plan-IBEW No. 702 (the "Savings
Plans") will receive a form of proxy by which such participant may direct the
respective agent or trustee under such Plan as to the manner of voting shares
credited to the participant's account under such Plan. Shareholders of record
who are participants in the Reinvestment Plan will receive one form of proxy
which will be deemed to include shares held of record and shares held under the
Reinvestment Plan. If a participant in any of the Savings Plans does not return
a proxy by April 22, 1994, the trustee under such Plans may, in its discretion,
vote such participant's shares under such Plan unless the participant votes in
person at the meeting. A participant in the Reinvestment Plan, the ESOP or any
Savings Plan wishing to vote in person at the meeting may obtain a proxy for
shares credited to his account under such Plan by making a written request
therefor by April 15, 1994 as follows: for the Reinvestment Plan to Illinois
Stock Transfer Company, 223 West Jackson Boulevard, Chicago, Illinois 60606; for
the ESOP or Savings Plans to Boston Safe Deposit and Trust Company, Attention:
Chris D. Kuhn, One Boston Place, Boston, Massachusetts 02116.

PROPOSALS OF SHAREHOLDERS. Under the rules of the Securities and Exchange
Commission, any shareholder proposal intended to be presented at the 1995 annual
meeting of shareholders of the Company must be received at the principal
executive office of the Company no later than November 16, 1994, in order to be
eligible to be considered for inclusion in the proxy materials relating to that
meeting.

VOTING SECURITIES BENEFICIALLY OWNED BY DIRECTORS, NOMINEES AND EXECUTIVE
OFFICERS. The directors, nominees and executive officers of the Company and CIPS
owned beneficially at February 1, 1994, an aggregate of 48,318 shares of Common
Stock of the Company representing 0.14% of the outstanding Common Stock and one
share of Preferred Stock of CIPS representing less than 0.01% of the outstanding
Preferred Stock. To the Company's knowledge, the only beneficial owner of more
than 5% of the Company's Common Stock as of December 31, 1993 was Franklin
Resources, Inc., which, together with certain affiliates, owned beneficially
2,139,400 shares or 6.3%. This information is based solely upon information set
forth in the Company's shareholder

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records and in statements filed with the Securities and Exchange Commission
pursuant to Section 13 of the Securities Exchange Act of 1934 wherein Franklin
Resources, Inc. maintains that it and its affiliates are not a "group" within
the meaning of applicable regulations. The Company understands that such shares
may be held by or for mutual fund affiliates of Franklin Resources, Inc.

ELECTION OF DIRECTORS

DIRECTOR INFORMATION

Nine directors are to be elected at the meeting. Barring unforeseen
contingencies, and in the absence of contrary directions, the proxies solicited
herewith will be voted for the election of William J. Alley, Clifford L.
Greenwalt, John L. Heath, Robert W. Jackson, Gordon R. Lohman, Hanne M.
Merriman, Donald G. Raymer, Thomas L. Shade and James W. Wogsland as directors
of the Company, to hold office until the next annual meeting of shareholders of
the Company or until their respective successors shall have been duly elected
and qualified. Each of the nominees is a director of the Company. Each of the
directors of the Company has served continuously as such and has served as a
director of CIPS, in each case, since his or her election in the respective
years indicated below. The proxies may also be voted for a substitute nominee or
nominees in the event any one or more of the above nominees shall be unable to
serve for any reason or be withdrawn from nomination, a contingency not now
anticipated.

Effective April 27, 1994, the number of directors constituting the Board
will be reduced to nine from 10. Under the policy adopted by the Board of
Directors with respect to the age of directors, Mr. Robert S. Eckley, who has
been a director of CIPS since 1973 and the Company since it became the holding
company of CIPS in 1990, will retire and not stand for reelection as director at
the meeting. His position will not be filled as a result in the reduction in the
size of the Board.

The following information is given with respect to the nominees for
election as directors:

WILLIAM J. ALLEY
Principal occupation: Chairman of the Board and Chief Executive Officer of
American Brands, Inc. (diversified manufacturing and
other businesses), Old Greenwich, Connecticut.
Age: 64
Served as a director of
the Company since: 1990
Served as a director of
CIPS since: 1974
Shares beneficially owned
at February 1, 1994: 1,422 shares of Common Stock. In addition, Mr. Alley's
account in the directors' deferred compensation plan
described below holds the equivalent of 3,792 shares of
Common Stock.
Other information: Mr. Alley is Chairman of the Audit Committee and a
member of the Compensation and Executive Committees of
the Board. He is a director of American Brands, Inc.,
Moorman Manufacturing Company and Rayonier, Inc.

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CLIFFORD L. GREENWALT
Principal occupation: President and Chief Executive Officer of the Company,
President and Chief Executive Officer of CIPS and
Chairman of the Board of CIPSCO Investment Company.

Age: 61
Served as a director of
the Company since: 1990

Served as a director of
CIPS since: 1986

Shares beneficially
owned at
February 1, 1994: 9,918 shares of Common Stock.
Other information: Mr. Greenwalt is a member of the Executive Committee of
the Board. He is a director of First of America Bank
Corporation, Kalamazoo, Michigan and a director of its
wholly owned subsidiary, First of America
Bank-Springfield, N.A. Mr. Greenwalt has been President
and Chief Executive Officer of the Company since it
became the parent company of CIPS in 1990. Mr. Greenwalt
was senior Vice President-Operations of CIPS from 1980
to August 1989 when he became President.
JOHN L. HEATH
Principal occupation: Retired Chairman and President of the Heath Candy Com-
pany, Robinson, Illinois.

Age: 58
Served as a director of
the Company since: 1990

Served as a director of
CIPS since: 1977

Shares beneficially
owned at
February 1, 1994: 4,000 shares of Common Stock.

Other information: Mr. Heath is a member of the Nominating and Audit
Committees of the Board. He served as Chairman of L.S.
Heath & Sons, Inc. from 1971 until 1988 and also as
President and Chief Executive Officer from 1971 until
1982. Mr. Heath is a director of the Biltmore Bank Corp.
and of its wholly owned subsidiary, The Biltmore
Investors Bank of Phoenix, Arizona. He is also a
director of Sun Street Food Corporation of Phoenix,
Arizona.

