The passage at Earth of the January 10--11, 1997, magnetic cloud induced a storm of moderate geomagnetic activity with Dst index reaching minimum values of about -83 nT. We study ring current formation during the early Bz negative phase of this magnetic cloud, using energetic particle data from three instruments on the Polar spacecraft and geosynchronous plasma data from the LANL spacecraft. We use our kinetic drift-loss model to simulate the evolution of ring current H+, He+, and O+ ion distributions and associated aeronomical effects during this period. The results from two Volland-Stern type magnetospheric electric field model formulations are compared: (1) Kp-dependent and (2) interplanetary magnetic field (IMF) dependent. We demonstrate that while both electric field models reproduce well the main trends of ring current formation and decay during the storm, the IMF-dependent model reproduces the rapidity of the main storm growth phase and its strength better. Comparing model results during the main phase of the storm with HYDRA, TIMAS, and CAMMICE data we find that the model reproduces very well the ring current distributions near dawn. The formation of the nose event, i.e., the rise of the 10--30 keV energy particles near dusk due to abruptly increased convection is, however, overestimated by the model. We compute plasmaspheric heating through Coulomb collisions as the storm evolves and find that maximum heating occurs initially on the nightside near L~3.5 and subsequently moves earthward to L~2.75, in agreement with Millstone Hill radar observations of midlatitude electron temperature enhancement on January 10. However, the magnitude of the energy transferred to plasmaspheric electrons through Coulomb collisions appears to be not sufficient to yield the observed elevated electron temperature at ~0830 UT, suggesting that additional energy sources should be considered during this event. ¿ 1999 American Geophysical Union