SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.   20549

                                      Form 10-K

          X      ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)

                 For the fiscal year ended     December 31, 1995

                 TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
           For the transition period from            to

                            Commission file number 1-3464

                             KENTUCKY UTILITIES COMPANY
               (Exact name of Registrant as specified in its charter)

               Kentucky and Virginia                     61-0247570
             (State of Incorporation)                 (I.R.S. Employer
                                                     Identification No.)
                One Quality Street
                Lexington, Kentucky                         40507
     (Address of principal executive offices)            (Zip Code)

         Registrant's telephone number, including area code:   606-255-2100
             Securities registered pursuant to Section 12(b) of the Act:

                                                  Name of Each Exchange on
                Title of Each Class                    Which Registered
        Preferred Stock, 4 3/4% cumulative,   Philadelphia Stock Exchange, Inc.
           stated value  $100 per share

             Securities registered pursuant to Section 12(g) of the Act:
              Preferred stock, cumulative, stated value $100 per share
                                  (Title of Class)

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
     405 of Regulation S-K is not contained herein, and will  not be contained,
     to  the best of Registrant's knowledge, in definitive proxy or information
     statements incorporated  by reference in Part III of this Form 10-K or any
     amendment to this Form 10-K.  ( X )
     Aggregate market  value of the voting  stock held by nonaffiliates  of the
     Registrant:   None

     Number of shares of Common Stock outstanding at March 8, 1996:  37,817,878
     shares (owned by the  parent - KU Energy Corporation).

                     Documents Incorporated by Reference:  None

     Exhibit Index appears on page 43.


                                         -72-
<PAGE>
                             KENTUCKY UTILITIES COMPANY

                                      Form 10-K

               Annual Report to the Securities and Exchange Commission
                        For the Year Ended December 31, 1995
                                    _____________

                                  TABLE OF CONTENTS

     Item                                                              Page
                                       PART I

     1. Business   . . . . . . . . . . . . . . . . . . . . . . . . . . .  3

     2. Properties   . . . . . . . . . . . . . . . . . . . . . . . . . .  9

     3. Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . 10

     4. Submission of Matters to a Vote of Security Holders  . . . . . . 10

        Executive Officers of the Registrant   . . . . . . . . . . . . . 11


                                       PART II

     5. Market for Registrant's Common Equity and Related
          Stockholder Matters  . . . . . . . . . . . . . . . . . . . . . 13

     6. Selected Financial Data  . . . . . . . . . . . . . . . . . . . . 14

     7. Management's Discussion and Analysis of Financial Condition
          and Results of Operations  . . . . . . . . . . . . . . . . . . 16

     8. Financial Statements and Supplementary Data  . . . . . . . . . . 24

     9. Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure   . . . . . . . . . . . . . . . . . . 41

                                      PART III

    10. Directors and Executive Officers of the Registrant   . . . . . . 41

    11. Executive Compensation   . . . . . . . . . . . . . . . . . . . . 41

    12. Security Ownership of Certain Beneficial Owners and Management   41

    13. Certain Relationships and Related Transactions   . . . . . . . . 41

                                       PART IV

    14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 42

        Exhibit Index  . . . . . . . . . . . . . . . . . . . . . . . . . 43

        Signatures   . . . . . . . . . . . . . . . . . . . . . . . . . . 48




                                         -73-
<PAGE>
                                       PART I
     Item 1.  Business

     General

     Kentucky Utilities Company (KU) is a wholly owned subsidiary of KU Energy
     Corporation (KU Energy).  KU is a public utility engaged in producing and
     selling electric energy.   KU provides electric service to  about 425,500
     customers in over 600  communities and adjacent suburban and  rural areas
     in  77 counties  in central,  southeastern and  western Kentucky,  and to
     about  28,600 customers  in  5 counties  in  southwestern Virginia.    In
     Virginia, KU  operates under the name Old Dominion Power Company.  Of the
     Kentucky communities,  161 are  incorporated municipalities  served under
     unexpired   municipal  franchises   and   the  rest   are  unincorporated
     communities  where no franchises are required.  Service has been provided
     in Virginia  without franchises  for  a number  of years.    The lack  of
     Virginia franchises is not expected to  have a material adverse effect on
     KU's operations.  KU  also sells electric energy at wholesale  for resale
     in 12 municipalities.

     The territory served by KU has an aggregate population estimated at about
     1,000,000.  The  largest  city  served  is   Lexington,  Kentucky.    The
     population  of the  metropolitan  Lexington area  is  estimated at  about
     225,000.   The populations of the next 10 largest cities served at retail
     range from about 21,000 to 9,000.  The territory served  includes most of
     the Blue  Grass Region of central  Kentucky and parts of  the coal mining
     areas  in southeastern  and western  Kentucky and  southwestern Virginia.
     Lexington is the  center of the Blue Grass Region,  in which thoroughbred
     horse,  burley  tobacco and  bourbon  whiskey  distilling industries  are
     located.  Among the principal industries in the territory served are coal
     mining, automotive and related  industries, the manufacture of  paper and
     paper products and of  electrical and other machinery and  primary metals
     processing.

     Revenues

     KU's  sources of electric revenues and the respective percentages of total
     revenues for the three years 1993-1995 were as follows:
<TABLE>
<CAPTION>
          Year Ended December 31,              1995               1994              1993
                                              Amount  %          Amount   %        Amount   %
                                                         (dollars in thousands)

<S>                                       <C>        <C>    <C>         <C>     <C>       <C>
          Residential                     $ 232,760  34     $ 213,574    34     $ 210,759  35
          Commercial                        151,778  22       142,207    22       138,271  23
          Industrial                        130,066  19       120,043    19       111,857  18
          Mine Power                         36,076   5        36,498     6        34,977   6
          Public Authorities                 54,161   8        49,869     8        48,142   8
          Wholesale                          50,699   7        47,961     7        46,898   8
          Opportunity                        25,241   4        41,704     7        15,565   2
          Miscellaneous Revenues              5,649   1         4,181     -         3,428   -
          Provision for Refund -
            Litigation Settlement                 -   -       (19,385)   (3)       (3,309)  -
               Total                      $ 686,430 100     $ 636,652   100     $ 606,588 100
</TABLE>

     The electric utility business  is affected by seasonal weather  patterns.
     As a result,  operating revenues (and associated  operating expenses) are
     not  generated  evenly throughout  the year.    See Item  7, Management's
     Discussion and Analysis of Financial Condition and Results of Operations -
     Sales and Revenues  for information related to revenues  including those
     from opportunity sales.

                                        -74-

<PAGE>
     Operations

     KU's  net generating capability was 3,509 megawatts at December 31, 1995.
     An additional  110-megawatt combustion turbine peaking  unit is scheduled
     to be  placed into  commercial operation  in  1996.   The net  generating
     capability available for  operation at any time  may be lower  because of
     periodic outages of generating units due to inspection, maintenance, fuel
     restrictions,  or  modifications required  by  regulatory  agencies.   KU
     obtains  power  from  other  utilities  under  bulk  power  purchase  and
     interchange  contracts.   At December 31,  1995, KU's  system capability,
     including purchases from others, was 3,903 megawatts. On August 16, 1995,
     an all-time   system peak demand, on a one-hour integrated basis, was set
     at 3,341 megawatts.   This peak  was surpassed on  February 5, 1996 by  a
     3,391  megawatt   peak.    See  Item 2,   Properties-Construction  for  a
     discussion of KU's plans to add additional peaking capacity.

     The percentage of KU's  system output which was internally  generated and
     purchased for the periods indicated was as follows:

                                              1995      1994       1993
               Internally Generated             82%       83 %       89 %
               Purchased                        18%       17 %       11 %


     KU is one of 28 members of the East Central Area Reliability Coordination
     Agreement,  the purpose  of which is  to augment  the reliability  of the
     members' bulk power supply through coordination of planning and operation
     of  generation and transmission facilities.   The members  are engaged in
     the generation, transmission and sale of electric power and energy in the
     east central area of the  United States, which covers all or  portions of
     Michigan, Indiana, Ohio, Kentucky, Pennsylvania, Virginia, West  Virginia
     and Maryland.  KU also has interconnections and contractually established
     operating arrangements with neighboring utilities and cooperatives.

     Under  a contract with Owensboro Municipal Utilities (OMU), KU has agreed
     to  purchase  from  OMU  the  surplus  output  of  the  150-megawatt  and
     250-megawatt generating units  at OMU's Elmer  Smith station.   Purchases
     under  the  contract  are made  under  a  contractual  formula which  has
     resulted  in costs which  were and are  expected to be  comparable to the
     cost of other power purchased or  generated by KU. Such power constituted
     about  8% of KU's net system output during 1995.  See Note 4 of the Notes
     to Financial Statements.

     KU  owns 20%  of the common  stock of Electric  Energy, Inc. (EEI), which
     owns  and  operates  a  1,000-megawatt generating  station  in   southern
     Illinois.   KU's  entitlement is  20% of  the available  capacity of  the
     station.  Purchases from EEI  are made under a contractual formula  which
     has resulted in costs which were and are expected to be comparable to the
     cost of other power purchased or generated by KU.  Such power constituted
     about 8% of  KU's net system output in 1995.   See Note 4 of the Notes to
     Financial Statements.

     KU had approximately 2,230 employees at December 31, 1995, of which about
     300 are covered by union contracts expiring August 1996.



                                        -75-
<PAGE>

     Fuel Matters

     Coal-fired  generating units provided more than 99% of KU's net kilowatt-
     hour generation for 1995.  The remainder of KU's net  generation for 1995
     was  provided by  hydroelectric plants,  oil and/or  natural gas  burning
     units.   The average  delivered cost of  coal purchased, per  ton and per
     million BTU  (MBTU), and the  percentage of  spot coal purchases  for the
     periods indicated were as follows:

                                                   1995      1994     1993


        Per ton - all sources                   $ 28.37   $ 28.91   $ 27.92
        Per MBTU - all sources                  $  1.16   $  1.19   $  1.15

        Per ton - spot purchases only           $ 26.84   $ 28.33   $ 26.23
        Per MBTU - spot purchases only          $  1.10   $  1.16   $  1.08
        Spot purchases as % of all sources           30 %      46 %      44 %


     KU maintains its fuel  inventory at levels  estimated to be necessary  to
     avoid  operational  disruptions  at  its  coal-fired   generating  units.
     Reliability of  coal deliveries can  be affected from  time to time  by a
     number of factors, including  coal mine labor strikes and  other supplier
     or transporter operating difficulties.

     KU  believes there are adequate reserves available to supply its existing
     base-load generating units with the quantity and quality of coal required
     for those  units throughout  their useful  lives.  KU  intends to  meet a
     substantial portion  of  its coal  requirements  with 3-year  and  5-year
     contracts.  KU anticipates  that coal supplied under such  contracts will
     represent  about two-thirds  of the  requirements over  the next  several
     years.   As part of this  strategy, KU is currently  negotiating and will
     continue to negotiate replacement contracts as contracts expire.  KU does
     not  anticipate any  problems negotiating  new contracts for  future coal
     needs.   The  balance of  coal  requirements  will be  met  through  spot
     purchases.   See Note 4  of  the Notes  to Financial  Statements for  the
     estimated obligations under existing fuel contracts for each of the years
     1996 through 2000.

     KU has  no long-term contracts in  place for the purchase  of natural gas
     for  its  combustion  turbine  peaking  units.    KU  has   met  its  gas
     requirements through spot purchases.  KU does not anticipate encountering
     any significant problems acquiring  an adequate supply of fuel  necessary
     to  operate its peaking units.  See Item 2, Properties-Construction for a
     discussion of KU's plans to add additional peaking capacity.

     Environmental Matters

     Federal   and  state  agencies   have  adopted  environmental  protection
     standards  which apply  to  the  electric  operations  of  KU.    Capital
     expenditures   to  comply   with  these   standards  amounted   to  about
     $193 million during the 1991-1995 time period.

     KU's  generating  units  are operated  in  compliance  with the  Kentucky
     Natural Resources  and Environmental Protection Cabinet's (Cabinet) State
     Implementation   Plan  (KYSIP)  and   New  Source  Performance  Standards
     developed under the  Clean Air Act.   The KYSIP  is a federally  approved


                                        -76-
<PAGE>

     plan  for the attainment of  the national ambient  air quality standards.
     The  KYSIP  contains  standards  relating  to  the  emissions of  various
     pollutants (sulfur  dioxide, particulates and nitrogen  oxides) from KU's
     fossil-fuel  fired  steam  electric  generating units.    These  emission
     standards are of varying stringencies and compliance with these standards
     is attained  through  a variety  of  air pollution  control  technologies
     (scrubbers, electrostatic precipitators, and low NOx burners) and the use
     of low-sulfur coal.   KU's operations are in substantial  compliance with
     current emission standards.

     The acid  rain control provisions of  the 1990 Clean  Air Act Amendments,
     which are effective  in two  phases, require KU  to further decrease  the
     emissions  of sulfur  dioxide and  nitrogen oxides  from  its fossil-fuel
     fired  steam  electric  generating units.    Ghent  Unit 1,  E. W.  Brown
     Units 1, 2 and 3, and Green River Unit 4 have been designated  as Phase I
     affected units which were required to comply with sulfur dioxide emission
     reduction obligations beginning January 1, 1995.  In order to comply with
     these sulfur  dioxide emission limitations,  KU has installed  a scrubber
     and related facilities on Ghent Unit 1 and  switched to lower sulfur coal
     on some  other Phase I affected  units.   In addition,  these units  were
     retrofitted with  low NOx  burners  in order  to comply  with  applicable
     nitrogen  oxide limitations under  United States Environmental Protection
     Agency (EPA) regulations.   The  EPA issued final  acid rain permits  for
     each of KU's  Phase I affected units.  The EPA's approval of KU acid rain
     compliance  plan  was accompanied  by  bonus allowances  awarded  for the
     installation  of the  scrubber on Ghent  Unit 1 and  an extension  of the
     Phase I  effective date to January 1,  1997, for certain  portions of the
     sulfur  dioxide emission  limitations.   KU's current  emission allowance
     strategy, in part, includes the banking of unused sulfur dioxide emission
     allowances.   These unused  allowances result from  the bonus  allowances
     received from the EPA  and the expected reduced sulfur  dioxide emissions
     from  the  installation  of  the  Ghent  Unit 1  scrubber.    The  banked
     allowances  are  expected  to  allow  KU  to delay  capital  expenditures
     associated with   KU's Phase II acid  rain compliance obligations,  which
     are  effective January 1,  2000.   KU's Phase II compliance  strategy, in
     addition  to utilizing  banked  allowances, may  include additional  fuel
     switching  or the installation of additional scrubbers.  However, KU will
     continue to  reassess its options  for complying  with Phase II  emission
     reduction  requirements to determine an overall least cost strategy.  See
     Item 7, Management's  Discussion and Analysis of  Financial Condition and
     Results  of Operations  - Construction  Requirements and  - Environmental
     Matters for additional discussion.

     During  1990,   each  of  KU's  five  fossil-fuel  fired  steam  electric
     generating stations  was re-issued a  wastewater discharge permit  by the
     Cabinet  under  the  Clean   Water  Act's  National  Pollutant  Discharge
     Elimination  System.   These  5-year  permits  place water  quality-based
     effluent limitations (i.e., thermal  and chemical limits) on each  of the
     power plant's discharges.   KU's operations are in substantial compliance
     with the conditions in the permits.  KU is in the process of renewing the
     required permits that expired in 1995, which continue in effect until new
     permits are issued.

     Pursuant to  the Resource Conservation  and Recovery Act,  utility wastes
     (fly  ash, bottom  ash  and scrubber  sludge)  have been  categorized  as
     special  wastes (i.e.,  wastes  of large  volume,  but low  environmental
     hazard).   The EPA  has concluded  that the  disposal of  coal combustion
     byproducts by practices common  to the utility industry are  adequate for


                                        -77-
<PAGE>

     the protection of  human health  and the environment.   The Cabinet  also
     regulates utility  wastes as special  wastes under  its waste  management
     program.

     Under  the Toxic  Substances  Control Act,  the  EPA regulates  the  use,
     servicing,  repair,  storage   and  disposal   of  electrical   equipment
     containing  polychlorinated  biphenyls  (PCB).    To  comply  with  these
     regulations,  KU  has  implemented  procedures  to  be  followed  in  the
     handling, storage  and disposal of  PCBs.  In addition,  KU has completed
     the mandated phase out of all of its pole-class PCB capacitors and has no
     vault-type PCB transformers in use, in or near commercial buildings.

     On February 13,  1990, KU received a  letter from the EPA  identifying KU
     and  others as  potentially responsible  parties under  the Comprehensive
     Environmental   Response  Compensation  and   Liability  Act  (CERCLA  or
     Superfund) for a disposal  site in Daviess County, Kentucky.   The letter
     also  asked  KU  and  the  other persons  or  entities  named  to proceed
     voluntarily with a  remediation program at the site.   Under Superfund, a
     responsible party  may be  liable  for all  or a  portion  of all  monies
     expended by  the government to take  corrective action at the  site.  The
     EPA  has turned  over responsibility  for investigation  of the  site and
     development  of  a  remediation  plan  to  a  group  (not  including  KU)
     originally named as potentially responsible parties.  KU has entered into
     an agreement  with the group as  to the portion of  the investigation and
     development costs to  be borne by  KU in connection with  the site.   The
     agreement does  not cover costs which may  be incurred in connection with
     any remediation plan.  A remediation plan is before the EPA for approval.
     KU does not believe that any liability with respect to the site will have
     a material impact on its financial position or results of operations.

     Regulation

     KU  is subject  to  the  jurisdiction  of  the  Kentucky  Public  Service
     Commission (PSC)  and the Virginia State Corporation  Commission (SCC) as
     to  retail rates  and service,  accounts, issuance  of securities  and in
     other  respects.   The Federal  Energy Regulatory  Commission (FERC)  has
     jurisdiction under the  Federal Power  Act over certain  of the  electric
     utility facilities  and operations, wholesale  sale of power  and related
     transactions and  accounting  practices  of  KU,  and  in  certain  other
     respects as provided in the Act.  The FERC has classified KU as a "public
     utility" as  defined in the  Act.   By reason of  owning and operating  a
     small  amount of  electric utility  property in  one county  in Tennessee
     (having a gross book value of about  $212,000), KU may also be subject to
     the  jurisdiction of the Tennessee Public Service Commission as to retail
     rates, accounts, issuance  of securities  and in other  respects.   Since
     1992,  utilities  in  Kentucky  have  had the  option  to  use  either  a
     historical test period or a forward-looking test period in rate filings.

     KU's fuel  adjustment clause  for Kentucky  customers, which operates  to
     reflect changes in the cost of fuel in billings to customers, is designed
     to conform to  a general regulation providing for a  uniform monthly fuel
     adjustment clause for all  electric utilities in Kentucky subject  to the
     jurisdiction  of the PSC.   The clause is based  on a formula approved by
     the  FERC but  with  certain modifications,  including  the exclusion  of
     excess fuel expense attributable to certain forced outages, the filing of
     fuel procurement  documentation, a procedure  for billing over  and under
     recoveries  of  fuel  cost fluctuations  from  the  base  rate level  and
     provision for  periodic public  hearings to  review past adjustments,  to


                                        -78-
<PAGE>

     make  allowance for any past adjustments found not justified, to disallow
     any improper expenses and to re-index base  rates to include current fuel
     costs.   The fuel adjustment clause mechanism for Virginia customers uses
     an average fuel  cost factor based primarily on  projected test year fuel
     costs.  The fuel cost factor  is adjusted annually for the over  or under
     collection of fuel costs from the previous year.

     Rate  regulation in  Kentucky allows  each electric  utility with  a PSC-
     approved  environmental compliance  plan and  environmental  surcharge to
     recover  on a current basis the cost  of complying with federal, state or
     local environmental requirements, including the  Federal Clean Air Act as
     amended,  which applies to  coal combustion  wastes and  by-products from
     facilities utilized for the production of energy from coal.  During 1994,
     the PSC approved KU's environmental surcharge, which is designed to allow
     KU to recover compliance related operating expenses and to earn a  return
     on those compliance related capital expenditures  not already included in
     existing rates through  the application  of the surcharge  each month  to
     customers'  bills.  Surcharge billings are subject to periodic PSC review
     of the level of environmental expenditures and reconciliation of previous
     surcharge  billings  with  actual  costs.    For  additional  information
     regarding  the environmental surcharge,  including information concerning
     pending  legal  proceedings,  see  Note 9  of  the  Notes  to   Financial
     Statements, "Environmental Cost Recovery."

     Integrated resource planning regulations  in Kentucky require KU  and the
     other major utilities to make triennial filings with the PSC, of  various
     historical  and  forecasted  information  relating  to  forecasted  load,
     capacity  margins and demand-side management  techniques.  KU is required
     to make its next filing on April 22, 1996.

     Pursuant to  Kentucky law, the PSC has  established the boundaries of the
     service  territory or area of  each retail electric  supplier in Kentucky
     (including KU), other than municipal corporations, within which each such
     supplier  shall  have  the  exclusive  right to  render  retail  electric
     service.

     The SCC requires each Virginia utility to make annual filings of either a
     base rate change or an Annual Informational Filing consisting of a set of
     standard financial schedules.  These filings are subject to review by the
     SCC Staff.  The SCC issues a Staff Report, which includes any findings or
     recommendations to the SCC relating to the individual utility's financial
     performance during  the historic  12-month  period, including  previously
     accepted adjustments.

     KU is  presently exempt  from all  the provisions  of the  Public Utility
     Holding Company  Act  of  1935, except  Section  9(a)(2)  thereof  (which
     relates to the acquisition of securities of public utility companies), by
     virtue  of  the  exemption granted  by  an order  of  the  Securities and
     Exchange Commission dated  April 19, 1949 and,  absent further action  by
     the Commission, by virtue of annual exemption statements filed by KU with
     the Commission pursuant to Rule 2 prescribed under the Act.

     National Energy Policy Act

     See Item 7,  Management's Discussion and Analysis  of Financial Condition
     and Results of Operation - Utility Issues -  Competition.


                                        -79-
<PAGE>
     Transmission Services and Power Services Tariffs

     In March 1995, the FERC issued a Notice of Proposed  Rulemaking (NOPR) by
     which  the FERC  will  require  public  utilities  that  own  or  control
     facilities used  for the  transmission of electric  energy in  interstate
     commerce   to   offer   "open   access"   transmission   service   on   a
     nondiscriminatory basis.   The FERC  also proposes to  allow, in  certain
     circumstances,  the collection of  charges for  the recovery  of stranded
     costs when customers  change power suppliers.  The FERC  expects to issue
     final  rules in 1996.   For further discussion,  see Item 7, Managements'
     Discussion and Analysis of Financial Condition and Results of Operation -
     Utility Issues- Competition.

     KU placed a Transmission Services  (TS) Tariff into effect in 1994  and a
     Power Services (PS)  Tariff into effect  in 1995.   The TS Tariff  covers
     wholesale  transactions involving  the use  of KU's  transmission system.
     The PS tariff  allows KU to  sell wholesale power at  market-based rates.
     The  FERC staff, intervenors and KU are engaged in settlement discussions
     designed to settle all outstanding issues.   Both tariffs are subject  to
     refund pending final FERC approval.

     Although these  new tariffs did not  have a material impact  on KU's 1995
     revenues   or  net  income,  they  are  indicative  of  the  increasingly
     competitive environment in which KU and other utilities operate.

     Item 2.  Properties
<TABLE>

     KU owns and operates the following electric generating stations:
<CAPTION>
                                                              Nameplate      Effective
                                                             Rating (KW)  Capability (KW)
      <S>               <C>             <C>                  <C>               <C>
      Steam:            Ghent           Ghent, Ky              2,226,060        1,976,000
                        Green River     South Carrollton, Ky     263,636          242,000
                        E. W. Brown     Burgin, Ky               739,534          661,000
                        Tyrone          Tyrone, Ky               137,500          136,000
                        Pineville       Four Mile, Ky             37,500           34,000
      Hydro:            Dix Dam &
                        Lock #7         Burgin, Ky                30,297           24,000
      Gas/Oil Peaking:  Haefling        Lexington, Ky             62,100           59,000
                        E.W. Brown      Burgin, Ky               357,000          377,000
                                                               3,853,627        3,509,000
</TABLE>

     Substantially all properties  are subject  to the lien  of KU's  Mortgage
     Indenture.

     Construction

     Three 110-MW combustion  turbine peaking units  have been installed  over
     the past  two years.  The  first peaking unit was  placed into commercial
     operation in  late 1994.   The second  and third units  were placed  into
     commercial operation  in February  1995 and December  1995, respectively.
     The total construction expenditures  for the years 1996 through  2000 are
     estimated  at  $547 million.    Such expenditures  include  an  estimated
     $190 million  for generating  facilities,  $83 million  for  transmission
     facilities  and $274 million  for  distribution  and general  facilities.
     Included in total construction expenditures  for the 1996-2000 period are
     $120 million  for 485 MW of  peak generating capacity to  be added during
     1996-2000 (including  one substantially  complete unit with  an effective
     capability of 110-MW scheduled for commercial operation in 1996.)  KU has
     no plans to  install coal-fired baseload generating capacity before 2010.

                                        -80-
<PAGE>
     Construction  expenditures for  the  years 1991  through 1995  aggregated
     about $647 million.  See Note 4 of the  Notes to Financial Statements for
     the  estimated amounts of construction expenditures for each of the years
     1996 through 2000.

     KU  frequently   reviews  its   construction  program   and  construction
     expenditures, which may  be affected by  numerous factors, including  the
     rate   of  load  growth,  changes  in   construction  costs,  changes  in
     environmental  regulations, least  cost  planning, the  adequacy of  rate
     relief  and  KU's  ability to  raise  necessary  capital.   (See  Item 7,
     Management's Discussion  and Analysis of Financial  Condition and Results
     of  Operations.)    KU's  planned additions  to  its  electric generating
     capacity are based on future load projections using estimated load growth
     rates.   Consideration  is  also  given  to  projections  by  neighboring
     utilities  of their  future loads  and capacity.   However,  forecasts of
     future loads  are subject  to numerous uncertainties,  including economic
     conditions and effectiveness of energy conservation measures.


     Item 3.  Legal Proceedings

     Environmental Cost Recovery

     See  Note 9 of  the Notes  to Financial  Statements, "Environmental  Cost
     Recovery," for a discussion of environmental surcharge legal proceedings.

     Fuel Matters

     As previously reported in Item 3 of the Quarterly Report on Form 10-Q for
     the period ending June 30, 1995,  a former coal supplier of KU  initiated
     arbitration proceedings to recover  on-going reclamation costs claimed to
     have been incurred during  mining operations at the supplier's  mine used
     to supply  KU under a  contract that expired in  1988.  In  addition, the
     supplier  also was seeking to recover final reclamation costs which began
     in 1994 and  were estimated to continue for four more years.  This matter
     was settled in December 1995 resulting in no obligation to KU.

     Item 4.  Submission of Matters to a Vote of Security Holders

     None.








                                        -81-
<PAGE>

     Executive Officers of the Registrant
                              Current      Positions Held During at Least the
      Name and Age         Positions Held  Last 5 Years


      Michael R. Whitley   Chairman and    Chairman of the Board of KU since
      Age 52               President*      August 1995 and President from
                                           November 1994.  Director of KU
                                           since March 1992.  Senior Vice-
                                           President of KU from March 1987 to
                                           November 1994.  Secretary of KU
                                           from July 1978 to November 1992.

      James M. Allison     Senior Vice-    Senior Vice-President of KU since
      Age 42               President       November 1994.  Vice-President of
                                           KU from February 1993 to November
                                           1994.  President and Chief
                                           Operating Officer of Wheeling
                                           Power Company from October 1989 to
                                           January 1993.

      O. M. Goodlett       Senior Vice-    Senior Vice-President of KU since
      Age 48               President*      November 1992.  Vice-President of
                                           KU from April 1982 to November
                                           1992.

      Wayne T. Lucas       Senior Vice-    Senior Vice-President of KU since
      Age 48               President       November 1994.  Vice President of
                                           KU from November 1986 to November
                                           1994.

      George S. Brooks II  General         Corporate Secretary of KU since
      Age 45               Counsel and     November 1992, and General Counsel
                           Corporate       since January 1988.
                           Secretary*

      Gary E. Blake        Vice-President  Vice-President of KU since
      Age 42                               November 1992.  Western Division
                                           Manager of KU from October 1991 to
                                           November 1992.  Assistant Western
                                           Division Manager of KU from March
                                           1990 to October 1991.  Field
                                           Operations Coordinator for KU from
                                           April 1986 to March 1990.

      William E. Casebier  Vice-President  Vice-President of KU since May
      Age 53                               1988.




                                        -82-
<PAGE>

      Executive Officers of the Registrant (continued)

                              Current      Positions Held During at Least the
      Name and Age         Positions Held  Last 5 Years

      Linda M. DiMascio    Vice-President  Vice-President of KU since
      Age 41                               February 1995. Director of Human
                                           Resources of Tucker Housewares
                                           from September 1994 to February
                                           1995.  Senior Area Coordinator for
                                           U.S. Manufacturing Department of
                                           Mobil Oil Corporation from April
                                           1992 to September 1994.  Assistant
                                           Employee Relations Manager,
                                           Torrance Refinery of Mobil Oil
                                           Corporation from October 1989 to
                                           April 1992.

      Gary L. Hawley       Vice-President  Vice President of KU since January
      Age 47                               1996.  Director of Bulk Power
                                           Planning from November 1986 to
                                           January 1996.
      Robert M. Hewett     Vice-President  Vice-President of KU since January
      Age 48                               1982.