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ROBERT W. JACKSON
Principal occupation: Senior Vice President, Chief Financial Officer and
Secretary of the Company, Senior Vice President--Finance
and Secretary of CIPS, and President and Chief Executive
Officer of CIPSCO Investment Company.

Age: 63
Served as a director of
the Company since: 1990

Served as director of
CIPS since: 1986

Shares beneficially
owned at
February 1, 1994: 6,160 shares of Common Stock.
Other information: Mr. Jackson is a director of Firstbank of Illinois Co.
and each of its wholly owned subsidiary banks, including
the First National Bank of Springfield.
GORDON R. LOHMAN
Principal occupation: President and Chief Executive Officer of AMSTED
Industries Incorporated (diversified manufacturer of
industrial products), Chicago, Illinois.

Age: 59
Served as a director of
the Company since: 1990

Served as a director of
CIPS since: 1989

Shares beneficially
owned at
February 1, 1994: 200 shares of Common Stock. In addition, Mr. Lohman's
account in the directors' deferred compensation plan de-
scribed below holds the equivalent of 3,270 shares of
Common Stock.

Other information: Mr. Lohman is Chairman of the Compensation Committee and
a member of the Audit Committee of the Board. He became
President of AMSTED Industries Incorporated in 1988 and
Chief Executive Officer in 1990. He was Executive Vice
President of that firm in 1988 and served as Vice
President from 1978 through 1987. He is a director of
American Brands, Inc.

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HANNE M. MERRIMAN
Principal occupation: Principal in Hanne Merriman Associates (retail business
consultants), Washington, D.C.

Age: 52
Served as a director of
the Company since: 1990

Served as a director of
CIPS since: 1990

Shares beneficially
owned at
February 1, 1994: 1,401 shares of Common Stock. In addition, Mrs.
Merriman's account in the directors' deferred compen-
sation plan described below holds the equivalent of
2,016 shares of Common Stock.

Other information: Mrs. Merriman is a member of the Audit and the
Nominating Committees of the Board. She was President of
Nan Duskin, Inc. from 1991 to 1992. Previously she had
been a retail business consultant from January 1990.
Mrs. Merriman also served as President and Chief
Executive Officer of Honeybee, Inc., a division of
Spiegel, Inc., and President of Garfinckels, a division
of Allied Stores Corporation. Mrs. Merriman is a
director of USAir Group, Inc., State Farm Mutual
Automobile Insurance Co., The Rouse Company and
AnnTaylor Stores Corporation.
DONALD G. RAYMER
Principal occupation: Retired President and Chief Executive Officer of CIPS.

Age: 69
Served as a director of
the Company since: 1990

Served as a director of
CIPS since: 1972

Shares beneficially
owned at
February 1, 1994: 8,034 shares of Common Stock. In addition, Mr. Raymer's
account in the directors' deferred compensation plan de-
scribed below holds the equivalent of 3,019 shares of
Common Stock.

Other information: Mr. Raymer is a member of the Executive Committee of the
Board. He is a director of Bank One Springfield. Mr.
Raymer was President and Chief Executive Officer of CIPS
from August 1980 to August 1989.

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THOMAS L. SHADE
Principal occupation: Retired Chairman of the Board and Chief Executive
Officer of Moorman Manufacturing Company (livestock feed
products), Quincy, Illinois.
Age: 63
Served as a director of
the Company since: 1991
Served as a director of
CIPS since: 1991
Shares beneficially
owned at
February 1, 1994: 2,333 shares of Common Stock. In addition, Mr. Shade's
account in the directors' deferred compensation plan de-
scribed below holds the equivalent of 1,374 shares of
Common Stock.
Other information: Mr. Shade is a member of the Audit and Compensation
Committees of the Board. Mr. Shade served as Chairman of
the Board and Chief Executive Officer of Moorman
Manufacturing Company during 1992 and 1993. He was
President and Chief Executive Officer of that firm from
1984 to 1992. He also is a director of Moorman
Manufacturing Company and Quincy Soybean Company, each
of Quincy, Illinois.
JAMES W. WOGSLAND
Principal occupation: Vice Chairman of Caterpillar, Inc. (heavy equipment and
engine manufacturer), Peoria, Illinois.
Age: 62
Served as a director of
the Company since: 1992
Served as a director of
CIPS since: 1992
Shares beneficially
owned at
February 1, 1994: 1,000 shares of Common Stock. In addition, Mr.
Wogsland's account in the directors' deferred
compensation plan described below holds the equivalent
of 653 shares of Common Stock.

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Other information: Mr. Wogsland is a member of the Audit and Nominating
Committees of the Board. Mr. Wogsland has been Vice
Chairman of Caterpillar, Inc. since 1990. He was
Executive Vice President of that firm from 1987 until
1990. He is a director of Caterpillar, Inc; First of
America Bank Corporation, Kalamazoo, Michigan and a
director of its wholly owned subsidiary, First of
America Bank--Illinois, N.A., Peoria, Illinois. He is
also a director of Protection Mutual Insurance Company.

EXECUTIVE COMPENSATION

The Company's principal operating subsidiary is CIPS. Each of the officers
of the Company is also an officer of CIPS and did not receive separate
compensation from the Company for services as a Company officer. The following
table contains information with respect to the compensation paid by CIPS for all
services rendered during 1991 through 1993 to the President and the four most
highly compensated executive officers of the Company and CIPS.

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION
-------------------- ALL OTHER
NAME OF INDIVIDUAL CAPACITIES IN WHICH SERVED YEAR SALARY BONUS(1) COMPENSATION(2)
- ------------------- ------------------------------ ---- -------- -------- ---------------

C. L. Greenwalt.... President and Chief Executive 1993 $339,093 $99,902 $ 5,852
Officer of the Company; 1992 317,375 0 2,073
President and Chief Executive 1991 301,834 -- 2,073
Officer of CIPS; Chairman of
the Board of CIPSCO Investment
Company
R. W. Jackson...... Senior Vice President, Chief 1993 224,545 44,699 2,864
Financial Officer and 1992 213,426 10,278 1,713
Secretary of the Company; 1991 199,109 -- 1,893
Senior Vice President Finance
and Secretary of CIPS;
President and Principal
Executive Officer of CIPSCO
Investment Company
L. A. Dodd......... Senior Vice President-- 1993 194,272 36,009 3,524
Operations of CIPS 1992 176,880 8,504 2,073
1991 161,684 -- 2,073
W. R. Morgan....... Vice President--Division 1993 142,713 21,235 2,700
Operations of CIPS 1992 135,758 8,653 2,073
1991 129,592 -- 2,073
G. W. Moorman...... Vice President--Power Supply 1993 134,585 20,047 2,564
of CIPS 1992 124,713 8,421 2,073
1991 117,509 -- 2,073

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(1) Amounts paid under the Company's Management Incentive Program which began in
1992.

