SCHEDULE 14A INFORMATION
(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

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

IES INDUSTRIES INC.
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(Name of Registrant as Specified In Its Charter)

IES INDUSTRIES INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(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:

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(2) Aggregate number of securities to which transaction applies:

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

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(4) Proposed maximum aggregate value of transaction:

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[_] 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:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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LOGO

Dear Shareholder of IES Industries Inc.:

You are cordially invited to attend the Annual Meeting of Shareholders of IES
Industries Inc. ("IES Industries") which will be held on Tuesday, May 16, 1995,
at the Collins Plaza Hotel, 1200 Collins Road N.E., Cedar Rapids, Iowa, at 2:00
p.m. (Central Daylight Time).

A map showing the location of the Annual Meeting of Shareholders is printed
on the last page of this Proxy Statement.

A notice of the meeting and a proxy/directions card are enclosed. We hope you
will sign, date and return the proxy/directions card as promptly as possible in
the enclosed self-addressed postage prepaid envelope. As a Shareholder, it is
in your best interest, as well as helpful to your Board of Directors, that you
participate in the affairs of IES Industries, whether you own a few shares or
many shares.

A copy of the Annual Report of IES Industries, including financial statements
for the fiscal year ended December 31, 1994, is included in this mailing with
your Proxy Statement. A report of the Annual Meeting will be mailed to all
Shareholders following the meeting.

Please let me express my appreciation for your past cooperation and I look
forward to your continued interest in IES Industries.

Whether or not you plan to attend the Annual Meeting, please promptly
complete, sign, date and return the enclosed proxy/directions card in the
enclosed postage prepaid envelope. You may, of course, attend the Annual
Meeting and vote in person, even if you have previously returned your proxy
card.

On behalf of your Board of Directors, thank you for your continued support.

Sincerely,

[SIGNATURE OF LEE LIU]
Lee Liu
Chairman of the Board, President &
Chief Executive Officer

March 20, 1995

IES INDUSTRIES INC.

--------------------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 16, 1995

To the Shareholders of

IES INDUSTRIES INC.

The Annual Meeting of the Shareholders of IES Industries Inc. ("IES
Industries"), an Iowa corporation, will be held at the Collins Plaza Hotel,
1200 Collins Road N.E., Cedar Rapids, Iowa, on the 16th day of May, 1995, at
the hour of 2:00 p.m. (Central Daylight Time) for the following purposes:

1. To elect a board of twelve directors to serve until the next ensuing
annual meeting or until their successors are duly elected and qualified.

2. To amend the Long-Term Incentive Plan of 1987.

3. To transact such other business as may properly come before the meeting
or at any adjournment or adjournments thereof.

The Board of Directors, in accordance with the Bylaws and Articles of
Incorporation of IES Industries, has fixed the close of business, March 10,
1995, as the record date for the determination of Shareholders entitled to
notice of and to vote at this meeting and any adjournment or adjournments
thereof. Your continued interest and cooperation are greatly appreciated.

This Notice and the Annual Report are sent to you by order of the Board of
Directors.
[LOGO OF SIGNATURE OF STEPHEN W. SOUTHWICK]
Stephen W. Southwick,
Secretary

Cedar Rapids, Iowa
March 20, 1995

The Bylaws require that the holders of a majority of the outstanding shares
of stock entitled to vote be represented in person or by proxy at the meeting
to constitute a quorum for the transaction of business. Therefore, regardless
of the number of shares you hold, it is important that your shares be
represented at the meeting.

PLEASE SIGN, DATE AND MAIL THE PROXY/DIRECTIONS CARD PROMPTLY IN THE
SELF-ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE PROMPT RETURN OF YOUR PROXY/DIRECTIONS CARD WILL SAVE THE
EXPENSE INVOLVED IN FURTHER COMMUNICATION.

IES INDUSTRIES INC.
IES TOWER
200 FIRST STREET S.E.
CEDAR RAPIDS, IOWA 52401

MARCH 20, 1995

PROXY STATEMENT

PROXY/DIRECTIONS CARDS FOR OWNERS OF COMMON STOCK

This Proxy Statement, the accompanying proxy/directions card and the Annual
Report are being mailed on or about March 20, 1995, to each holder of record of
IES Industries Inc. ("IES Industries" or the "Company") Common Stock at the
close of business March 10, 1995 (the "Shareholders") and to each beneficial
owner of Company Common Stock held in certain employee plans referred to below
who is not otherwise a holder of record. Proxy/directions cards in the form
enclosed are solicited by the Board of Directors of IES Industries for use at
the Annual Meeting of Shareholders ("Annual Meeting") to be held at the Collins
Plaza Hotel, 1200 Collins Road N.E., in the City of Cedar Rapids, Iowa, on May
16, 1995, at the hour of 2:00 p.m. (Central Daylight Time).

The proxy/directions cards enclosed have imprinted thereon the number of
shares of Common Stock held of record as well as shares held for the account of
Shareholder participants in the IES Industries Dividend Reinvestment and Stock
Purchase Plan. Proxy/directions cards for Shareholders who are employees of IES
Industries and who are participants in the IES Industries Employee Stock
Purchase Plan, the Dividend Reinvestment and Stock Purchase Plan or the IES
Industries Bonus Stock Ownership Plan will also have imprinted thereon the
number of shares held for the account of participants in that plan. Employees
who are not Shareholders of record but who are participants in any of the plans
will receive a proxy/directions card for shares being held for them pursuant to
such plan. The number of shares imprinted on the proxy/directions cards are the
number of shares to be voted in accordance with the instructions of the
Shareholder or Plan participant.

All shares of IES Industries Common Stock held for the account of
participants in the IES Industries Dividend Reinvestment and Stock Purchase
Plan, IES Industries Bonus Stock Ownership Plan and the IES Industries Employee
Stock Purchase Plan, respectively, are held of record by IES Industries Inc.,
Shareholder Services Department ("the Administrator"). All shares held in such
plans will be voted by the Administrator in the manner indicated by the
participant's proxy/directions card. Participants in the Iowa Southern
Utilities Company ("IS Utilities") Employee Stock Ownership Plan ("ESOP") will
receive a proxy/directions card for shares being held for them pursuant to such
plan. The number of shares imprinted on the proxy/directions card are the
number of shares to be voted in accordance with the instructions of the ESOP
participant. All shares of IES Industries Common Stock held for the account of
participants in the ESOP are held of record by Stephen W. Southwick (Vice
President, General Counsel & Secretary), as Trustee. All shares held in the
ESOP will be voted by the Trustee in the manner indicated by the participant's
proxy/directions card.

Employees who are participants in the IES Industries Common Stock Fund of the
IES Industries Employee Savings Plan (the "ESP") will receive a
proxy/directions card from American Express Trust Company (the "ESP Trustee"),
the holder of record for shares held in the ESP. The proxy/directions cards
have imprinted thereon the number of shares held for the account of each
participant. The number of shares imprinted on the proxy/directions card will
be voted by the ESP Trustee in accordance with the instructions of the ESP
participant. Shares not voted by the participants will be voted by the ESP
Trustee as the Employee Savings Plan Committee directs.

A person giving a proxy/directions card may revoke it at any time before the
shares of IES Industries Common Stock that it represents are voted. Except as
provided below, any Shareholder attending the meeting may, on request, vote his
or her own shares even though he or she has previously sent in a proxy.
Attendance at the IES Industries Annual Meeting will not in and of itself
constitute a revocation of a proxy. Because the

participants in the various plans described above are not the record owners of
shares held in such plans, such shares may not be voted in person at the Annual
Meeting by such participants. Unless revoked, the shares of IES Industries
Common Stock represented by the proxy/directions cards will be voted on all
matters to be acted upon at the Annual Meeting in accordance with the
instructions indicated thereon. If no instructions are indicated on the
proxy/directions card, such shares will be voted for the election of the
nominees for director named herein and for amending the Long-Term Incentive
Plan of 1987.

Directors are elected and the Long-Term Incentive Plan of 1987 is amended by
a majority of votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. Except as otherwise provided in the
Articles of Incorporation and the Bylaws, other items of business shall be
decided by a majority vote at a meeting at which a quorum is present. Votes by
proxy are voted by a proxy committee of three directors appointed by the Board
of Directors. Votes are counted and certified to the Secretary by the
Administrator and by inspectors of election appointed by the Administrator.
Abstentions and exceptions are also counted as votes cast and certified. Broker
non-votes are not voted by the proxy committee.

COST OF SOLICITATION

The cost of soliciting proxies/directions for the Annual Meeting will be
borne by IES Industries. Solicitation will be made primarily by mail. Officers,
directors or employees of IES Industries may, however, solicit
proxies/directions personally or by telephone or telegram without special
compensation for such service.

In addition, the Company has retained the services of D.F. King & Company to
assist in the solicitation of proxies. Such firm will solicit proxies by mail,
telephone, telegram and personal solicitation. For these services, D.F. King &
Company will be paid a fee not in excess of $5,000 (five thousand dollars) by
the Company, plus reasonable out-of-pocket costs and expenses.

IES Industries will reimburse brokers and other persons holding stock in
their names, or in the names of nominees, for their expenses in sending proxy
material to the beneficial owners of stock held of record by such brokers or
other persons.

PURPOSES OF MEETING

The only known business to be presented at the Annual Meeting is the election
of twelve directors of IES Industries to serve until the next annual meeting or
until their successors are duly elected and qualified and the amendment of the
Long-Term Incentive Plan of 1987. As of the date of mailing this Proxy
Statement, the Board of Directors does not know of any other business to be
brought before the Annual Meeting. However, the enclosed proxy/directions card
authorizes the voting of such shares on all other matters that may properly
come before the meeting and it is the intention of the proxy holders to take
such action in connection therewith as shall be in accordance with their best
judgment.

STOCK ENTITLED TO VOTE

On March 10, 1995, IES Industries had 28,916,656 outstanding shares of Common
Stock in which all voting rights are vested.

Each Shareholder entitled to vote upon the subject to be acted upon at the
Annual Meeting and at any and all adjournments thereof is entitled to one vote,
in person or by proxy, for each share of IES Industries Common Stock registered
in his or her name, at the close of business on March 10, 1995.

Shares cannot be voted at the Annual Meeting unless the record owner is
present in person or represented by proxy.

PROPOSAL NUMBER 1--NOMINATION AND ELECTION OF DIRECTORS

Twelve directors will be elected by the Shareholders at the Annual Meeting to
serve until the next annual meeting or until their respective successors have
been duly elected and qualified. Eleven of the nominees have previously been
elected as directors by the Shareholders. Jack R. Newman was appointed to the
Board of Directors on August 2, 1994.

In the event that any nominee should become unavailable for election, which
is not now contemplated, the Board of Directors reserves discretionary
authority to designate a substitute nominee. Proxies will be voted for the
election of such other nominee or nominees as may be so designated by the Board
of Directors.