      Ronald L. Whitmer    Vice-President  Vice-President of KU since
      Age 63                               November 1992.  Director of
                                           Production and Generation
                                           Construction of KU from May 1985
                                           to November 1992.  (Retired
                                           effective January 1996.)

      William N. English   Treasurer*      Treasurer of KU since April 1982.
      Age 45

      Michael D. Robinson  Controller*     Controller of KU since August
      Age 40                               1990.

      John J. Maloy, Jr.   Assistant       Assistant Treasurer of KU since
      Age 41               Treasurer       August 1984.
                                           (Not an Executive Officer)

     Note: Officers are elected annually by the Board of Directors.   There is
           no family relationship between any executive officer  and any other
           executive officer or any director.

     *     Certain  executive  officers of  KU  may  be considered  "executive
           officers" of  KU Energy for  certain purposes.   Identified persons
           hold  positions with  the same titles  at KU  Energy.   Refer to KU
           Energy's  Annual Report  on  Form 10-K  for  information concerning
           positions  held   during  the  last  five   years  and  information
           concerning KU Energy executive officers.



                                        -83-
<PAGE>

                                      PART II


     Item 5. Market  for Registrant's  Common Equity  and Related  Stockholder
             Matters

     All of the outstanding common stock of KU is held by KU Energy.

     The  following table sets forth  the cash distributions  (in thousands of
     dollars) on common stock paid by KU for the periods indicated:


                                        1995          1994
               First Quarter         $ 15,789      $ 15,411
               Second Quarter        $ 15,789      $ 15,411
               Third Quarter         $ 15,789      $ 15,411
               Fourth Quarter        $ 15,883      $ 15,411



     See Note 5 of the Notes to Financial Statements for information regarding
     dividend restrictions.

























                                        -84-
<PAGE>
<TABLE>
     Item 6.  Selected Financial Data
<CAPTION>

      Year ended December 31,                   1995       1994      1993       1992      1991
                                                                                (in thousands)
      Operating Revenues:
<S>                                         <C>       <C>        <C>       <C>        <C>
        Residential                         $232,760  $ 213,574  $210,759  $ 194,817  $202,885
        Commercial                           151,778    142,207   138,271    133,519   137,653
        Industrial                           130,066    120,043   111,857    102,808    98,595
        Mine power                            36,076     36,498    34,977     36,696    37,093
        Public authorities                    54,161     49,869    48,142     45,570    46,332
          Total sales to ultimate
            consumers                        604,841    562,191   544,006    513,410   522,558
        Other electric utilities              75,940     89,665    62,463     58,979    61,542
        Miscellaneous revenues and other       5,649      4,181     3,428      3,432     3,560

        Provision for refund -
          litigation settlement                    -    (19,385)   (3,309)         -         -
          Total operating revenues           686,430    636,652   606,588    575,821   587,660
      Operating Expenses:
        Fuel used in generation (1)          189,845    170,654   178,910    168,470   183,167
        Electric power purchased              69,579     61,442    34,711     32,753    26,744
        Other operating expenses             121,426    112,712   104,930     93,915    91,779

        Maintenance                           62,592     66,134    59,451     61,118    58,590
        Depreciation                          75,080     65,259    60,800     58,849    57,337
        Federal and state income taxes        44,670     44,683    48,178     41,489    46,569
        Other taxes                           14,694     14,582    14,347     13,359    12,858
          Total operating expenses           577,886    535,466   501,327    469,953   477,044
      Net Operating Income                   108,544    101,186   105,261    105,868   110,616
      Other Income and Deductions              8,235      9,299     8,331     11,226    12,062
      Income Before Interest Charges
        and AFUDC                            116,779    110,485   113,592    117,094   122,678
      Interest Charges:
        Interest on long-term debt            36,095     32,147    31,650     39,571    36,559
        Other interest                         4,021      2,411     1,249      1,394     1,626
          Total interest charges              40,116     34,558    32,899     40,965    38,185
      AFUDC                                      179      1,585       593        169       262
      Net Income                            $ 76,842  $  77,512  $ 81,286  $  76,298  $ 84,755
      Preferred Stock Dividend
        Requirements                           2,256      2,384     2,558      2,518     3,031
      Net Income Applicable to Common
        Stock                               $ 74,586  $  75,128  $ 78,728  $  73,780  $ 81,724
      Common Dividends                      $ 63,250  $  61,644  $ 60,509  $ 108,996  $ 56,727

     (1) Amounts  for 1994  and 1993  reflect  reductions of  $23.1  million and  $4.1 million,
          respectively, associated with refunds  to customers related to a litigation settlement
          with a former coal supplier.
</TABLE>

                                                 -85-
<PAGE>
<TABLE>

     Item 6.  Selected Financial Data
             (continued)
<CAPTION>
                                            1995        1994        1993        1992        1991
<S>                                    <C>        <C>         <C>         <C>         <C>
     Assets (in thousands)             $1,659,988 $1,618,100  $1,523,274  $1,408,453  $1,412,961
     Capitalization: (in thousands)
        Bonds                          $  545,830  $ 495,830  $  441,830  $  443,330  $  407,330
        Notes                                  64         86         107         128         149
        Unamortized premium on
          long-term debt                       86         96         108         519         713
        Preferred stock                    40,000     40,000      40,000      40,000      40,000
        Preferred stock with mandatory
          redemption                            -          -           -           -           -
        Common stock equity               576,537    565,201     552,106     534,073     569,289
             Total capitalization      $1,162,517 $1,101,213  $1,034,151  $1,018,050  $1,017,481
     % Total Capitalization
        Represented by:
        Long-term debt                       47.0       45.1        42.7        43.6        40.1
        Preferred stock                       3.4        3.6         3.9         3.9         3.9
        Common stock equity                  49.6       51.3        53.4        52.5        56.0
     Kilowatt-hours Generated,
        Purchased and Sold:
        (in thousands)
        Power generated                15,223,851 15,524,844  14,934,839  13,700,313  14,183,713
        Power purchased                 3,254,861  3,066,917   1,926,299   2,032,110   1,464,812
        Power interchanged - net           (6,569)     2,638       1,556       3,393     (10,725)
             Total                     18,472,143 18,594,399  16,862,694  15,735,816  15,637,800
        Less - losses and company use   1,054,589    998,010   1,066,251     876,862     906,468
        Remainder - kilowatt-hours
          sold                         17,417,554 17,596,389  15,796,443  14,858,954  14,731,332
        Sales classified:
          Residential                   5,016,012  4,706,058   4,702,697   4,278,098   4,385,670
          Commercial                    3,403,054  3,272,370   3,217,504   3,080,045   3,122,156
          Industrial                    3,850,647  3,641,469   3,409,213   3,093,113   2,874,016
          Mine power                      926,873    974,233     933,317     977,032     955,410
          Public authorities            1,297,913  1,225,668   1,199,893   1,123,494   1,133,176
             Total sales to
               ultimate consumers      14,494,499 13,819,798  13,462,624  12,551,782  12,470,428
          Other electric utilities      2,923,055  3,776,591   2,333,819   2,307,172   2,260,904
             Total                     17,417,554 17,596,389  15,796,443  14,858,954  14,731,332

     Average Number of Customers          449,144    440,590     432,636     425,403     419,340
     Residential Sales (per customer):
        Average kilowatt-hours             13,377     12,781      12,995      12,007      12,471
        Average revenue                $   620.75  $  580.05  $   582.41  $   546.80  $   576.93

     System Capability - Megawatts:
        Kentucky Utilities' plants          3,509      3,265       3,164       3,163       3,162
        Purchased contracts                   394        540         365         293         254
          Total system capability           3,903      3,805       3,529       3,456       3,416
     Net System Maximum Demand -
        Megawatts                           3,341      3,127       3,176       2,845       2,894
     Load Factor (%)                         58.7       59.8        57.7        59.4        58.4
     Heat Rate (BTU per KWH) (1)           10,377     10,306      10,367      10,344      10,350
     Fuel - Average Cost per Ton(1)    $    28.49  $   28.84  $    28.31  $    27.88  $    29.67
     Average Cost per Million BTU(1)   $     1.18  $    1.19  $     1.17  $     1.18  $     1.24
     (1) Based on coal consumed
</TABLE>
                                                  -86-

<PAGE>
     Item 7. Management's Discussion  and Analysis of Financial  Condition and
             Results of Operations

     KU, an electric utility, is a wholly owned subsidiary of KU Energy.

     RESULTS OF OPERATIONS

     1995 Compared to 1994

     Net Income Applicable to Common Stock

     Net  income applicable  to  common stock  in  1995 was  $74.6 million  as
     compared  to $75.1 million in 1994 (which includes a one-time recovery of
     about $1.9 million  associated  with the  resolution of  a coal  contract
     dispute).   Refer  to  Note 1  of  the  Notes  to  Financial  Statements,
     "Operating Revenues and Fuel Costs."
<TABLE>

     Sales and Revenues
                                                                Increase (Decrease)
                                                                  From Prior Years
<CAPTION>

                                                             1995                 1994
                                                      kWh      Revenues      kWh    Revenues
                                                      (%)       (000's)       (%)    (000's)
<S>                                                    <C>     <C>            <C>  <C>
            Residential                                 7      $ 19,186        -    $ 2,815
            Commercial                                  4         9,571        2      3,936
            Industrial                                  6        10,023        7      8,186
            Mine Power & Public
             Authorities                                1         3,870        3      3,248
                  Total Retail Sales                    5        42,650        3     18,185

            Wholesale                                   5         2,738        2      1,063
            Opportunity                               (42)      (16,463)     176     26,139
                  Total Other Electric Utilities      (23)      (13,725)      62     27,202

            Miscellaneous Revenues
             and Other                                  -         1,468        -        753
                  Total Before Refund                  (1)       30,393       11     46,140
            Provision for Refund -
              Litigation Settlement                     -        19,385        -    (16,076)
                  Total                                (1)     $ 49,778       11    $30,064
</TABLE>

     Kilowatt-hour  (kWh) sales  in 1995  were 1%  below sales  in 1994.   The
     decrease  was largely  due to a  42% decline  in opportunity  sales which
     reflects a return to more normal levels from the unusually high levels of
     opportunity sales in 1994.

     Sales  to residential customers  increased by 7%  in 1995 as  a result of
     favorable weather  in the second  half of 1995,  continued growth  in the
     number of residential customers and the impact of KU's marketing efforts.
     Industrial sales rose 6% as a result of continued economic growth in KU's
     service area.   About  29% of the increase  in industrial sales for  1995
     was  due to  greater sales  to Toyota  Motor Manufacturing,  KU's largest
     customer.

     Operating revenues  for 1995  were $686.4 million, up  $30.4 million (5%)


                                        -87-
<PAGE>
     from  1994, excluding the impact  of the refunds  to customers associated
     with  the   above  mentioned  resolution  of  a  coal  contract  dispute.
     Operating  revenues in 1994 were reduced by about $19.4 million, and fuel
     expense was reduced by about $23.1 million as a result of the refunds.

     The  increase in 1995  revenues was largely  due to the  growth in retail
     sales described  above and  to amounts  recovered under an  environmental
     surcharge (about $17.9 million in 1995 compared to $3.5 million in 1994).
     Refer to Note 9 of the Notes to Financial Statements, "Environmental Cost
     Recovery."

     1995 kWh Sales by Classification

     Year Ended December 31,                                          1995
     Residential                                                       29%
     Commercial                                                        20%
     Industrial                                                        22%
     Mine Power & Public Authorities                                   13%
     Opportunity                                                        7%
     Wholesale                                                          9%
        Total                                                         100%

     Operating Expenses

     Fuel expense  for 1995 was  $189.8 million, a $3.9 million  (2%) decrease
     from 1994, excluding the effect  of the 1994 refunds to customers.   This
     decrease  was due to  a 1%  decline in annual  coal consumption and  a 1%
     decrease in the average price per ton of coal consumed.

     Purchased  power  expense increased  $8.1 million  (13%) in  1995  due to
     increased  demand ($2.5 million)  and energy  costs ($5.6 million).   The
     increase in  energy costs reflects a 6% increase in kWh purchases as well
     as  higher  prices.     The  increase  in  kWh  purchases   is  primarily
     attributable  to the  significant  demand for  electricity  in the  third
     quarter of 1995 due to unusually warm weather.

     Other  operating expenses  increased  $8.7 million (8%)  in  1995 due  to
     increased generating plant  operations expenses   (primarily attributable
     to costs associated with environmental compliance) and administrative and
     general expenses.

     Maintenance expense decreased  $3.5 million (5%) in  1995.    Maintenance
     expense for 1994 included additional costs for damage from two severe ice
     storms in the first quarter of 1994.

     Depreciation  expense increased  $9.8 million (15%).   This  increase was
     related to the Ghent Unit 1 scrubber,  which was placed into service late
     in 1994, and  two combustion  turbine peaking units  placed into  service
     late in 1994 and early in 1995.

     Interest Charges

     Interest charges rose $5.9 million (17%) in 1995  reflecting the issuance
     of  $54 million of  long-term  debt in  the fourth  quarter of  1994, $50
     million of long-term  debt in the second quarter of  1995 and an increase

                                        -88-
<PAGE>
     in the average  amount of  short-term debt outstanding  during the  first
     half of 1995.

     1994 Compared to 1993

     Net Income Applicable to Common Stock

     Net  income applicable  to  common stock  in  1994 was  $75.1 million  as
     compared  to $78.7 million  in  1993.   The  decline was  largely  due to
     increased operating expenses which  primarily related to purchased power.
     The benefits  of weather in  the first half  of 1994  were offset by  the
     impact of  milder weather in the  third and fourth quarters  of the year.
     Earnings  for 1994  include  a one-time  recovery  of about  $1.9 million
     associated with  the resolution  of a coal  contract dispute.   Refer  to
     Note 1 of the Notes to Financial Statements, "Operating Revenues and Fuel
     Costs."

     Sales and Revenues

     Sales in  1994  increased 11%  from  sales in  1993.   The  increase  was
     primarily  due to  greater opportunity  sales and  to increased  sales to
     industrial  customers.    Opportunity sales  rose  176%  in  1994 due  to
     increased demand  for power from neighboring  utilities. Industrial sales
     rose  7%  in  1994  reflecting  a  continued  trend  of   growth  in  the
     manufacturing sector of  KU's service area.  About  42% of the industrial
     sales  increase  for  1994  was due  to  greater  sales  to Toyota  Motor
     Manufacturing.  In March 1994, Toyota  completed an $800 million assembly
     plant expansion.  Residential sales were flat as compared to 1993.

     Excluding  the effect  of  the refunds  to  customers, revenues  in  1994
     increased  $46.1 million  (8%) over  1993 as  a  result of  increased kWh
     sales.

     Operating Expenses

     Fuel expense, excluding  the effect  of the above  referenced refunds  to
     customers, increased  $10.7 million (6%) in 1994.  This increase was  due
     to  a 3% increase in annual coal  consumption attributable to greater kWh
     generation and  to a 2%  increase in  the average price  per ton  of coal
     consumed.

     Purchased  power  expense increased  $26.7 million (77%)  in 1994  due to
     higher  demand  costs  ($13.8 million)   and  increased  energy   charges
     ($12.9 million).  The higher demand costs are related to KU's decision to
     increase  purchased power commitments as  part of its  strategy to obtain
     the most  economical sources of  energy supply, which allows  KU to delay
     the need for additional baseload capacity.  Effective January 1, 1994, KU
     elected  to increase  from 5%  to 20%  its  entitlement to  the available
     capacity of a 1,000-megawatt generating station owned by Electric Energy,
     Inc. (EEI).  KU is a 20% owner  of EEI.  The increase in power  purchases
     was primarily from EEI.

     Maintenance  expense for  1994 was  $6.7 million (11%)  above 1993.   The
     increase was  primarily due to damage  from two severe ice  storms in the
     first quarter of  1994 and  to scheduled maintenance  at KU's  generating
     stations.

                                        -89-
<PAGE>
     LIQUIDITY AND CAPITAL RESOURCES

     Financial Condition

     KU continues  to maintain a  strong financial  position.  At  the end  of
     1995,  common stock  equity  represented 49.6%  of total  capitalization,
     while  long-term debt  was 47.0%  and  preferred stock  was  3.4%.   KU's
     financial strength is  reflected in  high quality credit  ratings.   KU s
     senior debt securities have ratings of AA  (Duff & Phelps), Aa2 (Moody's)
     and AA- (Standard & Poor's).
<TABLE>

      As of December 31,                 1995       1994        1993        1992         1991
<CAPTION>

<S>                                    <C>        <C>         <C>         <C>          <C>
      Capitalization (in millions)     $1,163     $1,101      $1,034      $1,018       $1,017

      Long-Term Debt                     47.0%      45.1%       42.7%       43.6%       40.1%
      Preferred Stock                     3.4%       3.6%        3.9%        3.9%        3.9%
      Common Stock Equity                49.6%      51.3%       53.4%       52.5%       56.0%
</TABLE>


     Cash from  operations accounted for  78% of cash requirements  in 1995 as
     compared  to 55%  in  1994 and  67% in  1993.   For these  purposes, cash
     requirements  exclude  optional  debt refinancings  and  redemptions  and
     optional preferred stock redemptions.

     Financing

     Taking  advantage  of  lower interest  rates,  KU  issued  $36 million of
     Series S First Mortgage Bonds at a rate of 5.99% in January 1996 and used
     the proceeds to redeem the $35.5 million of Series K First Mortgage Bonds
     which carried a rate of 7 3/8%.

     In  June 1995,  KU issued  $50 million of  Series R First  Mortgage Bonds
     bearing interest at 7.55%.  The proceeds were used primarily to refinance
     short-term   indebtedness  incurred   to  finance   ongoing  construction
     expenditures and general corporate requirements.

     In 1994, $54 million of Variable Rate Collateralized Solid Waste Disposal
     Facility Revenue Bonds were issued on behalf of KU.  In 1993, $50 million
     of 5 3/4% Collateralized Solid Waste Disposal Facility Revenue Bonds were
     issued.  Proceeds from  the sale of these tax exempt issues  were used to
     fund  a  portion   of  the  costs  of  certain  environmental  compliance
     facilities at KU's Ghent Generating Station.

     In  1993,   KU  refinanced  $120 million  of  first   mortgage  bonds  at
     significantly lower interest rates.

     KU also issued  $20 million of  6.53% preferred stock  in December  1993.
     Proceeds  from the  sale of  this issue  were used  to redeem  KU's 7.84%
     preferred stock in February 1994.

     To  provide working capital for operations,  KU began issuing  commercial
     paper in  1994.  At  the end  of 1994, KU  had $76.3 million  outstanding
     under its  commercial  paper  program. KU's  commercial paper balance was
     lowered to  $55.6 million by year-end 1995 through refinancing with long-

                                        -90-
<PAGE>
     term debt.

     KU's financial  strength is enhanced by  its low cost of  capital.  Shown
     below  are KU's embedded  costs of long-term debt  and preferred stock at
     the end of 1995, 1994 and 1993.

     Embedded Cost                                1995      1994      1993
     Long-Term Debt                               7.15%     7.06%     7.23%
     Preferred Stock                              5.64%     5.64%     6.37%

     Construction Requirements

     Construction expenditures  were $124.5 million  in 1995. Of  that amount,
     about   $23.1 million  related  to  construction  of  combustion  turbine
     generating  units  (peaking units),  $11.7 million related  to compliance
     with  the 1990  Clean  Air  Act  Amendments  and  $5.6 million  to  other
     environmental compliance measures.

     Projected  construction   expenditures  for  the   1996-2000  period  are
     $547.3 million.  Included in this amount is $120.4 million for additional
     peaking  units.  Also included  in  the 1996-2000  construction  total is
     $9.7 million for environmental compliance measures.

     KU  expects  to   provide  about  92%   of  its  1996-2000   construction
     requirements through internal sources of funds with the balance primarily
     from long-term debt.

<TABLE>

     Construction Expenditures by Function - Actual 1995 and Estimated 1996-2000
<CAPTION>

                                             Actual                Estimated
      (in millions of dollars)                1995    1996     1997     1998    1999     2000

<S>                                          <C>     <C>      <C>      <C>     <C>      <C>
      Total Construction Expenditures        $ 125   $ 108    $ 143    $ 115   $  97    $  84
      Generation                                42%     32%      48%      35%     33%      19%
      Distribution                              38%     43%      32%      42%     43%      53%
      Transmission & Other                      20%     25%      20%      23%     24%      28%
</TABLE>

     UTILITY ISSUES

     Competition

     The utility  industry continues to  move to  a more competitive  and less
     regulated operating  environment. Competition at the  wholesale level was
     set  in motion with the National Energy Policy Act of 1992 (NEPA).  Under
     NEPA, the Federal Energy Regulatory Commission (FERC) was given authority

                                        -91-
<PAGE>
     to order utilities  to open  their transmission lines  to third  parties.
     NEPA  also  removed  long-standing constraints  on  the  development   of
     wholesale power  generation by  establishing a  new class  of independent
     power  producers  which are  generally  exempt  from traditional  utility
     regulation.   In  March of  1995, the  FERC issued  a Notice  of Proposed
     Rulemaking  (NOPR)   which   would  require  electric utilities  to  file
     nondiscriminatory open  access transmission  tariffs that would  apply to
     all  wholesale  buyers and  sellers  of  electricity as  well  as to  the
     utility's  own wholesale  sales and  purchases.   A natural  outgrowth of
     NEPA,  the NOPR  also proposes  to allow,  in certain  circumstances, the
     collection of charges  for the  recovery of stranded  costs (fixed  costs
     which would likely be  unrecoverable in a fully competitive  market) when
     customers change  power suppliers.  The FERC expects to issue final rules
     in 1996.

     For KU,   the risks  associated with stranded costs  are small.    A 1995
     study by Moody's Investors Service estimated that  stranded costs for the
     U.  S.  investor-owned  utility  industry  total  some $135 billion.    A
     significant  portion  of  these   costs  would  become  unrecoverable  at
     competitive market prices.  KU was identified in the Moody's study as one
     of the best-positioned companies with no stranded costs.

     KU placed a  Transmission Services (TS) Tariff into effect  in 1994 and a
     Power  Services  (PS) Tariff  into effect   in  1995.   Both  tariffs are
     subject to  refund pending  final FERC  approval.   The TS Tariff  covers
     wholesale  transactions involving  the use  of KU's  transmission system,
     while the  PS  Tariff allows  KU  to leverage  its low-cost  position  by
     selling wholesale power at market-based rates.

     While  NEPA  prohibits  the  FERC  from  ordering  utilities  to  provide
     transmission access  to retail customers, several  states are considering
     proposals  that would allow retail wheeling.   Regulators and legislators
     have  not pushed for retail  wheeling in KU's  service territory, largely
     because rates  in the  area  are already  among the  very  lowest in  the
     country.   There  is also  some concern  that  retail wheeling  might put
     upward pressure on rates for some customer classes.

     KU  believes  that competition  and change  will  continue to  impact the
     industry going  forward.  With utility rates that are among the lowest in
     the  nation,  KU  believes  it  is well-positioned  for  an  increasingly
     competitive environment.

     KU  has launched  a  series of  innovative  marketing programs  that  are
     increasing  KU's market share.   In addition, KU  has developed strategic
     initiatives  to  increase opportunity   sales  and  to expand  its market
     through economic development.

     Environmental Matters

     Clean Air Act

     The Clean  Air Act Amendments  of 1990  require a two-phase  reduction in
     emissions  of sulfur  dioxide  and nitrogen  oxide.  KU met  its  Phase I
     requirements (which were effective January 1, 1995) primarily through the
     addition of a  flue gas  desulfurization system (scrubber)  on Unit 1  of

                                        -92-
<PAGE>

     KU's Ghent  Generating Station.  The scrubber  began commercial operation
     late in 1994.

     KU  estimates  capital  costs  for  the   scrubber  and  other  equipment
     modifications  related to  Clean  Air Act  compliance to  be $145 million
     through the year 1999.   Substantially all of this amount had  been spent
     through the end of 1995.

     KU's current strategy for Phase II requirements (which  will be effective
     January 1,  2000)  is to  use  accumulated emission  allowances  to delay
     additional  capital expenditures.  These allowances will  accumulate from
     saved emission  allowances as  a result of   reduced  emissions from  the
     Ghent Unit 1  scrubber and allowances received  through the Environmental
     Protection Agency's Phase I Extension Plan Program.

     KU's  future compliance plans are  contingent upon many factors including
     developments in the emission allowance market and the fuel market as well
     as  regulatory  and  legislative  actions  and  advances   in  clean  air
     technology.  KU will continue to  review and revise  its compliance plans
     accordingly to ensure that  its environmental obligations are met  in the
     most efficient and cost-effective manner.


     Environmental Cost Recovery

     In  August 1994, KU implemented an environmental cost recovery  mechanism
     (surcharge).   Authorized by  a 1992  state statute  and approved  by the
     Kentucky Public Service  Commission (PSC), the  surcharge is designed  to
     recover  certain  environmental compliance  costs,    including costs  to
     comply with  the Federal Clean Air Act as amended, through a surcharge on
     customers' bills.

     The  constitutionality of the surcharge  was challenged in  a state court
     action brought against KU and the PSC by the Attorney General of Kentucky
     and joined  by representatives  of consumer  groups.  In  July 1995,  the
     state  court  upheld the  constitutionality of the  surcharge statute but
     disallowed   recovery  of expenditures  incurred before  January 1, 1993.
     All  parties  (including  KU) have  appealed  to  the  Kentucky Court  of
     Appeals.    Refer  to  Note 9  of  the  Notes  to  Financial  Statements,
     "Environmental Cost Recovery."

     Other

     In  1990, KU received a  letter from the  Environmental Protection Agency
     (EPA) identifying KU and others as potentially  responsible parties under
     the Comprehensive Environmental  Response Compensation and  Liability Act
     of 1980  for a disposal  site in Daviess  County, Kentucky.   The EPA has
     turned over responsibility for investigation  of the site and development
     of  a remediation plan to a group  (not including KU) originally named as
     potentially responsible parties.   KU has entered into an  agreement with
     the group as to the portion of the investigation and development costs to
     be borne by KU in connection with the site.  A remediation plan is before
     the EPA awaiting approval. Even when  the final plan is approved, KU does
     not  believe that  any liability  with respect  to the  site will  have a
     material impact on its financial position or results of operations.


                                        -93-
<PAGE>

     Meeting Future Power Needs

     KU's  energy supply  strategy  is designed  to  provide an  adequate  and
     reliable  supply of  electricity  in an  environmentally responsible  and
     cost-effective  manner.  KU  projects an annual growth  in sales and peak
     demand of 2.8% and 3.0%, respectively,  over the next 5 years.  KU  plans
     to  provide for the future power needs of its customers primarily through
     purchased power  and the  addition of  combustion turbine  peaking units.
     Three 110-megawatt  gas/oil-fired peaking units have  been installed over
     the past two years.  An additional 485 megawatts of peaking unit capacity
     is  planned through  2000  including a  110-megawatt  unit scheduled  for
     commercial operation in 1996.   There are  no plans for additional  coal-
     fired baseload capacity before 2010.

     Inflation

     KU's  rates  are  designed  to recover  operating  and  historical  plant
     investment costs.  Financial statements, which are prepared in accordance
     with generally accepted  accounting principles, report operating  results
     in terms of  historic costs and do not evaluate  the impact of inflation.
     Inflation  affects  KU's  construction  costs,  operating   expenses  and
     interest charges.  Inflation  can also impact KU's  financial performance
     if rate relief  is not granted on a timely  basis for increased operating
     costs.









                                        -94-
<PAGE>
     Item 8.  Financial Statements and Supplementary Data


                      REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

     To Kentucky Utilities Company:

     We  have  audited  the  accompanying balance  sheets  and  statements  of
     capitalization  of Kentucky  Utilities Company  (a Kentucky  and Virginia
     corporation) as of December 31, 1995 and 1994, and the related statements
     of income  and retained earnings,  and cash flows  for each of  the three
     years  in the period ended December 31, 1995.  These financial statements
     and  the  schedule  referred to  below  are  the  responsibility of  KU's
     management.    Our  responsibility is  to  express  an  opinion on  these
     financial statements and schedule based on our audits.

     We conducted  our audits in  accordance with generally  accepted auditing
     standards.  Those standards require that we plan and perform the audit to
     obtain reasonable  assurance about  whether the financial  statements are
     free of  material misstatement.  An  audit includes examining, on  a test
     basis, evidence supporting  the amounts and disclosures  in the financial
     statements.  An audit  also includes assessing the  accounting principles
     used  and significant estimates made by management, as well as evaluating
     the overall financial statement presentation.  We believe that our audits
     provide a reasonable basis for our opinion.

     In  our  opinion,  the  financial statements  referred  to  above present
     fairly, in  all material  respects,  the financial  position of  Kentucky
     Utilities  Company as of December 31,  1995 and 1994,  and the results of
     its operations  and its  cash flows for  each of the  three years  in the
     period  ended December 31,  1995, in  conformity with  generally accepted
     accounting principles.

     Our audits were  made for the purpose of forming an  opinion on the basic
     financial  statements taken  as a  whole.   The  schedule listed  in Item
     14(A)(2) is presented for  purposes of complying with the  Securities and
     Exchange  Commission's rules  and  is not  part  of the  basic  financial
     statements.   This schedule has been subjected to the auditing procedures
     applied in  the audits  of  the basic  financial statements  and, in  our
     opinion,  fairly  states, in  all material  respects, the  financial data
     required to  be set  forth therein  in relation  to  the basic  financial
     statements taken as a whole.