(2) Premiums paid by the Company on behalf of the officers for group term life
insurance.

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11

Substantially all employees of the Company and CIPS (including officers)
participate in the CIPS Retirement Income Plan (the "Retirement Plan"),
including persons whose remuneration is reported in the foregoing table.
Employer contributions to the Retirement Plan are determined actuarially. For
purposes of the Retirement Plan, compensation of a participant is base pay,
exclusive of bonuses, overtime pay, and other special payments. Compensation for
the persons named in the Summary Compensation Table is substantially equivalent
to the compensation reported in the Table under "Salary." Retirement Plan
benefits depend upon years of service, age at retirement and final average pay.
In certain cases, pension benefits under the Retirement Plan (or compensation
used to measure such benefits) will be reduced to comply with maximum
limitations imposed by the Internal Revenue Code. CIPS maintains an unfunded
Excess Benefit Plan to provide for the payment of the difference between the
monthly benefit that would have been paid to participants under the Retirement
Plan if such limitations were not in effect and the reduced amount payable as a
result of such limitations. The credited years of service under the Retirement
Plan and the Excess Benefit Plan for the above listed persons as of December 31,
1993 are as follows: Greenwalt, 30 years; Jackson, 14 years; Dodd, 29 years;
Morgan, 30 years; and Moorman, 24 years. Assuming retirement at age 65, it is
estimated a participant would be eligible for a maximum annual benefit under the
Retirement Plan, as supplemented by the Excess Benefit Plan, as follows:

ANNUAL BENEFIT AFTER SPECIFIED
YEARS OF SERVICE(1)
AVERAGE ANNUAL --------------------------------------------------------
EARNINGS(2) 20 25 30 35 40
- -------------------------------------- -------- -------- -------- -------- --------

$125,000............................ $ 34,059 $ 42,574 $ 51,089 $ 59,603 $ 68,118
150,000............................ 41,559 51,949 62,339 72,728 83,118
175,000............................ 49,059 61,324 73,589 85,853 98,118
200,000............................ 56,559 70,699 84,839 98,978 113,118
225,000............................ 64,059 80,074 96,089 112,103 128,118
250,000............................ 71,559 89,449 107,339 125,228 143,118
275,000............................ 79,059 98,824 118,589 138,353 158,118
300,000............................ 86,559 108,199 129,839 151,478 173,118
325,000............................ 94,059 117,574 141,089 164,603 188,118
350,000............................ 101,559 126,949 152,339 177,728 203,118
375,000............................ 109,059 136,324 163,589 190,853 218,118
400,000............................ 116,559 145,669 174,839 203,978 233,118
425,000............................ 124,059 155,074 186,089 217,103 248,118

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(1) Annual benefits are on a straight-line annuity basis. Amounts shown have
been reduced by the deduction for Social Security benefits and are not
subject to any other offset amounts.

(2) "Average Annual Earnings" means the average annual base compensation during
the four consecutive years of highest pay during the ten-year period
immediately preceding retirement.

CIPS also maintains an unfunded Special Executive Retirement Plan (the
"Executive Plan") for each employee of the Company or CIPS who was hired from
outside the Company or CIPS as a senior officer and who is a participant in and
qualifies for benefits under the Retirement Plan. For purposes of the Executive
Plan, a senior officer includes the president, vice president and such other
officers of the Company or CIPS as shall be designated from time to time by the
Board of Directors of the Company or CIPS. A participant in the Executive Plan
who becomes disabled or retires in accordance with the Executive Plan is
eligible to receive benefits under the Executive Plan

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in an amount equal to the difference between (i) the amounts which would have
been payable under the Retirement Plan, as supplemented by the Excess Benefit
Plan, if the participant had 35 years of credited service under the Retirement
Plan (reduced in accordance with the Executive Plan if the participant
terminates employment for any reason prior to age 65) and (ii) the aggregate of
the amounts which are paid or payable (a) under the Retirement Plan as
supplemented by the Excess Benefit Plan, based upon the number of actual years
of credited service under the Retirement Plan, (b) under certain other pension
plans as a result of the participant's prior employment and (c) under any
employment contract with the Company or CIPS. A qualifying spouse of any
participant who dies is eligible to receive a percentage of the benefit provided
under the Plan for the participant. At present, Mr. Jackson is a participant
under the Executive Plan. His estimated annual benefits under the Retirement
Plan, the Excess Benefit Plan and the Executive Plan are as set forth in the
table above.

The individuals named in the Summary Compensation Table and three other
executive officers of the Company or CIPS have each entered into an Employment
Agreement with the Company, which provides that in the event of a "change in
control" of the Company or CIPS, the Company and/or CIPS or another subsidiary
of the Company will continue to employ the executive for a period of three years
from the date of the change in control, which period will be extended for one-
year increments unless notice to the contrary is given as provided in the
Employment Agreement (the "Period of Employment"). In the event of the
executive's (i) involuntary termination of employment during the Period of
Employment except by reason of death, disability, attainment of age 65 or cause
(as defined in the Employment Agreement) or (ii) resignation during the Period
of Employment for good reason (as defined in the Employment Agreement), the
executive will be entitled to payment of severance compensation in an amount
equal to the present value of the executive's base pay and incentive pay
(determined as provided in the Employment Agreement) that would have accrued if
the executive remained employed until the end of the Period of Employment. The
executive will also receive continued employee benefits until the end of the
Period of Employment, subject to offset for comparable benefits. The severance
compensation will be increased by an amount necessary to compensate the
executive for any excise tax payable as a result of the payment and any other
compensation paid by the Company or any of its affiliates being contingent on a
change in control under federal income tax law. A "change in control" occurs, in
general, if (i) as a result of a merger, consolidation or sale of assets, less
than a majority of the voting power of the Company is held after such event by
the persons who were holders of the voting power of the Company prior to such
event or less than a majority of the voting power of CIPS is held after such
event by the Company or by the holders of the voting power of the Company prior
to such event, (ii) any person (or group) acquires beneficial ownership of 20
percent or more of the voting power of the Company or CIPS or (iii) within any
two-year period a majority of the members of the Board of Directors of the
Company or CIPS ceases to be members (other than changes in members approved by
at least two-thirds of the continuing directors).