NOMINEES FOR ELECTION AS DIRECTORS

NAME AND AGE YEAR FIRST
ELECTED A
DIRECTOR

C.R.S. ANDERSON, 67 1978

Mr. Anderson is the retired Chairman of the Board of IES
Industries after serving in that position following the merger
of IE Industries Inc. and Iowa Southern Inc. Prior to the
merger, Mr. Anderson was Chairman and President of Iowa
[PHOTO Southern Inc., and had served in various positions at Iowa
APPEARS Southern Utilities Company since 1956. He is a past chairman
HERE] of the Missouri Valley Electric Association and the Iowa
Association of Business and Industry; and a former director of
IMG Bond Accumulation Fund, IMG Stock Accumulation Fund,
Midwest Gas Association and the Iowa Business Development
Credit Corporation. Mr. Anderson has been a director of IES
Industries since 1991 and was first elected to the Iowa
Southern Utilities Company board in 1978. Mr. Anderson serves
on the Executive Committee and chairs the Audit Committee.

J. WAYNE BEVIS, 60 1987

Mr. Bevis is Vice Chairman and Chief Executive Officer of
Pella Corporation, a window and door manufacturing company in
Pella, Iowa. He has served in various positions at Pella
[PHOTO Corporation since 1973. Mr. Bevis is Chairman of several Pella
APPEARS Corporation subsidiaries and a member of the Policy Advisory
HERE] Board of the Joint Center of Housing Studies of Harvard
University and the University of Iowa College of Business
Board of Visitors. He is a member and past chairman of the
Iowa Business Council. Mr. Bevis has been a director of IES
Industries since 1991 and was first elected to the IE
Industries Inc. board in 1987. Mr. Bevis serves on the Audit
Committee.

GEORGE DALY, 54 1988

Dr. Daly is Dean of the Leonard Stern School of Business, New
York University, New York, New York. Dr. Daly was Dean of the
[PHOTO College of Business Administration at the University of Iowa,
APPEARS Iowa City, Iowa from July 1983 to July 1993. He has published
HERE] a variety of academic journals and authored several books. Dr.
Daly has been active in government policymaking and formerly
held posts with federal governmental agencies. He has been a
director of the Company since 1991 and was first elected to
the IE Industries Inc. board in 1988. Dr. Daly serves on the
Compensation Committee.

BLAKE O. FISHER, JR., 50 1991

Mr. Fisher has served as Executive Vice President & Chief
Financial Officer of the Company since January 1991. He was
appointed President, Chief Operating Officer & Chief Financial
Officer of IES Utilities Inc. in February 1995. Mr. Fisher
[PHOTO previously held various management positions at Consumers
APPEARS Power Company, an electric and gas utility company in Jackson,
HERE] Michigan, beginning in 1967, including Vice President of
Finance and Treasurer. He is a director of McLeod, Inc., a
telecommunications company in Cedar Rapids, Iowa and a
director of Personal Safety Corporation. Mr. Fisher is also a
member of the board of trustees of Coe College, Theatre Cedar
Rapids and Brucemore, all located in Cedar Rapids, Iowa. He
has been a director of the Company since 1991 and was first
elected to the IE Industries Inc. board in 1991.

G. SHARP LANNOM, IV, 56 1987

Mr. Lannom is President and Chief Executive Officer of DeLong
Sportswear, Inc., a sportswear manufacturer in Grinnell, Iowa.
[PHOTO Mr. Lannom has served as Chief Executive Officer of DeLong
APPEARS since 1961. He is chairman of the Ahrens Family Center in
HERE] Grinnell, Iowa. Mr. Lannom has been a director of the Company
since 1991 and was first elected to the board of Iowa Southern
Inc. in 1987. Mr. Lannom serves on the Compensation Committee.

NAME AND AGE YEAR FIRST
ELECTED A
DIRECTOR

LEE LIU, 61 1981

Mr. Liu is Chairman of the Board, President & Chief Executive
Officer of the Company and is Chairman of the Board & Chief
Executive Officer of IES Utilities Inc. Mr. Liu has held a
number of professional, management and executive positions
since joining Iowa Electric Light and Power Company in 1957.
[PHOTO He is a director of: HON Industries Inc., an office equipment
APPEARS manufacturer in Muscatine, Iowa; Principal Financial Group, an
HERE] insurance company in Des Moines, Iowa; and Eastman Chemical
Company, a diversified chemical company in Kingsport,
Tennessee. Mr. Liu is also a director of the Edison Electric
Institute, an electric industry interest group in Washington,
D.C. He also serves as a trustee for Mercy Medical Center, a
hospital in Cedar Rapids, Iowa and is a member of the Iowa
Business Council, the Iowa Utility Association and the
University of Iowa College of Business Board of Visitors. Mr.
Liu has been a director of the Company since 1991 and was
first elected to the board of Iowa Electric Light and Power
Company in 1981. Mr. Liu chairs the Executive Committee and
serves on the Nominating Committee.

JACK R. NEWMAN, 61 1994

Mr. Newman has been a Partner of Morgan, Lewis & Bockius, an
international law firm based in Washington, D.C., specializing
in energy matters since December 1, 1994. Mr. Newman has been
engaged in private practice since 1967 and was previously a
[PHOTO partner in the law firms Newman & Holtzinger and Newman,
APPEARS Bouknight & Edgar. He has served as nuclear legal counsel to
HERE] the Company since 1968. Prior to 1967, Mr. Newman served as
Secretary and General Counsel of the Nuclear Materials and
Equipment Corporation and as Staff Counsel to the Joint
Congressional Committee on Atomic Energy. He advises a number
of utility companies on nuclear power matters, including many
European and Asian companies. Mr. Newman is a member of the
Bar of the State of New York, the Bar Association of the
District of Columbia, the Association of the Bar of the City
of New York, the Federal Bar Association and the Lawyers
Committee of the Edison Electric Institute. He was first
appointed to the board of the Company in August 1994. Mr.
Newman serves on the Compensation Committee.

ROBERT D. RAY, 66 1987

Mr. Ray is President and Chief Executive Officer of IASD
Health Services Inc. (formerly Blue Cross and Blue Shield of
Iowa, Western Iowa and South Dakota), an insurance firm in Des
Moines, Iowa. From 1983 until 1989 he was President and Chief
[PHOTO Executive Officer of Life Investors, Inc., an insurance firm
APPEARS in Cedar Rapids, Iowa. Mr. Ray served as Governor of the State
HERE] of Iowa for fourteen years, and was the United States Delegate
to the United Nations in 1984. He is a director of the Maytag
Company, an appliance manufacturer in Newton, Iowa and a
director of Norwest Bank of Iowa in Des Moines, Iowa. He also
serves as Chairman of the National Leadership Commission on
Health Care Reform and the National Advisory Committee on
Rural Health Care. Mr. Ray is a member of the Board of
Governors of Drake University, Des Moines, Iowa, and the Iowa
Business Council. He has been a director of the Company since
1991 and was first elected to the IE Industries Inc. board in
1987. Mr. Ray serves on the Audit and Nominating Committees.

NAME AND AGE YEAR FIRST
ELECTED A
DIRECTOR

DAVID Q. REED, 63 1967

Mr. Reed is a sole practitioner of law in Kansas City,
Missouri. Mr. Reed has been engaged in the private practice of
law since 1960. From 1972 until 1988, he was a senior member
[PHOTO of the firm of Kodas, Reed & McFadden, P.C. in Kansas City,
APPEARS Missouri. Mr. Reed is a member of the American Bar
HERE] Association, the Association of Trial Lawyers of America, the
Missouri Association of Trial Lawyers, the Missouri Bar and
the Kansas City Metropolitan Bar Association. He served in the
Missouri General Assembly from 1972 until 1974. Mr. Reed has
been a director of the Company since 1991 and was first
elected to the Iowa Electric Light and Power Company board in
1967. Mr. Reed serves on the Executive Committee and chairs
the Nominating Committee.

HENRY ROYER, 63 1984

Mr. Royer has been President and Chief Executive Officer of
River City Bank in Sacramento, California since August 1994.
[PHOTO He served as Chairman of the Board and President of Firstar
APPEARS Bank of Cedar Rapids, N.A. from 1983 until 1994. Mr. Royer is
HERE] a director of CRST, Inc., a trucking company in Cedar Rapids,
Iowa and has served on numerous Cedar Rapids community
organization boards. He has been a director of the Company
since 1991 and was first elected to the board of Iowa Electric
Light and Power Company in 1984. Mr. Royer serves on the
Executive Committee and chairs the Compensation Committee.

ROBERT W. SCHLUTZ, 59 1989

Mr. Schlutz is President of Schlutz Enterprises, a diversified
farming and retailing business in Columbus Junction, Iowa. He
is a director of PM Agri-Nutritional Group Inc., an animal
[PHOTO health business, in St. Louis, Missouri and the Iowa
APPEARS Foundation for Agricultural Advancement. Mr. Schlutz is a Vice
HERE] President of the Iowa State Fair Board and a member of various
community organizations. He also served on the National
Advisory Council for the Kentucky Fried Chicken Corporation.
He is a past chairman of the Environmental Protection
Commission for the State of Iowa. Mr. Schlutz has been a
director of the Company since 1991 and was first elected to
the Iowa Southern Inc. board in 1989. Mr. Schlutz serves on
the Audit Committee.

ANTHONY R. WEILER, 58 1979

Mr. Weiler is Senior Vice President, Merchandising, for
Heilig-Meyers Company, a 650 store furniture retailer
headquartered in Richmond, Virginia. Mr. Weiler was previously
Chairman and Chief Executive Officer of Chittenden & Eastman
[PHOTO Company, a national manufacturer of mattresses in Burlington,
APPEARS Iowa. He was with Chittenden & Eastman from 1960 until 1995,
HERE] and held various management positions. Mr. Weiler is President
of the National Home Furnishings Association and a director of
the Retail Home Furnishings Foundation. He is a trustee of
NHFA Insurance and a past director of the Burlington Area
Development Corporation, the Burlington Area Chamber of
Commerce and various community organizations. Mr. Weiler has
been a director of the Company since 1991 and was first
elected to the Iowa Southern Utilities Company board in 1979.
Mr. Weiler serves on the Nominating Committee.

Except as otherwise noted, all nominees have served in their current positions
for five years or more as of the date of this proxy. All other information is
as of January 1, 1995. All nominees are also the current directors of IES
Utilities Inc. ("IES Utilities"), the principal subsidiary of IES Industries.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES.

SECURITY OWNERSHIP OF BENEFICIAL OWNERS

The IES Industries Board does not know of any person who beneficially owns 5%
or more of the outstanding Common Stock of the Company.

SECURITY OWNERSHIP OF MANAGEMENT

Set forth below is certain information with respect to beneficial ownership
of the Common Stock of the Company as of February 10, 1995 by each current
director and nominee for director, certain Executive Officers and by all
directors and listed Executive Officers of the Company as a group:

AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS
------------------------ ------------------------ ----------

C.R.S. Anderson...................... 19,000 .07%
J. Wayne Bevis....................... 500 (2)
Dr. George Daly...................... 2,000 (2)
Blake O. Fisher, Jr.................. 11,361 .04%
Dr. Robert J. Latham................. 13,024 .05%
G. Sharp Lannom, IV.................. 800 (2)
Lee Liu.............................. 25,620 .09%
Rene H. Males........................ 7,855 .03%
Jack R. Newman....................... 0 (2)
Robert D. Ray........................ 1,500 (2)
David Q. Reed........................ 4,002 .01%
Larry D. Root........................ 13,295 .05%
Henry Royer.......................... 1,657 (2)
Robert W. Schlutz.................... 1,331 (2)
Anthony R. Weiler.................... 2,496 (2)
All listed Executive Officers and
directors of the Company as a group
(15 persons)........................ 104,441 .36%

- --------
(1) Includes ownership of shares by family members even though beneficial
ownership of such shares may be disclaimed.