                                         /s/ Arthur Andersen LLP
                                         Arthur Andersen LLP

     Chicago, Illinois
     January 29, 1996




                                        -95-
<PAGE>
<TABLE>

      Statements of
      Income and
      Retained
      Earnings
                                     Kentucky Utilities Company

<CAPTION>

      Year Ended December 31, (in thousands of dollars)      1995          1994          1993

<S>                                                     <C>          <C>          <C>
      Operating Revenues (See Note 1)                   $ 686,430    $  636,652   $   606,588
      Operating Expenses:
         Fuel, principally coal, used in generation
          (See Note 1)                                    189,845       170,654       178,910
        Electric power purchased                           69,579        61,442        34,711
        Other operating expenses                          121,426       112,712       104,930
        Maintenance                                        62,592        66,134        59,451
        Depreciation                                       75,080        65,259        60,800
        Federal and state income taxes                     44,670        44,683        48,178
        Other taxes                                        14,694        14,582        14,347
          Total Operating Expenses                        577,886       535,466       501,327
      Net Operating Income                                108,544       101,186       105,261
       Other Income and Deductions:
        Interest and dividend income                        2,838         4,295         2,813
        Other income and deductions - net                   5,467         6,098         5,926
          Total Other Income and Deductions                 8,305        10,393         8,739
      Income Before Interest Charges                      116,849       111,579       114,000

       Interest Charges:
        Interest on long-term debt                         36,095        32,147        31,650
        Other interest charges                              3,912         1,920         1,064
          Total Interest Charges                           40,007        34,067        32,714

       Net Income                                          76,842        77,512        81,286
      Preferred Stock Dividend Requirements                 2,256         2,384         2,558
      Net Income Applicable to Common Stock             $  74,586    $   75,128   $    78,728


      Retained Earnings Beginning of Year               $ 257,656    $  244,429   $   226,210
      Add Net Income                                       76,842        77,512        81,286
                                                          334,498       321,941       307,496
      Deduct:
        Dividends on preferred stock                        2,256         2,384         2,558
        Dividends on common stock                          63,250        61,644        60,509
        Preferred stock redemption expense                      -           257             -
                                                           65,506        64,285        63,067
      Retained Earnings End of Year                     $ 268,992    $  257,656   $   244,429


      The  accompanying  Notes   to  Financial  Statements  are  an  integral  part  of  these
      statements.
</TABLE>

                                                -96-
<PAGE>
<TABLE>

      Statements of
      Cash Flows
                                       Kentucky Utilities Company

      Year Ended December 31, (in thousands of dollars)         1995         1994          1993

      Cash Flows from Operating Activities:
<CAPTION>

<S>                                                      <C>           <C>          <C>
        Net income                                       $    76,842   $    77,512  $    81,286
        Items not requiring (providing) cash currently:
          Depreciation                                        75,080        65,259       60,800
          Deferred income taxes                               15,502        (1,559)       5,725
          Investment tax credit deferred                      (4,095)       (4,110)      (4,131)
          Changes in current assets and liabilities:
             Change in fuel inventory                          6,214        (4,579)       7,694
             Change in accounts receivable                    (7,759)         (203)      (9,331)
             Change in accounts payable                      (11,517)        5,511       22,768
             Change in liability to ratepayers                  (310)      (29,958)      36,867
             Change in escrow funds                              312        30,841      (37,752)
          Other - net                                         (1,210)        3,250        2,643

      Net Cash Provided by Operating Activities              149,059       141,964      166,569

      Cash Flows from Investing Activities:

        Construction expenditures - utility                 (124,515)     (193,344)    (177,069)
        Nonutility property                                     (272)         (465)      (4,956)
        Other                                                    153           836          380

      Net Cash Used by Investing Activities                 (124,634)     (192,973)    (181,645)

      Cash Flows from Financing Activities:

        Short-term borrowings - net                          (20,700)       76,300            -
        Issuance of long-term debt                            49,288        53,305      171,581
        Funds deposited with trustee - net                    15,100            95      (18,268)
        Retirement of long-term debt, including premiums         (21)          (21)    (180,677)
        Retirement of preferred stock, including premiums          -       (20,302)           -
        Issuance of preferred stock                                -             -       20,000
        Payment of dividends                                 (65,506)      (64,089)     (63,027)

      Net Cash Provided (Used) by Financing Activities       (21,839)       45,288      (70,391)

      Net Increase (Decrease) in Cash and Cash Equivalents     2,586        (5,721)     (85,467)

      Cash and Cash Equivalents Beginning of Year              3,111         8,832       94,299


      Cash and Cash Equivalents End of Year              $     5,697   $     3,111  $     8,832

      Supplemental Disclosures
      Cash paid for:
        Interest on short- and long-term debt            $    37,961   $    31,864  $    33,860
        Federal and state income taxes                   $    31,974   $    45,270       42,483

      The  accompanying  Notes  to  Financial  Statements   are  an  integral  part  of  these
      statements.
</TABLE>

                                                  -97-
<PAGE>
<TABLE>

      Balance
      Sheets                           Kentucky Utilities Company

      As of December 31, (in thousands of dollars)                         1995           1994

      Assets
<CAPTION>

      Utility Plant:
<S>                                                                 <C>           <C>
         Plant in service, at cost                                  $ 2,394,018   $  2,238,926
         Less:  Accumulated depreciation                                997,366        933,394
                                                                      1,396,652      1,305,532

         Construction work in progress                                   61,410        104,385
              Total Utility Plant                                     1,458,062      1,409,917

      Current Assets:
         Cash and cash equivalents                                        5,697          3,111
         Escrow funds - coal contract litigation                          6,599          6,911
         Construction funds held by trustee                               3,743         18,553
         Accounts receivable, net of allowance
              for doubtful accounts                                      49,471         41,712
         Accrued utility revenues                                        27,900         24,227
         Fuel, principally coal, at average cost                         29,438         35,652
         Plant materials and operating supplies, at average cost         23,064         20,081
         Other                                                            8,121         10,616
              Total Current Assets                                      154,033        160,863

      Investments, Deferred Charges and Other Assets:
         Unamortized loss on reacquired debt                             11,304         12,324
         Other                                                           36,589         34,996
              Total Investments, Deferred Charges and Other Assets       47,893         47,320
              Total Assets                                          $ 1,659,988   $  1,618,100

      Capitalization and Liabilities
      Capitalization: (See Statements of Capitalization)
         Common stock equity                                        $   576,537   $    565,201
         Preferred stock                                                 40,000         40,000
          Long-term debt                                                545,980        496,012
              Total Capitalization                                    1,162,517      1,101,213

      Current Liabilities:
         Long-term debt due within one year                                  21             21
         Short-term borrowings                                           55,600         76,300
         Accounts payable                                                38,000         49,517
         Accrued interest                                                 7,556          7,328
         Accrued taxes                                                    5,201          9,422
         Customers' deposits                                              6,876          6,423
         Accrued payroll and vacations                                    8,706          8,207
         Liability to ratepayers - coal contract litigation               6,599          6,909
         Other                                                            6,752          6,275
              Total Current Liabilities                                 135,311        170,402

      Deferred Credits and Other Liabilities:
         Accumulated deferred income taxes                              231,717        214,892
         Accumulated deferred investment tax credits                     34,180         38,275
         Regulatory tax liability                                        57,726         60,788
         Other                                                           38,537         32,530
              Total Deferred Credits and Other Liabilities              362,160        346,485
              Total Capitalization and Liabilities                  $ 1,659,988   $  1,618,100


      The  accompanying  Notes  to  Financial  Statements   are  an  integral  part  of  these
      statements.
</TABLE>
                                                  -98-
<PAGE>
<TABLE>

      Statements of
      Capitalization
                                       Kentucky Utilities Company

      As of December 31, (in thousands of dollars)                               1995       1994

<CAPTION>

      Common Stock Equity:
          Common stock, without par value,
<S>                                                                        <C>        <C>
             outstanding 37,817,878 shares                                 $  308,140 $  308,140
          Capital stock expense and other                                        (595)      (595)
          Retained earnings                                                   268,992    257,656
             Total Common Stock Equity                                        576,537    565,201

      Preferred Stock, cumulative, without par value,$100 stated value
          4 3/4%, outstanding 200,000 shares                                   20,000     20,000
          6.53%, outstanding 200,000 shares                                    20,000     20,000
             Total Preferred Stock                                             40,000     40,000

      Long-Term Debt:
          First Mortgage Bonds:
             5.95%  Series Q, due June 15, 2000                                61,500     61,500
             7 3/8% Series K, due December 1, 2002                             35,500     35,500
             6.32%  Series Q, due June 15, 2003                                62,000     62,000
             7.92%  Series P, due May 15, 2007                                 53,000     53,000
             7.55%  Series R, due June 1, 2025                                 50,000          -
             8.55%  Series P, due May 15, 2027                                 33,000     33,000
                                                                              295,000    245,000
          First Mortgage Bonds, Pollution Control Series:
             7 3/8% Pollution Control Series 7, due May 1, 2010                 4,000      4,000
             7.45%  Pollution Control Series 8, due September 15, 2016         96,000     96,000
             6 1/4% Pollution Control Series 1B, due February 1, 2018          20,930     20,930
             6 1/4% Pollution Control Series 2B, due February 1, 2018           2,400      2,400
             6 1/4% Pollution Control Series 3B, due February 1, 2018           7,200      7,200
             6 1/4% Pollution Control Series 4B, due February 1, 2018           7,400      7,400
             7.60%  Pollution Control Series 7, due May 1, 2020                 8,900      8,900
             5 3/4% Pollution Control Series 9, due December 1, 2023           50,000     50,000
             Variable Rate Pollution Control Series 10, due
              November 1, 2024                                                 50,800     35,700
             Variable Rate County of Carroll, Kentucky, Collateralized
              Solid Waste Disposal Facility Revenue Bonds, due
              November 1, 2024                                                  3,200     18,300
                                                                              250,830    250,830
               Total First Mortgage Bonds                                     545,830    495,830

          Unamortized premium                                                      86         96
          8% secured note, due January 5, 1999 (net of current maturity)           64         86
             Total Long-Term Debt                                             545,980    496,012
             Total Capitalization                                          $1,162,517 $1,101,213

      The  accompanying  Notes  to  Financial  Statements  are  an  integral  part  of   these
      statements.
</TABLE>

                                                  -99-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     1.  Summary of Significant Accounting Policies

     General

     Kentucky  Utilities Company (KU) is the principal subsidiary of KU Energy
     Corporation.   The preparation of financial statements in conformity with
     generally  accepted  accounting principles  requires  management to  make
     estimates  and assumptions that affect the reported amounts of assets and
     liabilities and  disclosure of contingent  assets and liabilities  at the
     date of the financial statements and the reported amounts of revenues and
     expenses during the reporting  period.  Actual results could  differ from
     those  estimates.    Certain   amounts  from  prior  periods  have   been
     reclassified to conform with the current year presentation.

     KU is a public utility engaged in producing and  selling electric energy.
     KU  provides  electric service  to about  425,500  customers in  over 600
     communities  and  adjacent suburban  and rural  areas  in 77  counties in
     central, southeastern and western Kentucky  and to about 28,600 customers
     in 5 counties in southwestern Virginia.

     Regulation

     KU is subject  to regulation  by the Kentucky  Public Service  Commission
     (PSC), the  Virginia State Corporation  Commission (SCC) and  the Federal
     Energy Regulatory Commission (FERC).  With respect to accounting matters,
     KU  maintains its  accounts  in accordance  with  the Uniform  System  of
     Accounts  as defined by these agencies.  KU's accounting policies conform
     to generally accepted accounting  principles applicable to rate regulated
     enterprises and reflect  the effects  of the ratemaking  process.   Other
     than  the unamortized loss on reacquired debt, KU's regulatory assets are
     insignificant.

     Utility Plant

     Utility  plant is stated at the original  cost of construction.  The cost
     of  repairs and  minor  renewals is  charged  to maintenance  expense  as
     incurred.     Property   unit  replacements   are  capitalized   and  the
     depreciation reserve is charged with the cost, less net salvage, of units
     retired.

     Depreciation

     Provision for  depreciation of  utility plant is  based on  straight-line
     composite rates applied to  the cost of depreciable property.   The rates
     approximated 3.5% in 1995, 3.4% in 1994, and 3.3% in 1993.

     Cash and Cash Equivalents

     For  purposes  of  reporting  cash  flows,  KU  considers  highly  liquid
     investments  with a  maturity of three  months or  less from  the date of
     purchase to be cash equivalents.



                                        -100-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     KU  utilizes a cash management mechanism that funds certain bank accounts
     for checks  as they are presented  to those banks.   KU classified checks
     written but not presented to those banks, which amounted to $10.5 million
     and  $11.5  million  at  December 31, 1995  and  1994,  respectively,  in
     accounts payable.

     Financial Instruments

     KU's temporary  cash investments  are classified as  held-to-maturity and
     are reported under the caption "Cash and cash equivalents" on the Balance
     Sheet.

     Unamortized Loss on Reacquired Debt

     KU defers costs (primarily call premiums) arising from  the reacquisition
     or retirement of long-term  debt.  Costs  related to refinanced debt  are
     amortized over  the lives  of  the new  debt issues.    Costs related  to
     retired  debt not  refinanced  are  amortized  over  the  period  to  the
     scheduled maturity of the retired debt.

     Operating Revenues and Fuel Costs

     Revenues  are recorded  based  on services  rendered  to customers.    KU
     accrues an estimate of  revenues for electric service furnished  from the
     meter reading dates to  the end of each accounting period.   Cost of fuel
     used in  electric  generation  is  charged to  expense  as  the  fuel  is
     consumed.  Fuel adjustment clauses  adjust operating revenues for changes
     in  the  level  of  fuel costs  charged  to  expense.   An  environmental
     surcharge  for  Kentucky retail  customers,  implemented  in August 1994,
     permits the  utility to  recover certain  ongoing  operating and  capital
     costs  of   compliance  with   federal,  state  or   local  environmental
     requirements  associated  with  the   production  of  energy  from  coal,
     including the Federal Clean Air Act as amended.   See Note 9 of the Notes
     to  Financial Statements, "Environmental Cost Recovery," for an update of
     environmental surcharge legal proceedings.

     Pursuant  to regulatory orders, KU  has been refunding  fuel cost savings
     related to the resolution of a coal contract dispute.   Refunds were made
     to  Virginia  retail  customers  during the  period  August 1993  through
     June 1994.    Refunds   were  made  to  wholesale   customers  under  the
     jurisdiction of the FERC in lump sum payments in September 1993.  Refunds
     to Kentucky retail customers commenced  in July 1994.  A portion  remains
     to be  refunded to Kentucky  customers who  have not filed  claims.   Any
     amounts  not claimed  within  seven years  of  the initial  refunds  will
     escheat to the state.

     Operating   revenues  and   fuel  expense  for   1994  were   reduced  by
     $19.4 million and $23.1 million, respectively,  resulting from the above-
     mentioned refunds.  Operating  revenues and fuel expense were  reduced by
     $3.3 million and $4.1 million, respectively, in 1993.   The refunding had
     no impact on operating revenues or fuel expense for 1995.  The difference
     between the reduction  in operating  revenues and the  reduction in  fuel


                                        -101-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     expense  is attributed to  incurred litigation  costs, fuel  cost savings
     related  to opportunity sales and costs incurred to administer the refund
     plan.   These  amounts were  allowed  to be  retained by  KU pursuant  to
     regulatory orders.

     Income Taxes

     KU  establishes deferred tax assets  and liabilities, as appropriate, for
     all temporary differences,  and adjusts deferred tax  balances to reflect
     changes in  tax rates expected  to be  in effect during  the periods  the
     temporary  differences reverse.    Investment tax  credits resulted  from
     provisions  of  the tax  law  which  permitted a  reduction  of KU's  tax
     liability based on certain construction  expenditures.  Such credits have
     been deferred in  the accounts and are  being amortized as reductions  in
     income tax  expense over the  life of the  related property.   Because of
     rate regulation, changes  in tax rates are deferred  and amortized as the
     temporary differences reverse.


     2.  Income Taxes

     KU is  included in  the consolidated  federal  tax return  of its  parent
     company,  KU  Energy.   Income  taxes  are  allocated  to the  individual
     companies,  including KU,  based  on their  respective taxable  income or
     loss.

     The accumulated deferred  income taxes as set forth  in the Balance Sheet
     arise from the following temporary differences:
<TABLE>

      As of December 31, (in thousands of dollars)                        1995         1994
<CAPTION>

      Deferred Tax Assets:
        Unamortized investment tax credit and other property
<S>                                                                   <C>          <C>
          related differences                                         $ 31,667     $ 31,805

        Other                                                           15,990       17,363
        Less:  Amounts included in current assets                        4,985        6,726
                                                                        42,672       42,442

      Deferred Tax Liabilities:
        Accelerated depreciation and other property
          related differences                                          268,203      251,282
        Other                                                            6,186        6,052
                                                                       274,389      257,334

      Net accumulated deferred income tax liability                   $231,717     $214,892
</TABLE>


                                                -102-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company
<TABLE>

      The components of income tax expense are as follows:

      Year Ended December 31, (in thousands of dollars)         1995          1994         1993
<CAPTION>

      Income taxes charged to Operating Income:
<S>                                                         <C>           <C>          <C>
      Current   - federal                                   $ 23,597      $ 37,058     $ 35,893
                - state                                        5,134         8,812        9,484
                                                              28,731        45,870       45,377
      Deferred  - federal                                     12,165        (1,114)       2,837
                - state                                        3,845            13           71
                                                              16,010        (1,101)       2,908
      Deferred investment tax credit                             (71)          (86)        (107)
                                                              44,670        44,683       48,178

      Income taxes charged to Other Income and Deductions:
      Current   - federal                                        854         1,537       (2,056)
                - state                                          190           344         (560)
                                                               1,044         1,881       (2,616)
      Deferred  - federal                                       (406)         (365)       2,261
                - state                                         (102)          (93)         556
                                                                (508)         (458)       2,817
      Amortization of deferred investment tax credit          (4,024)       (4,024)      (4,024)
                                                              (3,488)       (2,601)      (3,823)
      Total income tax expense                              $ 41,182      $ 42,082     $ 44,355
</TABLE>

     KU's  effective income tax rate,  determined by dividing  income taxes by
     the  sum of such taxes and net income,  was 34.9% in 1995, 35.2% in 1994,
     and 35.3% in  1993.  The  difference between the  effective rate and  the
     statutory  federal  income  tax rate  is  attributable  to  the following
     factors:
<TABLE>
<CAPTION>

      Year Ended December 31, (in thousands of dollars)        1995          1994          1993

<S>                                                      <C>           <C>          <C>
      Federal income tax computed at 35%                 $    41,308   $    41,858  $    43,974
      Add (Deduct):
      State income taxes, net of federal
        income tax benefit                                     5,894         5,899        6,208
      Amortization of deferred investment tax credit          (4,095)       (4,110)      (4,131)
      Other, net                                              (1,925)       (1,565)      (1,696)
      Total income tax expense                           $    41,182   $    42,082  $    44,355
</TABLE>


     3.  Retirement Benefits

     Pensions

     KU  has   a  noncontributory   defined  benefit  pension   plan  covering
     substantially all of  its employees.  Benefits under  this plan are based
     on years  of service, final average base pay and age at retirement.  KU's
     funding policy is to  make such contributions as are necessary to finance
     the  benefits provided  under  the plan.    KU's contributions  meet  the

                                        -103-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     funding  standards set forth  in the Employee  Retirement Income Security
     Act  of 1974.    The  plan assets  consist  primarily  of common  stocks,
     corporate bonds and U.S. Government Securities.

     KU  also  has  a  Supplemental  Security  Plan   for  certain  management
     personnel.   Retirement benefits under  this plan  are based on  years of
     service,  earnings  and age  at  retirement.   The  plan  has  no advance
     funding.    Benefit  payments are  made  to  retired  employees or  their
     beneficiaries from the general assets of KU.

     The  reconciliation of the funded status of  the retirement plans and the
     pension liability recorded by KU is as follows:
<TABLE>
<CAPTION>

     As of December 31, (in thousands of dollars)                         1995           1994

<S>                                                                  <C>            <C>
      Fair value of plan assets                                      $  179,203     $  154,314
      Projected benefit obligation                                     (183,795)      (169,599)
      Plan assets less than projected benefit obligation                 (4,592)       (15,285)
      Unrecognized net (gain)/loss from past
         experience different than that assumed                          (5,907)         5,246
      Unrecognized prior service cost                                     4,344          4,705
      Unrecognized net asset                                             (1,649)        (1,799)
      Regulatory effect recorded                                         (1,634)        (3,229)
      Pension liability                                              $   (9,438)    $  (10,362)

      Accumulated benefit obligation (including vested benefits
         of $139,250 and $124,094, respectively)                     $  141,531    $   126,146
</TABLE>

<TABLE>

      Components of Net Pension Cost:
<CAPTION>

      Year Ended December 31, (in thousands of dollars)       1995          1994          1993

<S>                                                       <C>           <C>          <C>
      Service cost (benefits earned during the period)    $   6,060     $   6,017    $   5,036
      Interest cost on projected benefit obligation          13,560        12,366       12,311
      Actual return on plan assets                          (27,064)       (3,723)     (13,229)
      Net amortization and deferral                          14,608        (8,765)       1,785
      Regulatory effect recorded                             (1,595)       (1,916)          56
      Net pension cost                                    $   5,569     $   3,979    $   5,959
</TABLE>

<TABLE>
<CAPTION>
      Assumptions Used in Determining Actuarial Valuations:

                                                           1995           1994            1993
      <S>                                                 <C>            <C>           <C>
      Weighted average discount rate used to
        determine the projected benefit obligation        7 3/4 %        8 1/4 %        7 1/2%

      Rate of increase for compensation levels (1)        4 3/4 %        5 1/2 %        4 3/4%

      Weighted average expected long-term rate
        of return on assets                               8 1/4 %        8 1/4 %        8 1/4%

      (1)4 3/4%, 6% and 5 1/4%, respectively, used for the Supplemental Security Plan valuation.
</TABLE>


                                        -104-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     Other Postretirement Benefits

     KU provides certain health  care and life insurance benefits  to eligible
     retired employees and  their dependents.   KU accrues,  during the  years
     that the employee renders  service, the expected cost of  providing these
     benefits   for  retired  employees,   their  beneficiaries   and  covered
     dependents.   The  postretirement health  care plan  is contributory  for
     employees who retired after December 31, 1992, with retiree contributions
     indexed annually  based upon the  experience of retiree  medical expenses
     for the preceding year.  Pre-1993 retirees are not required to contribute
     to the plan.  KU's employees become eligible for retiree medical benefits
     after 15  years of service and attainment of  age 55.  The life insurance
     plan  is noncontributory  and is  based on  compensation levels  prior to
     retirement.

     In  1993, KU  began  funding, in  addition  to current  requirements  for
     benefit payments, the maximum  tax-favored amount allowed through certain
     tax  deductible funding vehicles.  KU  anticipates making similar funding
     decisions  in future  years,  but will  consider  and make  such  funding
     decisions on the basis  of tax, regulatory and other  relevant conditions
     in effect  at such times.   The plan  assets consist primarily  of equity
     investments.

     The   reconciliation  of  the  funded   status  of  the   plans  and  the
     postretirement benefit liability recorded by KU is as follows:
<TABLE>
<CAPTION>

     As of December 31, (in thousands of dollars)                   1995                  1994

      Accumulated postretirement benefit obligation:
<S>                                                           <C>                   <C>
        Retirees                                              $   (28,575)          $   (31,992)
        Fully eligible active plan participants                    (8,250)               (8,287)
        Other active plan participants                            (26,831)              (25,578)
                                                                  (63,656)              (65,857)
      Plan assets at fair value                                    10,427                 5,341
      Accumulated postretirement benefit obligation
        in excess of plan assets                                  (53,229)              (60,516)
      Unrecognized net (gain)/loss from past
        experience different from that assumed                    (18,773)              (11,353)
      Unrecognized transition obligation                           56,801                60,142
      Accrued postretirement benefit liability                $   (15,201)          $   (11,727)
</TABLE>

<TABLE>

      Components of the net periodic postretirement benefit cost are as follows:
<CAPTION>

      Year Ended December 31, (in thousands of dollars)       1995          1994           1993
      Service cost (benefits attributed to service
<S>                                                     <C>           <C>           <C>
        during the period)                              $    1,918    $    2,105    $     2,048
      Interest cost on accumulated postretirement
        benefit obligation                                   4,926         4,926          5,730
      Actual return on plan assets                          (1,722)          (80)             -
      Net amortization and deferral                            792          (118)             -
      Amortization of transition obligation                  3,341         3,341          3,341
      Regulatory effect recorded                                 -           689           (689)
      Net periodic postretirement benefit cost          $    9,255    $   10,863    $    10,430
</TABLE>


                                                 -105-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company
<TABLE>
<CAPTION>

      Assumptions Used in Determining Actuarial Valuations:   1995          1994           1993
      <S>                                                   <C>           <C>
      Weighted average discount rate used to                                             <C>
        determine the projected benefit obligation          7 3/4%        8 1/4%         7 1/2%

      Rate of increase for compensation levels              4 3/4%        5 1/2%         4 3/4%

      Weighted average expected long-term rate of
        return on assets                                    8    %        8 1/4%              -
</TABLE>

     For measurement  purposes, a  7.5% annual  rate  of increase  in the  per
     capita cost of  covered health care  benefits is assumed  for 1996.   The
     health care  cost trend rate  is assumed  to decrease gradually  to 4.75%
     through  2003  and remain  at that  level  thereafter over  the projected
     payout  period of the benefits.   Increasing the assumed health care cost
     trend  rates  by one percentage  point in  each  year would  increase the
     accumulated postretirement benefit obligation as of December 31, 1995, by
     $10.6 million  (17%) and the aggregate  of the service  and interest cost
     components of the net  periodic postretirement benefit cost for  the year
     by $1.4 million (20%).

     4.  Commitments and Contingencies
<TABLE>
<CAPTION>

     The effects of certain commitments made by KU are estimated below:

      (in thousands of dollars)      1996      1997       1998      1999       2000  1996-2000
      Estimated Construction
<S>                              <C>       <C>        <C>        <C>       <C>        <C>
       Expenditures              $108,000  $143,500   $114,700   $97,200   $ 83,900   $547,300
      Estimated Contract
       Obligations:
        Fuel                      152,500   114,800     77,000    39,800      4,600   388,700
        Purchased power            27,700    28,900     27,400    26,300     25,600   135,900
        Operating leases            2,800     2,800      2,800     2,700      2,700    13,800
      Sinking Fund Requirements:
        First mortgage bonds     $    376  $    376   $    376   $   376   $    355   $ 1,859
</TABLE>

     Construction Program

     KU  frequently  reviews  its  construction program  and  may  revise  its
     projections of related expenditures based  on revisions to its  estimated
     load growth and projections of its future load.

     See Management's Discussion and  Analysis - Construction Requirements for
     a discussion of future construction expenditures including those relating
     to  construction of peaking units  and compliance with  the Federal Clean
     Air Act as amended.

     Coal Supply

     Obligations  under  KU's coal  purchase  contracts are  stated  at prices
     effective January 1, 1996,  and are subject to changes as  defined by the
     terms of the contracts.


                                        -106-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     Purchased Power Agreements

     KU  has purchase  power arrangements  with Owensboro  Municipal Utilities
     (OMU),   Electric  Energy, Inc.  (EEI), and  Virginia Electric  and Power
     Company  (Virginia Power).   Under  the OMU  agreement, which  expires on
     January 1, 2020, KU purchases, on an economic basis, all of the output of
     a 400-MW generating station not required by OMU.  The amount of purchased
     power  available  to  KU  during  1996-2000,  which  is  expected  to  be
     approximately  8% of  KU's total  kWh requirements,  is dependent  upon a
     number  of   factors  including  the  units'   availability,  maintenance
     schedules, fuel  costs and OMU  requirements.  Payments are  based on the
     total costs  of the  station allocated per  terms of  the OMU  agreement,
     which generally  follows delivered kWh.   Included in the  total costs is
     KU's proportionate share of debt service  requirements  on $198.8 million
     of  OMU bonds  outstanding at  December 31, 1995.   The  debt service  is
     allocated  to KU based  on its annual allocated  share of capacity, which
     averaged approximately 49% in 1995.
     KU  has a  20% equity ownership  in EEI,  which is  accounted for  on the
     equity  method of  accounting.   KU's  entitlement, beginning  January 1,
     1994, is 20%  of the available capacity of a  1,000-MW station.  Payments
     are based  on the total  costs of the  station allocated per  terms of an
     agreement among the owners, which generally follows delivered kWh.

     KU has  contracted to purchase 110-MW of capacity from Virginia Power for
     the periods of June  1997 through September 1997 and January 1998 through
     February 1998.

     Sinking Fund Requirements

     Annual sinking fund requirements for KU's first mortgage bonds may be met
     with  cash or  expenditures  for bondable  property  as provided  in  the
     Mortgage  Indenture.    KU   intends  to  meet  the  1996   sinking  fund
     requirements with expenditures for bondable property.

     Lines of Credit

     KU  has aggregate  bank  lines of  credit of  $80 million,  all of  which
     remained  unused at December 31,  1995.  A portion  of these credit lines
     ($20 million) expires  in September  1996, and the  balance ($60 million)
     expires in  December 1997.    In support  of these  lines  of credit,  KU
     compensates the banks by paying a commitment fee.


     5.  Common Stock

     KU  is subject  to  restrictions  applicable  to all  corporations  under
     Kentucky  and  Virginia law  on the  use  of retained  earnings  for cash
     dividends on  common stock, as  well as  those contained in  its Mortgage
     Indenture and Articles  of Incorporation.   At  December 31, 1995,  there
     were no restricted retained earnings.