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

OVERVIEW. The Compensation Committee of the Board of Directors of the
Company (the "Committee") is charged with overall oversight and review of the
performance and compensation of the executive officers of the Company. The
Committee is responsible for assuring that executive compensation and benefit
plans are implemented and are consistent with the Company's shareholder
interests, corporate goals and compensation philosophy.

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The Company's executive officer compensation program supports these goals
and objectives. It is designed to attract, retain, motivate and reward top
quality and experienced officers to achieve the Company's business objectives.
It links executive compensation with corporate performance by providing the
opportunity to earn superior compensation during periods of superior results,
but also limiting compensation during periods with lesser results.

The executive officer compensation program consists of a base salary and an
annual incentive. The base salary is determined by a combination of the
individual's performance relative to specific job responsibilities and market
comparisons of salaries for similar jobs in the utility industry. Particular
emphasis is placed on salary data provided by the Edison Electric Institute
("EEI") survey of electric and combination electric and natural gas utilities.
This group of utilities is essentially the same group that makes up the utility
peer group whose performance is shown on the Performance Graph below. The
philosophy is to pay base salaries and provide for incentive compensation that
are comparable to the medians of such amounts for the subgroup of utilities
included in the EEI survey that are of comparable size to the Company (based on
revenues). Salaries for the officers listed in the Summary Compensation Table
were increased in 1993 to track competitive base salaries being paid by the
utility industry and to reflect performance, which is determined subjectively by
the Committee based on individual evaluations. Incentive compensation was earned
based on achievement of the objectives of the annual management incentive
program (described below).

THE MANAGEMENT INCENTIVE PLAN. The Management Incentive Plan ("MIP"), an
annual incentive program instituted in 1992, strongly supports the Company's
primary goal of achieving superior returns on shareholders' investments. The MIP
is intended to provide additional compensation to the executive officers, named
in the Summary Compensation Table above, along with five other officers and 22
other employees of the Company and its subsidiaries. It is the Committee's
responsibility to administer the MIP and in so doing (1) set the overall
corporate financial performance goal and unit or individual objectives, (2)
determine the participants to be included in the MIP, and (3) determine the
amount of each participant's incentive pay to be based on attainment of the
overall corporate goal and the amount to be based on achievement of his or her
unit or individual objectives.

The overall corporate goal is based on attainment of targeted return on
Common Stock equity of the Company. The Committee has determined that return on
equity is the measure of corporate performance that most directly measures
management's performance. Individual unit objectives relate to customer service,
revenue growth, cost control and other strategic initiatives. The MIP provides
for threshold, target and maximum levels of awards based on performance against
the predetermined targets. Achievement of threshold performance earns
approximately one-half of the target award while maximum performance earns
approximately 1.5 times the target award. As currently administered, total
incentive pay varies, depending on the participant's position within the
organization, from a minimum of 7% of base salary for some participants,
assuming threshold corporate and unit goals are achieved, to a maximum of 40% of
base salary for the President and Chief Executive Officer assuming maximum
performance is achieved. A participant may receive the portion of his or her
incentive pay tied to unit or individual objectives even though the Company has
not attained the overall corporate goal, with the exception of the President and
Chief Executive Officer, whose incentive pay is tied solely to the overall
corporate goal of return on equity. For other executive officers, individual
unit awards are weighted, according to the participant's position, to

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produce awards from 20% to 35% of the total award with corporate performance
goals weighted to make up the remaining 80% to 65%. However, for any incentive
pay to be earned by any participant, overall earnings of the Company, on a per
share basis, must equal or exceed the annualized Common Stock dividend rate then
in effect. Accordingly, shareholders will realize an appropriate return on their
investment prior to the payment of any incentive compensation.

The targeted corporate goal of return on common equity was exceeded in 1993
resulting in MIP participants, including the officers named in the Summary
Compensation Table, earning various amounts of incentive compensation, based on
the formulas previously described. In addition, the Committee determined that
incentive compensation was earned by participants in 1993 for achievement of
individual and unit goals, in accordance with the MIP provisions. The Committee,
in accordance with plan provisions, authorized an adjustment in 1993 to allow an
individual to earn one-half of his or her unit goal threshold level award if
such goal was not achieved due to extraordinary circumstances beyond the control
of the individual participant. None of the other predetermined requirements for
earning awards was modified. Incentive awards are payable in cash as soon as
feasible following the close of the year after determination by the Committee of
the level of attainment of the goals. Benefits earned in 1993 are reflected in
the "Bonus" column of the Summary Compensation Table above.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The Committee is responsible
for reviewing the Chief Executive Officer's performance and adjusting his base
salary accordingly. In addition, the Committee adjusts base salary to reflect
changes in the prevailing competitive market levels for Chief Executive Officers
in other comparably-sized utilities, as described above. The Committee increased
Mr. Greenwalt's salary in 1993 from $317,375 to $339,093 in recognition of his
strong performance in completing the responsibilities of his position, his
tenure as Chief Executive Officer, and increased compensation levels in the
utility industry.

Incentive compensation for the Chief Executive Officer was determined in
accordance with the provisions and formulas of the MIP. Accordingly, Mr.
Greenwalt's incentive compensation is based solely on the Company's performance
as measured by the overall corporate goal of return on equity. He earned $99,902
under the MIP in 1993 because the Company's return on common equity exceeded the
predetermined target goal as established in the MIP.

The members of the Committee are indicated below. No member of the
Compensation Committee is a current or former officer of the Company or CIPSCO.

G. R. Lohman, Chairman
W. J. Alley
T. L. Shade

PERFORMANCE GRAPH

The following graph is a comparison of the Company's Common Stock
performance compared to the Standard & Poors' 500 index and an industry peer
group as reported by the Edison Electric Institute. Comparison is also made to
the Dow Jones Utility Average. The graph assumes $100 invested at December 31,
1988, and all dividends paid during the period reinvested in additional Company
Common Stock. The EEI peer group is made up of 100 investor-owned electric and
combination electric and natural gas utilities. The returns have been weighted
to reflect the different market capitalization of each utility in the group. As
described in the Compensation Committee

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report, incentive compensation is based on return on the Company's common equity
rather than total return, as shown on the graph, because the Compensation
Committee believes it is a more direct measure of management's performance.