(2) Less than .01% of the Class (Common Stock).

OTHER TRANSACTIONS

The Company has a contract with Blue Cross and Blue Shield of Iowa, now known
as IASD Health Services Inc., for administration of its employee health
insurance plan, as it has for many prior years. In 1994, the Company paid
$294,660 to Blue Cross and Blue Shield of Iowa. As previously stated, Mr. Ray
is President and Chief Executive Officer of the insurance company.

FUNCTIONING OF THE BOARD OF DIRECTORS AND COMMITTEES

IES Industries' Board has an Executive Committee, an Audit Committee, a
Nominating Committee and a Compensation Committee.

Current members of the Executive Committee are Lee Liu, Chairman; C.R.S.
Anderson; David Q. Reed and Henry Royer. The current members served on this
Committee during 1994. The Committee met twice during 1994. It is empowered
with all of the authority vested in the IES Industries Board, subject to
certain limitations, and may act when the IES Industries Board is not in
session.

Current members of the Audit Committee are C.R.S. Anderson, Chairman; J.
Wayne Bevis; Robert D. Ray and Robert W. Schlutz. The current members served on
this Committee during 1994. The Committee met twice during 1994. The principal
functions of the Committee are to review IES Industries' internal audit
activities, including reviews of the internal control procedures; to oversee
the compliance process; to recommend to the IES Industries Board an independent
public accounting firm to be IES Industries' auditors; and to approve the audit
arrangements and audit results. Both the internal and independent auditors have
direct and independent access to the Audit Committee.

Current members of the Nominating Committee are David Q. Reed, Chairman; Lee
Liu; Robert D. Ray and Anthony R. Weiler. The current members served on this
Committee during 1994. The Committee met twice during 1994. Its principal
function is to review and recommend to the IES Industries Board nominees to
serve on the Board and its committees. While there are no formal procedures,
the Committee considers nominees brought to its attention by other members of
the IES Industries Board, members of management and Shareholders.

Current members of the Compensation Committee are Henry Royer, Chairman; Dr.
George Daly; G. Sharp Lannom, IV and Jack R. Newman. Dr. Salomon Levy was a
member of the Committee until May 17, 1994. Mr. Newman was appointed to the
Committee on August 2, 1994. The other current members served on this Committee
during 1994. The Committee met three times during 1994. The principal functions
of the committee are to review and make recommendations to the IES Industries
Board on the salaries and other compensation and benefits of the elected
officers of IES Industries and its subsidiaries, and to review and administer
incentive compensation or similar plans for officers and other key employees of
IES Industries and its subsidiaries. The report of the Compensation Committee
is included later in this Proxy Statement.

IES Industries Board met six times in 1994. The various committees of the
Board met an aggregate of nine times. All of the directors, except G. Sharp
Lannom, IV, attended 75% or more of these meetings. Mr. Lannom attended 83% of
the Board meetings and 33% of the Compensation Committee meetings.

COMPENSATION OF DIRECTORS

Non-employee directors of IES Industries receive fees of $12,000 per year
plus $700 per meeting attended. Non-employee directors also receive $700 per
committee meeting attended. If a Committee meeting is the same day as a meeting
of the Board of Directors or if a Committee meeting is by telephone conference,
each participating non-employee director receives $350, one-half the regular
Committee meeting fee. In addition, non-employee directors serving as chairman
of a committee receive an annual fee of $1,500 for serving in such capacity.
Directors who are officers do not receive any fees for attendance at Board
meetings or meetings of committees of which they are members. Robert F. Brewer
and Dr. Salomon Levy, who served as directors until May 17, 1994, will serve as
emeritus directors of the Company until May 16, 1995. As emeritus directors,
Mr. Brewer received meeting fee payments of $2,800 and Dr. Levy received
meeting fee payments of $700 in 1994.

Under the Director Retirement Plan, the Company provides a retirement or
death benefit to directors, including directors who are employees of the
Company, in an amount equal to 80% of the annual directors fee. Such amount is
payable annually, based upon length of service, to directors who have served at
least four years, with a maximum payment period of eight years. Mr. Brewer and
Dr. Levy each received payments of $8,000 under the Director Retirement Plan in
1994.

S. Levy, Incorporated, an engineering and management consulting firm of which
Dr. Salomon Levy, a director until May 17, 1994, is Chairman, performed
consulting services for IES Utilities in 1994 for which it was paid $205,398.
Dr. Levy has retired as Chief Executive Officer of S. Levy, Incorporated and
does not participate in the day to day management of the company. IES Utilities
has a service contract with S. Levy, Incorporated pursuant to which it supplied
these services and under which it will provide services in 1995. Dr. Salomon
Levy was appointed as the Nuclear Advisor to the Board of Directors on May 17,
1994 and was paid $2,824 in 1994 for his services as Nuclear Advisor. Dr. Levy
also serves on the IES Utilities Nuclear Safety Committee.

Director Jack R. Newman has served as nuclear legal counsel to the Company
since 1968. The law firm of which Mr. Newman is a Partner went through two
reorganizations in 1994. The law firm Newman & Holtzinger was paid $79,825; the
law firm Newman, Bouknight & Edgar was paid $326,250 for a total payment to Mr.
Newman's law firms for legal services in 1994 of $406,075. Mr. Newman's current
firm, Morgan, Lewis & Bockius, did not perform any legal services for the
Company in 1994, but is expected to provide legal services to the Company in
1995.

The Company makes available to members of the Board of Directors a business
travel accident insurance policy at an annual cost to the Company of $13 per
director. No director received any payments under such policy in 1994.

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

Under the supervision of the Compensation Committee of the Board of
Directors, IES Industries has implemented compensation practices intended to
enhance the performance of the Company and increase its value to all
shareholders. In order to provide information on current and future practices
of the Company, the Compensation Committee has furnished the following report
on executive compensation.

Compensation Philosophy

The Compensation Committee has devoted substantial attention to the
philosophy of IES Industries compensation. This philosophy is intended to
provide guiding principals for the future and is embodied in four primary
objectives:

1. To provide incentives based on value delivered to IES Industries'
Shareholders and customers.

2. To clearly link individual executive pay actions to performance.

3. To maintain a system of rewards that is structured competitively with
industry standards.

4. To attract, motivate and retain executives of the highest quality.

The most important performance yardstick in our compensation program is our
ability to deliver value to Shareholders through appreciation in share price,
payment of dividends and their future continuity. On an ongoing basis, the
Committee will test and refine the compensation program to ensure a high
correlation between the level of compensation and the return to Shareholders.
Achieving desirable Shareholder returns over a sustained period of time
requires management's attention to a number of financial and non-financial
strategic elements which enable us to focus on the current and long-term
requirements of the customer. Our compensation program, therefore, focuses
executives on actions that directly impact Shareholder return in the short- and
long-term and on providing service to our customers.

The Committee uses multiple sources of information to evaluate and establish
appropriate compensation practices. While using multiple sources, we rely on
data from a utility industry peer group of companies (as listed in the
Performance Graph on page 12) to assess IES Industries' relative performance
and compensation levels. Peer companies were selected by meeting multiple
criteria including revenue size, sources of revenue, geographic location,
markets served, and comparable operations. Consistent with our objectives, the
Committee will position its executives' total compensation target levels at the
median of this peer group of companies. The total compensation target levels
for the last fiscal year for the Chief Executive Officer and Executive Officers
in general were consistent with said policy. Annual executive total
compensation will fall below, at, or above the median depending on individual
and company performance.

IES Industries' executive compensation program has three components--base
salary, annual incentives and long-term incentives. The target mix of total
compensation for executives will be an approximate range of 50% to 75% base
salary and the remainder of 25% to 50% in the combined total of short- and
long-term incentives. The calculations for the short- and long-term incentive
awards for the Chief Executive Officer and the Executive Officers in general
are described later in this report. Furthermore, the Committee believes this
mix, while more variable than industry-wide practices, serves to send a clear
message to IES Industries' executives that performance directly governs pay.

The Committee strongly believes that incentive compensation should only be
awarded with commensurate performance. We have approved compensation plans
which include high threshold (minimum) levels of performance to ensure that
incentives are paid only when truly earned.

Description of Compensation Programs

The following text briefly describes the role of each element of
compensation.

Base Salary

Base salary will be at levels sufficient to attract and retain qualified
executives. Aggregate base salary increases are intended to parallel increases
in the pay levels of the utility industry as a whole. Individual executive
salary increases will reflect the individual's level of performance, current
position within salary range and utility industry trends.

Annual Incentive

IES Industries' executive annual incentive plan serves to recognize and
reward executives for taking actions that build the value of the Company,
generate competitive total returns to Shareholders, and minimize cost to the
Company's customers. The formula for annual incentive awards recognizes
operational and financial goals of significance to IES Industries and is based
on IES Industries' achievement of Earnings Per Share (EPS) versus a
predetermined target and a Cost to the Customer measure versus a peer group
cost target, along with the achievement of individual objectives. The criteria
for the annual incentive plan is reviewed prior to the beginning of a new
fiscal year. Payments are made based on corporate and individual performance
versus target, with an emphasis on corporate over individual.

For the 1994 fiscal year, this plan had various incentive levels with target
award opportunities ranging from 8% to 35% of base salary. Awards based on the
target criteria of EPS and Cost to the Customer measure could range between 0%
and 150% of the target incentive level, with adjustments for individual
performance. The corporate performance for 1994 based on the predetermined
financial and operational goals provided, in general, 140% of the target
incentive level with adjustments for individual considerations. The results of
this plan for the Chief Executive Officer and the Executive Officers in general
appear in this Proxy Statement.

Long-Term Incentives

IES Industries' current long-term incentive plan serves to reward executive
performance in successfully executing the long-term business strategy and
building shareholder value. The plan allows for the awarding of nonqualified
stock options, stock appreciation rights, restricted stock, and performance
units payable in cash or stock. The plan is more fully discussed in Proposal
Number 2 on page 13.

The performance criteria for the long-term incentive plan for fiscal years
1993 and 1994 include total return to shareholders versus the peer group (35%),
earnings growth versus three-year growth rates (35%) and team/individual
performance (30%).

Any awards to be made under the long-term incentive plan for 1994 performance
will be determined in May, 1995 and will be reported in the Company's next
Proxy Statement. Awards for 1993 performance were determined in May 1994 and
only shares of restricted stock were granted. The 1993 awards for the Chief
Executive Officer and the next highest paid Executive Officers are shown in the
Summary Compensation Table as 1993 compensation.

Compensation Administration

The Committee follows an annual cycle to administer each of the three
components of executive compensation. The integrity of our compensation program
relies on a rigorous, annual performance evaluation process. Moreover, the
Committee's evaluation process includes the use of outside consultants in order
to assure it has the best possible information and an objective approach to the
administration of compensation programs.

Discussion of Chief Executive Officer Pay

Consistent with the compensation philosophy, the Committee managed the Chief
Executive Officer's total compensation during 1994 based on the overall
performance of IES Industries and on relative levels of compensation for Chief
Executive Officers in the utility industry.

The Committee took the following 1994 compensation actions for the Chief
Executive Officer:

1. Set base salary at $340,000. Since Mr. Liu performed at a level which
warranted an 8% performance increase to base salary, the Compensation
Committee elected to increase his base salary to $340,000. Mr. Liu's base
salary for 1994 was based on the corporate policies for executive
compensation rather than his "Employment Agreement", which is described on
page 20.