     6.  Preferred Stock

     Each series of preferred stock is redeemable at the  option of KU upon 30
     days' written notice as follows:

                                        -107-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company


                             Redemption Price per Share
      Series                 (plus accrued and unpaid dividends, if any)
      4 3/4%                 $101.00

      6.53%                  (Not redeemable prior to December 1, 2003.)
                             $103.265 through November 30, 2004, decreasing
                             approximately $.33 each twelve months thereafter to
                             $100 on or after December 1, 2013.


     As  of December 31, 1995, there were  5.3 million shares  of KU preferred
     stock,  having   a  maximum  aggregate  stated   value  of  $200 million,
     authorized for issuance.

     7.  Short-Term and Long-Term Debt

     KU's short-term financing requirements are  satisfied through the sale of
     commercial  paper.  The weighted  average interest  rate on  the year-end
     balance was 5.83% for 1995 and 6.07% for 1994.

     In 1994, KU  entered into a  loan agreement with  the County of  Carroll,
     Kentucky to finance the construction  of solid waste disposal facilities.
     The  County of Carroll issued $54 million of variable rate revenue bonds,
     with the proceeds held in a construction fund.  In 1994 and 1995, KU drew
     down  $35.7 million and  $15.1 million, respectively,  relating to  these
     bonds.  Kentucky  Utilities Pollution Control Series 10  Bonds are issued
     under KU's Mortgage Indenture.

     Under  the provisions for the variable  rate revenue bonds, KU can choose
     between various  interest rate  options.   Currently, the daily  interest
     rate option is  being utilized.  The average annual  interest rate on the
     bonds  during 1995 was 3.95% and  was 4.10% for 1994.   The variable rate
     bonds are  subject to tender for purchase at the option of the holder and
     to mandatory tender for  purchase upon the occurrence of  certain events.
     If tendered bonds  are not remarketed,  KU has available lines  of credit
     which may be used to repurchase the bonds.

     In June 1995,  KU issued  $50 million of Series R  First Mortgage  Bonds.
     The  proceeds were  used primarily  to refinance  short-term indebtedness
     incurred  to  finance  ongoing  construction  expenditures  and   general
     corporate requirements.

     Substantially all of KU's  utility plant is pledged  as security for  the
     First Mortgage Bonds.


     8.  Financial Instruments

     The  following methods  and assumptions  were used  to estimate  the fair
     value of each class of financial instruments  for which it is practicable
     to estimate that value:

                                        -108-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     Cash and  cash equivalents, escrow funds,  construction funds, short-term
     borrowings,  commercial  paper and  customers'  deposits carrying  values
     approximate fair value because of the short maturity of these amounts.

     Long-term debt  fair values are  based on quoted  market prices for  KU's
     first mortgage bonds and on current rates available to KU for debt of the
     same remaining maturities for KU's pollution control bonds and promissory
     note.

     KU  has  an interest  rate  swap  agreement  with a  notional  amount  of
     $70 million.  Fair value of  this instrument is the estimated  amount the
     counter-party  would pay  to KU  to  terminate the  swap at  the date  of
     measurement.  This agreement expires  in early 1996.  KU has  no downside
     interest rate risk associated with this agreement.

     The estimated fair  values of KU's  financial instruments at  December 31
     are as follows:
<TABLE>
<CAPTION>

                                                      1995                    1994
                                             Carrying     Estimated    Carrying   Estimated
      (in thousands of dollars)               Amount      Fair Value     Amount   Fair Value

<S>                                         <C>         <C>          <C>          <C>
      Interest rate swap                    $       -   $      600   $        -   $   1,550

      Long-term debt                        $ 546,001   $  594,395   $  496,033   $ 475,976
</TABLE>

     If the difference between fair value and carrying value of KU's long-term
     debt  were settled at amounts  approximating those above, the anticipated
     regulatory treatment would require  return of or allow recovery  of these
     amounts in rates over a prescribed amortization period.  Accordingly, any
     settlement would not have a significant impact on KU's financial position
     or results of operations.

                                  -109-

<PAGE>



     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     9. Environmental Cost Recovery

     Since August 1994, KU has been collecting an environmental surcharge from
     its Kentucky retail  customers under a Kentucky  statute which authorizes
     electric  utilities  (including  KU) to  implement,  beginning January 1,
     1993, an environmental surcharge.   The surcharge is designed  to recover
     certain  operating and capital costs of compliance with federal, state or
     local environmental requirements associated with the production of energy
     from  coal,  including the  Federal  Clean  Air  Act  as amended.    KU's
     environmental surcharge was  approved by  the PSC  in July  1994 and  was
     implemented in August 1994.

     The constitutionality  of the  surcharge was  challenged in  the Franklin
     County  (Kentucky) Circuit Court in an action  brought against KU and the
     PSC by the Attorney General of  Kentucky and joined by representatives of
     consumer  groups.  In  July 1995,  the Circuit  Court entered  a judgment
     upholding the constitutionality of the statute, but vacating that part of
     the PSC's July 1994 order which the judgment describes as  allowing KU to
     recover, under  the surcharge, environmental expenditures incurred before
     January 1,   1993,  and  ordering  the  case  remanded  to  the  PSC  for
     determination in accordance with the Circuit Court judgment.

     The Attorney General and other  consumer representatives appealed to  the
     Kentucky  Court  of  Appeals that  part  of  the  Circuit Court  judgment
     upholding the constitutionality of the surcharge statute.  The PSC and KU
     appealed  that part  of the  judgment denying  recovery of  environmental
     expenditures incurred before  January 1, 1993.   On August 22, 1995,  the
     PSC ordered all surcharge revenues collected by KU from that date subject
     to  refund pending  final  determination  of  all  appeals.    The  total
     collections under the surcharge from August 22, 1995 through December 31,
     1995 were approximately $7 million.

     KU  believes the  constitutionality  of  the  surcharge statute  will  be
     upheld,  but it cannot  predict the outcome  of that part  of the Circuit
     Court  judgment  disallowing   recovery  of  environmental   expenditures
     incurred  before January 1,  1993.   If  the  Circuit Court  judgment  is
     ultimately upheld as  entered, KU estimates  that the amount it  would be
     required  to refund  (which  is based  solely  on costs  associated  with
     environmental expenditures incurred before January 1, 1993) for surcharge
     collections  through  December 31,  1995,   from  the  inception  of  the
     surcharge  would be  approximately $6 million,  and from  August 22, 1995
     would be approximately $2 million.  At this time, KU has not recorded any
     reserve for refund.

                                        -110-
<PAGE>
     Supplementary
     Quarterly
     Financial
     Information
     (Unaudited)
                             Kentucky Utilities Company

     Quarterly  financial results  for  1995 and  1994  are summarized  below.
     Generally, quarterly  results may  fluctuate due to  seasonal variations,
     changes  in fuel  costs and  other factors.   Operating revenues  for the
     third quarter of 1994 were reduced by $17.5 million related to refunds to
     customers of fuel  cost savings associated with the resolution  of a coal
     contract dispute.   Operating revenues  for other quarters  in 1994  were
     insignificantly impacted by the refunds.  The refunding had  no impact on
     operating revenues for 1995.   Refer to Note 1 of  the Notes to Financial
     Statements for additional information.
<TABLE>
<CAPTION>

     Quarter                                    4th           3rd          2nd           1st
                                                                   (in thousands of dollars)
      1995
<S>                                       <C>          <C>          <C>           <C>
      Operating Revenues                  $  170,152   $   194,373  $   154,757   $  167,148
      Net Operating Income                    30,626        33,073       18,283       26,562
      Net Income                              22,438        24,915       10,561       18,928
      Net Income Applicable
             to Common Stock                  21,874        24,351        9,997       18,364
      1994
      Operating Revenues                  $  159,586   $   156,512  $   154,026   $  166,528
      Net Operating Income                    20,835        29,737       20,034       30,580
      Net Income                              14,053        23,642       14,473       25,344
      Net Income Applicable
             to Common Stock                  13,489        23,078       13,909       24,652

      These  quarterly  amounts  reflect,  in  KU's  opinion,  all  adjustments
     (including  only  normal  recurring  adjustments) necessary  for  a  fair
     presentation.
</TABLE>








                                        -111-
<PAGE>

     Item 9. Changes in  and Disagreements with Accountants  on Accounting and
             Financial Disclosure

     None.

                                      PART III


     Item 10. Directors and Executive Officers of the Registrant

     Refer to KU  Energy's definitive proxy statement  (Proxy Statement) filed
     with the Securities and  Exchange Commission in connection with  its 1996
     Annual  Shareholder Meeting  under the  caption "Election  of Directors--
     General"  for  the  information  required  by  this  item  pertaining  to
     directors.  Such information  is incorporated herein by reference  and is
     also  filed herewith as Exhibit 99B.   Information required  by this item
     relating  to  executive officers  of KU  is  set forth  under  a separate
     caption in Part I hereof.

     Item 11. Executive Compensation

     Refer  to  KU Energy's  Proxy Statement  under  the caption  "Election of
     Directors -- Directors' Compensation, and -- Executive Compensation" (but
     excluding any information  contained under the subheadings  -- "Report of
     Compensation Committee  on Executive  Compensation", and  -- "Performance
     Graph") for the  information required by this item.   Such information is
     incorporated  herein  by   reference  and  is  also  filed   herewith  as
     Exhibit 99B.

     Item 12. Security Ownership of Certain Beneficial Owners and Management

     Refer  to  KU Energy's  Proxy Statement  under  the caption  "Election of
     Directors--Voting  Securities Beneficially  Owned by  Directors, Nominees
     and Executive  Officers; Other Information" for  the information required
     by this item.   Such information is incorporated herein by  reference and
     is also filed herewith as Exhibit 99B.

     Item 13. Certain Relationships and Related Transactions

     None.







                                        -112-
<PAGE>
                                      PART IV


     Item  14.   Exhibits,  Financial  Statement  Schedules,  and  Reports  on
     Form 8-K

     (A)     The following  (1) financial statements,  (2) schedules, and  (3)
             exhibits, are filed as a part of this Annual Report.

             (1)  Financial Statements

                 Report of Independent Public Accountants,
                 Statements of Income and Retained Earnings for the three
                   years ended December 31, 1995,
                 Statements of Cash Flows for the three years ended
                   December 31, 1995,
                 Balance Sheets as of December 31, 1995 and 1994
                 Statements of Capitalization as of December 31, 1995 and
                  1994, and
                 Notes to Financial Statements.

             (2)  Schedules

                 Schedule II     Valuation and qualifying accounts.

             The  following Schedules  are omitted  as  not applicable  or not
             required under Regulation S-X:

                 I, III, IV, V.











                                        -113-
<PAGE>
    (3) Exhibits

      Number                         Description                        Page

        3.A    Amended and Restated Articles of Incorporation of
               Kentucky Utilities Company.  (Exhibits 4.03 and 4.04
               to Form 8-K Current Report of KU, dated December 10,
               1993).  Incorporated by reference.                         -

        3.B    By-laws of Kentucky Utilities Company dated
               December 14, 1992.  (Exhibit 3B to Form 10-K Annual
               Report of KU for the year ended December 31, 1992).
               Incorporated by reference.                                 -

        4.A    Indenture of Mortgage or Deed of Trust dated May 1,
               1947 between Kentucky Utilities Company and First
               Trust of Illinois National Association (successor to
               Bank of America Illinois, formerly Continental Bank,
               National Association and formerly Continental
               Illinois National Bank and Trust Company of Chicago)
               and a successor individual co-trustee, as Trustees
               (the Trustees) (Amended Exhibit 7(a) in File
               No. 2-7061), and Supplemental Indentures thereto
               dated, respectively, January 1, 1949 (Second Amended
               Exhibit 7.02 in File No. 2-7802), July 1, 1950
               (Amended Exhibit 7.02 in File No. 2-8499), June 15,
               1951 (Exhibit 7.02(a) in File No. 2-8499), June 1,
               1952 (Amended Exhibit 4.02 in File No. 2-9658),
               April 1, 1953 (Amended Exhibit 4.02 in File
               No. 2-10120), April 1, 1955 (Amended Exhibit 4.02 in
               File No. 2-11476), April 1, 1956 (Amended
               Exhibit 2.02 in File No. 2-12322), May 1, 1969
               (Amended Exhibit  2.02 in File No. 2-32602), April 1,
               1970 (Amended Exhibit 2.02 in File No. 2-36410),
               September 1, 1971 (Amended Exhibit 2.02 in File
               No. 2-41467), December 1, 1972 (Amended Exhibit 2.02
               in File No. 2-46161), April 1, 1974 (Amended
               Exhibit 2.02 in File No. 2-50344), September 1, 1974
               (Exhibit 2.04 in File No. 2-59328), July 1, 1975
               (Exhibit 2.05 in File No. 2-59328), May 15, 1976
               (Amended Exhibit 2.02 in File No. 2-56126), April 15,
               1977 (Exhibit 2.06 in File No. 2-59328), August 1,
               1979 (Exhibit 2.04 in File No. 2-64969), May 1, 1980
               (Exhibit 2 to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1980), September 15, 1982
               (Exhibit 4.04 in File No. 2-79891), August 1, 1984
               (Exhibit 4B to Form 10-K Annual Report of KU for the
               year ended December 31, 1984), June 1, 1985
               (Exhibit 4 to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1985), May 1, 1990
               (Exhibit 4 to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1990), May 1, 1991
               (Exhibit 4 to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1991), May 15, 1992
               (Exhibit 4.02 to Form 8-K of KU dated May 14, 1992),
               August 1, 1992 (Exhibit 4 to form 10-Q Quarterly


                                        -114-
<PAGE>

      Number                         Description                        Page

        4.A    Report of KU for the quarter ended September 30,
      (cont.)  1992), June 15, 1993 (Exhibit 4.02 to Form 8-K of KU
               dated June 15, 1993) and December 1, 1993
               (Exhibit 4.01 to Form 8-K of KU dated December 10,
               1993).  Incorporated by reference.                         -

       4.B     Supplemental Indenture dated March 1, 1992 between
               Kentucky Utilities Company and the Trustees,
               providing for the conveyance of properties formerly
               held by Old Dominion Power Company (Exhibit 4B to
               Form 10-K Annual Report of KU for the year ended
               December 31, 1992).  Incorporated by reference.            -

        4.C    Supplemental Indenture dated November 1, 1994 between
               Kentucky Utilities Company and the Trustees (Exhibit
               4C to Form 10-K Annual Report of KU for the year
               ended December 31, 1994).  Incorporated by reference.      -

        4.D    Supplemental Indenture dated June 1, 1995 between
               Kentucky Utilities Company and the Trustees
               (Exhibit 4 to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1995).  Incorporated by
               reference.                                                 -
        4.E    Supplemental Indenture dated January 15, 1996 between
               Kentucky Utilities Company and the Trustees.             49-72

       10.A    KU's Amended and Restated Performance Share Plan
               (Exhibit 10A to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1993).  Incorporated by
               reference.                                                 -

       10.B    KU's Annual Performance Incentive Plan (Exhibit 10B
               to Form 10-K Annual Report of KU for the year ended
               December 31, 1990).  Incorporated by reference.            -

       10.C    Amendment No. 1 to KU's Annual Performance Incentive
               Plan (Exhibit 10D to Form 10-K Annual Report of KU
               for the year ended December 31, 1991).  Incorporated
               by reference.                                              -

       10.D    Amendment No. 2 to KU's Annual Performance Incentive
               Plan (Exhibit 10H to Form 10-K Annual Report of KU
               for the year ended December 31, 1993).  Incorporated
               by reference.                                              -

       10.E    Amendment No. 3 to KU's Annual Performance Incentive
               Plan (Exhibit 10I to Form 10-K Annual Report of KU
               for the year ended December 31, 1993).  Incorporated
               by reference.                                              -

       10.F    KU's Executive Optional Deferred Compensation Plan
               (Exhibit 10C to Form 10-K Annual Report of KU for the
               year ended December 31, 1990).  Incorporated by
               reference.                                                 -

       10.G    Amendment No. 1 to KU's Executive Optional Deferred
               Compensation Plan (Exhibit 10F to Form 10-K Annual
               Report of KU for the year ended December 31, 1991).
               Incorporated by reference.                                 -


                                        -115-
<PAGE>

      Number                         Description                        Page

       10.H    Amendment No. 2 to KU's Executive Optional Deferred
               Compensation Plan (Exhibit 10J to Form 10-K Annual
               Report of KU for the year ended December 31, 1993).
               Incorporated by reference.                                 -

       10.I    KU's Supplemental Security Plan (Exhibit 10I to
               Form 10-K Annual Report of KU for the year ended
               December 31, 1991).  Incorporated by reference.            -

       10.J    Amendment No. 1 to KU's Supplemental Security Plan.
               (Exhibit 10J to Form 10-K Annual Report of KU for the
               year ended December 31, 1994).  Incorporated by
               reference.                                                 -

       10.K    Amendment No. 2 to KU's Supplemental Security Plan.
               (Exhibit 10K to Form 10-K Annual Report of KU for the
               year ended December 31, 1994).  Incorporated by
               reference.                                                 -

       10.L    KU's Director Retirement Retainer Program, and
               Amendment No. 1 (Exhibit 10G to Form 10-K Annual
               Report of KU for the year ended December 31, 1991).
               Incorporated by reference.                                 -

       10.M    KU's Amended and Restated Director Deferred
               Compensation Plan                                        73-90

        12     Computation of Ratio of Earnings to Fixed Charges         91

        21     List of Subsidiaries                                      92

        23     Consent of Independent Public Accountants                 93

        27     Financial Data Schedule (required for electronic
               filing only in accordance with Item 601(c)(1) of
               Regulation S-K).                                           -

       99.A    Description of Common Stock                              94-95

       99.B    Director and Executive Officer Information               96-106

         Note - Exhibit numbers 10.A through 10.M are management contracts
         or  compensatory plans or  arrangements required  to be  filed as
         exhibits to this Form 10-K.



                                        -116-
<PAGE>

     The following instruments defining the rights of holders of certain long-
     term debt  of KU  have not  been filed with  the Securities  and Exchange
     Commission but will be furnished to the Commission upon request.

         1.  Loan Agreement dated as of  May 1, 1990 between KU and the County
             of Mercer,  Kentucky, in  connection with  $12,900,000 County  of
             Mercer, Kentucky, Collateralized Solid  Waste Disposal   Facility
             Revenue  Bonds (KU  Project) 1990  Series A, due  May 1, 2010 and
             May 1, 2020.

         2.  Loan Agreement dated as of May 1,  1991 between KU and the County
             of Carroll,  Kentucky, in connection  with $96,000,000 County  of
             Carroll,  Kentucky,  Collateralized  Pollution  Control   Revenue
             Bonds (KU Project) 1992 Series A, due September 15, 2016.

         3.  Loan Agreement  dated as  of August 1,  1992 between  KU and  the
             County  of  Carroll,  Kentucky,  in  connection  with  $2,400,000
             County  of  Carroll,  Kentucky, Collateralized  Pollution Control
             Revenue Bonds (KU Project) 1992 Series C, due February 1, 2018.

         4.  Loan Agreement  dated as  of August 1,  1992 between  KU and  the
             County  of  Muhlenberg, Kentucky,  in connection  with $7,200,000
             County of Muhlenberg, Kentucky, Collateralized  Pollution Control
             Revenue Bonds (KU Project) 1992 Series A, due February 1, 2018.

         5.  Loan Agreement  dated as  of August 1,  1992 between  KU and  the
             County of Mercer, Kentucky, in connection  with $7,400,000 County
             of  Mercer, Kentucky,  Collateralized  Pollution  Control Revenue
             Bonds (KU Project) 1992 Series A, due February 1, 2018.

         6.  Loan Agreement  dated as  of August 1,  1992 between  KU and  the
             County  of  Carroll, Kentucky,  in  connection  with  $20,930,000
             County  of  Carroll,  Kentucky, Collateralized  Pollution Control
             Revenue Bonds (KU Project) 1992 Series B, due February 1, 2018.

         7.  Loan Agreement dated as of  December 1, 1993, between KU  and the
             County of  Carroll,  Kentucky,  in  connection  with  $50,000,000
             County  of Carroll, Kentucky, Collateralized Solid Waste Disposal
             Facilities  Revenue   Bonds  (KU   Project)  1993  Series A   due
             December 1, 2023.

         8.  Loan Agreement dated as of  November 1, 1994, between KU  and the
             County  of  Carroll,  Kentucky, in  connection  with  $54,000,000
             County   of  Carroll,  Kentucky,  Collateralized     Solid  Waste
             Disposal Facilities Revenue Bonds (KU Project)  1994 Series A due
             November 1, 2024.

     (B)   No reports  on Form 8-K were filed by KU during the last quarter of
           1995.





                                        -117-
<PAGE>
<TABLE>

                                                                                 SCHEDULE II


                                    KENTUCKY UTILITIES COMPANY

                                 VALUATION AND QUALIFYING ACCOUNTS
<CAPTION>




      Year Ended December 31,                                       1995      1994      1993
                                                                              (in thousands)
      Accumulated Provision for Uncollectible Accounts Receivable

<S>                                                              <C>       <C>       <C>
      Balance at beginning of year                               $   457   $   923   $ 1,033

      Balance at end of year                                     $   455   $   457   $   923





      Note-Other valuation and qualifying accounts are not significant.

</TABLE>








                                                -118-
<PAGE>
                                            SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
     Exchange Act  of 1934, the registrant  has duly caused this  report to be
     signed on its behalf by the undersigned, thereunto duly authorized, on
     March 8, 1996.

                                          KENTUCKY UTILITIES COMPANY


                                          /s/ Michael R. Whitley
                                          Michael R. Whitley
                                          Chairman and President

         Pursuant  to the requirements of the Securities Exchange Act of 1934,
     this report has  been signed below by the following  persons on behalf of
     the registrant in the capacities and on the date indicated.

         Signature                 Title

         /s/ Michael R. Whitley
         Michael R. Whitley        Chairman and President (Principal Executive
                                   Officer) and Director

         /s/ O. M. Goodlett
         O. M. Goodlett            Senior Vice-President (Principal Financial
                                   Officer)

         /s/ Michael D. Robinson
         Michael D. Robinson       Controller (Principal Accounting Officer)

         /s/ Mira S. Ball
         Mira S. Ball              Director

         /s/ Harry M. Hoe
         Harry M. Hoe              Director

         /s/ Milton W. Hudson
         Milton W. Hudson          Director

         /s/ John T. Newton
         John T. Newton            Director

         /s/ Frank V. Ramsey, Jr.
         Frank V. Ramsey, Jr.      Director

         /s/ Warren W. Rosenthal
         Warren W. Rosenthal       Director

         /s/ William L Rouse, Jr.
         William L. Rouse, Jr.     Director

         /s/ Charles L. Shearer
         Charles L. Shearer        Director

         /s/ Lee T. Todd, Jr.
         Lee T. Todd, Jr.          Director

     March 8, 1996

                                        -119-

<PAGE>
                             Executed in 120 Counterparts
                             No. 12


                                SUPPLEMENTAL INDENTURE



                                Dated January 15, 1996

                                    ______________


                              KENTUCKY UTILITIES COMPANY

                                          TO


                    FIRST TRUST OF ILLINOIS, NATIONAL ASSOCIATION
                                AND FRANK SGARAGLINO,
                                     AS TRUSTEES


                                    ______________



             (SUPPLEMENTAL TO THE INDENTURE OF MORTGAGE OR DEED OF TRUST
                 DATED MAY 1, 1947, AS AMENDED, HERETOFORE EXECUTED BY
             KENTUCKY UTILITIES COMPANY TO CONTINENTAL ILLINOIS NATIONAL
                          BANK AND TRUST COMPANY OF CHICAGO
                         AND EDMOND B. STOFFT, AS TRUSTEES.)


                                    _____________



                        (PROVIDING FOR FIRST MORTGAGE BONDS,
                           SERIES S, DUE January 15, 2006)

                                       -120-
<PAGE>


                 THIS SUPPLEMENTAL  INDENTURE,  dated  January  15,  1996
             made  and entered  into  by and  between KENTUCKY  UTILITIES
             COMPANY, a corporation organized and existing under the laws
             of the Commonwealths  of Kentucky and  Virginia (hereinafter
             commonly  referred to as the "Company"),  and FIRST TRUST OF
             ILLINOIS,   NATIONAL   ASSOCIATION,   a   national   banking
             association having its  office or place  of business in  the
             City of  Chicago, Cook County, State  of Illinois, successor
             to  Bank of  America  Illinois, formerly  named  Continental
             Bank, National Association and Continental Illinois National
             Bank  and  Trust Company  of  Chicago (hereinafter  commonly
             referred  to  as   the  "Trustee"),  and  FRANK   SGARAGLINO
             (successor Co-Trustee), of the City of Chicago, Cook County,
             State  of  Illinois,  as  Trustees under  the  Indenture  of
             Mortgage or Deed of Trust dated May 1, 1947, as modified and
             amended  by  the  several  indentures  supplemental  thereto
             heretofore  executed  by and  between  the  Company and  the
             Trustees from time to time under said  Indenture of Mortgage
             or  Deed of  Trust; said  Indenture of  Mortgage or  Deed of
             Trust,  as   so  modified  and  amended,  being  hereinafter
             commonly referred  to as the "Indenture";  and said Trustees
             under the  Indenture being hereinafter commonly  referred to
             as  the "Trustees"  or the  "Trustees under  the Indenture";
             Witnesseth:

                 WHEREAS,  the Company,  by resolution  of its  Board  of
             Directors and  the Pricing  Committee thereof duly  adopted,
             has determined  to issue  forthwith an additional  series of
             its bonds to be secured by the Indenture, as hereby modified
             and  amended, such bonds to be known and designated as First
             Mortgage Bonds, Series S  (hereinafter sometimes referred to
             as the "bonds of  Series S" or the "bonds of  said Series"),
             and  to  be authorized,  authenticated  and  issued only  as
             registered bonds without coupons; and

                 WHEREAS,  the Company  desires, in  accordance with  the
             provisions of Article I, as hereby amended, Section 6(e)  of
             Article II and Article XVI of the Indenture, to execute this
             supplemental indenture  for  the  purpose  of  creating  and
             authorizing the bonds of Series S  and modifying or amending
             certain provisions  of the Indenture in  the particulars and
             to the  extent  hereinafter in  this supplemental  indenture
             specifically provided; and

                 WHEREAS, the  execution and delivery  by the Company  of
             this supplemental indenture have been duly authorized by the
             Board of  Directors of the Company and the Pricing Committee
             thereof; and the Company has requested, and hereby requests,
             the Trustees to enter into and join with  the Company in the
             execution and delivery of this supplemental indenture; and



                                         -121-
<PAGE>


                 WHEREAS, the  bonds of  Series S  are to  be authorized,
             authenticated  and issued  only  in the  form of  registered
             bonds  without  coupons, and  each  of  such bonds  and  the
             certificate of the Trustee thereon shall be substantially in
             the following form, to wit:

                              (Form of bond of Series S)


             No. . . . . .                                $. . . . . . .

                              Kentucky Utilities Company
                            First Mortgage Bond, Series S

             Original
               Issue           Dated           Maturity
               Date            Date              Date            CUSIP

              January 24,      January 15,      January 15,
                  1996            1996              2006



                             Interest
             Interest         Payment           Record
               Rate            Dates            Dates

              5.99%             July 15            July 1
                             January 15         January 1



             REGISTERED OWNER ___________________________________


             PRINCIPAL     AMOUNT    ____________________________________
             DOLLARS


                 Unless  this certificate  is presented by  an authorized
             representative of  The Depository Trust Company,  a New York
             corporation  ("DTC"),  to  the  Company  or  its  agent  for
             registration  of transfer,  exchange,  or  payment, and  any
             certificate issued is registered  in the name of Cede  & Co.
             or  in  such other  name as  is  requested by  an authorized
             representative of DTC (and any payment is made to Cede & Co.
             or to such  other entity  as is requested  by an  authorized
             representative of  DTC), ANY TRANSFER, PLEDGE,  OR OTHER USE
             HEREOF  FOR  VALUE  OR OTHERWISE  BY  OR  TO  ANY PERSON  IS
             WRONGFUL  inasmuch as  the Registered  Owner hereof,  Cede &
             Co., has an interest herein.


                                          -122-
<PAGE>


                 Kentucky Utilities  Company,  a  Kentucky  and  Virginia
             corporation (hereinafter referred to as the "Company"),  for
             value  received, hereby  promises to  pay to  the Registered
             Owner specified above  or registered assigns,  the Principal
             Amount specified above on the Maturity Date specified above,
             and to pay to the Registered Owner interest on said sum from
             the  Dated  Date  specified  above,  at  the  Interest  Rate
             specified above, payable half-yearly on the Interest Payment
             Dates  specified above,  until said  principal sum  is paid.
             The interest  so payable on any Interest  Payment Dates will
             be  paid,  subject to  certain  exceptions  provided in  the
             Supplemental  Indenture dated January  15, 1996, hereinafter
             referred  to,  to  the  Registered  Owner at  the  close  of
             business of the Trustee  on the immediately preceding Record
             Date.  Both  the principal of and the interest  on this bond
             shall be payable at the  office or agency of the Company  in
             the  City  of Chicago,  State of  Illinois,  in any  coin or
             currency of the United  States of America which at  the time
             of payment is legal tender for public and private debts, or,
             at  the  option of  the Registered  Owner,  in like  coin or
             currency,  at the  office or  agency of  the Company  in the
             Borough of Manhattan, City  of New York, State of  New York.
             At the option of the Company, interest on this bond shall be
             payable  by check mailed on the Interest Payment Date to the
             Registered Owner hereof.