1989 1990 1991 1992 1993

CIPSCO $111 $115 $159 $185 $200

S & P 500 132 128 166 179 197

EEI 100 130 132 169 182 203

DJ UTIL 136 129 149 155 170

Incorporates returns of CIPS prior to 10/1/90

DIRECTORS' COMPENSATION

No annual retainer or fees are paid to any director who is an officer of
the Company or CIPS or any other subsidiary of the Company. During 1993, other
members of the Board of the Company received an annual retainer of $13,000 for
serving on the Board of the Company. The Company pays no additional fees for
attendance at Board meetings or for service on committees.

The annual retainer paid to each director by the Company is reduced by an
amount equal to the aggregate amount paid to such director by each subsidiary of
the Company as an annual retainer for services as a director of such subsidiary.
Non-employee directors of CIPS received an annual retainer of $10,000, and a fee
of $750 for each CIPS Board meeting or committee meeting attended. All directors
are on the Board of the Company and CIPS. Consequently, the aggregate annual
retainer for service on both Boards for 1993 was $13,000. The Chairman of the
CIPS Executive

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Committee received an additional annual fee of $2,500 and the Chairman of the
CIPS Audit Committee and the Chairman of the CIPS Compensation Committee each
received an additional annual fee of $2,000. Directors were also reimbursed for
their reasonable travel and out-of-pocket expenses for each Company Board or
Committee meeting attended.

The Company and CIPS each maintain an unfunded deferred compensation plan
under which directors may elect to defer directors' retainers and fees paid by
that company. For each director who elects to participate in a plan, the amount
of his or her directors' retainers and fees is accrued in an unfunded account in
the name of the director. Such amount is adjusted in value by an amount
equivalent to the amount which would be available if the director's compensation
were invested in the Company's Common Stock and dividends on such stock were
reinvested. The aggregate value of each participant's accounts in the plans at
February 1, 1994 (based on deferred director's fees paid by the Company and
CIPS) was equivalent to investments in Company Common Stock as follows: Mr.
Alley, 3,792 shares; Mr. Lohman, 3,270 shares; Mrs. Merriman, 2,016 shares; Mr.
Raymer, 3,019 shares; Mr. Shade, 1,374 shares; and Mr. Wogsland, 653 shares.
Amounts accrued in a director's account will be paid in cash upon his or her
retirement as a director either in a single payment or over a period not to
exceed 20 calendar quarters, with interest. Because officers of the Company or
CIPS receive no compensation for services as directors, any director who is an
officer is not eligible to participate in the plans.

The Company has established a Director Retirement Plan for directors of the
Company and its affiliates, including CIPS, who are not or have never been
officers of the Company or any affiliate, including CIPS. Each director who has
completed five years of service on the Board of the Company or any of its
affiliates is eligible for monthly retirement payments for a period of the
lesser of 10 years or the number of full years the director served on any of the
Boards. The annual retirement benefit for a director of the Company is equal to
the annual retainer in effect for the Company's directors (without reduction for
director's fees paid by affiliates of the Company) at the time the director
ceases to serve as a director. The annual retirement benefit for a director who
is not a member of the Board of the Company is equal to the annual retainer in
effect at the time the director ceases to serve as a director for each of the
Boards of which the director was a member but not to exceed the amount of
retainer for the Company's directors. Such annual retirement payment is reduced
a proportional amount for retiring directors younger than age 72.

MEETINGS AND COMMITTEES OF THE BOARD

During 1993, the Board of Directors held six meetings. The Board of
Directors of the Company and the Board of Directors of CIPS have each
established an Executive Committee, an Audit Committee, a Nominating Committee
and a Compensation Committee. Committee members are appointed by a majority of
directors at the Board of Directors meeting following the annual meeting of
shareholders. Committee members are the same for the Company's committees and
CIPS committees.

Mr. Eckley, Mr. Alley, Mr. Greenwalt and Mr. Raymer are the members of the
Executive Committee. The Company's Executive Committee held one meeting and the
CIPS Executive Committee held eight meetings in 1993. The Executive Committee
has and may exercise all the authority of the Board of Directors in the
management of the Company, except in respect of certain matters or action as
provided by Illinois law.

Mr. Alley, Mr. Heath, Mr. Lohman, Mrs. Merriman, Mr. Shade and Mr. Wogsland
are the members of the Audit Committee. The Company's Audit Committee and the
CIPS Audit Committee each held three meetings in 1993. The Audit Committee
engages an independent public accountant for the Company, subject to the
approval of the Board and the Company's shareholders; discusses with the
independent public accountant the scope and results of its audit and the
adequacy of the

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Company's accounting, financial and operating controls; approves the performance
of non-audit professional services by the independent public accountant; and
discusses with management and the independent public accountant the Company's
accounting principles, policies and practices and its reporting policies and
practices.

Mr. Eckley, Mr. Heath, Mrs. Merriman and Mr. Wogsland are the members of
the Nominating Committee. The Company's Nominating Committee and the CIPS
Nominating Committee each held one meeting in 1993. The Nominating Committee
seeks out and recommends to the Board qualified candidates for election to the
Board; reviews the performance of Board members and, based upon such review,
makes recommendations to the Board as to which Board members should stand for
re-election. In making recommendations of nominees for election to the Board,
the Nominating Committee will consider persons recommended by shareholders. Any
shareholder wishing to make such a recommendation should write to the President
of the Company who will forward all such recommendations to the Nominating
Committee.

Mr. Lohman, Mr. Alley, and Mr. Shade are the members of the Compensation
Committee. The Company's Compensation Committee held one meeting and the CIPS
Compensation Committee held three meetings in 1993. The Compensation Committee
establishes the compensation to be paid officers of the Company (other than
assistant officers); reviews directors' fees and fees paid to directors for
membership on the various committees of the Board; reports to the Board as to
appropriate levels of compensation for such officers and recommends to the Board
directors' fees and fees for membership on such committees. No member of the
Compensation Committee is a current or former officer of the Company or CIPS.