2. Provided a cash incentive in 1995 of $161,798 based on 1994
performance. Mr. Liu's annual incentive target is 35% of base salary, which
represents a more variable approach than industry practices and is based on
the formula for annual incentive awards. The formula for performance in
1994 provided 137% of the target incentive.

3. Granted 5,670 Shares of restricted stock on June 1, 1994 at a market
price per share of $27.375. This grant represents a target award of
restricted stock as part of the compensation program. This grant vests at a
rate of 33% per year.

4. Granted 3,000 Shares of restricted stock on June 1, 1994 at a market
price per share of $27.375. To recognize Mr. Liu's contribution to IES
Industries, the Compensation Committee approved a supplemental grant of
3,000 restricted shares, which will remain restricted until he retires. To
recognize Mr. Liu's contribution to the Company, the Compensation Committee
authorized in 1990 a supplemental grant of restricted stock under the
Company's Long-Term Incentive Plan to be given over a five year period. The
supplemental grant of 3,000 restricted shares, which will remain restricted
until Mr. Liu retires, is the fifth annual grant pursuant to the 1990
decision. The number of shares granted in 1994 was based on financial
achievements and specific objectives.

The following table shows, for the fiscal years ending December 31, 1992-
1994, the cash compensation paid by the Company and its subsidiaries as well as
certain other compensation paid or accrued for those years, to the Chief
Executive Officer and to each of the four most highly compensated Executive
Officers of the Company and its subsidiaries:

SUMMARY COMPENSATION TABLE

LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------- ----------------
NAME AND PRINCIPAL RESTRICTED STOCK ALL OTHER
POSITION(1) YEAR SALARY BONUS(3) OTHER(4) AWARDS(5) COMPENSATION(6)
------------------ ---- -------- -------- -------- ---------------- ---------------

Lee Liu--Chairman of the
Board, 1994 $324,375 $161,798 $1,114 * $13,604
President & Chief 1993 307,450(2) 157,500 1,625 $237,341 10,571
Executive Officer 1992 298,600(2) 71,250 798 186,750 9,518
- ---------------------------------------------------------------------------------------------
Blake O. Fisher, Jr.-- 1994 210,060 88,800 160 * 7,138
Executive Vice
President & 1993 212,475(2) 81,974 720 74,049 4,392
Chief Financial Officer 1992 204,959(2) 50,000 386 32,868 3,070
- ---------------------------------------------------------------------------------------------
Larry D. Root-- 1994 197,765 70,935 483 * 7,820
Executive Vice
President 1993 200,694(2) 77,176 2,168 69,724 5,948
1992 194,069(2) 37,724 1,051 28,355 6,748
- ---------------------------------------------------------------------------------------------
Rene H. Males-- 1994 162,750 57,534 1,761 -- 4,910
Executive Vice
President 1993 179,024(2) 65,100 404 -- 25,817
1992 179,218(2) 22,800 94 -- 901
- ---------------------------------------------------------------------------------------------
Robert J. Latham-- 1994 133,269 31,204 561 * 4,202
Senior Vice President, 1993 112,582 31,984 1,864 19,518 2,789
Finance 1992 108,251 21,746 930 8,746 3,368

- --------
* The grants of restricted stock pursuant to the long-term incentive plan
for the 1994 plan year have not been determined as of the date of this
Proxy Statement. See footnote (5) below for a discussion of restricted
stock awards.
(1) Mr. Males is not an officer of the registrant, but is an officer of IES
Utilities Inc., a wholly-owned subsidiary of the registrant.
(2) The amounts reported as salary include director's fees and payments in lieu
of director's fees for each of Messrs. Liu, Fisher, Root and Males, of
$11,200 in 1993, and $13,600 in 1992.
(3) The Company does not pay bonuses. The amounts listed represent plan year
awards pursuant to the Management Incentive Compensation Plan, the
Company's annual incentive plan, with cash payment made in the subsequent
calendar year.
(4) The 1994 amounts shown as Other Annual compensation represent the earnings
for the Key Employee Deferred Compensation Plan in excess of 120% of the
applicable federal long-term rate provided under Section 1274(d) of the
Internal Revenue Code.
(5) The awards of restricted stock have been made on the first day of June
since 1988, with one-third of the award being restricted for one year, one-
third being restricted for two years and one-third being restricted for
three years. In addition, in December 1992 and June 1993, Mr. Liu received
grants of 4,000 shares, and in June 1994, Mr. Liu received a grant of 3,000
shares, all of which will vest at retirement. Restricted stock is
considered outstanding upon award date and dividends are paid to the
eligible officers on these shares while restricted. The amounts shown in
the table above represent the value of the awards based upon closing price
of IES Industries Common Stock on the award date. The award date is in the
calendar year following the plan year. At December 31, 1994, the listed
officers had restricted stock for which restrictions had not lapsed (based
upon the December 30, 1994 closing price of IES Industries Common Stock) as
follows:

SHARES VALUE
------ --------

Lee Liu................................................... 19,669 $496,642
Blake O. Fisher, Jr....................................... 3,709 93,652
Larry D. Root............................................. 3,654 92,264
Rene H. Males............................................. -- --
Robert J. Latham.......................................... 1,080 27,270

No stock options nor stock appreciation rights have been awarded to the
Executive Officers listed above.
(6) Amounts shown for 1994 represent: (a) contributions by the Company to the
applicable employee savings plan in the following amounts: Mr. Liu--$5,510,
Mr. Fisher--$4,999, Mr. Root--$4,700, Mr. Males--$3,323 and Dr. Latham--
$2,954; and (b) amounts included in W-2 earnings for life insurance
coverage in excess of $50,000 in the following amounts: Mr. Liu--$8,094,
Mr. Fisher--$2,139, Mr. Root--$3,120, Mr. Males--$1,587, and Dr. Latham--
$1,248.

The Committee is aware of the limitations the recent tax legislation has
placed on the tax deductibility of compensation in excess of $1 million which
is earned in any year by an Executive Officer. Currently none of the Executive
Officers has earned compensation subject to such limitations. Proposed
regulations are not yet in final form. The Committee will continue to monitor
developments in this area.

March 10, 1995

Compensation Committee

Henry Royer, Chair
Dr. George Daly

G. Sharp Lannom, IV
Jack R. Newman

PERFORMANCE GRAPH

The graph below compares the total return to Shareholders of IES Industries
Inc. versus that for the S&P 500 and IES Industries' peer group. Peer companies
were identified based on revenue size, sources of revenue, geographic location,
markets served and comparable operations. The following 18 companies comprise
IES Industries' peer group:

CIPSCO Inc. LG&E Energy Corp.
CILCORP Inc. MDU Resources Group, Inc.
DPL Inc. Midwest Resources Inc.
IPALCO Enterprises Inc. Minnesota Power and Light Company
Illinois Power Company Southwestern Public Service Company
Interstate Power Co. UtiliCorp United Inc.
Iowa-Illinois Gas and Electric Company WPL Holdings Inc.
KU Energy Corp. Wisconsin Energy Corporation
Kansas City Power and Light Company Wisconsin Public Service Corporation

IES INDUSTRIES INC.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN

[GRAPH APPEARS HERE]

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG [IES INDUSTRIES], S&P 500 INDEX AND PEER GROUP

Measurement Period [IES S&P
(Fiscal Year Covered) INDUSTRIES] 500 INDEX PEER GROUP
- ------------------- ----------- --------- ----------

Measurement Pt-
12/31/89 $100.00 $100.00 $100.00
FYE 12/31/90 $108.92 $ 96.90 $102.00
FYE 12/31/91 $128.38 $126.52 $136.87
FYE 12/31/92 $148.87 $136.24 $147.01
FYE 12/31/93 $168.30 $149.84 $166.22
FYE 12/31/94 $147.30 $147.53 $153.47

Total returns for each peer company were determined in accordance with the
Securities and Exchange Commission regulations, i.e. weighted according to each
company's stock market capitalization.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mr. Royer, Chairman of the Company's Compensation Committee, was Chairman of
the Board and President of Firstar Bank of Cedar Rapids, N.A. until August,
1994. Mr. Liu, Chairman of the Board, President & Chief Executive Officer,
served as a director of Firstar Bank of Cedar Rapids, N.A., until January,
1994. Mr. Liu was not a member of the Company's Compensation Committee. Firstar
Bank does not have a Compensation Committee.

PROPOSAL NUMBER 2--TO AMEND THE IE INDUSTRIES INC.
LONG-TERM INCENTIVE PLAN OF 1987

Long-Term Incentive Plan: At the Annual Meeting on May 19, 1987, the
shareholders approved the IE Industries Inc. Long-Term Incentive Plan of 1987
(the "1987 Plan"), a ten year incentive plan for officers and key employees of
the Company and its subsidiaries. The 1987 Plan expires on December 31, 1996.
The Board of Directors believes that it has served an important function and
should be renamed and continued for another ten years. The Board of Directors
believes that the Company's earning performance and growth is dependent upon
ensuring the best possible management. The Board further believes that the
continuation of the 1987 Plan will be an important aid to the Company in its
future acquisitions and diversification as well as in recruiting and retaining
individuals of outstanding abilities and in motivating their maximum efforts on
behalf of the Company.

If the proposal is approved, the 1987 Plan will be renamed the IES Industries
Inc. Long-Term Incentive Plan (the "IES Plan") and will be extended for a ten
year period commencing January 1, 1997. There are no other material changes to
the 1987 Plan. The major features of the IES Plan are the same as the 1987
Plan: nonqualified stock options; limited stock appreciation rights;
performance units payable in whole or in part in the Company's Common Stock
and/or cash and restricted stock. A summary of the principal provisions of the
IES Plan is set forth below. This summary is qualified by reference to the full
text of the IES Plan, which is annexed as Exhibit A to this Proxy Statement.

Administration

The IES Plan will continue to be administered by the Compensation Committee
of the Board of Directors (the "Committee"), which consists of four non-
employee directors. The Committee, within the terms of the IES Plan,
establishes the eligibility of participants and the conditions of grants, and
may accelerate payments and vesting of grants.

Eligibility

The Committee, in its discretion, will select the participants in the IES
Plan from among those key employees of the Company and its subsidiaries who, in
the opinion of the Committee, are in a position to make the most significant
contributions to the continued growth, development, and success of the Company
or any of its subsidiaries. Since it is within the discretion of the Committee
to determine which employees receive awards and the amount and type of award
received, it is not possible at the present time to determine the number of
individuals to whom awards will be made under the IES Plan, or the amounts of
the awards. The Executive Officers of the Company named in the table under the
caption "Summary Compensation Table" herein are among the officers who are
presently eligible to receive awards under the 1987 Plan. In order to respond
to external conditions and provide the Committee flexibility in granting
awards, participants will be eligible to receive in the same year any
combination of awards authorized.

Shares Available

The 1987 Plan provided that the aggregate number of shares of the Company's
Common Stock which may be subject to awards may not exceed 600,000. As of the
date of this Proxy Statement, 478,937 shares of

the Company's Common Stock remain authorized and unissued under the 1987 Plan.
The Company's Common Stock delivered under the IES Plan may be authorized and
unissued shares, or, at the discretion of the Committee, may be purchased on
the open market.