                 EXCEPT UNDER THE LIMITED CIRCUMSTANCES  DESCRIBED IN THE
             INDENTURE, THIS GLOBAL BOND MAY NOT BE TRANSFERRED EXCEPT AS
             A  WHOLE BY THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY
             TO  THE DEPOSITARY,  ANOTHER  NOMINEE OF  THE DEPOSITARY,  A
             SUCCESSOR OF THE DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR.

                 This bond is  one of the bonds of the Company issued and
             to be issued from time to time under and in accordance  with
             and  all secured  by the  indenture of  mortgage or  deed of
             trust dated  May  1, 1947,  executed  and delivered  by  the
             Company  to First  Trust  of Illinois,  National Association
             (successor to Bank of America Illinois, formerly Continental
             Bank, National Association and Continental Illinois National
             Bank and Trust Company  of Chicago) (hereinafter referred to
             as the "Trustee") and Edmond B. Stofft, as Trustees, and the
             various  indentures supplemental  thereto each  executed and
             delivered  by   the  Company  to  the   Trustees  (including
             Successor  Co-Trustees)  under  said indenture  of  mortgage
             (said indenture of mortgage and said supplemental indentures
             being   hereinafter  referred   to,  collectively,   as  the
             "Indenture").    Reference  to  the  Indenture  and  to  all
             supplemental indentures, if any, hereafter executed pursuant
             to the Indenture  is hereby  made for a  description of  the
             property mortgaged and pledged, the nature and extent of the
             security and the rights of the holders and Registered Owners
             of  said bonds  and of  the Trustees  and of the  Company in

                                         -123-
<PAGE>


             respect of such security.  By the terms of the Indenture the
             bonds to be secured thereby are issuable in series which may
             vary as to date, amount, date of maturity, rate of interest,
             redemption  provisions,  medium  of  payment  and  in  other
             respects as in the Indenture provided. Bonds of Series S are
             not subject to redemption prior to maturity.

                 In case  of certain events of  default specified in  the
             Indenture, the principal of this bond may be declared or may
             become due and  payable in  the manner and  with the  effect
             provided in the Indenture.  No recourse shall be had for the
             payment of the principal of or interest on this bond, or for
             any claim based hereon, or otherwise in respect hereof or of
             the Indenture  or any indenture supplemental  thereto, to or
             against any incorporator, stockholder, officer  or director,
             past,  present  or   future,  of  the  Company,  or  of  any
             predecessor  or successor  corporation,  either directly  or
             through   the  Company  or  such  predecessor  or  successor
             corporation, under  any constitution  or statute or  rule of
             law,  or by the enforcement of any assessment or penalty, or
             otherwise,    all    such   liability    of   incorporators,
             stockholders,   directors  and  officers  being  waived  and
             released by the Registered Owner hereof by the acceptance of
             this  bond and  being likewise  waived  and released  by the
             terms  of the Indenture.   This bond is  transferable by the
             Registered  Owner  hereof, in  person  or  by attorney  duly
             authorized, at the principal office or place  of business of
             the  Trustee under  the  Indenture, upon  the surrender  and
             cancellation of this bond  and the payment of any  stamp tax
             or other governmental  charge, and upon any  such transfer a
             new registered bond  or bonds without  coupons, of the  same
             series and for the same aggregate principal amount,  will be
             issued to the transferee in exchange herefor; provided, that
             the  Company shall not be  required to transfer, exchange or
             register bonds of Series S during the 10 days next preceding
             an Interest Payment Date.

                 This bond shall  not be valid  or become  obligatory for
             any   purpose  unless   and   until  it   shall  have   been
             authenticated  by  the  execution  by  the  Trustee  or  its
             successor  in trust  under  the Indenture  of the  Trustee's
             Certificate endorsed hereon.








                                         -124-
<PAGE>


                 IN  WITNESS  WHEREOF,  Kentucky  Utilities  Company  has
             caused this bond to be executed in its name by the manual or
             facsimile  signature of  its President  or one  of its  Vice
             Presidents, and its corporate seal or a facsimile thereof to
             be hereto  affixed or imprinted  hereon and attested  by the
             manual or facsimile signature of its Secretary or one of its
             Assistant Secretaries.


                         KENTUCKY UTILITIES COMPANY


                         By ___________________________
                                  President
             ATTEST:

             _________________________
                   Secretary

               This  bond is one  of the  bonds of  the series designated
             therein, described in the within mentioned Indenture.

                                     FIRST TRUST OF ILLINOIS, NATIONAL
                                             ASSOCIATION
                                       as Trustee

                                     By _______________________________
                                          Authorized Officer

                          (End of form of bond of Series S)



                 NOW, THEREFORE, in consideration of the premises and  of
             the sum  of One Dollar ($1.00)  duly paid by  the Trustee to
             the Company, and of  other good and valuable considerations,
             the  receipt whereof  is  hereby acknowledged,  and for  the
             purpose  of  further  assuring  to the  Trustees  under  the
             Indenture  their  title  to,  or  lien  upon,  the  property
             hereinafter described,  under and  pursuant to the  terms of
             the Indenture  and for the  purpose of further  securing the
             due  and punctual payment  of the principal  of and interest
             and  the premium,  if  any, on  all  bonds which  have  been
             heretofore or shall be  hereafter issued under the Indenture
             and indentures  supplemental thereto  and which shall  be at
             any time outstanding thereunder and secured thereby, and for
             the  purpose  of  securing  the   faithful  performance  and
             observance of all the covenants  and conditions set forth in
             the Indenture and/or in any indenture  supplemental thereto,
             the  Company has  given,  granted,  bargained, sold,  trans-
             ferred, assigned, pledged, mortgaged, warranted the title to
             and  conveyed,  and  by  these presents  does  give,  grant,

                                          -125-
<PAGE>


             bargain, sell, transfer,  assign, pledge, mortgage,  warrant
             the  title  to  and convey  unto  FIRST  TRUST  OF ILLINOIS,
             NATIONAL ASSOCIATION and FRANK SGARAGLINO, as Trustees under
             the Indenture as therein provided, and the successors in the
             trusts thereby created, and to their assigns, all the right,
             title  and interest  of the Company  in and  to any  and all
             premises,   plants,   property,   leases   and   leaseholds,
             franchises, permits,  rights and  powers, of every  kind and
             description, real and personal  (1) which have been acquired
             by the Company through construction, purchase, consolidation
             or  merger, or otherwise, and  which at the  date hereof are
             owned by the Company, and (2) which shall be acquired by the
             Company,  through   construction,  purchase,  consolidation,
             merger,  or otherwise, on or subsequent  to the date hereof,
             together, in each case, with the rents, issues, products and
             profits therefrom,  excepting, however, and  there is hereby
             expressly reserved and excluded from  the lien and effect of
             the Indenture and of this supplemental indenture, all right,
             title and  interest of the Company, now  owned, or hereafter
             acquired,  in and to (a)  all cash, bonds,  shares of stock,
             obligations and  other  securities not  deposited  with  the
             Trustee  or  Trustees  under  the  Indenture,  and  (b)  all
             accounts and bills receivable, judgments (other than for the
             recovery of real  property or establishing a lien  or charge
             thereon  or   right  therein)  and  choses   in  action  not
             specifically  assigned to  and pledged  with the  Trustee or
             Trustees  under  the  Indenture,   and  (c)  all  lamps  and
             supplies, machinery, appliances, goods,  wares, merchandise,
             commodities, equipment, apparatus, materials and/or supplies
             acquired or held by  the Company for sale, lease,  rental or
             consumption in the ordinary course of  business, and (d) the
             last day of each  of the demised terms created by  any lease
             of property leased to  the Company and under each  and every
             renewal of any such  lease, the last  day of each and  every
             such demised term being hereby  expressly reserved to and by
             the Company, and  (e) all  gas, oil, ore,  copper and  other
             minerals now or hereafter existing upon, within or under any
             real estate of the  Company subject to, or hereby  subjected
             to, the lien of the Indenture.

                 Without  in  any   way  limiting   or  restricting   the
             generality of  the  foregoing description  or the  foregoing
             exceptions  and reservations,  the Company  hereby expressly
             gives, grants, bargains, sells, transfers, assigns, pledges,
             mortgages, warrants the title to and conveys unto said FIRST
             TRUST   OF  ILLINOIS,   NATIONAL   ASSOCIATION   and   FRANK
             SGARAGLINO, as Trustees under  the Indenture, and unto their
             successor or  successors in trust, and  their assigns, under
             the  trusts and for the purposes of the Indenture, as hereby
             amended, the  properties described  in Section 5  of Article
             III of  this supplemental indenture  (said description being
             incorporated  herein by  reference with  the same  force and

                                        -126-
<PAGE>


             effect  as  if  set  forth  at  length  herein),  and  which
             properties  have  been  acquired  by  the  Company,  through
             construction,   purchase,   consolidation   or  merger,   or
             otherwise, and which are owned by the Company at the date of
             the   execution   hereof   together  with   the   tenements,
             hereditaments  and  appurtenances  thereunto   belonging  or
             appertaining.

                 TO  HAVE  AND  TO HOLD  all  said  property, rights  and
             interests hereinabove described or referred to and conveyed,
             assigned, pledged or mortgaged,  or intended to be conveyed,
             assigned,  pledged  or mortgaged,  together with  the rents,
             issues, products and profits therefrom unto said FIRST TRUST
             OF  ILLINOIS, NATIONAL ASSOCIATION  and FRANK SGARAGLINO, as
             Trustees  under  the  Indenture,   as  hereby  modified  and
             amended,  and unto  their successor  or successors  in trust
             forever, BUT  IN TRUST,  NEVERTHELESS, upon the  trusts, for
             the  purposes  and subject  to  all  the terms,  conditions,
             provisions  and  restrictions of  the  Indenture,  as hereby
             modified and amended.

                 And  upon  the  considerations  and  for  the   purposes
             aforesaid, and in order to provide, pursuant to the terms of
             the  Indenture, for  the  issuance under  the Indenture,  as
             hereby modified and amended, of bonds of Series S and to fix
             the terms,  provisions and  characteristics of the  bonds of
             said  Series, and to modify  and amend the  Indenture in the
             particulars  and   to   the  extent   hereinafter  in   this
             supplemental  indenture  specifically provided,  the Company
             hereby covenants and agrees with the Trustees as follows:

                                      ARTICLE I

                 Section  1.   A  series  of  bonds  issuable  under  the
             Indenture, as hereby  modified and amended, and  to be known
             and designated as "First  Mortgage Bonds, Series S" (herein-
             after in this Article sometimes referred to as the "bonds of
             Series S" or as the "bonds of said Series"), and which shall
             be executed,  authenticated and issued  only in the  form of
             registered  bonds  without coupons,  is  hereby  created and
             authorized.  The bonds of said Series shall be substantially
             in the form thereof hereinbefore recited.  If so directed by
             the Company, the  bonds of  Series S  shall be  issued as  a
             single  global  security  for  each  maturity  thereof   and
             registered  in the name  of The Depository  Trust Company or
             its  nominee or  successor under a  "book-entry-only" system
             pursuant to  a letter of representation  between the Company
             and  the Trustee  and said  depository.   Each bond  of said
             Series  shall  be  dated as  of  the  Interest Payment  Date
             thereof  to which interest was paid  next preceding the date
             of  issue, unless  (a) issued  on  an Interest  Payment Date
             thereof  to which interest was paid, in which event it shall

                                        -127-
<PAGE>


             be dated as of the date of issue, or (b) issued prior to the
             occurrence  of the  first Interest  Payment Date  thereof to
             which  interest was paid, in  which event it  shall be dated
             the Dated  Date; and the bonds  of said Series shall  be due
             and payable  on the  Maturity Date hereinabove  specified in
             the  form of bond, shall bear interest from the date thereof
             at  the Interest  Rate per  annum specified  in the  form of
             bond,  payable half-yearly  on  the  Interest Payment  Dates
             specified in the form of bond in each year to the Registered
             Owners  as specified on the registry books of the Trustee on
             the  close of  business  on the  applicable  Record Date  as
             hereinafter provided; shall be  payable both as to principal
             and interest,  at the office or agency of the Company in the
             City  of Chicago, State of Illinois, in any coin or currency
             of the United States of America which at the time of payment
             is  legal tender  for public  and private  debts, or  at the
             option of the Registered Owner, in like coin or currency, at
             the  office or  agency  of the  Company  in the  Borough  of
             Manhattan, City of  New York, State of New York; and, at the
             option  of the Company, shall  be payable as  to interest by
             check mailed on the Interest  Payment Date to the Registered
             Owner thereof.  So  long as any "book-entry-only"  system is
             in  effect,  the  bonds of  said  Series  shall  be paid  as
             provided in the letter of representation referred to above.

                 Anything contained  in Section  14 of Article  I of  the
             Indenture (or  elsewhere in  the Indenture) to  the contrary
             notwithstanding, only the  person in whose  name any of  the
             bonds of  Series S is registered (the "Registered Owner") at
             the close  of business  on any  Record Date  (as hereinafter
             defined) with respect to any Interest  Payment Date shall be
             entitled to  receive the  interest payable on  such Interest
             Payment Date notwithstanding the cancellation  of such bonds
             upon any transfer  or exchange subsequent to the Record Date
             and prior to such  Interest Payment Date; provided, however,
             that  if and to the extent the  Company shall default in the
             payment of  the interest due on such  Interest Payment Date,
             such defaulted  interest shall  be paid  to  the persons  in
             whose names outstanding bonds  of said Series are registered
             on the record  date to  be established by  the Trustees  for
             payment of such defaulted interest.

                 The term  "Record Date" as used  in this  Article I with
             respect to any Interest Payment Date applicable to the bonds
             of  said Series (other than an Interest Payment Date for the
             payment of  defaulted interest)  shall  mean the  applicable
             Record  Date specified  in the  form of bond  next preceding
             such Interest Payment Date, or, if such Record Date shall be
             a  legal holiday or a  day on which  banking institutions in
             the City of Chicago, Illinois, or the Borough  of Manhattan,
             City of New York,  State of New York, are  authorized by law
             to close, then the next preceding  day which shall not be  a

                                        -128-
<PAGE>


             legal holiday or  a day  on which such  institutions are  so
             authorized to close.

                 The  bonds  of Series  S are  not subject  to redemption
             prior to maturity.

                 Section 2.   The bonds of  said Series  shall, from time
             to time, be  executed on  behalf of the  Company and  sealed
             with  the corporate seal of  the Company, all  in the manner
             provided in or  permitted by Section 6  of Article I of  the
             Indenture, as follows:

                 (a)  bonds  of said  Series executed  on  behalf of  the
             Company  by its  President or  a Vice  President and  by its
             Secretary  or an Assistant  Secretary may be  so executed by
             the manual or  facsimile signature of such President or Vice
             President and  of such Secretary or  Assistant Secretary, as
             the case may be, of the Company, or of any person or persons
             who  shall have been such  officer or officers,  as the case
             may be, of the Company on  or subsequent to the date of this
             supplemental indenture, notwithstanding that he or  they may
             have ceased to be such officer or officers of the Company at
             the time  of the actual  execution, authentication, issuance
             or  delivery of  any of such  bonds of said  Series, and any
             such  manual or  facsimile signature  or signatures  of such
             officer or officers of the Company as above provided, on any
             such  bonds  shall constitute  execution  of  such bonds  on
             behalf of the  Company by  such officer or  officers of  the
             Company  for  the  purposes  of  the  Indenture,  as  hereby
             modified and amended,  and shall be valid  and effective for
             all purposes provided  that all bonds  of said Series  shall
             always be executed on behalf of the Company by the manual or
             facsimile signature of its President or a Vice President and
             of  its  Secretary  or  an  Assistant  Secretary,  as  above
             provided,  and provided,  further, that  none of  such bonds
             shall be executed on  behalf of the Company by the manual or
             facsimile signature of the same officer or person acting  in
             more than one capacity; and

                 (b)  such   corporate  seal  of   the  Company  may   be
             facsimile, and  any  bonds  of  said Series  on  which  such
             facsimile seal  of the Company shall  be affixed, impressed,
             imprinted or reproduced  shall be deemed  to be sealed  with
             the corporate seal  of the  Company for the  purpose of  the
             Indenture,  as   hereby  modified  and  amended,   and  such
             facsimile  seal  shall  be   valid  and  effective  for  all
             purposes.

                 The Company shall not be required to transfer,  exchange
             or register bonds  of said  Series during the  10 days  next
             preceding an Interest Payment Date.


                                         -129-
<PAGE>


                 Section 3.  (a)  Except  as provided in subsections  (c)
             and (g)  below, the holder of  all of the  bonds of Series S
             shall be The Depository Trust  Company ("DTC") and the bonds
             of said Series shall  be registered  in the  name of  Cede &
             Co., as nominee for DTC.

                 (b)     The bonds  of Series S shall be initially issued
             in  the  form of  a  single  authenticated fully  registered
             certificate in the name  of Cede & Co. and in  the principal
             amount of the  bonds of  Series S (a "Global  Bond").   Upon
             initial issuance, the ownership of such bonds of said Series
             shall be registered in the bond register kept by the Trustee
             in the name  of Cede & Co., as nominee  of DTC.  So  long as
             the bonds of said Series are evidenced by a Global Bond, the
             Trustee  and the Company may  treat DTC (or  its nominee) as
             the  sole  and exclusive  holder  of the  bonds  of Series S
             registered  in its name for  the purposes of  payment of the
             principal  of, premium, if any, and interest on the bonds of
             said Series or portion thereof to be redeemed, and of giving
             any notice  permitted or  required to  be  given to  holders
             under the Indenture and neither  the Trustee nor the Company
             shall  be affected  by  any notice  to  the contrary.    The
             Trustee shall  pay all principal  of, premium,  if any,  and
             interest  on the bonds of Series S registered in the name of
             Cede & Co. only to or "upon the order of" DTC  (as that term
             is  used  in  the  Uniform Commercial  Code  as  adopted  in
             Illinois and New York), and all such payments shall be valid
             and effective  to fully satisfy and  discharge the Company's
             obligations with  respect to  the principal of,  premium, if
             any, and interest on such bonds of said Series to the extent
             of the sum or sums so paid.  Except as otherwise provided in
             Section 3(c)  and (g) below, no person  other than DTC shall
             receive  authenticated  bond  certificates   evidencing  the
             obligation of the  Company to make payments of principal of,
             premium, if any, and  interest on the bonds of  said Series.
             Upon delivery by DTC to the Trustee of written notice to the
             effect that  DTC has determined to substitute  a new nominee
             in place of Cede & Co., and subject to  the provision of the
             Indenture  with  respect to  transfers  of  bonds, the  word
             "Cede & Co."  in this supplemental indenture  shall refer to
             such new nominee of DTC.

                 (c)     Any Global Bond shall be exchangeable for  bonds
             of Series S in certificated form  registered in the names of
             Participants and/or  Beneficial Owners if, but  only if, (i)
             DTC notifies the Company  that it is unwilling or  unable to
             continue  as depository for bonds  of said Series  or at any
             time ceases to be a clearing agency registered as such under
             the Securities  Exchange Act  of 1934, as  amended, (ii) the
             Company instructs the Trustee that such Global Bond shall be
             exchangeable  or  (iii) there  shall  have  occurred  and be
             continuing  an event of default or an event that with notice

                                         -130-
<PAGE>


             or  passage of time, or  both, would constitute  an event of
             default.    In  any such  event,  the  Trustee  shall issue,
             transfer and exchange bond  certificates as requested by DTC
             in  appropriate  amounts  pursuant   to  Article  I  of  the
             Indenture and  Section 1 of  Article I of  this supplemental
             indenture.   The Company  shall pay all  costs in connection
             with  the production,  execution and  delivery of  such bond
             certificates.     If  bond  certificates  are   issued,  the
             provisions  of the  Indenture  shall apply  to, among  other
             things, the  transfer and exchange of  such certificates and
             the method of payment and principal of, premium, if any, and
             interest on such certificates.

                 (d)     Notwithstanding  any  other  provision  of  this
             supplemental indenture to the contrary, so long as any bonds
             of  Series S are evidenced  by a Global  Bond, registered in
             the name of Cede & Co., as nominee of DTC, all payments with
             respect to the principal of,  premium, if any, and  interest
             on the bonds  of said Series and all notices with respect to
             the  bonds  of  said   Series  shall  be  made  and   given,
             respectively,  to  DTC  as  provided  in the  representation
             letter relating to the  bonds of said Series among  DTC, the
             Trustee  and the Company.  The  Trustee is hereby authorized
             and  directed to comply with all terms of the representation
             letter.

                 (e)     In   connection   with   any  notice   or  other
             communication to  be provided pursuant to  the Indenture for
             the bonds  of Series S  by the Company  or the Trustee  with
             respect to any  consent or other action  to be taken  by the
             holders  of the  bonds of  said Series,  the Company  or the
             Trustee,  as  the case  may be,  shall  seek to  establish a
             record date  to the  extent permitted by  the Indenture  for
             such consent or  other action  and give DTC  notice of  such
             record  date not  less than  fifteen (15)  calendar days  in
             advance  of such record date  to the extent  possible.  Such
             notice  to DTC  shall be  given only  when DTC  is the  sole
             holder.

                 (f)     NEITHER  THE TRUSTEE NOR  THE COMPANY SHALL HAVE
             ANY   RESPONSIBILITY   OR   OBLIGATION  TO   ANY   OF  DTC'S
             PARTICIPANTS (EACH, A "PARTICIPANT"), ANY PERSON  CLAIMING A
             BENEFICIAL  OWNERSHIP  IN THE  BONDS  OF SERIES  S  UNDER OR
             THROUGH DTC OR ANY PARTICIPANT (EACH, A "BENEFICIAL OWNER"),
             OR ANY OTHER PERSON WHICH IS NOT SHOWN ON THE BOND  REGISTER
             MAINTAINED BY THE TRUSTEE AS BEING A HOLDER, WITH RESPECT TO
             (i) THE ACCURACY  OF ANY  RECORDS MAINTAINED BY  DTC OR  ANY
             PARTICIPANT; (ii) THE  PAYMENT BY DTC OR  ANY PARTICIPANT OF
             ANY  AMOUNT IN RESPECT OF THE PRINCIPAL OF, PREMIUM, IF ANY,
             OR  INTEREST ON THE BONDS  OF SAID SERIES;  (iii) ANY NOTICE
             WHICH  IS PERMITTED OR REQUIRED TO BE GIVEN TO HOLDERS UNDER
             THE INDENTURE OF BONDS OF SAID SERIES; (iv) THE SELECTION BY

                                         -131-
<PAGE>


             DTC OR ANY PARTICIPANT  OF ANY PERSON TO RECEIVE  PAYMENT IN
             THE  EVENT OF A PARTIAL REDEMPTION OF THE BONDS OF SERIES S;
             OR (v) ANY  CONSENT GIVEN  OR OTHER ACTION  TAKEN BY DTC  AS
             BONDHOLDER.

                 SO LONG AS CEDE  & CO. IS  THE REGISTERED HOLDER OF  THE
             BONDS OF SERIES S  AS NOMINEE OF  DTC, REFERENCES HEREIN  TO
             THE  BONDS OF SAID SERIES OR REGISTERED HOLDERS OF THE BONDS
             OF SAID  SERIES SHALL MEAN CEDE & CO. AND SHALL NOT MEAN THE
             BENEFICIAL  OWNERS OF  THE  BONDS  OF  SAID SERIES  NOR  DTC
             PARTICIPANTS.

                 (g)     No Global  Bond may be  transferred except as  a
             whole by DTC to a nominee  of DTC or by a nominee of  DTC to
             DTC or  another nominee of DTC or by DTC or any such nominee
             to a successor of DTC or a nominee of such successor.

                 (h)     Upon  the termination  of  the  services of  DTC
             with respect to the bonds of Series S pursuant to subsection
             (c) of this Section  3 after which no substitute  book-entry
             depository is appointed,  the bonds of said  Series shall be
             registered in whatever name or names holders transferring or
             exchanging  bonds   of  said  Series   shall  designate   in
             accordance with the provisions of the Indenture.

                                      ARTICLE II

                 Section 1.  Section  10 of Article III  and Section 1 of
             Article VII  of the  Indenture are  each  hereby amended  to
             provide that the Company covenants and agrees to observe and
             comply with the  provisions of said  sections as so  amended
             hereby so long  as the  bonds of Series  S are  outstanding.
             The bonds  outstanding  on the  date  hereof to  which  said
             Section 10 applies  are Series K, Nos. 7,  8, Series P, Nos.
             1B, 2B, 3B and 4B,  Series Q, Nos. 9  and 10 and Series R.
             The bonds  outstanding  on the  date  hereof to  which  said
             Section 1 applies are Series K, P, Q and R.

                                     ARTICLE III

                 Section   1.    The  provisions   of  this  supplemental
             indenture shall  be effective  from and after  the execution
             hereof; and  the Indenture, as hereby  modified and amended,
             shall remain in full force and effect.

                 Section 2.   Each holder or  registered owner  of a bond
             of   any  series   not  now   outstanding  which   shall  be
             authenticated by the Trustee and issued by the Company under
             the   Indenture  (as  hereby   amended)  subsequent  to  the
             execution of  this supplemental indenture and  of any coupon
             pertaining  to any such bond, by the acquisition, holding or
             ownership  of such  bond  and coupon,  thereby consents  and

                                         -132-
<PAGE>


             agrees to, and  shall be  bound by, the  provisions of  this
             supplemental indenture.

                 Section 3.  Each reference in  the Indenture, or in this
             supplemental  indenture,  to any  article, section,  term or
             provision of the Indenture shall mean and be deemed to refer
             to  such   article,  section,  term  or   provision  of  the
             Indenture, as hereby modified  and amended, except where the
             context otherwise indicates.

                 Section 4.  All  the covenants, provisions, stipulations
             and agreements in this supplemental  indenture contained are
             and  shall  be for  the sole  and  exclusive benefit  of the
             parties  hereto, their  successors and  assigns, and  of the
             holders and registered owners from time to time of the bonds
             and  of the coupons issued and outstanding from time to time
             under and secured  by the Indenture, as  hereby modified and
             amended.

                 This supplemental  indenture  has  been  executed  in  a
             number of identical counterparts,  each of which so executed
             shall be deemed to be an original.

                 At  the  time of  the  execution  of  this  supplemental
             indenture,   the   aggregate   principal   amount   of   all
             indebtedness  outstanding, or  to be  presently outstanding,
             under and secured by the  Indenture, as hereby modified  and
             amended,  is $580,130,000, consisting  of and represented by
             First Mortgage Bonds of the Company of the following series:

                    Interest       Maturity                  Principal
             Series   Rate           Date                      Amount

              K      7 3/8         December 1, 2002        $35,500,000(a)
              No. 7  7 3/8         May 1, 2010               4,000,000
                     7.60          May 1, 2020               8,900,000
              No. 8  7.45          September 15, 2016       96,000,000
              P      7.92          May 15, 2007             53,000,000
                     8.55          May 15, 2027             33,000,000
              No. 1B 6 1/4         February 1, 2018         20,930,000
              No. 2B 6 1/4         February 1, 2018          2,400,000
              No. 3B 6 1/4         February 1, 2018          7,200,000
              No. 4B 6 1/4         February 1, 2018          7,400,000
              Q      5.95          June 15, 2000            61,500,000
                     6.32          June 15, 2003            62,000,000
              No. 9  5 3/4         December 1, 2023         50,000,000
              No. 10 Variable      November 1, 2024         52,300,000(b)
              R      7.55          June 1, 2025             50,000,000
              S      (c)           January 15, 2006         36,000,000(d)

             _________


                                         -133-
<PAGE>

             (a)    To  be paid  and  discharged  not more  than 90  days
                    after issuance of Series S.

             (b)    An  additional $1,700,000  remains  authorized  to be
                    issued.

             (c)    At the Interest Rate specified in the form of bond.

             (d)    To  be presently  issued  by the  Company  under  the
                    Indenture, as hereby modified and amended.

                 All  of said bonds of  Series K, Series  P, Series Q and
             Series R, respectively,  were sold  by the  Company to,  and
             upon  the  issue  thereof  were  owned  and  held   by,  the
             corporations and partnerships whose names and residences are
             stated  in the  Supplemental  Indentures dated  December  1,
             1972, May 15, 1992, June 15, 1993 and June 1,  1995, respec-
             tively, executed by the Company  to the Trustees under  said
             Indenture as heretofore modified and amended.

                 All of said bonds of Series No. 7  and Series No. 8 were
             heretofore issued,  and upon the issuance  thereof were held
             by,  First Security  National  Bank and  Trust Company,  One
             First  Security Plaza,  Lexington, Fayette  County, Kentucky
             40507,  as trustee  (now succeeded  by Bank  One, Lexington,
             N.A.).

                 All  of  said  bonds   of  Series  No.   1B  through  4B
             inclusive, Series  No. 9 and  Series No. 10  were heretofore
             issued  and  delivered  by  the Company  to,  and  upon  the
             issuance thereof  were held  by, Bank One,  Lexington, N.A.,
             201  East Main  Street, Lexington, Fayette  County, Kentucky
             40507, as trustee.

                 The   Thirty-Six   Million  Dollars   ($36,000,000)   in
             principal  amount  of  bonds  of  Series S  proposed  to  be
             presently  issued by  the  Company under  the Indenture,  as
             hereby modified  and amended, are to be issued and delivered
             by the Company  to, and  upon the issuance  thereof will  be
             owned by, Goldman, Sachs  & Co., 85 Broad Street,  New York,
             New York  and J.J.B. Hilliard,  W.L. Lyons, Inc.,  501 South
             Fourth Avenue, Louisville, Kentucky.