During 1993, each director attended 100 percent of the total of the
meetings of the Company's and CIPS Board and of committees of each company's
Board of which he or she was a member.

APPROVAL OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

Subject to the approval of the shareholders of the Company, the Board of
Directors has appointed the firm of Arthur Andersen & Co. as independent public
accountants to examine the annual financial statements of the Company for 1994.
The firm has served as the Company's independent public accountants since 1990
and as the independent public accountants for CIPS for many years. A
representative of Arthur Andersen & Co. will be present at the annual meeting to
make a statement if he or she so desires, and to respond to questions.

The following resolution concerning the appointment of independent public
accountants will be offered at the meeting:

"RESOLVED, that the appointment by the Company's Board of Directors of
Arthur Andersen & Co. to examine the annual financial statements of the Company
and its subsidiaries for 1994 is hereby approved."

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOREGOING PROPOSAL.

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SHAREHOLDER PROPOSALS

SHAREHOLDER PROPOSAL NO. 1

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOLLOWING SHAREHOLDER
PROPOSAL. Murray Katz and Beatrice M. Katz, 11435 Monterrey Drive, Silver
Spring, Maryland 20902, owners of 433 shares of the Company's Common Stock,
advised the Company that they intend to submit the following proposal for action
at the annual meeting.

"RESOLVED: That the shareholders of CIPSCO Inc. recommend that the Board of
Directors institute a salary and compensation ceiling such that as to future
employment contracts, no senior executive or director of the Company receive
combined salary and other compensation which is more than two times the salary
provided to the President of the United States," that is, no more than
$400,000."

Reasons: There is a general consensus that corporate officials are grossly
overpaid and that this is promulgated by the hands-off policy of Boards of
Directors. The recommended ceiling is sufficient to motivate any person to do
his best. There is no corporation which exceeds the size and complexity of the
United States government of which the President is the chief executive officer.
Even government agencies exceed the size, as measured by personnel and budget,
of private corporations. The President of the United States receives a salary of
$200,000; even agency heads and members of Congress are paid only somewhat more
than $100,000.

The duties of the President of the United States are not comparable to
those of senior executive officers or directors (the President has a much more
demanding job). While the President has many valuable compensations which may
exceed those of company executives, we use the salary of the President only as a
reference point for shareholders to consider as they evaluate this resolution.

Officers of public corporations are the employees and not the owners,
except as they may be shareholders in common with other stockholders. The Board
of Directors, a closed group which perpetuates itself, determines who is to be
selected to the Board and who is to be an officer of the company, as well as the
compensation to be received. They should not give the appearance that they run
the corporations for their benefit and only incidentally for the benefit of
shareholders. They should not unnecessarily drain away millions of dollars in
salary, stock options and other compensation. When the recommended ceiling is
exceeded, it may be an expression of greed and abuse of power.

At times, there is no direct correlation between the profitability of a
corporation and the compensation to officers. In many corporations, compensation
increases even as profits fall. High compensation need not serve as an incentive
for a better run or more profitable corporation. Many qualified people would
gladly step in and do as good a job as the incumbent officers of the Corporation
and would have no hesitation serving under the aforementioned ceiling on
compensation.

Any officer who believes he can better the corporation should be
sufficiently motivated to purchase stock on the open market or to receive stock
options as part of his salary and compensation package. To remain competitive in
world markets we must cut our costs and not overcompensate directors and
officers.

Last year a similar proposal received the vote of 31.4% of the stockholders
voting on the issue.

"If you AGREE, please mark your proxy FOR this resolution."

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DIRECTORS' RECOMMENDATION.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE PRECEDING SHAREHOLDER
PROPOSAL. You may vote AGAINST by merely signing the enclosed proxy card and
returning it. You may also vote AGAINST by marking the box indicating that all
your shares are voted as recommended by the Board of Directors or by marking the
AGAINST box under Item 3 -- Shareholder Proposal No. 1 on the proxy card.

The Board of Directors recommends a vote AGAINST for the following reasons:

The proponent's stated "reasons" for the proposal are replete with
generalities which simply do not apply to your Company. These generalities in
effect make accusations about Company management and the Board which the Board
believes are absolutely false. Unfortunately, under the rules of the Securities
and Exchange Commission, the Company is compelled to print the proponent's
"reasons" verbatim, regardless of whether they apply or whether they are
logically or properly formulated.

The Board has maintained a fair and balanced approach to executive
compensation which reflects the conservative nature of the industry. In
addition, the Board believes executive compensation should be linked to
corporate performance and shareholders' interests rather than an arbitrary,
unrelated standard.

Executive compensation at CIPSCO is below the median for executives at
comparable companies. Unlike other companies, CIPSCO has no stock option plans
or excessive benefit packages which could result in significant gains to
executives. The modest percentage increases in the Company's executive
compensation over the last decade have been significantly less than percentage
increases in shareholders' returns over the same period.

As is clear from the Summary Compensation Table and the Compensation
Committee Report presented above, the Company's Management Incentive Plan is
directly linked to shareholder's return on equity. This linkage is much more
effective than an arbitrary limit in assuring that shareholder interests are
paramount.

Putting arbitrary limitations on compensation, as suggested by the
proposal, would not be in the best interests of the shareholders as the Company
faces an increasingly competitive environment. It is critical that the Company
continue to attract, retain and motivate executives with the expertise to deal
with a large, complex company in a rapidly changing industry such as ours. If
limitations, such as those proposed, were to be placed on the Company, it would
remove the flexibility needed to properly motivate executive management or
compete for executive talent, particularly because other companies would not be
so limited.

The proposal's comparison to salaries for government service is misplaced,
inappropriate and irrelevant. The government does not operate on a profit motive
and does not use compensation to attract and motivate qualified office holders
and employees. A desire for public service and other considerations motivate
candidates for elective office, not compensation. Further, certain elected
officials, especially the President of the United States, enjoy perquisites
having a value far in excess of their salary. The true "compensation package"
for these officials greatly exceeds the "pay ceiling" suggested by the proposal.

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In summary, the Board believes adoption of the limitations urged by the
proposal would be detrimental to the Company and its shareholders.