Nonqualified Stock Options

The IES Plan provides that options granted thereunder may be options which do
not qualify as Incentive Stock Options as defined in the Internal Revenue Code
("nonqualified options"), and permits the Committee to determine the number of
shares subject to each stock option and the manner and time of exercise. No
options will be exercisable more than 10 years after date of grant. The option
price per share will not be less than the fair market value (as defined in the
IES Plan) of a share of the Company's Common Stock on the date granted and will
be payable in cash and/or shares of the Company's Common Stock. Options will be
evidenced by stock option agreements in a form approved by the Committee.

The IES Plan sets forth conditions for exercise of options under certain
circumstances upon or after termination of employment or in the event of the
death, disability, retirement or termination associated with a change in
control of the Company. Stock options are nontransferable except by will or in
accordance with applicable laws of descent and distribution. The granting of an
option does not accord the employee the rights of a shareholder, and such
rights accrue only after exercise and registration of shares in the employee's
name.

Limited Stock Appreciation Rights

The Committee may, in its discretion, also grant limited stock appreciation
rights with an exercise price equal to the fair market value of a share of the
Company's Common Stock on the date a grant is made and which, upon a change of
control of the Company, as defined in the IES Plan, will be surrendered
automatically in exchange for cash equal in value to the excess of the fair
market value of the Company's Common Stock over the exercise price at the time
of such surrender.

Performance Units

The Committee may grant performance unit awards which are to be credited to a
performance unit account maintained for each participant. The Committee shall
define the value of such performance units at the time of award or the time of
payment. The Committee may determine such values for each performance period.
Payments to holders of performance units shall be made at the end of each of
the performance periods and shall be paid in cash, stock, restricted stock, or
any combination thereof as the Committee shall determine. Performance units
will be earned only to the extent that the Company has achieved predetermined
performance objectives which measure the Company's success and the respective
participants have remained in the employ of the Company throughout the award
period. The award of performance units will not entitle the participant to any
ownership, dividend, voting, or other rights of a stockholder until
distribution is made in the form of shares of the Company's Common Stock.

The IES Plan sets forth conditions for the acceleration in payment of, or the
forfeiture of, performance units under certain circumstances for termination of
employment or upon or after death or in the event of the disability, retirement
or termination of the participant associated with the change of control of the
Company. The granting of performance unit awards will not entitle the
participant to any ownership, dividend, voting or other rights of a stockholder
until payment is made in the form of unrestricted shares of the Company's
Common Stock.

Restricted Stock

The Committee may award to selected employees shares of the Company's Common
Stock which are subject to certain restrictions. Common Stock awarded pursuant
to such a restricted stock award is represented by a stock certificate in the
name of the employee. Such employee is entitled to vote the restricted

stock and to exercise shareholder rights, including the right to receive all
dividends or other distribution paid or made with respect to the restricted
stock except that (1) the Company may retain custody of the stock certificate
during the restriction period and (2) the employee may not sell, transfer,
pledge, exchange, hypothecate or otherwise dispose of the stock during the
restriction period except by will or in accordance with applicable laws of
descent and distribution. Noncompliance with any of the restrictions will
result in forfeiture of the restricted stock. If the employee has satisfied all
of the conditions of the restricted stock award established by the Committee,
the Company will deliver at the end of the restriction period the stock
certificate representing the shares with no restriction.

The IES Plan sets forth conditions for waiver of restrictions with respect to
the restricted stock awards under certain circumstances upon termination of
employment or upon or after death or in the event of disability, retirement, or
termination associated with the change of control of the Company.

Federal Tax Consequences

No taxable income will be realized by an optionee upon the grant of a
nonqualified option. Upon exercise of a nonqualified option the employee will
realize ordinary income in an amount measured by the excess of the fair market
value of the shares on the date of exercise over the option price, and the
Company will be entitled to a corresponding deduction.

An employee who has been granted the right to exercise a limited stock
appreciation right will not realize taxable income at the time of the grant,
and the Company will not be entitled to a deduction at that time. However,
shares or cash delivered upon exercise of such right will be taxable as
ordinary income to the employee, and the Company will be entitled to a
corresponding deduction.

An employee who has been granted a performance unit award will not realize
taxable income at the time of grant, and the Company will not be entitled to a
deduction at that time. Whether a performance unit is paid in cash or shares,
the employee will have ordinary income and the Company will have a
corresponding deduction. The measure of such income and deduction will be the
cash and the fair market value of the shares at the time the performance units
awarded are paid out.

An employee receiving restricted stock pays tax when the restrictions lapse.
At the time the restrictions lapse, the value of the award for tax purposes is
the fair market value of the shares at that time. This value is taxed as
ordinary income. The Company receives a tax deduction at the same time and for
the same amount taxable to the employee. With regard to dividends in cash and
stock, as long as the stock is restricted, the Company will be entitled to a
deduction for compensation at the time they are paid for such cash dividends
and the value of such stock dividends received by the employee, and the
employee will have taxable compensation income at that time in a corresponding
amount.

Amendment and Termination

The Board of Directors of the Company may terminate the IES Plan at any time
or, with the consent of an individual participant, cancel, reduce or alter the
number of outstanding awards thereunder. The Board may amend or suspend or, if
suspended, reinstate, the IES Plan in whole or in part, provided, however, that
without further shareholder approval, the Board shall not (1) increase the
maximum number of shares authorized for awards, (2) increase the period during
which awards may be granted or (3) modify materially the requirement as to
eligibility for participation in the IES Plan.

Vote required

Amendment of the 1987 Plan requires approval by the holders of a majority of
the outstanding shares of Common Stock of the Company entitled to vote.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" AMENDING THE LONG-TERM
INCENTIVE PLAN AS SET FORTH IN PROPOSAL 2.

IES INDUSTRIES PLANS

IES Industries Pension Plans: IES Industries, IES Utilities and the Cedar
Rapids and Iowa City Railway Company have non-contributory retirement plans
covering employees who have at least one year of accredited service. Directors
who are not officers do not participate in the plans. Maximum annual benefits
payable at age 65 to participants who retire at age 65, calculated on the basis
of straight life annuity, are illustrated in the following table:

PENSION PLAN TABLE

AVERAGE OF HIGHEST ANNUAL ESTIMATED MAXIMUM ANNUAL RETIREMENT
SALARY (RENUMERATION) BENEFITS BASED ON SERVICE YEARS
FOR 3 CONSECUTIVE -----------------------------------------------------
YEARS OF THE LAST 10 15 20 25 30 35
- ------------------------- ------ ------ ------ ------ -------

125,000 26,307 35,076 43,846 52,615 61,384
150,000 31,932 42,576 53,221 63,865 74,509
175,000 37,182 49,701 62,221 74,740 87,259
200,000 42,432 56,826 71,221 85,615 100,009
225,000 47,682 63,951 80,221 96,490 112,759
250,000 48,516 65,084 81,651 98,218 114,785
300,000 48,516 65,084 81,651 98,218 114,785
400,000 48,516 65,084 81,651 98,218 114,785
450,000 48,516 65,084 81,651 98,218 114,785
500,000 48,516 65,084 81,651 98,218 114,785

For 1994, $118,800 is the maximum benefits allowable under the retirement
plans prescribed by Section 415 of the Internal Revenue Code. The 1995 maximum
is $120,000.

With respect to the officers named in the Summary Compensation Table, the
renumeration for retirement plan purposes would be substantially the same as
that shown as "Salary". As of December 31, 1994, the officers had accredited
years of service for the retirement plan as follows: Lee Liu, 37 years; Blake
O. Fisher, Jr., 4 years; Larry D. Root, 24 years; and Robert J. Latham, 11
years.

Supplemental Retirement Plans: IES Industries has a non-qualified
Supplemental Retirement Plan ("SRP") for eligible officers of IES Industries
and IES Utilities which includes Messrs. Fisher & Latham. The plan provides for
payment of supplemental retirement benefits equal to 69% of the officer's base
salary in effect at the date of retirement, reduced by benefits receivable
under the qualified retirement plan, for a period not to exceed 18 years
following the date of retirement. In the event of the death of the officer
following retirement, similar payments reduced by the joint and survivor
annuity of the qualified retirement plan will be made to his designated
beneficiary (surviving spouse or dependent children), if any, for a period not
to exceed 12 years from the date of the officer's retirement. Thus, if an
officer died 12 years after retirement, no payment to the beneficiary would be
made. Death benefits are provided on the same basis to a designated beneficiary
for a period not to exceed 12 years from the date of death should the officer
die prior to retirement. The Supplemental Retirement Plan further provides that
if, at the time of the death of an officer, the officer is entitled to receive,
is receiving, or has received supplemental retirement benefits by virtue of
having taken retirement, a death benefit shall be paid to the officer's
designated beneficiary or to the officer's estate in an amount equal to 100% of
the officer's annual salary in effect at the date of retirement. Under certain
circumstances, an officer who takes early retirement will be entitled to
reduced benefits under the Supplemental Retirement Plan. The Supplemental
Retirement Plan also provides for benefits in the event an officer becomes
disabled under the terms of the qualified retirement plan. IES Industries has
purchased life insurance on the participants sufficient in amount to finance
actuarially all of its future liabilities under the Supplemental Retirement
Plan and IES Industries is the owner and beneficiary of all such life
insurance. The Supplemental Retirement Plan has been designed so that if the
assumptions made as to mortality, experience, policy dividends, tax credits and
other factors are realized, IES Industries will fully recover all of its
premium payments over the life of the Supplemental Retirement Plan.

The following table shows the estimated aggregate annual benefits payable
under the Supplemental Retirement Plan equal to 69% of the officer's base
salary in effect at the date of retirement:

IES INDUSTRIES INC.

SUPPLEMENTAL RETIREMENT PLAN PAYMENTS
69% SRP BENEFIT

SERVICE YEARS
FINAL ANNUAL ---------------------------------------------------------------------------
SALARY 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------

125,000 59,943 51,174 42,404 33,635 24,866
150,000 71,568 60,924 50,279 39,635 28,991
175,000 83,568 71,049 58,529 46,010 33,491
200,000 95,568 81,174 66,779 52,385 37,991
225,000 107,568 91,299 75,029 58,760 42,491
250,000 123,984 107,416 90,849 74,282 57,715
300,000 158,484 141,916 125,349 108,782 92,215
400,000 227,484 210,916 194,349 177,782 161,215
450,000 261,984 245,416 228,849 212,282 195,715
500,000 296,484 279,916 263,349 246,782 230,215

Messrs. Liu and Root have elected to continue under supplemental retirement
agreements previously provided to them by the Company with provisions for
payment of benefits equal to 75% of the officer's base salary, for a period not
to exceed 15 years following the date of retirement, and payment to the
surviving spouse or dependent children for a period not to exceed 10 years
following the date of retirement. The remaining provisions of these agreements
are identical to the Supplemental Retirement Plan discussed above.

The following table shows the estimated aggregate annual benefits payable
under the Supplemental Retirement Plan equal to 75% of the officer's base
salary in effect at the date of retirement:

IES INDUSTRIES INC.