                 Section 5.  The Company hereby gives, grants,  bargains,
             sells, transfers, assigns, pledges, mortgages,  warrants the
             title to  and conveys unto the Trustee  under the Indenture,
             upon  the trusts and for  the purposes of  the Indenture, as
             hereby modified, the following described properties:

               FIRST: The  following described  electric substations  and
             switching stations of the Company located in Kentucky:


                                         -134-
<PAGE>


                    Item   1:   The  69   kV   switching   station   near
               Madisonville in Hopkins County.

                    Item 2:  The 69 kV  switching station near  Pineville
               in Harlan County.

               SECOND:  The  following  described  electric  transmission
             lines of the Company located in Kentucky:

                    Item 1.  The 138  kV single  circuit steel  pole line
               extending  from  the  Ghent/Kenton   line  to  the  Butler
               Substation near Butler in Pendleton County.

                    Item 2.  The  69  kV single  circuit wood  pole  line
               extending  from the  Boyle  County/Lancaster line  to  the
               Danville #582 Substation near Danville in Boyle County.

                    Item 3.  The 69 kV  single circuit extension from the
               Lake Reba/Paint  Lick line  to the  Berea Substation  near
               Berea in Madison County.

                    Item  4.   The 138  kV single circuit  extension from
               the Brown  North/Higby  Mill  #2 line  to the  Clays  Mill
               Substation near Lexington in Fayette County.

                    Item 5.   The  69 kV  single circuit  wood pole  line
               extending  from the Rocky Branch/Pocket  line near Liggett
               in Harlan County.

                    Item 6.   The  69 kV  single circuit  wood pole  line
               extending form  the Lancaster/Dix line  near Lancaster  in
               Garrard County.

                    Item 7.   The  69 kV  single circuit  wood pole  line
               extending  from  the Cimarron  Tap  line  to  the  Andalex
               Island  Mine   metering  structure  near  Madisonville  in
               Hopkins County.

               THIRD:   The  following  described  electric  transmission
             lines of the Company located in Virginia:

                    Item 1.   The 34.5 kV  single circuit  wood pole line
               extending from the Dorchester/Andover 34.5 kV line to  the
               Canepatch  metering  structure  near  Canepatch  in   Wise
               County.

                    Item 2.   The 34.5 kV  single circuit  wood pole line
               extending  form the  Pardee Tap  line to  the new  Potcamp
               metering structure near Potcamp in Wise County.




                                         -135-
<PAGE>


                    Item 3.   The  69 kV  single circuit  wood pole  line
               attending from  the Imboden/Dorchester 69  kV line to  the
               Bear Branch Substation near Norton in Wise County.

               FOURTH:   The  following  described  real  estate  of  the
             Company situated in Carroll County, Kentucky.

               Beginning at a point  in the easterly line  of a tract  as
               conveyed to  Harold Swango  and recorded in Deed  Book 98,
               Page 25, in the  Carroll County Court Clerk s Office, said
               point  being  at  the  northwest  corner  of  a  tract  as
               conveyed to Elizabeth O Neal by the  will of T. W. O Neal,
               appearing of  record  in Will  Book  9,  Page 52,  in  the
               aforementioned  County  Clerk s  Office,  and  said  point
               having coordinate values of North 841.310'; West  6578.167
               as related  to the Control  System for Kentucky  Utilities
               Ghent Generating  Station; thence  with the  east line  of
               Swango North 20 deg. 37 min.  34 sec. West 1109.63 feet to
               a point  in  the  south  line of  the  Kentucky  Utilities
               Company tract,  said point being  at the northeast  corner
               of the  Swango tract;  thence leaving the  line of  Swango
               and  with the  southerly line  of the  Kentucky  Utilities
               Company tract North 65 deg. 08  min. 21 sec. East  1991.24
               feet to an iron pin; thence North 25  deg. 15 min. 24 sec.
               West 709.81  feet to an iron pin; thence North  81 deg. 36
               min. 54  sec. East  1142.51 feet  to an  iron pin;  thence
               South 25 deg. 40 min. 46 sec. East  197.82 feet to an iron
               pin;  thence North 67  deg. 47  min. 06  sec. East 1080.39
               feet to  a point  at the  Northwest corner  of a  tract as
               conveyed  to William  Gex and  Nancy  E. Diuguid  by  deed
               dated 2 January, 1973 and of record in Deed Book 77,  Page
               490,  and also deed dated  28 March, 1985 and of record in
               Deed  Book  99, Page  71,  in  the  aforementioned  County
               Clerk s Office; thence  leaving the southerly line of  the
               Kentucky Utilities  Company tract  and with  a fence,  the
               westerly  line of Diuguid  South 21  deg. 11  min. 52 sec.
               East 2024.50  feet to a fence  post; thence  with a fence,
               the  northerly line of  Diuguid South  65 deg.  17 min. 23
               sec.  West 435.58 feet  to a  fence post;  thence South 80
               deg. 45 min.  36 sec. West  387.01 feet  to a fence  post;
               thence  South 66 deg. 47 min. 38 sec.  West 122.32 feet to
               a fence post;  thence North 71 deg.  37 min. 54 sec.  West
               68.18  feet to a fence  post; thence South 79 deg. 15 min.
               54 sec. West  111.53 feet to a fence post; thence South 70
               deg.  40 min. 21 sec.  West 704.83 feet  to a wooden fence
               post in the east  line of the  previously mentioned O Neal
               tract; thence  leaving the northerly  line of Diuguid  and
               with the  easterly line  of O Neal  and a  fence North  24
               deg. 19  min. 03 sec.  West 441.59 feet to  a corner fence
               post; thence  with  the  northerly line  of O Neal  and  a
               fence South 79 deg. 46 min. 29 sec.  West 760.53 feet to a
               fence post;  thence South  81 deg.  24 min.  34 sec.  West

                                         -136-
<PAGE>


               263.05 feet to a corner fence  post; thence South 18  deg.
               57 min. 54 sec. West 233.77 feet  to a point; thence South
               65 deg. 27 min. 56 sec. West 610.52  feet to a fence post;
               thence South 63 deg.  23 min. 46 sec. West 570.34 feet  to
               the  point  of  beginning and  containing  149.185  acres,
               being the description set forth  in that property line map
               of Fuller,  Mossbarger, Scott and  May, which is  attached
               hereto  and made  a part  hereof, and  being the  property
               acquired by  the Company by deed  dated July  20, 1995 and
               recorded in Deed Book  124, Page 273, Carroll County Court
               Clerk s Office.

               FIFTH: The following described real estate of the  Company
             situated in Fayette County, Kentucky:

               All of Parcel 1  of the Consolidation  Minor Final  Record
               Plat,  Kentucky  Utilities  Company  Lansdowne  Substation
               Property of  record in Plat Cabinet  J, Slide  705, in the
               Office  of  the  Fayette  County  Clerk  being  known  and
               designated  as   a  portion  of  Lansdowne-Merrick   Park,
               Lexington,  Fayette   County,  Kentucky,   and  being  the
               property  acquired by  the Company by deed  dated July 19,
               1995  and recorded  in deed  Book 1797,  Page 598, Fayette
               County Court Clerk s Office.

               SIXTH: The following described real estate of the  Company
             situated in Grayson County, Kentucky:

               BEGINNING at a stake in the  east right of way  of Wallace
               Avenue, thence N 63  degrees 00' 02" E,  153.24 feet to  a
               stake, thence  S 56 degrees  56' 55" E,  193.60 feet to  a
               stake,  thence S  18 degrees  36' 07" W  230.42 feet  to a
               stake, thence N  71 degrees  30' 56" W,  155.56 feet to  a
               stake in the east right of  way of Wallace Avenue,  thence
               along the meanders of Wallace Avenue  N 17 degrees 51' 17"
               W 104.65 feet to  a stake, thence N  23 degrees 26'  22" W
               114.65 feet  to the  point of  beginning, containing  1.36
               acres,  more  or less,  as  determined  by  a survey  made
               August 12,  1994 by  Clemons Lane  Surveying, Inc.  R.L.S.
               2811,  and being  the property acquired by  the Company by
               deed dated April 13, 1995 and  recorded in Deed Book  252,
               Page 55, Grayson County Court Clerk s Office.

               SEVENTH:  The  following   decribed  real  estate  of  the
             Company situated in Harlan County, Kentucky:

                    Item 1:  Beginning at a steel pin set in  the line of
               the Cornelius property and at the northwest corner of  the
               Jeffrey Howard property;




                                         -137-
<PAGE>


                    thence  N 11  50'31"  W, 670.87  feet to  a steel pin
               found  on a spur,  the northeast  corner of  the Cornelius
               property;

                    thence continuing up  the spur N 54  23'32" E, 276.42
               feet  to a  steel pin  and cap  set  on  top of  the ridge
               between  Coxs Branch  and Rock  Branch, said  point  has a
               blazed 24" oak tree as a witness;

                    thence with  the ridge between  Coxs Branch and  Rock
               Branch, S 83  32'34" E, 440.76 feet to a steel pin set  on
               top of the ridge under a 500kv electric transmission  line
               of  the Kentucky Utilities Company and at the south right-
               of-way  of an  old electric  transmission line  which  has
               been removed;

                    thence   with   the  south   right-of-way   of   said
               transmission line  which has been removed, S 12  34'42" E,
               881.45 feet to a steel pin in the center of Coxs Branch;

                    thence down and  with the center of Coxs Branch,  the
               following five courses:  S 42  33' 28"  W, 57.76 feet to a
               point in ledge rock in the center of Coxs Branch;

                    thence S  77  28'16"  W, 147.87  feet to  a point  in
               ledge rock in the center of Coxs Branch;

                    thence S  14  56'17" W, 24.63  feet a  point in ledge
               rock in the center of Coxs Branch;

                    thence S  82  37'  17" W, 92.73  feet to  a point  in
               ledge rock in the center of Coxs Branch;

                    thence  N 76   28'08" W,  40.84  feet  to a  point in
               ledge rock in the center of  Coxs Branch, a common  corner
               with Jeffrey  Howard, a steel pin  and cap  witness on the
               bank bears N 10  26'35" E, 10.28 feet;

                    thence with the line of Jeffrey Howard, N 63   58'46"
               W,  440.17 feet  to  the point  of  beginning,  containing
               14.32  acres as  surveyed  by David  A.  Atwell,  Kentucky
               Registered Surveyor,  License Number 2063,  June 16, 1995,
               and being  the property acquired  by the  Company by  deed
               dated August 10, 1995 and recorded  in Deed Book 320, Page
               37, Harlan County Court Clerk s Office.

                    Item 2.  Beginning at a steel pin found  in the north
               right-of-way  of  Kentucky Highway  72,  at  the southeast
               corner of the Cornelius property;

                    thence with the Cornelius property line N 11   38'28"
               W, 323.29 feet to a steel pin set this survey;

                                         -138-
<PAGE>


                    thence leaving the  Cornelius line and with the  line
               of a tract to be conveyed by  Josh Howard to the  Kentucky
               Utilities Company, S 63  58'46" E,  440.17 feet to a  mark
               on ledge rock  in the center of  Coxs Branch, a steel  pin
               witness set  on the bank of Coxs Branch bears N 10  26'35"
               W, 10.28 feet;

                    thence down  and with the center  of Coxs Branch  the
               following  six courses: N  71  13'01"  W, 14.41  feet to a
               mark on ledge rock in the center of Coxs Branch;

                    thence S 72  01'34" W,  70.88 feet to a mark on ledge
               rock in the center of Coxs Branch;

                    thence S 69  04'11" W, 62.00 feet to a mark on  ledge
               rock in the center of Coxs Branch;

                    thence S 58  08'49" W, 78.43  feet to a mark on ledge
               rock in the center of Coxs Branch;

                    thence  S 62  54'14" W, 48.59 feet to a mark on ledge
               rock in the center of Coxs Branch;

                    thence S 53  30'25" W, 63.73 feet  to a steel pin set
               in the center of Coxs Branch  at the north right-of-way of
               Kentucky Highway 72;

                    thence with  the said  right-of-way N  60  17'26"  W,
               34.83  feet to  the point  of beginning,  containing  1.28
               acres by  survey of David  A. Atwell, Kentucky  Registered
               Surveyor License  Number 2063,  June 16,  1995, and  being
               the property acquired  by the Company by deed dated August
               10, 1995  and recorded in Deed  Book 320,  Page 41, Harlan
               County Court Clerk s Office.

               EIGHTH:  The  following  described  real  estate  of   the
             Company situated in McCracken County, Kentucky:

               Beginning  at a  point which  is the  intersection of  the
               centerline of the  Woodville-Heath Road (KY 725) with  the
               east  R/W line of Rice Springs Road (KY  995); thence S 15
               degrees 00' W 662.00 feet along the east R/W line of  Rice
               Springs  Road to a point;  thence S 70 degrees 00' E 425.6
               feet  to an iron  pin, said  iron pin  being the northeast
               corner of  Grantee s 100'  x 100' substation lot  and also
               the "true" point of beginning for this survey; thence

                    1.   S 20 degrees  00' W 100.00  feet along the  east
               side of Grantee s lot to an iron pin;

                    2.   N 70 degrees 00'  W 100.00 feet  along the south
               side of Grantee s lot to an iron pin;

                                         -139-
<PAGE>


                    3.   S 20  degrees  00'  W 22.47  feet along  a  line
               common to the Grantors  property to an iron pin;

                    4.  S 71  degrees 37' 49" E  150.06 feet along a line
               common to the James E. Beasley,  Jr., property to an  iron
               pin;

                    5.   N 20  degrees 00'  E 118.20  feet  along a  line
               common to Grantors  property to an iron pin;

                    6.   N  70  degrees 00'  W 50.00  feet  along a  line
               common  to  Grantors  property  to  the  "true"  point  of
               beginning,  containing .185 acres, and  being the property
               acquired by  the Company by deed  dated June  19, 1995 and
               recorded  in Deed  Book 834,  Page 836,  McCracken  County
               Clerk's Office.










                                         -140-
<PAGE>


               IN  WITNESS WHEREOF,  said  Kentucky  Utilities Company  has
          caused  this instrument to be  executed in its  corporate name by
          its President or a  Vice President and its  corporate seal to  be
          hereunto  affixed  and to  be attested  and countersigned  by its
          Secretary,   and   said  First   Trust   of   Illinois,  National
          Association,  for the purpose  of entering into  and joining with
          the Company in  the execution of this supplemental indenture, has
          caused  this instrument to be  executed in its  corporate name by
          one of its Vice Presidents and  its corporate seal to be hereunto
          affixed  and  to  be attested  by  one  of  its Vice  Presidents,
          Assistant  Vice  Presidents or  Trust  Officers,  and said  Frank
          Sgaraglino, for the purpose of entering into and joining with the
          Company  in the  execution  of this  supplemental indenture,  has
          signed and sealed  this instrument;  all as of  the day and  year
          first above written.


                                        KENTUCKY UTILITIES COMPANY


                                        By        /s/ O. M. Goodlett
                                                  O. M. Goodlett
                                              Senior Vice President

            Attest:     /s/ George S. Brooks II
                        George S. Brooks II
                        General Counsel
                         and Secretary                    (Corporate Seal)



                                        FIRST TRUST OF ILLINOIS, NATIONAL
                                             ASSOCIATION



                                        By   /s/ Steven E. Charles
                                             Steven E. Charles
                                             Vice President



          Attest:  /s/ Larry Kusch
                   Larry Kusch
                   Asst. Vice President
                                                           (Corporate Seal)



                                        /s/ Frank Sgaraglino
                                        FRANK SGARAGLINO
                                                                      (Seal)



                                         -141-
<PAGE>


          Commonwealth of Kentucky )
                                   ) ss:
          County of Fayette        )

               I, Rella M. Evans, a Notary Public in and for said County in
          the  Commonwealth  aforesaid,  do   hereby  certify  that   O. M.
          Goodlett, Senior Vice President  of Kentucky Utilities Company, a
          Kentucky  and  Virginia corporation,  and  George  S. Brooks  II,
          General Counsel and Secretary of  said corporation, who are  both
          personally known to  me to be  the same  persons whose names  are
          subscribed to the foregoing  instrument as such officers of  said
          corporation, and who  are both personally known to  me to be such
          officers, appeared before  me this  day in  person and  severally
          acknowledged  before me  that they  signed, sealed  and delivered
          said instrument as their free and voluntary act as such officers,
          and as the free and  voluntary act and deed of said  corporation,
          for the  uses and  purposes  therein set  forth; and  said O.  M.
          Goodlett,  upon  oath, acknowledged  himself  to  be Senior  Vice
          President of said  corporation and that,  as such officer,  being
          authorized so to do, he executed said instrument for the purposes
          therein  contained,  by  signing  the name  of  said  corporation
          thereto by himself as such officer.

               Given  under my  hand and  official seal  this 18th day of
          January, 1996.


                                             /s/ Rella M. Evans
                                             Rella M. Evans
                                            Notary Public
          (Notarial Seal)
                               My commission expires: November  20, 1999










                                         -142-
<PAGE>


          State of Illinois        )
                                   ) ss:
          County of Cook           )

               I, David W. Traubert, a Notary Public in and for said County
          in the State aforesaid, do hereby certify that:

               (a)  Steven E. Charles, a  Vice President of  First Trust of
          Illinois,  National Association, a  national banking association,
          and Larry Kusch, an Assistant Vice President of said association,
          who are both personally known to  me to be the same persons whose
          names are  subscribed to  the foregoing  instrument as  such Vice
          President  and Assistant Vice President  of said association, and
          who are both personally known to me to be such officers, appeared
          before me this day in person and severally acknowledged before me
          that  they signed, sealed and  delivered said instrument as their
          free  and voluntary  act as such  officers, and  as the  free and
          voluntary  act and  deed of  said association,  for the  uses and
          purposes therein  set forth;  and  said Steven  E. Charles,  upon
          oath,  acknowledged himself  to  be  a  Vice  President  of  said
          association and that, as such officer, being authorized so to do,
          he executed  said instrument for the  purposes therein contained,
          by signing the  name of  said association thereto  by himself  as
          such officer; and

               (b)  Frank Sgaraglino, personally known to me to be the same
          person  described  in,  and  whose  name  is subscribed  to,  the
          foregoing instrument,  appeared before me this day  in person and
          acknowledged  before  me that  he  executed,  signed, sealed  and
          delivered said instrument as his free and voluntary act and deed,
          for the uses and purposes therein set forth.

               Given  under my  hand and  official seal  this 18th  day of
          January, 1996.


                                        /s/ D. W. Traubert
                                        D. W. Traubert
                                        Notary Public

          (Notarial Seal)




               This  instrument was prepared by George  S. Brooks II, Esq.,
          One Quality Street, Lexington, Kentucky 40507.


                                             /s/ George S. Brooks II
                                             George S. Brooks II


                                         -143-

<PAGE>

                              KENTUCKY UTILITIES COMPANY
                         DIRECTOR DEFERRED COMPENSATION PLAN

              (As Amended and Restated Effective As Of December 1, 1995)


                                      ARTICLE I

                                       Purpose

                    The Kentucky Utilities Company Director Deferred

          Compensation Plan (the "Plan") was established, effective June 1,

          1989, to provide eligible directors of Kentucky Utilities Company

          with the opportunity to defer some or all of the compensation

          which may be payable to them for services to be performed as

          members of the Board of Directors of Kentucky Utilities Company.

          The terms and conditions of the Plan, as amended and restated

          effective as of December 1, 1995, are set forth below.


                                      ARTICLE II

                                     Definitions

                    The following words and phrases shall have the meanings

          set forth below unless a different meaning is clearly required by

          the context:

                         (a)  Account:  The account maintained
                    for each Participant showing his or her
                    interest under the Plan which shall be
                    divided into Subaccount I and Subaccount II
                    as provided in Section 4.1.

                         (b)  Accounting Date:  Each March 31,
                    June 30, September 30 and December 31 of each
                    calendar year.  The first Accounting Date
                    under the Plan was June 30, 1989.

                         (c)  Beneficiary:  The person or persons
                    (natural or otherwise) designated, in
                    accordance with Section 5.4, to receive the

                                      -144-
<PAGE>


                    distribution of a Participant's Account
                    balance in the event of the Participant's
                    death.

                         (d)  Board:  The Board of Directors of
                    the Company.

                         (e)  Committee:  The Compensation
                    Committee of the Board.

                         (f)  Company:  Kentucky Utilities
                    Company, a corporation organized and existing
                    under the laws of the Commonwealth of
                    Kentucky.

                         (g)  Compensation:  Any retainer and
                    meeting fees payable to the Director by the
                    Company for services rendered as a member of
                    the Board or any committee thereof.

                         (h)  Director:  Any member of the Board
                    on or after the Effective Date who is
                    separately compensated for his or her
                    services as a member of the Board.

                         (i)  Effective Date:  June 1, 1989.

                         (j)  Fair Market Value:  The closing
                    price of the Parent's Common Stock as
                    reported in the listing of the New York Stock
                    Exchange - Composite Transactions on a
                    specified date.

                         (k)  Parent:  KU Energy Corporation or
                    any successor thereto.

                         (l)  Participant:  A Director
                    participating in the Plan in accordance with
                    the provisions of Section 3.2, or a former
                    Director whose Account balance under the Plan
                    has not been paid in full.

                         (m)  Plan:  The Kentucky Utilities
                    Company Director Deferred Compensation Plan
                    set forth in this instrument, as it may be
                    amended from time to time.

                         (n)  Service:  An individual's service
                    on the Board and on the boards of the Parent
                    or any Subsidiary.

                         (o)  Subsidiary:  An entity in which the
                    Company or the Parent directly or indirectly
                    beneficially owns 50% or more of the voting
                    securities.

                                        -145-
<PAGE>


                                     ARTICLE III

                            Eligibility and Participation

                    3.1  Eligibility:  Each member of the Board who was a

          Director on the Effective Date was eligible to participate in the

          Plan as of the Effective Date.  Each other Director shall be

          eligible to participate in the Plan as of the first day of the

          month next following the date he or she becomes a Director.

                    3.2  Participation:  A Director may elect to

          participate in the Plan effective as of the date the Director

          first becomes eligible to participate as provided in Section 3.1,

          or effective as of the January 1st of any calendar year beginning

          after such date, by filing written notice of such election with

          the Company prior to the effective date of such election.  Such

          notice shall be accompanied by (i) an election to defer

          Compensation as provided in Section 3.4, (ii) an election with

          respect to Account adjustments as provided in Section 4.3, and

          (iii) an election as to the method of payment as provided in

          Section 5.1.  Upon filing such election notice, the Director

          shall become a Participant in the Plan effective as of the date

          elected as permitted in this Section 3.2.

                    3.3  Crediting of Compensation:  Commencing on the

          effective date of a Participant's participation in the Plan and

          continuing during the period that Compensation is to be credited

          to the Participant's Account under the Plan, the Company shall

          defer payment of and credit to the Participant's Account all or

          such portion, as elected by the Participant under Section 3.4, of

          the Compensation that the Participant would have received for

          services rendered by the Participant during such period as a

                                        -146-
<PAGE>


          member of the Board but for his participation in the Plan, such

          credits to be made as provided in Section 4.2(b).

                    3.4  Election to Defer:  At the time a Director elects

          to become a Participant, the Director shall elect to have from

          10% to 100%, in specified multiples of 10%, of his or her

          Compensation for services rendered subsequent to the date the

          Director becomes a Participant deferred under the Plan and

          credited to his or her Account as provided in Section 3.3.  Such

          election shall remain in effect until changed or terminated as

          hereinafter provided.

                    A Participant may change his or her election under this

          Section 3.4 effective as of the January 1st of any calendar year

          with respect to Compensation for services to be rendered as a

          Director on or subsequent to such January 1st, by giving the

          Company written notice of such change prior to such January 1st.

          Any change may (i) increase or decrease, within the limits

          prescribed in the preceding paragraph, the portion of

          Compensation to be deferred and credited to the Participant's

          Account as provided in Section 3.3, (ii) terminate an election to

          defer Compensation under this Section 3.4 or (iii) resume the

          deferral of Compensation under the Plan within the limits

          prescribed in the preceding paragraph.  A change in the portion

          of Compensation deferred or the termination of a Participant's

          election to defer Compensation shall not entitle the Participant

          to receive payment of his or her Account balance, which shall be

          payable only as provided in Article V.





                                        -147-
<PAGE>


                    Any election or change in election under this

          Section 3.4 shall be made on a form provided or prescribed by the

          Company.


                                      ARTICLE IV

                                Participants' Accounts

                    4.1  Individual Accounts:  A separate Account shall be

          maintained by the Company on its books for each Participant.

          Such Account shall be divided into subaccounts to specifically

          identify the portion of the Account subject to adjustment under

          Section 4.3(a) ("Subaccount I") and the portion of the Account

          subject to adjustment under Section 4.3(b) ("Subaccount II").  As

          of January 1, 1995, each Participant's Account shall be allocated

          to Subaccount I unless the Participant has elected otherwise as

          of such date as provided in Section 4.3.  Subaccounts I and II

          may, in turn, be further subdivided into such subaccounts as the

          Company considers desirable for purposes of the administration of

          the Plan.

                    4.2  Accounting Procedures:  Each Participant's Account

          shall be adjusted as of each Accounting Date as follows and in

          the following order:

                         (a)  The amount of any transfer to or
                    from Subaccount I or Subaccount II of the
                    Participant's Account, pursuant to a change
                    in election or deemed election under Section
                    4.3, made as of the first day of the calendar
                    quarter ending on such Accounting Date shall
                    be added to or subtracted from, as the case
                    may be, the applicable Subaccounts as of the
                    first day of such calendar quarter.

                         (b)  Each Participant's Account shall
                    next be credited with the amount of
                    Compensation to be credited to his or her
                    Account as provided in Section 3.3 during the

                                       -148-
<PAGE>


                    calendar quarter ending on such Accounting
                    Date.  Credits shall be made as of the last
                    business day of the respective calendar
                    months in which such Compensation would have
                    been paid to the Participant by the Company
                    but for his or her participation in the Plan
                    and shall be allocated to Subaccount I or
                    Subaccount II in accordance with the
                    Participant's election or deemed election as
                    in effect as of the respective dates as of
                    which the credits are made.

                         (c)  Each Participant's Account shall
                    next be charged as of such Accounting Date
                    with the amount of any distributions under
                    the Plan to the Participant or to his or her
                    Beneficiary effective as of or prior to such
                    Accounting Date.

                         (d)  Subaccount I of each Participant's
                    Account shall next be credited with the
                    amount equivalent to interest, as determined
                    under Section 4.3(a), to be added to the
                    Participant's Account as of such Accounting
                    Date.

                         (e)  Subaccount II of each Participant's
                    Account shall next be adjusted upwards or
                    downwards, as the case may be, in accordance
                    with Section 4.3(b), to reflect the Fair
                    Market Value of the hypothetical shares of
                    Parent Common Stock allocated to Subaccount
                    II of the Participant's Account as of such
                    Accounting Date.

               4.3  Election With Respect to Subaccount Adjustments:

          Subaccount I and Subaccount II of a Participant's Account are

          subject to adjustment as provided in Section 4.2 as follows:

                         (a)  Subaccount I Adjustments.
                    Subaccount I of a Participant's Account shall
                    be adjusted as of an applicable Accounting
                    Date by the addition of an amount equivalent
                    to interest.  The interest equivalent to be
                    credited as of an Accounting Date shall be
                    equal to the interest that would be earned on
                    the average of the balances in Subaccount I
                    of the Participant's Account at the end of
                    each calendar month during the calendar
                    quarter ending on such Accounting Date, at a
                    rate per annum which equals the average prime
                    rate charged by banks as reported in the


                                        -149-
<PAGE>


                    Federal Reserve Bulletin published on or next
                    prior to such Accounting Date.

                         (b)  Subaccount II Adjustments:
                    Subaccount II of a Participant's Account
                    shall be adjusted as of an applicable
                    Accounting Date occurring after December 31,
                    1994 to equal the Fair Market Value as of
                    such Accounting Date (or, if the Accounting
                    Date is not a trading date, as of the trading
                    date next preceding such Accounting Date) of
                    the number of hypothetical shares of Parent
                    Common Stock allocated to Subaccount II of
                    the Participant's Account as of such
                    Accounting Date.  The number of hypothetical
                    shares of Parent Common Stock allocated to
                    Subaccount II of a Participant's Account as
                    of any date shall be equal to the number of
                    shares of Parent Common Stock that would be
                    allocated to the Account as of such date if
                    (i) the Compensation credited to the
                    Participant's Account to be allocated to
                    Subaccount II was invested in the Parent's
                    Common Stock at Fair Market Value on the
                    trading day that is coincident with or next
                    preceding the last day of the calendar month
                    in which such Compensation would have been
                    paid to the Participant but for participation
                    in the Plan, (ii) any balance transferred
                    effective as of January 1, 1995 from
                    Subaccount I due to the one-time election
                    permitted under the following provisions of
                    this Section 4.3 was invested in the Parent's
                    Common Stock at the average Fair Market Value
                    on trading days during the month of December,
                    1994, (iii) cash dividends on the shares of
                    Parent Common Stock treated as allocated to
                    Subaccount II of the Participant's Account
                    were automatically reinvested in the Parent's
                    Common Stock at Fair Market Value on the
                    trading day that is coincident with or next
                    following the applicable dividend payment
                    date, and (iv) any transfers to Subaccount I
                    due to a change in election under Section 4.3
                    or any distributions from Subaccount II of
                    the Participant's Account were made at Fair
                    Market Value on the trading day that is
                    coincident with or next preceding the
                    effective date of such change of election or
                    distribution of the number of hypothetical
                    shares of Parent Common Stock needed to make
                    such transfer or distribution, which
                    hypothetical shares shall be subtracted from
                    the number of shares treated as allocated to
                    Subaccount II of the Participant's Account as

                                        -150-
<PAGE>


                    of the effective date of the transfer or
                    distribution.