For all of the above reasons, the Board of Directors recommends that
shareholders vote AGAINST this proposal. Proxies solicited by the Board will be
so voted unless a contrary choice is specified. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST SHAREHOLDER PROPOSAL NO. 1.

SHAREHOLDER PROPOSAL NO. 2

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOLLOWING PROPOSAL.
George Hausmann and Ruby M. Hausmann, 135 E. Randolph, Vandalia, Illinois 62471,
owners of 1000 shares of the Company's Common Stock, advised the Company that
they intend to submit the following proposal for action at the annual meeting.

RESOLVED: That the Shareholders of CIPSCO, Inc. recommend that the Board of
Directors take the necessary steps to insure that any increase in salary and/or
compensation in future employment contracts for senior executives and directors
be no greater percentage-wise than the increase in dividends paid to the
Stockholders.

In the event that there should be a decrease of dividends paid to
Stockholders there will be a corresponding decrease percentage-wise in salary
and/or compensation paid to senior executives and directors; this decrease shall
be limited to no more than 10% per year.

Reasoning: Salary and compensation should at no time be independent of the
change in the dividends paid to the Shareholders who are the true owners of
CIPSCO, Inc.

At no time should the senior executives and directors be permitted salary
and compensation increases above the percentage granted to the owners of CIPSCO.

If you AGREE with the above reasoning please mark your proxy FOR the
resolution.

DIRECTORS' RECOMMENDATION.

The Board of Directors recommends a vote AGAINST for the following reasons:

The Board believes a balanced executive compensation program should have a
portion of the executive's pay linked to corporate performance. The existing
Management Incentive Plan, instituted by the Board of Directors, was carefully
developed and implemented to achieve this objective in a fair and balanced
manner. Although the proponent is attempting to link pay to performance, the use
of only dividend increases as the linking factor would not ensure that executive
compensation is properly tied to shareholder benefits and shareholder interests.
The long term achievement of increased shareholder value requires more than
merely raising dividends. The proposal's ill-conceived design would not
necessarily result in the intended benefits to shareholders and could make
management less accountable for performance.

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The Company's Management Incentive Plan, described in the Compensation
Committee Report presented above, directly links compensation to shareholders'
return on equity. Return on equity is a more complete measure of the success of
the Company than any other factor, including dividend increases. Shareholders
benefit from improved performance, as measured by increasing return on equity,
through market appreciation and dividends. Under the proponent's plan, dividends
might be increased even if an increase were not prudent or could not be
sustained given the Company's financial outlook. Such dividend increases would
be at the expense of the market value of the stock and the long term viability
of the Company.

The proponent's resolution, if adopted, would not provide the Board with
the necessary flexibility to provide performance incentives to management,
especially in difficult times. The Company could not take into account important
contributions of executives -- no matter how significant. All matters other than
dividends would be irrelevant. Such a restriction on flexibility of designing
compensation plans would make it difficult, if not impossible, for the Company
to compete for executive talent, particularly in a market where other companies
have no such restriction.

For all of these reasons, the Board of Directors recommends that
shareholders vote AGAINST this proposal. Proxies solicited by the Board will be
so voted unless a contrary choice is specified. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST SHAREHOLDER PROPOSAL NO. 2.

SHAREHOLDER PROPOSAL NO. 3

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOLLOWING PROPOSAL.
Robert K. Pachesa, 424 W. Mechanic, Hillsboro, Illinois 62049, beneficial owner
of 520 shares of the Company's Common Stock, has advised the Company that he
intends to submit the following proposal for action at the annual meeting.

BE IT RESOLVED: That the shareholders of CIPSCO, Inc. ("Company") request
that the Board of Directors in the future refrain from entering into agreements
providing executive compensation contingent on a change in control of the
Company unless such agreements or arrangements are specifically submitted to the
shareholders for approval.

Supporting Statement. The Company has contingency employment agreements
with nine senior executives, including Messrs. Greenwalt, Jackson, Dodd, Morgan
and Moorman, which provide compensation contingent upon a change in control of
the Company. The agreements provide that if an officer's employment is
involuntarily terminated or he resigns for good reason after a change of control
of the Company, that executive will be entitled to payment of severance
compensation in an amount equal to the present value of the executive's base pay
and incentive pay for at least a three year period. Continuation of employee
benefits is also an integral part of these executive packages. As described on
pages 9-11 of the Company's 1993 Proxy Statement, these so-called "golden
parachutes" can amount to hundreds of thousands of dollars in guaranteed
compensation for the affected executives. These employment agreements with the
"golden parachute" provisions were adopted without consideration by the
Company's shareholders. Golden parachutes, as defined in this proposal, are
payments contingent on change in control.

Lucrative severance pay to corporate executives triggered by a change in
control of the corporation, commonly referred to as "golden parachutes," is a
controversial matter. Golden parachutes, in our opinion, introduce an
inappropriate element of personal consideration for managers that potentially
conflicts with their fiduciary responsibility to shareholders. We believe this

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may cause managers to operate in a manner which fails to maximize value for
shareholders in the event of a potential takeover. Such a situation, we believe,
is fundamentally unfair to shareholders, the ultimate owners of the Company.
Moreover, it is our opinion that special compensation arrangements for a favored
few executives undoubtedly has a corrosive impact on the morale and attitude of
the remainder of employees who do not share such privileged status.
Shareholders, as owners concerned with the long-term productive and financial
performance of the Company, should be concerned with this type of disparity.

A 1990 study by the United Shareholders Association also provides
justification for the submission of golden parachute arrangements to
shareholders for consideration. The study of 1,000 major U.S. corporations found
that the average annualized two-year return was 20 percent higher for the 559
companies without such plans for management.

We believe that the issue of whether the Company should, in the future,
provide management with golden parachutes is of such critical importance that
shareholders should make this decision. We believe shareholder approval is one
of the best ways available to address potential conflicts of interest that may
arise between the board and top executives on the one hand, and shareholders on
the other hand, when a change of control is threatened.

Accordingly, we urge your approval of this Proposal.

DIRECTORS' RECOMMENDATION.

The Board of Directors recommends a vote AGAINST for the following reasons:

The Company's Board of Directors believe that employee compensation
arrangements which provide reasonable contingent benefits upon a change in
control serve the best interests of shareholders, and are an important and
entirely appropriate element of a sound compensation program. Requiring
shareholder approval of such agreements gives shareholders no additional
benefits and can significantly increase the Company's costs and decrease its
flexibility.