SUPPLEMENTAL RETIREMENT PLAN PAYMENTS
75% SRP BENEFIT

SERVICE YEARS
FINAL ANNUAL ---------------------------------------------------------------------------
SALARY 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------

125,000 67,443 58,674 49,904 41,135 32,366
150,000 80,568 69,924 59,279 48,635 37,991
175,000 94,068 81,549 69,029 56,510 43,991
200,000 107,568 93,174 78,779 64,385 49,991
225,000 121,068 104,799 88,529 72,260 55,991
250,000 138,984 122,416 105,849 89,282 72,715
300,000 176,484 159,916 143,349 126,782 110,215
400,000 251,484 234,916 218,349 201,782 185,215
450,000 288,984 272,416 255,849 239,282 222,715
500,000 326,484 309,916 293,349 276,782 260,215

Mr. Males has elected to continue under a supplemental retirement agreement
previously provided to him by IS Utilities with provisions for payment of
benefits equal to 65% of base salary for life, subject to consumer price index
adjustment, and payments to survivors after death of the officer for a period
not to exceed 15 years following the date of retirement.

The following table shows the estimated aggregate annual benefits payable
under the Supplemental Retirement Plan equal to 65% of the officer's base
salary in effect at the date of retirement:

IES INDUSTRIES INC.

SUPPLEMENTAL RETIREMENT PLAN PAYMENTS
65% SRP BENEFIT

SERVICE YEARS
FINAL ANNUAL ---------------------------------------------------------------------------
SALARY 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------

125,000 54,943 46,174 37,404 28,635 19,866
150,000 65,568 54,924 44,279 33,635 22,991
175,000 76,568 64,049 51,529 39,010 26,491
200,000 87,568 73,174 58,779 44,385 29,991
225,000 98,568 82,299 66,029 49,760 33,491
250,000 113,984 97,416 80,849 64,282 47,715
300,000 146,484 129,916 113,349 96,782 80,215
400,000 211,484 194,916 178,349 161,782 145,215
450,000 243,984 227,416 210,849 194,282 177,715
500,000 276,484 259,916 243,349 226,782 210,215

Executive Guaranty Plan: IES Industries Board has approved an Executive
Guaranty Plan (the "Guaranty Plan") for officers of IES Industries and its
principal subsidiary, IES Utilities. The purpose of the Guaranty Plan is to
promote flexibility in financial planning of participating officers and to
provide an inducement to new officers in order to retain and attract the best
possible executive management team. Under the Guaranty Plan, IES Industries
guarantees loans within defined limits, based on salary level and years of
service made to participating officers for various specified purposes,
including real estate acquisitions and purchases of IES Industries Common
Stock. As of December 31, 1994, guarantees of $82,891, $53,060 and $50,000,
were outstanding for Messrs. Liu, Root and Fisher, respectively.

Executive Change of Control Agreements: In 1991, IE Industries entered into
certain agreements with eleven of its Executive Officers, including Messrs.
Liu, Root, Fisher and Latham. IE Industries' merger with Iowa Southern
constituted a change of control of IE Industries for purposes of these
agreements. Accordingly, if an Executive Officer was terminated within a three-
year period following the consummation of the merger, July 1, 1991, the
surviving corporation (IES Industries) would have been required to continue the
Executive Officer's salary and provide certain other benefits as described
below. No Executive Officer was terminated during this three year period. These
agreements were updated in 1994 for Messrs. Root, Fisher and Latham and the
other executive officers to coordinate these agreements with the Supplemental
Retirement Plan. In addition, the Company entered into agreements with three
additional executive officers. The 1991 agreement for Mr. Liu is still in
effect. These agreements provide for salary continuation and certain other
benefits in the event the executive is terminated within a three-year period
following a "change of control" of IES Industries. Change of Control for these
agreements is as described in IES Industries Restated Articles of Incorporation
and, in addition, will be deemed to have occurred, if following a merger,
consolidation or reorganization, the owners of the capital stock entitled to
vote in the election of directors of IES Industries prior to the transactions
own less than 75% of the resulting entity's voting stock or during any period
of two consecutive years, individuals who, at the beginning of such period
constitute the Board of Directors of the parent company, cease for any reason
to constitute at least a majority of the Board of Directors of any successor
organization. IES Industries, following termination of any officer except for
just cause, death, retirement, disability or voluntary resignation (other than
resignation under certain circumstances), agrees to continue the executive's
salary at a level equal to his salary just prior to termination for a period up
to but not to exceed thirty-six months. Additionally, certain benefits,
including life insurance and health and medical insurance, as well as incentive
awards, equal to that awarded executives of the same or comparable designation
will be payable for a like period. In the event the executive dies during the
period of these payments, salary and benefits as described above shall be
payable during the remainder of the term to the

executive's surviving spouse or his estate. The executive will also become
immediately vested and entitled to receive awards of Restricted Stock or other
rights granted to the executive under the IES Industries Long-Term Incentive
Plan. With respect to those executives who were 56 or older at the time of the
change of control, the Supplemental Retirement Plan of IES Industries is
specifically amended to provide that the executive is immediately vested and
entitled to receive, at normal retirement age, benefits provided under the
Supplemental Retirement Plan, including benefits payable to the spouse or
dependent child in the event of his death during the period to which he was
otherwise entitled to such benefits.

IES Industries believes that these agreements enable IES Industries to employ
key executives who can approach major business decisions objectively and
without concern for their personal situations. Each agreement signed in 1991
was effective for three years following execution and is deemed thereafter to
be extended automatically for one-year periods unless the IES Industries Board
terminates such agreement. The 1994 agreements are effective for one year
following execution and are deemed thereafter to be extended automatically for
one-year periods unless the IES Industries Board terminates such agreements.

IS UTILITIES PLANS

IS Utilities Pension Plan: IS Utilities provided a contributory pension plan
which covered substantially all non-collective bargaining employees who have
completed the minimum eligibility requirements of 1,000 hours in a year. The
plan was amended effective January 1, 1991 to be non-contributory. As of
December 31, 1994, Mr. Males has four years of accredited service under the
Pension Plan. Participants contributed one percent of annual compensation to
the Pension Plan through 1990.

The following table shows the estimated aggregate annual benefits payable
under the IS Utilities Pension Plan. Maximum annual benefits payable at age 65
to participants who retire at age 65, calculated on the basis of straight life
annuity, are illustrated in the following table:

PENSION PLAN TABLE

AVERAGE OF HIGHEST ANNUAL ESTIMATED MAXIMUM ANNUAL RETIREMENT
SALARY (REMUNERATION) BENEFITS BASED ON SERVICE YEARS
FOR 3 CONSECUTIVE -----------------------------------------------------
YEARS OF THE LAST 10 15 20 25 30 35
- ------------------------- ------ ------ ------ ------ -------

For 1994, $118,800 is the maximum benefits allowable under the retirement
plans prescribed by Section 415 of the Internal Revenue Code. The 1995 maximum
is $120,000.

IS Utilities Senior Executive Severance Agreements: Individual agreements
providing for severance pay were entered into by IS Utilities and four senior
executives, including Mr. Males. The benefits to be provided were generally as
follows: a lump sum payment equal to the executives' salary for a payment
period equal to the greater of 24 months, or one month multiplied by years of
service with a limit of 30 months. Mr. Males's agreement provides for the
greater of 24 months or the period between the date his employment terminates
and January 28, 1996. In addition, each covered senior executive was entitled
to continuation of life and health insurance coverage during the payment period
and reimbursement of certain other expenses. No senior executive was terminated
under these agreements. The only agreement still in effect is with Mr. Males.

An individual will be deemed to be involuntarily terminated for reasons other
than cause if he resigns after (A) a significant change in the nature or scope
of the individual's authorities or duties from those commensurate with his
position and authority immediately prior to the change in control; (B) a
material adverse change in the individual's compensation or any of his
benefits, in the aggregate, compared to his compensation and benefits, in the
aggregate, immediately prior to the change in control; (C) the relocation of
his office to a location more than 50 miles from the location of his office
immediately prior to the change in control; or (D) the failure by IS Utilities
to obtain a satisfactory agreement from any successor to assume and agree to
perform the severance benefit agreement. In addition, an individual will be
deemed to be involuntarily terminated for reasons other than cause if he
resigns after a reasonable determination by him that, as a result of a change
in control and in circumstances thereafter, he is unable to exercise the
authorities, powers, functions or duties associated with his position and
contemplated by the agreement.

EMPLOYMENT AGREEMENTS

IE Industries Inc. and Iowa Electric Light and Power Company, the predecessor
companies of IES Industries and IES Utilities Inc., entered into an employment
agreement (the "Liu Agreement") with Lee Liu, which became effective July 1,
1991. The Liu Agreement provides that Mr. Liu shall be employed as President,
Chief Executive Officer and Chairman of the Executive Committee of IES
Industries and as Chief Executive Officer and Chairman of IES Utilities from
July 1, 1991 until April 1995, which period shall be automatically extended
unless at least six months prior to any expiration thereof either IES
Industries or IES Utilities or Mr. Liu shall give notice that they do not wish
to extend such time (the "Period of Employment"). To date, neither party has
given such notice. The Liu Agreement also provides that he shall become
Chairman of the Board at such time as C.R.S. Anderson ceases to serve in such
position. This occurred on July 1, 1993. The Liu Agreement provides that Mr.
Liu shall provide consulting services to the Company for three years (the
"Period of Consulting") after the conclusion of the Period of Employment.

During the Period of Employment, Mr. Liu will be paid a base annual salary of
at least $275,000, and will be entitled to participate in all incentive
compensation plans applicable to the positions he holds and all retirement and
employee welfare benefit plans. During the Period of Employment, Mr. Liu's
incentive compensation shall be at least equal to that paid to the Chairman of
the Board of IES Industries.

If Mr. Liu's employment is terminated without his consent by IES Industries
or IES Utilities during the Period of Employment for other than an unremedied
material breach or just cause or by his resignation if such resignation occurs
after IES Industries fails to cause him to be employed in or elected to the
positions specified in the Liu Agreement or after a material diminution in his
duties, responsibilities or status, then Mr. Liu shall be entitled to an amount
equal to the sum of his base annual salary as of the date of termination plus
his average incentive compensation during the three years immediately preceding
the date of termination multiplied by the number of years (and fractions
thereof) then remaining in the Period of Employment. Mr. Liu also would be
entitled to continued insurance coverages and an amount equal to the then
present value of the actuarially determined difference between the aggregate
retirement benefits actually to be received by him as of the date of
termination and those that would have been received by him had he continued to
be employed at the base salary in effect at termination through the expiration
of the Period of Employment. All his shares of IES Restricted Stock would also
vest at that time.

During the Period of Consulting, Mr. Liu will make himself available for up
to 30 days per year, report to the Chief Executive Officer of IES Industries
and will earn an annual consulting fee equal to 13.33% of his highest annual
base salary during his Period of Employment. If Mr. Liu's consulting services
are terminated for reasons other than material breach or just cause, he will be
entitled to a lump sum payment equal to the amount of the consulting fee he
would otherwise have earned during the Period of Consulting.

CERTAIN SEC FILINGS

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than 10% of the registered
class of the Company's equity securities to file reports of

ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Such officers, directors and Shareholders are required by SEC
regulations to furnish the Company with copies of all such reports that they
file.

Based solely on a review of copies of reports filed with the SEC with respect
to 1994 transactions and of written representations by certain officers and
directors, all persons subject to the reporting requirements of Section 16(a)
filed the required reports on a timely basis.

