AMENDMENT NO. 2
                                       TO
                          AGREEMENT AND PLAN OF MERGER


        THIS AMENDMENT No. 2 (this "Amendment No. 2"), dated as of August 16,
   1996, by and among WPL Holdings, Inc., a holding company incorporated
   under the laws of the State of Wisconsin ("WPL"), IES Industries Inc., a
   holding company incorporated under the laws of the State of Iowa ("IES"),
   Interstate Power Company, an operating public utility incorporated under
   the laws of the State of Delaware ("Interstate"), WPLH Acquisition Co., a
   wholly-owned subsidiary of WPL incorporated under the laws of the State of
   Wisconsin ("Acquisition"), and Interstate Power Company, a wholly-owned
   subsidiary of Interstate incorporated under the laws of the State of
   Wisconsin ("New Interstate").

                              W I T N E S S E T H:

        WHEREAS, the parties hereto have entered into an Agreement and Plan
   of Merger dated as of November 10, 1995, as amended (the "Merger
   Agreement");

        WHEREAS, in furtherance of the transactions contemplated therein, the
   respective parties have agreed to make certain further amendments to the
   Merger Agreement;

        NOW, THEREFORE, in consideration of the premises and the
   representations, warranties, covenants and agreements contained herein,
   the parties hereto, intending to be legally bound hereby, agree as
   follows:

        1.   Amendments.  Upon the execution of this Amendment No. 2 by all
   parties hereto, the Merger Agreement shall be amended as follows:

             (a)  Section 2.1(b)(i) of the Merger Agreement shall be amended
        by deleting such section in its entirety and replacing it with the
        following language:

                  "Each issued and outstanding share of IES Common Stock
             (other than shares canceled pursuant to Section 2.1(a)(i)
             and IES Dissenting Shares (as hereinafter defined)) shall
             be converted into the right to receive 1.14 (the "IES
             Ratio") duly authorized, validly issued, fully paid and
             nonassessable (except as otherwise provided in Section
             180.0622(2)(b) of the WBCL) shares of Common Stock, par
             value $.01 per share, of WPL ("WPL Common Stock"),
             including, if applicable, associated rights (the "WPL
             Rights") to purchase shares of WPL Common Stock pursuant to
             the terms of that certain Rights Agreement between WPL and
             Morgan Shareholder Services Trust Company, as Rights Agent
             thereunder, dated as of February 22, 1989 (the "WPL Rights
             Agreement").  Until the Distribution Date (as defined in
             the WPL Rights Agreement) all references in this Agreement
             to the WPL Common Stock shall be deemed to include the
             associated WPL Rights.  

             (b)  The Index of Defined Terms which precedes the body of the
        Merger Agreement shall be amended to delete the defined terms "McLeod
        Contingency" and "McLeod."

        2.   References to Merger Agreement.  From and after the date of this
   Amendment No. 2, each reference in the Merger Agreement to "this
   Agreement," "hereof," "hereunder" or words of like import, and all
   references to the Merger Agreement in any and all agreements, instruments,
   documents, notes, certificates and other writings of every kind and
   nature, shall be deemed to mean the Merger Agreement as modified and
   amended by this Amendment No. 2.

        3.   Full Force and Effect.  The Merger Agreement, as amended by this
   Amendment No. 2, is and shall remain in full force and effect and is
   hereby in all respects ratified and confirmed.

        4.   Counterparts.  This Amendment No. 2 may be executed in
   counterparts, each of which shall be deemed to be an original, with the
   same effect as if the signatures thereto and hereto were upon the same
   instrument.

        IN WITNESS WHEREOF, WPL, IES, Interstate, Acquisition and New
   Interstate have caused this Amendment No. 2 to be signed by their
   respective officers thereunto duly authorized as of the date first written
   above.

                                     WPL HOLDINGS, INC.

   Attest:

   By:/s/ Edward M. Gleason          By:/s/ Erroll B. Davis, Jr.        
     Edward M. Gleason                 Name:  Erroll B. Davis, Jr.
     Corporate Secretary               Title: President and Chief Executive
                                              Officer

                                     IES INDUSTRIES INC.

   Attest:

   By:/s/ Stephen W. Southwick       By:/s/ Lee Liu                      
     Stephen W. Southwick              Name:  Lee Liu
     Secretary and General Counsel     Title: Chairman of the Board,
                                              President and Chief Executive
                                              Officer

                                     INTERSTATE POWER COMPANY
                                     (a Delaware Corporation)

   Attest:

   By:/s/ Jospeh C. McGowan          By:/s/ Michael R. Chase     
     Joseph C. McGowan                 Name:  Michael R. Chase
     Secretary and Treasurer           Title: Executive Vice President


                                     WPLH ACQUISITION CO.

   Attest:

   By:/s/ Edward M. Gleason          By:/s/ Erroll B. Davis, Jr.     
     Edward M. Gleason                 Name:  Erroll B. Davis, Jr.
     Secretary                         Title: President


                                     INTERSTATE POWER COMPANY
                                     (a Wisconsin corporation)

   Attest:

   By:/s/ Joseph C. McGowan          By:/s/ Michael R. Chase             
     Joseph C. McGowan                 Name:  Michael R. Chase
     Secretary                         Title: President