                    At the time a Director elects to become a Participant

          or as of January 1, 1995, if later, the Director shall elect to

          have the Compensation thereafter deferred under Section 3.4 and

          credited to the Participant's Account allocated, in specified

          multiples of 10%, to Subaccount I or Subaccount II.  If a

          Director who is a Participant as of December 31, 1994 fails to

          make an election hereunder as of January 1, 1995, he shall be

          deemed to have elected to have Compensation deferred on or after

          January 1, 1995 allocated to Subaccount I.  A Participant's

          election or deemed election under this Section 4.3 shall remain

          in effect until changed as hereinafter provided.

                    A Participant may change his or her election or deemed

          election under this Section 4.3 effective as of the January 1st

          of any calendar year beginning on or after January 1, 1995 by

          giving the Company written notice of such change prior to such

          January 1st.  Any change shall direct that subsequent

          Compensation credits under Section 3.3 be allocated, in specified

          multiples of 10%, to Subaccount I or Subaccount II.  Such change

          shall be effective commencing with the January 1st elected and

          shall remain in effect until further changed as provided herein.

          In addition, a Director who is a Participant as of December 31,

          1994 may make a one-time election to have the Balance (as

          hereinafter defined) credited to the Participant's Account as of

          December 31, 1994 transferred, in specified multiples of 10%, to

          Subaccount II effective as of January 1, 1995.  For purposes of

          the preceding sentence, "Balance" shall mean the portion of the


                                        -151-
<PAGE>


          amount credited to the Participant's Account as of December 31,

          1994 attributable to Compensation deferred under the Plan

          subsequent to April 30, 1992 plus the interest equivalent

          credited to the Account in respect of such Compensation since

          April 30, 1992 through December 31, 1994.

                    Any election or change in election under this Section

          4.3 shall be made on a form provided or prescribed by the

          Company.

                    Notwithstanding the foregoing provisions of this

          Section 4.3, if a Participant terminates his or her Service and

          any portion of the balance credited to his or her Account is to

          be paid in accordance with Payment Method II or Payment Method

          III as provided in Section 5.1, any balance in Subaccount II of

          the Participant's Account shall be transferred by a deemed

          election to Subaccount I of the Participant's Account as of the

          day after the Accounting Date that is coincident with or next

          following the Participant's termination of Service.


                                      ARTICLE V

                               Distribution of Benefits

                    5.1  Termination For Reasons Other Than Death:  Within

          15 days after the Accounting Date coincident with or next

          following the date on which the Participant terminates his or her

          Service for any reason other than death (but not earlier than

          July 1, 1995 if a Participant made the one-time election

          permitted under Section 4.3 to transfer all or part of his or her

          Account to Subaccount II effective as of January 1, 1995) the

          Company shall pay, or commence to pay, to the Participant in cash


                                        -152-
<PAGE>


          the amount credited to his or her Account.  Payment shall be made

          in accordance with Payment Method I, Payment Method II or Payment

          Method III, below, as elected by the Director:

                         (a)  Payment Method I - By payment in a
                    lump sum of the portion, if any, of the
                    amount credited to the Participant's Account
                    as of the Accounting Date coincident with or
                    next following the date on which the
                    Participant terminates his or her Service
                    which is to be paid pursuant to this Payment
                    Method I.

                         (b)  Payment Method II - By payment in
                    quarterly installments, the number of which
                    shall be the lesser of (i) 40 or (ii) the
                    aggregate number of full calendar quarters
                    during which compensation was credited to the
                    Participant's Account under the Plan and to
                    his or her account under any similar plan of
                    the Parent or a Subsidiary (but not counting
                    any such calendar quarter more than once)
                    while an election with respect to this
                    Payment Method II or a similar payment method
                    under any such other plan was in effect.  The
                    amount of each installment shall be equal to
                    the quotient obtained by dividing the
                    portion, if any, of the balance credited to
                    Participant's Account as of the Accounting
                    Date coincident with or next preceding the
                    date of such installment payment which is to
                    be paid pursuant to this Payment Method II by
                    the number of installment payments remaining
                    to be made to such Participant at the time of
                    such calculation.

                         (c)  Payment Method III - By payment in
                    annual installments, the number of which
                    shall be the lesser of (i) 10 or (ii) the
                    aggregate number of full calendar years (but
                    not less than one) during which compensation
                    was credited to the Participant's Account
                    under the Plan and to his or her account
                    under any similar plan of the Parent or a
                    Subsidiary (but not counting any such
                    calendar year more than once) while an
                    election with respect to this Payment Method
                    III or a similar payment method under any
                    such other plan was in effect.  The amount of
                    each installment shall be equal to the
                    quotient obtained by dividing the portion, if
                    any, of the balance credited to Participant's
                    Account as of the Accounting Date coincident

                                         -153-
<PAGE>


                    with or next preceding the date of such
                    installment payment which is to be paid
                    pursuant to this payment Method III by the
                    number of installment payments remaining to
                    be made to such Participant at the time of
                    such calculation.

          A method of payment shall be elected by the Director at the time

          the Director elects to become a Participant, which method of

          payment election shall remain in effect until changed as

          hereinafter provided.

               A Participant may change his or her payment method election

          under this Section 5.1 effective as of the January 1st of any

          calendar year beginning on or after January 1, 1996 by giving the

          Company written notice of such change prior to the January 1st as

          of which the change is to be effective.  A change in a payment

          method election, however, shall only be effective with respect to

          amounts credited to the Participant's Account attributable to

          Compensation deferred under the Plan for services to be rendered

          on or subsequent to such January 1st and while such change in

          payment method election shall remain in effect.  A change in

          payment method election shall remain in effect until further

          changed as provided herein.

                    An election or change in election as to the method of

          payment shall be made on a form provided or prescribed by the

          Company and once made shall be irrevocable with respect to

          amounts credited to the Participant's Account that are

          attributable to Compensation deferred under the Plan for services

          rendered during the period for which the payment method election

          or change thereof was in effect.




                                         -154-
<PAGE>


                    5.2  Death:  Upon the death of a Participant, whether

          before or after termination as a member of the Board, prior to

          the complete distribution of the balance credited to his or her

          Account, any undistributed amount credited to the Participant's

          Account as of the Accounting Date coincident with or next

          following the Participant's date of death shall be paid in cash

          in a lump sum to the Participant's Beneficiary within 15 days

          after such Accounting Date (but not earlier than July 1, 1995 if

          a Participant made the one-time election permitted under Section

          4.3 to transfer all or part of his or her Account to Subaccount

          II effective as of January 1, 1995).

                    5.3  Hardship Distribution:  With the written consent

          of the Committee, a Participant may withdraw, as of an Accounting

          Date prior to termination of Service, from the portion of his or

          her Account credited to Subaccount I as of such Accounting Date a

          cash amount not in excess of the balance credited to Subaccount I

          of the Participant's Account as of such Accounting Date.  The

          Committee, in its sole discretion, may consent to such withdrawal

          but only if the withdrawal is necessary, upon demonstration by or

          on behalf of the Participant, because of a substantial financial

          hardship of the Participant as a result of accident, illness or

          disability.  The Committee, in its sole discretion, shall

          determine the amount of such a distribution that is needed to

          meet the need created by the hardship.  Any such distribution

          shall be charged to the Participant's Account credited to

          Subaccount I and, in such manner as the Committee shall determine

          in its discretion, among any payment method subaccounts

          thereunder.

                                         -155-
<PAGE>


                    5.4  Beneficiary:  As used in the Plan, the term

          "Beneficiary" means:

                         (a)  The last person designated as
                    Beneficiary by the Participant in a written
                    notice on a form prescribed by and filed with
                    the Company;

                         (b)  If there is no designated
                    Beneficiary or if the person so designated
                    shall not survive the Participant, such
                    Participant's spouse; or

                         (c)  If no such designated Beneficiary
                    and no such spouse is living upon the death
                    of a Participant, or if all such persons die
                    prior to the full distribution of the
                    Participant's Account, then the legal
                    representative of the last survivor of the
                    Participant and such persons, or, if the
                    Company shall not receive notice of the
                    appointment of any such legal representative
                    within one year after such death, the
                    heirs-at-law of such survivor (in the
                    proportions in which they would inherit his
                    intestate personal property) shall be the
                    Beneficiaries to whom the then remaining
                    balance of the Participant's Account shall be
                    distributed.

          Any Beneficiary designation may be changed from time to time by

          like notice similarly delivered.  No notice given under this

          Section shall be effective unless and until the Company actually

          receives such notice and enters it in its records.


                                      ARTICLE VI

                                Financing of Benefits

                    The Plan shall be a nonqualified and unfunded plan.

          Benefit payments under the Plan shall represent an unsecured

          general obligation of the Company and shall be paid by the

          Company from its general assets.  No special fund or trust shall

          be created or held for the financing of benefits under the Plan.



                                         -156-
<PAGE>


                                     ARTICLE VII

                                 Facility of Payment

                    Whenever a person entitled to receive any payment under

          the Plan is a person under legal disability or a person not

          adjudicated incompetent but who, by reason of illness or mental

          or physical disability, is in the opinion of the Committee unable

          properly to manage his or her affairs, then such payments shall

          be paid in such of the following ways as the Committee deems

          best:  (a) to such person directly; (b) to the legally appointed

          guardian or conservator of such person; (c) to some relative or

          friend of such person for his or her benefit; (d) for the benefit

          of such person in such manner as the Committee considers

          advisable.  Any payment made in accordance with the provisions of

          this Article shall be a complete discharge of any liability for

          the making of such payment under the Plan, and the distributee's

          receipt shall be a sufficient discharge to the Company.


                                     ARTICLE VIII

                                    Administration

                    The Plan shall be administered by the Compensation

          Committee of the Board.  The Committee shall have such duties

          and powers as may be necessary to discharge its duties hereunder,

          including, but not by way of limitation, to construe and

          interpret the Plan, decide all questions of eligibility and

          determine the amount and time of payment of benefits hereunder.

          The Committee shall have no power to add to, subtract from or

          modify any of the terms of the Plan, or to change or add to any

          benefits provided under the Plan, or to waive or fail to apply


                                         -157-
<PAGE>


          any requirements of eligibility for a benefit under the Plan.  No

          Participant who is a member of such Committee may vote on any

          question relating specifically to himself or herself.


                                      ARTICLE IX

                                    Miscellaneous

                    9.1  Other Agreements.  The Plan shall not affect in

          any way the rights or obligations of a Director under any

          deferred compensation or other agreement between the Director and

          the Company or the Parent, including, but not limited to, the

          KU Energy Corporation Director Retirement Retainer Program or the

          Kentucky Utilities Company Director Retirement Retainer Program.

                    9.2  Successors.  The Company shall require any

          successor (whether direct or indirect, by purchase, merger,

          consolidation, reorganization or otherwise) to all or

          substantially all of the business and/or assets of the Company

          expressly to assume and to agree to perform this Plan in the same

          manner and to the same extent the Company would be  required to

          perform if no such succession had taken place.  This Plan shall

          be binding upon and inure to the benefit of the Company and any

          successor of or to the Company, including without limitation any

          persons acquiring directly or indirectly all or substantially all

          of the business and/or assets of the Company whether by sale,

          merger, consolidation, reorganization or otherwise (and such

          successor shall thereafter be deemed the "Company" for the

          purposes of this Plan), and the heirs, executors and

          administrators of each Director.




                                         -158-

<PAGE>


                    9.3  Interests Not Transferable.  No person shall have

          any right to commute, encumber, pledge or dispose of any right to

          receive payments hereunder, nor shall such payments be subject to

          seizure, attachment or garnishment for the payments of any debts,

          judgments, alimony or separate maintenance obligations or be

          transferable by operation of law in the event of bankruptcy,

          insolvency or otherwise, all payments and rights hereunder being

          expressly declared to be nonassignable and nontransferable.

                    9.4  Amendment and Termination.  The Plan may be

          amended from time to time or terminated by the Board at any time,

          but no amendment or termination may adversely affect the rights

          of any person without his or her prior written consent.

                    9.5  Applicable Law.  This Plan shall be construed in

          accordance with and governed by the laws of the Commonwealth of

          Kentucky.

                    9.6  Notices.  For all purposes of this Plan, all

          communications provided for herein shall be in writing and shall

          be deemed to have been duly given when delivered or five business

          days after having been mailed by United States registered or

          certified mail, return receipt requested, postage prepaid,

          addressed to the Company (to the attention of the Secretary of

          the Company) at its principal executive office and to a

          Participant at his or her principal residence, or to such other

          address as any party may have furnished to the other in writing

          and in accordance herewith, except that notices of change of

          address shall be effective only upon receipt.

                    9.7  Severability:  Each section, subsection and lesser

          section of this Plan constitutes a separate and distinct

                                         -159-
<PAGE>


          undertaking, covenant and/or provision hereof.  Whenever

          possible, each provision of this Plan shall be interpreted in

          such manner as to be effective and valid under applicable law.

          In the event that any provision of this Plan shall finally be

          determined to be unlawful, such provision shall be deemed severed

          from this Plan, but every other provision of this Plan shall

          remain in full force and effect, and in substitution for any such

          provision held unlawful, there shall be substituted a provision

          of similar import reflecting the original intention of the

          parties hereto to the extent permissible under law.

                    9.8  Withholding of Taxes:  The Company may withhold

          from any amounts payable under this Plan all federal, state, city

          and other taxes as shall be legally required.

                    IN WITNESS WHEREOF, Kentucky Utilities Company has

          caused this instrument to be executed in its name by its Chairman

          of the Board and Chief Executive Officer and its Corporate Seal






                                         -160-
<PAGE>


          to be hereunto affixed, attested by its Secretary, on this

          day of January, 1996.


                                             KENTUCKY UTILITIES COMPANY




                                             By /s/ Michael R. Whitley
                                               Chairman, President and
                                               Chief Executive Officer


          [Corporate Seal]


          ATTEST:



           /s/ George S. Brooks II
                 Secretary







                                         -161-

<PAGE>
<TABLE>

                                                                                    EXHIBIT 12

                                     KENTUCKY UTILITIES COMPANY

                          COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES


<CAPTION>


      Year Ended December 31,             1995       1994        1993       1992        1991
                                                                 (in thousands except ratios)

      Earnings
<S>                                  <C>        <C>         <C>        <C>         <C>
         Net Income                  $ 76,842   $  77,512   $ 81,286   $  76,298   $ 84,755
      Adjustments
         Fixed charges                 40,116      34,558     32,899      40,965     38,185
         Income taxes
         Current Federal               23,597      37,058     35,893      30,838     37,241
         Current State                  5,134       8,812      9,484       7,951      9,252
         Deferred Federal--Net         12,165      (1,114)     2,837       2,269        570
         Deferred State--Net            3,845          13         71         561        160
         Deferred investment
           tax credit--Net                (71)        (86)      (107)       (130)      (654)
         Income taxes included
           in Other Income
           and Deductions
         Current Fed and State          1,044       1,881     (2,616)       (224)     2,085
         Deferred Fed and State          (508)       (458)     2,817       1,144       (458)
         Amortization of
           investment credit           (4,024)     (4,024)    (4,024)     (4,019)    (3,723)
         Undistributed income of
           Electric Energy, Inc            99         (39)       (38)        (53)         5


           Total Earnings            $158,239   $ 154,113   $158,502   $ 155,600   $167,418

      Fixed Charges
         Int on long-term debt       $ 36,095   $  32,147   $ 31,650   $  39,571   $ 36,559
         Other interest charges         4,021       2,411      1,249       1,394      1,626

           Total Fixed Charges       $ 40,116   $  34,558   $ 32,899   $  40,965   $ 38,185


      Ratio of Earnings
        to Fixed Charges                 3.94        4.46       4.82        3.80       4.38

      ____________

      Note--Rentals are not material and have not been included in fixed charges.
                                            -162-
</TABLE>
<PAGE>

                                                                     EXHIBIT 21


                             KENTUCKY UTILITIES COMPANY

                                LIST OF SUBSIDIARIES






     Electric  Energy,  Inc., an  Illinois  corporation--KU owns  20%  of EEI's
     common stock.


















                                         -163-

<PAGE>


                                                                     EXHIBIT 23


                      CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS






          As  independent   public  accountants,  we  hereby   consent  to  the
     incorporation by  reference in the previously  filed Form S-8 Registration
     Statements of KU Energy  Corporation and Kentucky Utilities  Company (File
     Nos. 33-44234 and 33-57087) of our report dated January 29, 1996, included
     in  Kentucky Utilities Company's Form 10-K for the year ended December 31,
     1995.




                              /s/ Arthur Andersen LLP
                              Arthur Andersen LLP

     Chicago, Illinois
     March 8, 1996









                                         -164-

<PAGE>
[ARTICLE] UT
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF DECEMBER 31, 1995 AND THE STATEMENTS OF INCOME AND CASH FLOWS FOR
THE PERIOD ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-K ANNUAL REPORT.
[/LEGEND]
[MULTIPLIER] 1,000
<TABLE>
<S>                             <C>
[PERIOD-TYPE]                   YEAR
[FISCAL-YEAR-END]                          DEC-31-1995
[PERIOD-END]                               DEC-31-1995
[BOOK-VALUE]                                  PER-BOOK
[TOTAL-NET-UTILITY-PLANT]                    1,458,062
[OTHER-PROPERTY-AND-INVEST]                     11,957
[TOTAL-CURRENT-ASSETS]                         154,033
[TOTAL-DEFERRED-CHARGES]                        35,936
[OTHER-ASSETS]                                       0
[TOTAL-ASSETS]                               1,659,988
[COMMON]                                       308,140
[CAPITAL-SURPLUS-PAID-IN]                        (594)
[RETAINED-EARNINGS]                            268,991
[TOTAL-COMMON-STOCKHOLDERS-EQ]                 576,537
[PREFERRED-MANDATORY]                                0
[PREFERRED]                                     40,000
[LONG-TERM-DEBT-NET]                           545,980
[SHORT-TERM-NOTES]                              55,600
[LONG-TERM-NOTES-PAYABLE]                            0
[COMMERCIAL-PAPER-OBLIGATIONS]                       0
[LONG-TERM-DEBT-CURRENT-PORT]                       21
[PREFERRED-STOCK-CURRENT]                            0
[CAPITAL-LEASE-OBLIGATIONS]                          0
[LEASES-CURRENT]                                     0
[OTHER-ITEMS-CAPITAL-AND-LIAB]                 441,850
[TOT-CAPITALIZATION-AND-LIAB]                1,659,988
[GROSS-OPERATING-REVENUE]                      686,430
[INCOME-TAX-EXPENSE]                            44,670
[OTHER-OPERATING-EXPENSES]                     533,216
[TOTAL-OPERATING-EXPENSES]                     577,886
[OPERATING-INCOME-LOSS]                        108,544
[OTHER-INCOME-NET]                               8,305
[INCOME-BEFORE-INTEREST-EXPEN]                 116,849
[TOTAL-INTEREST-EXPENSE]                        40,007
[NET-INCOME]                                    76,842
[PREFERRED-STOCK-DIVIDENDS]                      2,256
[EARNINGS-AVAILABLE-FOR-COMM]                   74,586
[COMMON-STOCK-DIVIDENDS]                        63,250
[TOTAL-INTEREST-ON-BONDS]                       36,095
[CASH-FLOW-OPERATIONS]                         149,059
[EPS-PRIMARY]                                        0<F1>
[EPS-DILUTED]                                        0<F1>
<FN>
<F1>ALL OUTSTANDING COMMON STOCK OF KENTUCKY UTILITIES COMPANY IS HELD BY ITS
PARENT COMPANY, KU ENERGY CORPORATION.  THEREFORE, EARNINGS PER SHARE IS NOT
APPLICABLE.
</FN>
</TABLE>
<PAGE>

                                                                   EXHIBIT 99.A


                             DESCRIPTION OF COMMON STOCK

     General.   The authorized capital stock of KU consists of 5,300,000 shares
     of  Preferred Stock, cumulative, without par value, issuable in series, of
     which 37,817,878  shares were outstanding at  December 31, 1995, 2,000,000
     shares of  Preference Stock, cumulative,  without par  value, issuable  in
     series, and 80,000,000 shares of Common Stock, without par value  of which
     37,817,878 shares were outstanding  (all of which were held  by KU Energy)
     at  December 31,  1995.   No  shares  of Preference  Stock  are issued  or
     outstanding.

     The  following statements,  unless  the context  otherwise indicates,  are
     brief summaries of the  substance or general effect of  certain provisions
     of KU's Restated Articles of Incorporation  and resolutions and amendments
     establishing series of Preferred Stock (collectively, the Articles) and of
     KU's Mortgage  Indenture, as  amended, securing its  first mortgage  bonds
     (Indenture).  The statements make  use of defined terms, are not  complete
     and do not give effect to statutory or common law.

     Dividend Rights.   The Board of  Directors of KU may  declare dividends on
     the Common Stock out of any surplus or net profits of KU legally available
     for the purpose, provided full cumulative dividends on the Preferred Stock
     and  the Preference Stock for the  current and all past quarterly dividend
     periods shall have been paid or declared and set apart  for payment and KU
     is not in arrears in its sinking fund obligations in respect of any shares
     of Preferred Stock or Preference Stock.

     Limitations on Dividends on Common Stock.  The Indenture provides that, so
     long as certain currently  outstanding series of First Mortgage  Bonds are
     outstanding, KU will not declare or  pay any dividends on its Common Stock
     or make  any other distribution  on or  purchase any of  its Common  Stock
     unless the amounts expended by KU for maintenance and repairs and provided
     for depreciation  subsequent to April 30,  1947, plus KU's  earned surplus
     (retained  earnings) for such period and remaining after any such payment,
     distribution or purchase,  shall aggregate not less than  15% of the gross
     operating revenues of KU for the period.  The Articles provide, in effect,
     that, so  long as any  of the  Preferred Stock is  outstanding, the  total
     amount  of  all  dividends or  other  distributions  on  Common Stock  and
     purchases  of such  stock that  may be  paid or  made during  any 12-month
     period shall not exceed (a) 75% of the "net income available for dividends
     on common stock" if the ratio of "common stock equity"  to "total capital"
     (each as defined) of KU shall be 20% to 25%, or (b) 50% of such net income
     if such ratio shall be less than 20%.   When such ratio is 25% or more, no
     such dividends, distributions or purchases may be paid or made which would
     reduce  such ratio  to less  than 25%  except to  the extent  permitted by
     clauses (a) and (b) above.  As of December 31, 1995, no amount of retained
     earnings was restricted under the Indenture or Articles.

     Voting Rights.  Each share of Common Stock is entitled to one vote on each
     matter voted on at stockholders' meetings, except as otherwise provided in
     the  Articles,  and  to  cumulative  voting  rights  in  the  election  of
     directors.    Shares  of Preferred  Stock  and  Preference  Stock are  not
     entitled to vote for the election of directors or in respect of  any other
     matters,  except as  expressly  provided  in the  Articles  or  as may  be
     required by  law.  The  Articles give  to holders of  Preferred Stock  and
     Preference Stock  certain special voting rights designed  to protect their
     interest  with respect  to specified  corporate action.   In  addition, in

                                         -165-
<PAGE>



     certain events  relating  to  dividends in  default  on  Preferred  Stock,
     holders of Preferred Stock as a class  are entitled to elect a majority of
     the  full Board of Directors; and  in certain events relating to dividends
     in default on the Preference Stock, holders of Preference Stock as a class
     are entitled to elect two directors.

     Liquidation  Rights.   Upon  the liquidation  or  dissolution of  KU,  the
     holders  of Preferred Stock  and the Preference  Stock are  entitled to be
     paid designated amounts out of the  net assets of KU in preference to  the
     Common  Stock.   After  such payment  to  holders of  Preferred  Stock and
     Preference Stock, the remaining assets and profits shall be distributed to
     the holders of Common Stock.

     Board of  Directors.    KU's  Bylaws provide  for  a  Board  of  Directors
     comprised of from nine to  eleven members as determined from time  to time
     by  the Board.   The Board  currently has  eleven members.   KU's Articles
     provide for the classification  of the Board of Directors into groups with
     directors  being elected for three-year terms subject to certain rights of
     holders of Preferred Stock and Preference Stock to elect directors.

     Preemptive  Rights.   Holders of  KU's Stock have  no preemptive  right to
     subscribe for stock or securities of KU.

     Call  of  Special Meetings.    KU's Articles  provide that  no  meeting of
     shareholders (except for certain  meetings called by holders  of Preferred
     Stock or Preference Stock) may be called by shareholders unless called  by
     the holders of at least 51 percent of all the votes entitled to be cast on
     each issue proposed to be considered at the special meeting.

     Miscellaneous.   The outstanding  shares of Common  Stock of  KU are fully
     paid and non-assessable.

     Under Kentucky and  Virginia law, KU may  amend the Articles  to increase,
     decrease or  adjust its capital  stock or  any class thereof  or otherwise
     amend  any  provision of  the Articles  or any  amendment thereto,  in the
     manner permitted by  law, subject, however, to the  limitations prescribed
     in the Articles; and all rights conferred on stockholders in the  Articles
     or any amendment thereto are subject to the foregoing.

     The  Transfer Agents  of  the Common  Stock  are Illinois  Stock  Transfer
     Company, Chicago,  Illinois, and Harris  Trust and Savings  Bank, Chicago,
     Illinois; and the  Registrar is  Harris Trust and  Savings Bank,  Chicago,
     Illinois.




                                         -166-

<PAGE>
                                                                    EXHIBIT 99.B
<PAGE>

  Shareholders may vote either in person or by duly authorized proxy. The
giving of a proxy will not prevent a shareholder from voting in person at the
meeting. A proxy may be revoked by a shareholder at any time prior to the
voting thereof by giving written notice to the Secretary of the Company prior
to such voting. All shares entitled to vote and represented by effective
proxies on the enclosed form, received by the Company, will be voted at the
meeting (or any adjourned session thereof) in accordance with the terms of such
proxies.

  Each Participant in the Company's Automatic Dividend Reinvestment and Stock
Purchase Plan (the "Reinvestment Plan"), Kentucky Utilities' Employee Stock
Ownership Plan (the "ESOP") or the Kentucky Utilities Employee Savings Plan
(the "Savings Plan") will receive a form of proxy by which such Participant may
direct the agent or trustee under such Plans as to the manner of voting shares
credited to the Participant's accounts under such Plans. Shareholders of record
who are participants in the Reinvestment Plan will receive only one form of
proxy for their certificated shares and those shares which they may have
acquired through reinvested dividends. A Participant of any of such Plans
wishing to vote in person at the meeting may obtain a proxy for shares credited
to his account under such Plans by making a written request therefor by April
8, 1996, as follows: for the Reinvestment Plan, to George S. Brooks II,
Secretary of the Company, at the address stated on page 1; for the ESOP, to
Banc One Kentucky, PO Box 32500, Louisville, Kentucky 40232, Attention: Barbara
J. Steele, Trust Investment Division; and for the Savings Plan, to National
City Bank, Kentucky, PO Box 36010, Louisville, Kentucky 40233, Attention:
Judith E. Meany.

                             Election of Directors

              WARREN W. ROSENTHAL, who has served as a director of the Company
              since 1991 and of Kentucky Utilities Company since 1976, will
  [PHOTO]     not stand for re-election at the 1996 Annual Meeting of
              Shareholders in accordance with the Board of Directors'
              retirement policy. The Company expresses its appreciation to Mr.
              Rosenthal for his substantial contribution and his years of
              dedicated service as a director.

  General. Five directors are to be elected at the meeting. Barring unforeseen
circumstances and in the absence of contrary directions, the proxies solicited
herewith will be voted for the election of Mira S. Ball, Carol M. Gatton, Frank
V. Ramsey, Jr., Charles L. Shearer and Lee T. Todd, Jr. as directors of the
Company, to hold office until the 1999 Annual Meeting of Shareholders of the
Company or, in the case of Mr. Gatton, until the 1998 Annual Meeting of
Shareholders, or in each case until their respective successors shall have been
duly elected and qualified. The proxies may also be voted for a substitute
nominee or nominees in the event any one or more of said persons shall be
unable to serve for any reason or be withdrawn from nomination, an occurrence
not now anticipated. Except as otherwise indicated, each nominee has been
engaged in his present principal occupation for at least the past five years.
All information regarding share ownership is as of January 31, 1996.

                                      -167-
<PAGE>

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

              MIRA S. BALL, 61, is Secretary-Treasurer and Chief Financial
              Officer of Ball Homes, Inc., a single-family residential
  [PHOTO]     developer and property management company. She has been a
              director of the Company and Kentucky Utilities since 1992. Ms.
              Ball beneficially owns 5,986 shares of Common Stock of the
              Company.

              CAROL M. GATTON, 63, is Chairman of Area Bancshares, Inc., a
              bank holding company in Owensboro, Kentucky. He is also involved
  [PHOTO]     in real estate ventures and automobile dealerships. Mr. Gatton
              beneficially owns 1,000 shares of Common Stock of the Company.

              FRANK V. RAMSEY, JR., 64, is President and Director of Dixon
              Bank, Dixon, Kentucky, and a farm owner and operator. He has
  [PHOTO]     been a director of the Company since 1991 and a director of
              Kentucky Utilities since 1986. Mr. Ramsey beneficially owns
              1,400 shares of Common Stock of the Company.