INDEPENDENT PUBLIC ACCOUNTANTS

The Audit Committee recommended and the Board of Directors authorized the
engagement of Arthur Andersen LLP as auditors for IES Industries and its
subsidiaries for 1995. They have served as IES Industries' auditors for 1994
and for many prior years. The Board believes that because of the Audit
Committee's direct and independent access to both the internal and independent
auditors and the Audit Committee's overall responsibility for audit results and
supervision of the auditors, the Audit Committee is best suited to select the
independent auditor and approve audit arrangements. A representative of Arthur
Andersen LLP will be in attendance at the Annual Meeting and will be available
to respond to appropriate questions and to make a statement if he desires to do
so.

SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING

Shareholder proposals for the 1996 Annual Meeting of IES Industries must be
received at the offices of IES Industries no later than the close of business
on November 21, 1995, for inclusion in the 1996 Proxy Statement and form of
proxy.

GENERAL

A copy of the Annual Report of IES Industries, including financial statements
for the fiscal year ended December 31, 1994, has been included in this mailing
to Shareholders with this Proxy Statement.

A copy of the Company's Annual Report on Form 10-K (excluding exhibits) for
the year ended December 31, 1994, which is required to be filed with the
Securities and Exchange Commission, will be made available to stockholders to
whom this Proxy Statement is mailed, without charge, upon written request to
the office of the Director, Shareholder Services, IES Industries Inc., 200
First Street S.E., Cedar Rapids, Iowa 52401.

By Order of the Board of Directors

[LOGO OF SIGNATURE OF STEPHEN W. SOUTHWICK]

Stephen W. Southwick
Secretary

Cedar Rapids, Iowa
March 20, 1995

EXHIBIT A

IES INDUSTRIES INC.

LONG-TERM INCENTIVE PLAN

1. PURPOSE

The purposes of the IES Industries Inc. Long-Term Incentive Plan ("Plan)
are to:

a. Provide incentives to key employees to perform in the best interests
of the Company, its customers and its shareholders.

b. Encourage key employees to increase their proprietary interest in IES
Industries Inc. and thereby in their interest in the success of the Company
and its shareholders.

c. Provide a means of attracting and retaining a high quality of
employees.

To meet these purposes the Plan provides for the granting of nonqualified
Stock Options, Stock Limited Stock Appreciation Rights and Performance Units,
or any combination thereof.

2. DEFINITIONS

The following definitions shall be applicable throughout the Plan:

a. "Award" means award granted to any Key Employee in accordance with the
provisions of the Plan in the form of Nonqualified Stock Options,
Restricted Stock, Performance Units, Limited Stock Appreciation Rights or
any combination thereof.

b. "Award Agreement" means the written agreement evidencing each award
granted to a Key Employee under the Plan.

c. "Board" means the Board of Directors of the Company.

d. "Change of Control" means the occurrence of the event defined in
Section 11.

e. "Committee" means the Compensation Committee of the Board or any such
other committee as may be designated by the Board to administer the Plan,
the membership of such committee as may be designated by the Board to
administer the Plan, the membership of such committee not being less than
three members of the Board, all of whom are disinterested persons as
defined by Section 16(b) of the Securities Exchange Act of 1934 and Rules
thereunder.

f. "Company" means IES Industries Inc. and any subsidiary thereof unless
otherwise stated to mean only IES Industries Inc., or only one of the
subsidiaries of IES Industries Inc.

g. "Date of Grant" means the actual date that Awards granted under the
Plan are approved by the committee.

h. "Disability" means total disability as defined in the Company's long-
term disability plan.

i. "Fair Market Value" means, as of any date, the composite closing price
for one share of Stock on the New York Stock Exchange, or, if no sales of
Stock have taken place on such date, the composite closing price on the
most recent date on which selling prices were quoted, the determination to
be made in the discretion of the Committee.

j. "Key Employee" means an employee (including any officer or director
who is also an employee) of the Company who, in the judgment of the
Committee, functions in a capacity which can considerably impact Company
performances.

k. "Limited Stock Appreciation Right" means a Stock appreciation right
which shall become exercisable automatically upon the occurrence of a
Change of Control as described in Section 11 of the Plan.

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l. "Option" means a nonqualified stock option awarded under Section 7 of
the Plan.

m. "Performance Unit" means a performance unit awarded under Section 9 of
the Plan.

n. "Performance Objective" shall mean the performance criteria or
combination of factors as determined by the Committee under Section 9.

o. "Plan" means the IES Industries Inc. Long-Term Incentive Plan.

p. "Restricted Stock" means Stock awarded under Section 8 of the Plan
subject to such restrictions as the Committee deems appropriate.

q. "Retirement" means normal or early retirement from the Company as
defined in the Company's retirement plan.

r. "Stock" means the common stock of IES Industries Inc.

3. ADMINISTRATION

The Plan shall be administered by the Committee. No member of the Committee
shall be eligible to receive an Award under the Plan, or awards or grants under
any other stock benefit plan of the Company or its affiliates or shall have
been eligible to receive an Award under the Plan or any other stock benefit
plan of the Company or its affiliates at any time within one year immediately
preceding the member's appointment to the Committee. Subject to the provisions
of the Plan, the Committee shall have exclusive power to:

a. Select employees to participate in the Plan.

b. Determine the amount and type of Awards to be made.

c. Determine the time(s) when Awards will be made and the times and
conditions to which payment of Awards may be subject.

The Committee shall have full power, discretion and authority to interpret,
construe and administer the Plan. The Committee's decisions regarding Awards
need not be uniform and may be made selectively among Key Employees. The
Committee's interpretation of the Plan or any Awards granted under the Plan and
all decisions and determinations by the Committee with respect to the Plan
shall be final, binding and conclusive on all parties.

4. SHARES SUBJECT TO THE PLAN

The aggregate of shares of Stock which may be awarded under the Plan or
subject to purchase by exercising Options shall not exceed 600,000 shares. Such
shares of Stock shall be authorized and unissued shares, Treasury shares or
shares purchased on the open market or by private purchase at prices no higher
than the Fair Market Value at the time of purchase. If, for any reason, any
shares of Stock awarded or subject to purchase by exercising an Option under
the Plan are not delivered or are reacquired by IES Industries Inc. for reasons
including, but not limited to, a forfeiture of Restricted Stock or termination,
expiration, or cancellation of an Option, such shares of Stock shall again
become available for Award under the Plan.

5. EFFECTIVE DATE AND TERM OF THE PLAN

The 1987 Plan went into effect on January 1, 1987 and expires on December 31,
1996. Subject to the approval of the amendment of this Plan by a majority of
the Shareholders of the Company at the 1995 Annual Meeting of Shareholders, the
Plan shall continue to be in effect as of January 1, 1997 and will expire on
December 31, 2006. Subject to the provisions of Section 13, Awards may be made
as provided herein for a period of ten years. The Plan shall continue in effect
until all matters relating to the payment of Awards and administration of the
Plan have been settled.

6. GRANT OF AWARDS

Each Award granted under the Plan shall be evidenced by a written Award
Agreement. Such agreement shall be subject to and incorporate the express terms
and conditions, if any, required under the Plan or required by the Committee.

A-2

7. STOCK OPTIONS

The Committee shall authorize the granting of one or more options to any Key
Employee. Each Option granted shall be subject to the following conditions:

a. Option Term: The Option awarded may be exercised at such times and
subject to such conditions as determined by the Committee; provided,
however, that no Option shall be exercisable after ten years from the Date
of Grant.

b. Option Price: The Option price per share shall be determined by the
Committee at the time such Option is awarded and shall not be less than the
Fair Market Value of one share of Stock on the Date of Grant.

c. Exercise: The purchase price of the shares of stock as to which an
Option shall be exercised shall be paid to the Company at the time of
exercise either in cash or Stock already owned having a total Fair Market
Value equal to the option price at the time the Option is exercised.

d. Termination: In the event that a Key Employee to whom an Option has
been awarded terminated employment for any reason other than death,
Disability, Retirement, or a termination associated with a Change of
Control as described in Section 11, such Option shall be canceled
coincident with the effective date of termination. In the event that a Key
Employee to whom an Option has been awarded terminates by reason of death,
Disability or Retirement, such Option may be exercised for a period of one
year after the date of termination; however, in no event beyond the
expiration date noted in the Award Agreement.

e. Options shall not be transferable by an employee except by will or the
laws of descent and distribution and shall be exercisable during the
employee's lifetime only by the Key Employee to whom such Options were
granted.

f. Notwithstanding any other provisions, any Option which has not expired
under its term and is held by a Key Employee at the time of a Change of
Control shall be exercisable as of the date of such Change of Control.

8. RESTRICTED STOCK

The Committee shall authorize the granting of Restricted Stock Awards to any
Key Employee.

a. At the time the Restricted Stock Award is made, the Committee shall
establish a restriction period (after which restrictions will lapse) which
shall mean a period commencing on the Award Date of Grant and ending on
such date as the Committee shall determine (the "Restriction Period"). The
Committee may provide for the lapse of restrictions in installments where
it deems appropriate; further, each Restricted Stock Award may have a
different Restriction Period.

b. Except when the Committee determines otherwise, pursuant to Paragraph
(d) of this Section, if a Key Employee to whom an Award has been made
terminates employment with the Company for any reason before the expiration
of the Restriction Period, all shares of Restricted Stock still subject to
restriction shall be forfeited and shall be reacquired by the Company.

c. No shares of Restricted Stock awarded shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period except that such Restricted Stock may be bequeathed in a
testamentary will or by designating a beneficiary pursuant to the Plan
during the Restriction Period.

d. In cases of death, Disability, Retirement, or in cases of special
circumstances, the Committee may, in its sole discretion, when it finds
that a waiver would be in the best interests of the Company, elect to waive
any or all remaining restrictions with respect to a Key Employee's
Restricted Stock.

e. Notwithstanding any other provisions, all restrictions on any
Restricted Stock Award shall lapse immediately upon a Change of Control as
described in Section 11.

f. Each Restricted Stock Award shall be evidenced by an Award Agreement
which shall define the Restriction Period and contain such terms and
conditions as the Committee shall require.

A-3

g. As soon as practicable after the Award of Restricted Stock, the
Company shall cause to be issued a Stock certificate, registered in the
name of the Key Employee to whom such Award has been made, evidencing the
Restricted Stock Award. Unless such certificate is deposited with a
custodian pursuant to Paragraph (h) of Section 8, each such certificate
shall bear the following legend:

"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture and restrictions against transfer)
contained in the IES Industries Inc. Long-Term Incentive Plan and an
Award Agreement entered into between the registered owner of such
shares and IES Industries Inc. A copy of the Plan and Award Agreement
is on file in the office of the Secretary of IES Industries Inc., 200
First Street, S.E., Cedar Rapids, Iowa 52401.

Such legend shall not be removed from any Stock certificate evidencing such
Restricted Stock until the lapse of restrictions.

h. As an alternative to delivering a Stock certificate pursuant to
Paragraph (g) of Section 8 and in lieu of the legend, any certificate in
respect of an Award of Restricted Stock may be deposited by the Company
with a custodian to be designated by the Company. The Company shall cause
the custodian to issue the Key Employee a receipt evidencing any Stock held
by its registered in the name of the Key Employee.

i. Upon delivery of Restricted Stock to the Key Employee (or the
custodian, if any) as a Restricted Stock Award, the Key Employee shall,
except as set forth in Paragraph (c) of Section 8, have all of the rights
of a shareholder with respect to the Restricted Stock, including the right
to vote the shares of Restricted Stock and receive all dividends or other
distributions paid or made with respect to the Restricted Stock.

j. Each Key Employee shall agree at the time of a Restricted Stock Award,
and as a condition thereof, the Key Employee will not in the year in which
the Award is made, make any election under Section 83(b) of the Internal
Revenue Act of 1986, as amended, to include in gross income the value of
any Restricted Stock at the Date of Grant. If the Key Employee makes such
an election, all Restricted Stock awarded to such Key Employee shall be
forfeited.