The agreements in place with the Company (which are described on page 10 of
this proxy statement) are intended to minimize, rather than create, a conflict
of interest executives might be deemed to have in the event a tender offer or
other takeover bid were made for the Company. These agreements, by providing
financial security for possible job loss following a takeover, help management
to assess a takeover bid objectively and to advise the Board whether the bid is
in the best interests of the Company and its shareholders without fear of
personal financial loss. Furthermore, since it can be a long period from the
time a change in control is proposed until it is completed, the Company could be
at a disadvantage if it were to lose key employees during that time. The
existing employment agreements are an incentive for key managers to protect
shareholder interests and to remain with the Company during a contest for
control and following a takeover.

It is important to note that under the Company agreements, no benefit is
paid unless (1) a change in control occurs and (2) thereafter the executive is
discharged from employment or, under

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limited circumstances, resigns. Also, it is not the executive, but the acquirer
which then controls the Company that determines through its actions if a payment
will be triggered under the agreement. The employment agreements are not
designed to "reward" executives with benefits and will not result in "lucrative
severance pay."

The Board believes that change-in-control agreements are an important and
necessary benefit that enables the Company to compete for and retain the best
management personnel. Termination agreements of this type have no current cost
to the Company or the shareholders and are similar to other such agreements
which exist at a majority of companies in our industry. These agreements will
NOT prevent a business combination that would increase shareholder value.

In those circumstances when the Board believes employment agreements with
change-in-control payment features would be in the best interests of the Company
and its shareholders, the Board needs the flexibility to quickly and efficiently
provide such agreements to executives. This flexibility would be severely
hampered by the need to submit such agreements to shareholders for approval.
Under the proposal, unless the Company were to incur the significant expense of
a special meeting of shareholders, such employment agreements could only be
entered into once a year after approval at the annual meeting of shareholders or
subject to a general pre-approval which might not be sufficient for all needs.
In today's increasingly competitive business climate, no company can afford to
wait one year to institute needed and desirable changes. Further, approval of
such agreements by shareholders does not add any benefits for shareholders that
are not already obtained when the Board, in its discretion, authorizes fair and
necessary change-in-control agreements.

A 1993 study by the United Shareholders Association, the organization
referred to by the proponent, quantified various shareholder rights provisions,
including change-in-control provisions. According to this study, the Company
ranks in the top 1% in protection of shareholder rights among the 1,000
corporations included in the study.

OTHER MATTERS

At the date hereof, the Board of Directors of the Company knows of no
business to come before the meeting other than those matters described above.
However, should any such business properly come before the meeting, the proxies
will be voted in respect thereof in accordance with the judgment of the person
or persons voting the proxies.

CIPSCO Incorporated

By Order of the Board of Directors,

[SIG]

R. W. Jackson
Senior Vice President and Secretary

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Graphic Material Appendix

The performance graph required by Item 402(1) of Regulation
S-K is on page 13 of this filing. The paper copy has a line graph
with four differentiated lines showing the returns given in the
data presented on page 13. A paper copy of the graph has been
submitted supplementally to the Branch Chief pursuant to
Regulation S-T, Item 304 (d) (2).

25
SOLICITED BY THE BOARD OF DIRECTORS OF CIPSCO INCORPORATED

The undersigned appoints, and directs the agents of the Plans identified on the
reverse hereof to appoint C. L. Greenwalt and R. W. Jackson, and each of them
as attorneys and proxies with power of substitution, to vote as indicated
hereon all shares of Company common stock held of record by and for the account
of the undersigned in the Plans on the record date and, in their discretion, to
vote on all other matters which may properly come before the 1994 Annual
Meeting of Shareholders of CIPSCO Incorporated and at all adjourned sessions
thereof, all as set forth in the Notice and Proxy Statement relating to the
meeting.

If joint account, each
joint owner should sign,
State title when signing
as executor, administrator,
trustee, guardian, etc.

DO NOT FOLD

DATED ___________________

MARK "X" HERE TO VOTE WITH DIRECTORS' RECOMMENDATIONS: / /

All shares will be voted in accordance SIGNED ____________________
with the Board of Directors'
recommendations, if you mark the box __________________________
above (any contrary marking on the reverse
side will be disregarded) or leave all
boxes unmarked. If you wish to vote
other than with the Directors'
recommendations, specify your choices
by marking the appropriate boxes on
the reverse side.

26
If you have marked the box on the reverse side of this card, you should NOT
complete the sections below. The votes represented by this proxy, if properly
executed, will be voted as indicated by you. If you sign and return the proxy
unmarked or mark the box on the reverse, such votes will be voted "FOR" the
election of directors and approval of the appointment of auditors, and
"AGAINST" Shareholder Proposals 1, 2 and 3. No proposal is related to or
conditioned on any other proposal.

DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1 AND 2. DIRECTORS RECOMMEND A VOTE "AGAINST" ITEMS 3, 4, AND 5.

FOR AGAINST ABSTAIN
1. Election of Directors FOR / / Withhold Authority / / 3. Shareholder Proposal #1 / / / / / /
All nominees to vote for all nominees
listed below 4. Shareholder Proposal #2 / / / / / /
(except as marked
to the contrary) 5. Shareholder Proposal #3 / / / / / /

W. J. Alley T. L. Shade
R. W. Jackson J. L. Heath
D. G. Raymer H. M. Merriman
C. L. Greenwalt J. W. Wogsland
G. R. Lohman

To withold authority to vote for any individual If you choose not to mark the box on the reverse side,
nominee, strike a line through the nominee's mark your votes on this side with an /X/. Then DATE
name in the list above. PROXY AND SIGN ON REVERSE side exactly as name(s)
printed and return signed proxy in enclosed envelope.

Participants in (i) the Company's Automatic Dividend
2. Approval of the appointment of FOR AGAINST ABSTAIN Reinvestment and Stock Purchase Plan and (ii) Central
Arthur Andersen & Co. as / / / / / / Illinois Public Service Company's Employee Stock
independent public Ownership Plan or any of its Employee Savings Plans,
accountants for 1994. direct Illinois Stock Transfer Company and Boston
Safe Deposit and Trust Company, respectively, as
agent, to vote as indicated on the reverse hereof.

(To be signed on reverse side)