9. PERFORMANCE UNITS

Subject to the provisions of the Plan, the Committee shall be authorized to
make awards of Performance Units. In this capacity, the Committee shall:

a. Determine and designate from time to time those Key Employees to whom
Awards of Performance Units shall be made.

b. Determine the Performance Period (the "Performance Period") applicable
to such Awards. The Performance Period shall not be less than two years.
Performance Periods may overlap and Key Employees may participate
simultaneously with respect to Performance Units for which different
Performance Periods are prescribed.

c. Determine the Performance Objectives of Awards of Performance Units.
Performance Objectives may vary from Key Employee to Key Employee and
between groups of Key Employees and shall be based upon such performance
criteria or combination of factors as the Committee may deem appropriate,
including, but not limited to, measures of financial and/or operating
performance as defined internally or in comparison to other companies. If
during the course of a Performance Period, there shall occur significant
events which the Committee expects to have a substantial effect on the
applicable Performance Objectives during such period, the Committee may
revise such Performance Objectives.

d. At the beginning of a Performance Period the Committee shall determine
the number of Performance Units to be awarded. Further, the Committee shall
define the value of such Performance Units which shall be paid if the
Performance Objectives are met in whole or in part, or exceeded.

e. At the end of the Performance Period the Performance Units will be
paid in cash, Stock, Restricted Stock or any combination thereof as the
Committee shall determine appropriate.

A-4

f. If a Key Employee terminates employment during a Performance Period
because of death, Disability, Retirement, Change of Control or under
circumstances where the Committee in its sole discretion finds that a
waiver would be in the best interest of the Company, that Key Employee may,
as determined by the Committee, be entitled to a payment of Performance
Units at the end of the Performance Period based upon the extent to which
the Performance Objectives were satisfied at the end of such period and
prorated for the portion of the Performance Period during which the Key
Employee was employed; provided, however, the Committee may provide for an
earlier payment in settlement of such Performance Units in such amount and
under such terms and conditions as the Committee deems appropriate or
desirable. If a Key Employee terminates employment during a Performance
Period for any other reason, then such Key Employee shall not be entitled
to any Award with respect to that Performance Period unless the Committee
shall determine otherwise.

10. LIMITED STOCK APPRECIATION RIGHTS

The Committee shall be authorized to grant Limited Stock Appreciation Rights
to Key Employees subject to Plan provisions. The exercise price of a Limited
Stock Appreciation Right shall equal the Fair Market Value for a share of Stock
on the date the Award is made.

a. A Limited Stock Appreciation Right may be exercised during a period of
six months following a Change of Control as defined by the Company in
Section 11.

b. Upon exercise of a Limited Stock Appreciation Right the Key Employee
shall receive, for each Limited Stock Appreciation Right awarded, a payment
in cash equal to the difference between the exercise price and the greater
of:

(1) the highest price per share of common stock paid in connection
with the Change of Control; or

(2) the highest price per share of common stock during the 60 day
period prior to the Change of Control.

c. If a Key Employee to whom one or more Limited Stock Appreciation
Rights have been awarded terminates employment for any reason prior to a
Change of Control, all such Limited Stock Appreciation Rights shall be
canceled coincident with the date of termination.

11. CHANGE OF CONTROL

For the purpose of this Plan, a Change of Control shall mean a business
combination as defined by the Eighth Article in the Company's Restated Articles
of Incorporation as approved by the Company's Shareholders. If subsequently,
the Articles of Incorporation are amended to delete or change the Eighth
Article, then as defined in Exhibit A to the Long-Term Incentive Plan of 1987.

12. GENERAL

a. Government and other regulations. The obligation of the Company to make
payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules and regulations, and to such approvals by governmental agencies as
may be required. The Company shall be under no obligation to register under the
Securities Act of 1933, as amended ("Act") any of the shares of Stock paid
under the Plan. If the shares paid under the Plan may in certain circumstances
be exempt from registration under the Act, the Company may restrict the
transfer of such shares in such manner as it deems advisable to ensure the
availability of any such exemption.

b. Tax withholding. The Company shall have the right to deduct from all
Awards paid in cash any federal, state or local taxes as required by law to be
withheld with respect to such cash payments and, in the case of Awards paid in
Stock, the Key Employee or other person receiving such Stock will be required
to pay to the Company the amount of any such taxes which the Company is
required to withhold with respect to such Stock.

A-5

c. Claim to Awards and employment rights. No employee or other person shall
have any claim or right to be granted an Award under the Plan. Neither this
Plan nor any action taken hereunder shall be construed as giving any employee
any right to be retained in the employ of the Company.

d. Beneficiaries. Any payment of Awards due under this Plan to a deceased
participant shall be paid to the beneficiary designated by the participant and
filed with the Committee. If no such beneficiary has been designated or
survives the participant, payment shall be made to the participant's heirs
under his will, or if there shall be no will, to his heirs under the laws of
descent and distribution. A beneficiary designation may be changed or revoked
by a participant at any time provided the change or revocation is filed with
the Committee.

e. Nontransferability. A person's rights and interest under the Plan,
including amounts payable, may not be assigned, pledged, or transferred except,
in the event of an employee's death, to a designated beneficiary as provided in
the Plan, or in the absence of such designation, by will, or if there be no
will, under the laws of descent and distribution.

f. Indemnification. Each person who is or shall have been a member of the
Committee or of the Board shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be a party or in which he may be
involved by reasons of any action or failure to act under the Plan and against
and from any and all amounts paid by him in satisfaction of judgment in any
such action, suit, or proceeding against him. He shall give the Company an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company's Articles of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.

g. Reliance on reports. Each member of the Committee and each member of the
board shall be fully justified in relying or acting in good faith upon any
report made by the independent public accountant of the Company and upon any
other information furnished in connection with the Plan by any person other
than himself. In no event shall any person who is or shall have been a member
of the Committee or of the Board be liable for any determination made or other
action taken or any omission to act in reliance upon any such report or
information or for any action taken, including the furnishing of information,
or failure to act, if done in good faith.

h. Relationship to other benefits. No payment under the Plan shall be taken
into account in determining any benefits under any pension, retirement, profit
sharing, group insurance or other benefit plan of the Company.

i. Expenses. The expenses of administering the Plan shall be borne by the
Company.

j. Pronouns. Masculine pronouns and other words of masculine gender shall
refer to both men and women.

k. Titles and headings. The titles and headings of the sections in the Plan
are for convenience of reference only, and in the event of conflict, the text
of the Plan, rather than such titles or headings, shall control.

13. CHANGES IN CAPITAL STRUCTURE

Options, Limited Stock Appreciation Rights, Restricted Stock Awards and any
agreements evidencing such Awards shall be subject to adjustment by the
Committee as to the number and price of shares of Stock or other considerations
subject to such Awards in the event of changes in the outstanding Stock by
reason of stock dividends, stock splits, recapitalizations, reorganizations,
mergers, consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Date of Grant of any such Option or Awards.
In the event of any such change in the outstanding Stock, the aggregate number
of shares available under the Plan shall be appropriately adjusted by the
Committee, whose determination shall be conclusive.

A-6

14. AMENDMENTS AND TERMINATION

The Board may at any time terminate the Plan or, with the expressed written
consent of an individual participant, cancel or reduce or otherwise alter his
outstanding Awards thereunder if, in its judgment, the tax, accounting, or
other effects of the Plan or potential payouts thereunder would not be in the
best interest of the Company. The Board may, at any time, or from time to time,
amend or suspend and, if suspended, reinstate, the Plan in whole or in part,
provided, however, that without further shareholder approval the Board shall
not:

a. Increase the maximum number of shares which may be issued on exercise
of Options, Limited Stock Appreciation Rights, or pursuant to Restricted
Stock Awards or Performance Unit Awards, except that the Board may exercise
powers delegated to the Committee as provided in Section 12.

b. Change the minimum Option price.

c. Extend the maximum Option term.

d. Extend the termination date of the Plan.

e. Materially modify the requirements as to eligibility for participation
in the Plan.

A-7

[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE

1. THE ELECTION OF DIRECTORS:

AGAINST
FOR ALL ALL EXCEPTIONS
[_] [_] [_]

2. AMEND THE LONG TERM INCENTIVE PLAN:

FOR AGAINST ABSTAIN
[_] [_] [_]

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE FOLLOWING:

NOMINEES: C.R.S. Anderson; J. Wayne Bevis; Dr. George Daly;
Blake O. Fisher, Jr.; G. Sharp Lannom, IV; Lee Liu; Jack R. Newman;
Robert D. Ray; David Q. Reed; Henry Royer; Robert W. Schlutz;
Anthony R. Weiler.

EXCEPTIONS:

To withhold authority to vote for any particular nominee write the nominee's
name(s) on the line(s) below.

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-------------------------------------------------------------------------
If you have noted comments on the other side of the card mark here. [_]

Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.

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SIGNATURE(S) DATE

IES INDUSTRIES INC.
PROXY/DIRECTION CARD FOR
ANNUAL MEETING ON MAY 16, 1995
- --------------------------------------------------------------------------------
THIS PROXY/DIRECTION IS SOLICITED BY THE BOARD OF DIRECTORS OF IES INDUSTRIES
INC. ("IES INDUSTRIES").
The undersigned hereby appoints Henry Royer, David Q. Reed, and Robert W.
Schlutz, jointly and severally with full power of substitution, to vote all
shares of common stock which the undersigned holds of record and is entitled to
vote at the Annual Meeting of Shareholders to be held at the Collins Plaza
Hotel, 1200 Collins Road N.E., Cedar Rapids, Iowa, on the 16th day of May, 1995
at 2:00 p.m. (CDT), or any adjournment thereof. All SHARES VOTABLE INCLUDE
SHARES HELD OF RECORD BY THE ADMINISTRATOR FOR THE PARTICIPANTS IN THE IES
INDUSTRIES DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN, EMPLOYEE STOCK
PURCHASE PLAN, BONUS STOCK OWNERSHIP PLAN, EMPLOYEE STOCK OWNERSHIP PLAN AND
EMPLOYEE SAVINGS PLAN. SHARES WILL BE VOTED IN THE MANNER SPECIFIED BY THE
UNDERSIGNED AND IN THE DISCRETION OF THE PERSONS NAMED ABOVE OR SUCH
ADMINISTRATOR ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. IF
NO SPECIFICATION IS MADE, SUCH SHARES WILL BE VOTED BY THE PERSONS NAMED ABOVE
OR SUCH ADMINISTRATOR FOR ALL NOMINEES TO THE BOARD OF DIRECTORS AND FOR
AMENDING THE LONG TERM INCENTIVE PLAN. The following space is provided for
comments. Please mark the comments box on the reverse side if you use this
space.

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(continued and to be signed on reverse side)