              CHARLES L. SHEARER, PH.D., 53, is President of Transylvania
              University, Lexington, Kentucky. He has been a director of the
  [PHOTO]     Company since 1991 and a director of Kentucky Utilities since
              1987. Dr. Shearer beneficially owns 1,389 shares of Common Stock
              of the Company which include 200 shares held solely by his wife
              and 14 shares held by his children.

              LEE T. TODD, JR., PH.D., 49, is President and Chief Executive
              Officer of DataBeam Corporation, a Kentucky-based high
  [PHOTO]     technology firm. He was elected a director of the Company and
              Kentucky Utilities in August of 1995 when the number of
              positions on the Boards was increased. Dr. Todd beneficially
              owns 500 shares of the Common Stock of the Company.

                                      -168-
<PAGE>

  Information with respect to those directors whose terms are not expiring is
as follows:

              HARRY M. HOE, 70, is President and a director of J. R. Hoe &
              Sons, Inc., Middlesboro, Kentucky, a foundry and casting
  [PHOTO]     company. He has been a director of the Company since 1991 and a
              director of Kentucky Utilities since 1979. Mr. Hoe beneficially
              owns 15,794 shares of Common Stock of the Company which include
              5,088 shares held solely by his wife. His term expires in 1998.

              MILTON W. HUDSON, 68, has been an economic consultant
              (Washington, DC) since 1991. He was Managing Director and Senior
  [PHOTO]     Economic Advisor of Morgan Guaranty Trust Company of New York
              from January 1990 until his retirement in June 1991. He has been
              a director of the Company since 1991 and a director of Kentucky
              Utilities since 1990. Mr. Hudson beneficially owns 1,142 shares
              of Common Stock of the Company. His term expires in 1997.

              JOHN T. NEWTON, 65, retired in 1995 as Chairman of the Board and
              Chief Executive Officer of the Company and Kentucky Utilities, a
  [PHOTO]     position he had held since 1987. He had also been President of
              these companies from 1987 to November 1, 1994. Mr. Newton has
              been a director of the Company since 1988 and a director of
              Kentucky Utilities since 1974. He beneficially owns 32,653
              shares of Common Stock of the Company which include 7,668 shares
              held jointly with his wife and 5,000 shares held solely by his
              wife. His term expires in 1997.

              WILLIAM L. ROUSE, JR., 63, was Chairman of the Board and Chief
              Executive Officer and a director of First Security Corporation
  [PHOTO]     of Kentucky, a multi-bank holding company, prior to his
              retirement in 1992. Mr. Rouse is a director of Ashland,
              Incorporated. He has been a director of the Company since 1991
              and a director of Kentucky Utilities since 1989. Mr. Rouse
              beneficially owns 1,000 shares of Common Stock of the Company.
              In addition, Mr. Rouse's account under the Directors Deferred
              Compensation Plan described below has the equivalent of 2,186
              shares of Common Stock. His term expires in 1997.

              MICHAEL R. WHITLEY, 53, was elected Chairman, President and
              Chief Executive Officer of the Company and Kentucky Utilities on
  [PHOTO]     August 1, 1995. He had been President and Chief Operating
              Officer of the Company and Kentucky Utilities since November 1,
              1994. He was Executive Vice President of these companies from
              August 1, 1994 to November 1, 1994. Before this period, he had
              been a Senior Vice President of the Company since 1988 and of
              Kentucky Utilities since 1987. Mr. Whitley was Secretary of the
              Company from 1988 until 1992 and of Kentucky Utilities from 1978
              until 1992. Mr. Whitley is a director of LFS Bancorp Inc. and
              its wholly owned subsidiary, Lexington Federal Savings Bank. Mr.
              Whitley has been a director of the Company and Kentucky
              Utilities since 1992. Mr. Whitley beneficially owns 24,122
              shares of the Common Stock of the Company which include 6,300
              shares held jointly with his wife and 337 shares held solely by
              his wife. His term expires in 1998.

                                       -169-
<PAGE>

  Voting Securities Beneficially Owned by Directors, Nominees and Executive
Officers. The directors, nominees and executive officers of the Company and
Kentucky Utilities owned beneficially at January 31, 1996 an aggregate of
181,707 shares of Common Stock of the Company, representing in the aggregate
 .5% of such stock.

  Meetings and Committees of the Board of Directors. All members of the
Company's Board of Directors are currently members of Kentucky Utilities' Board
of Directors. The Board of Directors of the Company and the Board of Directors
of Kentucky Utilities have each established six committees: the Executive
Committee, the Audit Committee, the Compensation Committee, the Finance
Committee, the Long-Range Planning Committee, and the Nominating and Corporate
Governance Committee. Committee members are the same for committees of the
Company and committees of Kentucky Utilities.

  During 1995, the Board of Directors of the Company held 19 meetings
(including Committee meetings), and the Board of Directors of Kentucky
Utilities held 22 meetings (including Committee meetings).

  During 1995, each current director attended 100% of the meetings of the
Company's and Kentucky Utilities' Board of Directors and applicable committee
meetings.

  The members of the Executive Committee are Messrs. Newton, Rosenthal, Rouse,
Shearer and Whitley. Neither the Company's nor Kentucky Utilities' Executive
Committee met during 1995. The Executive Committee has the full power of the
Board between meetings of the Board, except as provided by law.

  The members of the Audit Committee are Ms. Ball and Messrs. Hoe, Hudson and
Rouse. The Company's Audit Committee met two times in 1995 as did the Kentucky
Utilities' Audit Committee. The Audit Committee selects and engages (and may
discharge) the Company's independent auditors; approves or disapproves each
professional service or type of service to be provided by the auditors; meets
with the auditors regarding the scope and results of the annual audit and of
internal accounting procedures and practices; reviews any recommendations which
may be made by the independent auditors; and generally exercises supervision
over all matters relating to audit functions, making periodic reports to the
Board.

  The members of the Compensation Committee are Messrs. Ramsey, Rosenthal and
Rouse. The Company's Compensation Committee met three times in 1995 and the
Kentucky Utilities' Compensation Committee met five times. The Compensation
Committee reviews compensation for all officers, directors' fees and fees paid
to directors for membership on the various committees of the Board; makes
recommendations to the Board at least annually with respect to appropriate
levels of compensation and fees and administers certain benefit plans.

  The members of the Finance Committee are Messrs. Hudson, Ramsey, Rosenthal
and Shearer. The Company's Finance Committee met one time in 1995 and the
Kentucky Utilities' Finance Committee met twice in 1995. The Finance Committee
monitors and reviews financing programs and capital structure of the Company,
reviews the Company's cash position in order to establish programs for the
proper investment of amounts determined to be available for such purpose from
time to time, and reports to the Board at least annually concerning its
activities, or, when appropriate, makes recommendations which the committee
deems appropriate for action to be taken by the Board.

  The members of the Long-Range Planning Committee are Messrs. Ramsey,
Rosenthal, Rouse, Shearer and Todd. The Company's Long-Range Planning Committee
met once in 1995 as did the Kentucky Utilities Long-Range Planning Committee.
The Long-Range Planning Committee makes recommendations to the Board with
respect to the Company's future strategy.

                                     -170-
<PAGE>

  Performance Graph. The following performance graph compares the performance
for the last five years of the Company's Common Stock (or for periods prior to
December 1, 1991, Kentucky Utilities' Common Stock) to the S&P 500 Index and
the index of investor-owned electric and combination electric and natural gas
utilities reported by Edison Electric Institute (the "EEI Index"). The graph
gives total shareholder return in each case assuming $100 invested at December
31, 1990 and the reinvestment of all dividends. Following the graph is a chart
giving the same information.

                       [PERFORMANCE GRAPH APPEARS HERE]

                              Shareholder Returns
                             (Dividends Reinvested)

<TABLE>
<CAPTION>
                                                  DECEMBER 31,
                                 -----------------------------------------------
                                  1990    1991    1992    1993    1994    1995
                                 ------- ------- ------- ------- ------- -------
<S>                              <C>     <C>     <C>     <C>     <C>     <C>
KU Energy....................... $100.00 $142.00 $153.40 $166.87 $165.22 $194.85
EEI Index.......................  100.00  128.87  138.69  154.11  136.28  178.55
S&P 500 Index...................  100.00  130.47  140.41  154.56  156.60  215.45
</TABLE>

  Directors' Compensation. Each director of the Company is also a director of
its principal subsidiary, Kentucky Utilities. Each director who is not an
employee of the Company or Kentucky Utilities is paid an annual retainer of
$20,000. This retainer is reduced by any retainer paid from a Company
subsidiary. Kentucky Utilities pays non-employee directors an annual retainer
of $15,000. Thus, the net annual Company retainer paid to such directors is
$5,000 but the aggregate paid for serving on both Boards is $20,000.

  In addition to an annual retainer, the Company and Kentucky Utilities pay
each non-employee director a $750 fee for each meeting of a Board or a
particular committee attended; provided that if the Boards of the Company and
Kentucky Utilities meet on the same day, only one $750 fee is paid for both
meetings. Similarly,

                                      -171-
<PAGE>

if the same committee of the Boards of the Company and Kentucky Utilities meet
on the same day, only one $750 fee is paid for both meetings. Out-of-pocket
travel expenses are paid to directors for all meetings attended.

  All eligible directors of the Company and Kentucky Utilities are entitled to
participate in the Director Retirement Retainer Programs (the "Director
Retirement Plans") of the Company and Kentucky Utilities. Directors who are
not, and have not previously been, an officer of Kentucky Utilities, the
Company, or their affiliated companies ("outside directors") are eligible to
participate. An outside director who is 65 years of age and has completed at
least five consecutive years of service on the Company's and/or Kentucky
Utilities' Board will receive, upon termination of service from a Board for any
reason other than death, an annual retirement benefit equal to the annual
retainer paid to such Board's directors in effect as of such termination,
payable monthly over a period of years equal to the number of full years such
director served on the Board, but not in excess of 10 years. Such payments
cease, however, if the director dies before all such payments are made. The
annual retainer in effect upon the director's termination from a Board will
generally be calculated as described in the first paragraph under this caption.
In the event of a change in control of the Company or Kentucky Utilities, any
person then receiving a retirement benefit would be paid, within 30 days of the
change in control, a lump-sum payment equal to the discounted present value of
all then unpaid installments of the director's retirement benefit. In the event
of a change in control, each outside director in office immediately prior to
such change in control will be eligible to receive an accelerated retirement
benefit if the director terminates service from a Board for any reason other
than death within three years of the date of the change in control. Such
accelerated retirement benefit would be paid in a lump sum within 30 days of
such termination and would be equal to the discounted present value of the
retirement benefit which such director would have received if the director had
retired from the Board at age 70 (or for certain directors, 72) and lived to
collect the full benefit otherwise payable under the applicable Director
Retirement Plan. Such benefit would be based on the higher of the annual
retainer in effect immediately prior to the change in control or immediately
prior to such director's termination of service. Change in control is broadly
defined under the Director Retirement Plans and includes any merger,
consolidation, reorganization or sale of substantially all of the assets of the
Company or Kentucky Utilities which results in less than a majority of the
voting power of the resulting entity being owned by the holders of the Common
Stock of the Company prior to the transaction; a change in the majority of the
Board of Directors of the Company or Kentucky Utilities over a two-year period
which is not approved by two-thirds of the incumbent directors; and the
acquisition by any person or group of persons of beneficial ownership of 10% or
more of the Common Stock of the Company or Kentucky Utilities.

  Directors may elect to have all or a specified portion of their directors'
fees deferred under the Director Deferred Compensation Plans (the "Director
Deferred Compensation Plans") of the Company and Kentucky Utilities. Amounts
deferred will be maintained in unfunded accounts for each participant, which,
based on a choice made by the Director, either: (1) bear interest at a floating
rate based upon the average prime rate charged by banks as reported in the
Federal Reserve Bulletin; or (2) experience appreciation (depreciation) and
earnings based on a hypothetical investment in the Company's common stock.
Amounts deferred under the Director Deferred Compensation Plans will be paid to
the participant upon termination as a director for any reason other than death
based on a choice made by the Director as permitted by the Director Deferred
Compensation Plans in a single payment or, with interest, quarterly over a
period of not to exceed 40 calendar quarters, or, with interest, annually over
a period of not to exceed 10 years. In the event of a participant's death,
payment of any remaining balance of credited amounts will be made in a single
payment to a designated beneficiary. In certain cases, directors may receive a
distribution of deferred amounts in the event of substantial financial
hardship. Because officers of the Company and Kentucky Utilities receive no
compensation for services as directors, any director who is an officer is not
eligible to participate in the plans.

                                      -172-
<PAGE>

  Executive Compensation. The following table contains information with respect
to the compensation paid by (or earned from) the Company and Kentucky
Utilities, for all services rendered during 1993 through 1995 in all
capacities, to the Chief Executive Officers and the other four most highly
compensated executive officers of the Company and Kentucky Utilities:

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                        LONG-TERM
                                                                       COMPENSATION
                                    ANNUAL COMPENSATION                  PAYOUTS
                                  -----------------------              ------------
                                                                           LTIP
                                                          OTHER ANNUAL ------------  ALL OTHER
                                                   BONUS  COMPENSATION   PAYOUTS    COMPENSATION
NAME AND PRINCIPAL POSITION       YEAR SALARY ($) ($)(3)     ($)(4)       ($)(5)       ($)(6)
---------------------------       ---- ---------- ------- ------------ ------------ ------------
<S>                               <C>  <C>        <C>     <C>          <C>          <C>
JOHN T. NEWTON;                   1995  328,616    74,811    23,959            0      232,257
 Former Chairman of the Board,    1994  462,694   149,979    13,380      158,738        7,561
 Former Chief Executive Officer,  1993  424,237   144,362    11,886            0        8,444
 & Current Director of the
 Company & Kentucky Utilities(1)
MICHAEL R. WHITLEY;               1995  318,467    73,476       116            0        4,686
 Chairman of the Board, President 1994  245,490    67,157       481       50,508        5,560
 & Chief Executive Officer &      1993  219,529    62,164     1,258            0        6,045
 Director of the Company &
 Kentucky Utilities(2)
JAMES W. TIPTON;                  1995  227,591    39,942     1,445            0        4,667
 Senior Vice President            1994  214,043    63,210     1,373       50,508        5,537
 of the Company                   1993  204,042    60,331     1,201            0        5,712
O. M. GOODLETT;                   1995  210,195    44,550         0            0        4,500
 Senior Vice President of the     1994  200,251    56,889         0       30,246        4,500
 Company & Kentucky Utilities     1993  188,724    54,257         0            0        4,497
WAYNE T. LUCAS;                   1995  194,553    42,160       711            0        4,692
 Senior Vice President            1994  159,699    33,754       523       22,658        5,522
 of Kentucky Utilities            1993  139,331    31,695       446                     5,813
JAMES M. ALLISON;                 1995  169,405    38,160         0            0        4,527
 Senior Vice President            1994  133,674    29,131         0            0        4,500
 of Kentucky Utilities            1993  110,885    24,222     5,576            0            0
</TABLE>
--------
(1) Retired as Chairman and CEO in August 1995.
(2) Assumed additional titles of Chairman and CEO on August 1, 1995, having
    been President since November 1, 1994.
(3) Bonuses are paid under the Incentive Plans. The bonus reported for Mr.
    Newton for 1995 has been prorated to reflect his retirement as of August 1,
    1995. Any bonus earned but deferred under the Executive Deferred
    Compensation Plans is included in the Table.

                                      -173-
<PAGE>

(4) Other annual compensation consists of the following items: (1) amounts for
    group term life insurance and related taxes; (2) an amount for above-market
    interest earned and paid on deferred compensation for Mr. Newton in 1995;
    and (3) an amount for taxes related to moving expenses for Mr. Allison in
    1993.
(5) Reflects payouts under the Kentucky Utilities Performance Share Plan
    described under "Report of Compensation Committee on Executive
    Compensation" above. Performance goals were not met, and thus no payouts
    were made for the Performance Cycle that relates to 1993 and 1995 in the
    table above. Amounts shown for 1994 reflect a payout in the form of
    restricted shares of the Company's common stock of 75% of the contingent
    grant for the Performance Cycle commencing in 1991. Such restricted stock
    will be forfeited if the officer terminates employment prior to January 1,
    2001 for any reason other than retirement, disability or death. In the
    event of a change in control, the restrictions lapse immediately.
(6) All other compensation includes: (a) above-market-rate interest earned on
    deferred compensation; (b) the employer matching contribution made to the
    officer's account in the 401(k) Employee Savings Plan; and (c) Supplemental
    Security Plan Payment of $227,757 to Mr. Newton as the benefit payable for
    the period of August 1, 1995 through July 31, 1996. Such amounts for 1995
    with respect to items (a) and (b) are shown in the following table.

<TABLE>
<CAPTION>
                                                      INTEREST ON     401(K)
     EXECUTIVE                                          DEFERRED     MATCHING
      OFFICER                                         COMPENSATION CONTRIBUTION
     ---------                                        ------------ ------------
       <S>                                            <C>          <C>
       John T. Newton................................     $N/A        $4,500
       Michael R. Whitley............................     $186        $4,500
       James W. Tipton...............................     $167        $4,500
       O. M. Goodlett................................     $N/A        $4,500
       Wayne T. Lucas................................     $192        $4,500
       James M. Allison..............................     $ 27        $4,500
</TABLE>

  Performance Shares contingently awarded under the Performance Share Plans in
1995 are reported in the Long-Term Incentive Plan awards table below. A
description of how awards are determined is presented under "Report of
Compensation Committee on Executive Compensation." A description of the scale
by which performance targets are set follows the table.

              Long-Term Incentive Plan--Awards In Last Fiscal Year

<TABLE>
<CAPTION>
                                      PERFORMANCE
                                       OR OTHER    ESTIMATED FUTURE PAYOUTS UNDER NON-
                                        PERIOD                    STOCK
                          NUMBER OF      UNTIL            PRICE-BASED PLANS(5)
                            UNITS     MATURATION  -------------------------------------
                              OR          OR      THRESHOLD
NAME                     OTHER RIGHTS  PAYOUT(4)     ($)      TARGET ($)    MAXIMUM ($)
----                     ------------ ----------- --------- --------------- -----------
<S>                      <C>          <C>         <C>       <C>             <C>
John T. Newton..........    1,727(1)        3        $ 0    $25,905-$38,858  $ 51,810
Michael R. Whitley......    4,075(2)        3        $ 0    $61,125-$91,688  $122,250
James W. Tipton.........    2,445(2)        3        $ 0    $36,675-$55,013  $ 73,350
O. M. Goodlett..........    2,200(3)        3        $ 0    $33,000-$49,500  $ 66,000
Wayne T. Lucas..........    2,085(3)        3        $ 0    $31,275-$46,913  $ 62,550
James M. Allison........    1,855(3)        3        $ 0    $27,825-$41,738  $ 55,650
</TABLE>
--------
(1) Constitutes Performance Shares contingently granted under the KUE
    Performance Share Plan in 1995 as adjusted on a prorated basis to reflect
    retirement as of August 1, 1995.

                                      -174-
<PAGE>

(2) Constitutes Performance Shares contingently granted under the KUE
    Performance Share Plan in 1995.
(3) Constitutes Performance Shares contingently granted under the Kentucky
    Utilities Performance Share Plan in 1995.
(4) Number of years in Performance Cycle.
(5) See description below for the scale that determines which amount would be
    applicable. Amounts are calculated based on the price of the Company's
    Common Stock on December 31, 1995.

  For the Performance Cycle commencing in 1995, payouts of contingent grants
shown in the table above will be determined by calculating the average return
on equity for the Performance Cycle of the Company or Kentucky Utilities, as
the case may be, compared to the average return on equity for the Performance
Cycle for the comparable companies. The returns will be ranked in descending
order. For the 1995-1997 Performance Cycle, the scale that determines if grants
are earned is as follows: if the Company's or Kentucky Utilities' rank, as the
case may be, is in the top two, the payout will be 100% of the contingent grant
(the Maximum shown in the table); if their rank is third or fourth, the payout
will be 75% and if their rank is fifth or sixth, the payout will be 50% (the
two figures shown as Target in the table); and if their rank is seventh or
below, no shares will be awarded (shown as the Threshold in the table) for that
Performance Cycle under the applicable Performance Share Plan.

  Each of the officers of the Company and Kentucky Utilities is entitled to
participate in the Kentucky Utilities employee retirement plans described
below. Executive officers, like other employees, are eligible to participate in
Kentucky Utilities' Retirement Plan, and all eligible persons whose
compensation is reported in the Summary Compensation Table participated in the
Retirement Plan. Contributions to the Retirement Plan are determined
actuarially and cannot be readily calculated as applied to any individual
participant or small group of participants. Generally, compensation for
Retirement Plan purposes means base compensation while a participant, excluding
overtime pay, commissions, performance incentive compensation or other
extraordinary compensation. The compensation for Retirement Plan purposes of
the individuals named in the foregoing table is substantially equivalent to the
base salary reported in the Summary Compensation Table. The credited years of
service under the Retirement Plan for such persons were as follows: Mr. Newton,
37 years; Mr. Whitley, 31 years; Mr. Tipton, 28 years; Mr. Goodlett, 25 years;
Mr. Lucas, 26 years; and Mr. Allison, 1 year. All of the credited years of
service were computed as of December 31, 1995 except for Mr. Newton's service
which was determined as of August 1, 1995, his date of retirement. Retirement
Plan benefits depend upon length of service, age at retirement and amount of
compensation (determined in accordance with the Retirement Plan).

  Although higher amounts are determined under the Retirement Plan and shown in
the table below, in most cases, pension benefits under the Retirement Plan or
compensation used to measure such benefits will be reduced to comply with
maximum limitations imposed by the Internal Revenue Code. Under such
limitations effective in 1995, no base compensation above $150,000 may be used
to calculate a benefit, except in the case of certain executive officers to
preserve benefits accrued under previously applicable rules. In addition, no
annual benefit derived from employer contributions may exceed $120,000.
Assuming retirement at age 65, a Retirement Plan participant would be eligible
at retirement for a maximum annual pension benefit (without taking into account
the Internal Revenue Code limitations referred to above) set forth in the
following table. However, assuming retirement at age 65, assuming 1995 base
compensation and taking into account the Internal Revenue Code limitations, the
annual pension benefit under the Retirement Plan for the executive officers
named in the Summary Compensation Table would be as follows: Mr. Whitley,
$101,643; Mr. Tipton, $93,138; Mr. Goodlett, $84,738; Mr. Lucas, $86,998; and
Mr. Allison, $50,219. Mr. Newton's annual pension benefit under the Retirement
Plan commencing on his August 1, 1995 retirement date is $106,309.

                                       -175-
<PAGE>

<TABLE>
<CAPTION>
  FINAL
 AVERAGE                       ANNUAL BENEFIT AFTER SPECIFIED YEARS OF SERVICE(2)
  BASE                   --------------------------------------------------------------
 PAY(1)                     15       20       25       30       35       40       45
 -------                 -------- -------- -------- -------- -------- -------- --------
<S>                      <C>      <C>      <C>      <C>      <C>      <C>      <C>
$150,000................ $ 29,999 $ 39,999 $ 49,999 $ 59,999 $ 69,998 $ 79,998 $ 89,998
$200,000................ $ 39,999 $ 53,332 $ 66,665 $ 79,998 $ 93,331 $106,664 $119,997
$250,000................ $ 49,999 $ 66,665 $ 83,331 $ 99,998 $116,664 $133,330 $149,996
$300,000................ $ 59,999 $ 79,998 $ 99,998 $119,997 $139,997 $159,996 $179,996
$350,000................ $ 69,998 $ 93,331 $116,664 $139,997 $163,329 $186,662 $209,995
$400,000................ $ 79,998 $106,664 $133,330 $159,996 $186,662 $213,328 $239,994
$450,000................ $ 89,998 $119,997 $149,996 $179,996 $209,995 $239,994 $269,993
$500,000................ $ 99,998 $133,330 $166,663 $199,995 $233,328 $266,660 $299,993
$550,000................ $109,997 $146,663 $183,329 $219,995 $256,660 $293,326 $329,992
$600,000................ $119,997 $159,996 $199,995 $239,994 $279,993 $319,992 $359,991
</TABLE>
--------
(1) "Final average base pay" generally means the average annual compensation
    during the 60 consecutive months of highest pay during the period of
    employment.
(2) Annual benefits shown are on a straight life annuity basis. Amounts shown
    are not subject to any deduction for Social Security benefits or other
    offset amounts. Benefits may be reduced by Internal Revenue Code
    limitations described above.

  Executive officers and certain other employees of the Company and Kentucky
Utilities are eligible to be members in Kentucky Utilities' Supplemental
Security Plan which provides retirement, disability and death benefits as well
as a change in control retirement benefit and a change in control severance
benefit. As to executive officers, upon retirement at age 65, an eligible
member will receive 15 annual payments of an amount equal to 75% of basic
compensation, offset by benefits payable from any defined benefit plan of the
Company or an affiliate (such as Kentucky Utilities' Retirement Plan) and
social security benefits. Basic compensation is the annualized base monthly
salary of the member, exclusive of performance incentive compensation or other
extraordinary compensation, in effect at termination of employment by
retirement, disability or death. Upon termination of employment by death of an
eligible executive officer prior to age 65, the member's beneficiary will
receive an annual benefit equal to 50% of basic compensation until the later of
the date such member would have attained age 65 or completion of 15 annual
payments. Upon termination of employment by disability prior to age 65, the
member will receive the "retirement benefit" if the member lives to retirement
age and remains disabled or the "death benefit" if the member dies prior to
retirement age and is disabled at death. Benefits will be paid from the general
funds of the employer. The estimated annual benefits from Kentucky Utilities'
Supplemental Security Plan that would be payable upon retirement at normal
retirement age for the individuals named in the Summary Compensation Table
(assuming 1995 basic salary) are as follows: Mr. Whitley, $145,164; Mr. Tipton,
$62,166; Mr. Goodlett, $62,889; Mr. Lucas, $43,376; and Mr. Allison, $63,262.
Mr. Newton's annual benefit under the Supplemental Security Plan, commencing on
his August 1, 1995 retirement, is $227,757. To assist in providing funds to pay
such benefits when they become payable, insurance is purchased on the lives of
the members of the Supplemental Security Plan.

  Under the Supplemental Security Plan, members are entitled to change in
control severance benefits in the following circumstances: (i) involuntary
termination of the individual's employment within two years following the
change in control for reasons other than cause, death, permanent disability or
attainment of age 65; (ii) resignation within two years of the change in
control for good reason (as defined in the plan); and (iii) in respect of the
Chairman of the Board, the President, the Chief Financial Officer or, if such
positions are filled by less than three persons, the Executive Vice President,
in each case of Kentucky Utilities,

                                      -176-
<PAGE>

termination of employment for any reason during the 30-day period commencing on
the first anniversary of the change in control. In such circumstances, the
employee will be entitled to a change in control severance payment equal to a
certain percentage (300% in the case of executive officers of the Company or
Kentucky Utilities) of the sum of (i) the employee's basic compensation and
(ii) the employee's target annual performance incentive compensation. In
addition, the employee will be entitled to continuation of certain employee
welfare benefits for up to three years following termination of employment,
subject to an offset for comparable benefits. Under the Supplemental Security
Plan, the employee is entitled to receive additional payments, if necessary, to
reimburse the employee for certain federal excise tax liabilities. The
Supplemental Security Plan's change in control retirement benefit provides
that, upon termination of employment, other than for cause (as defined in the
Supplemental Security Plan) following a change in control, an eligible member
will receive a lump sum amount equal to the present value of the retirement
benefit (described in the preceding paragraph and assuming the member is then
65 but prorated if the member then has less than 15 years of service, including
an assumed three additional years of service for executive officers); provided
that, if the termination is more than two years from the change in control, the
calculation of years of service will not include the assumed additional three
years and the compensation upon which the benefit is calculated will be the
actual compensation in effect at termination (rather than the compensation in
effect at the change in control which, if higher, would be used if termination
occurred within two years of the change in control). The change in control
severance benefits and change in control retirement benefits are effective for
a minimum of five years, which is automatically extended from year to year
unless Kentucky Utilities gives notice that it does not wish to extend the
period of effectiveness. Change in control has essentially the same meaning as
under the Director Retirement Plans described under "Directors' Compensation."

  The Performance Share Plans and Executive Deferred Compensation Plans contain
provisions relating to a change in control. Under each of these plans a change
in control has essentially the same meaning as under the Director Retirement
Plans described under "Directors' Compensation." Under the Performance Share
Plans, if a participant's employment is terminated voluntarily or involuntarily
after a change in control, such participant will have the right to an immediate
cash payment for all Performance Cycles in which the participant is currently
participating. The amount payable to a participant in the event of termination
in connection with a change in control will be determined in accordance with
the formula specified in the Performance Share Plan. In addition, after a
change in control, whether or not the participant is terminated, under the
Executive Deferred Compensation Plans, all amounts held under such plans will
be paid to the participant.

                                    General

  Independent Public Accountants. The Audit Committee of the Board has selected
the firm of Arthur Andersen LLP as independent public accountants to examine
the financial statements of the Company and Kentucky Utilities for 1996. The
firm has served as the independent public accountants for the Company and
Kentucky Utilities for many years. Representatives of the firm are not expected
to be present at the annual meeting.

  Proposals of Shareholders. Under the rules of the Securities and Exchange
Commission, any shareholder proposal intended to be presented at the 1997
Annual Meeting of Shareholders must be received by the Company at its principal
executive offices no later than November 17, 1996 in order to be eligible to be
considered for inclusion in the Company' proxy materials relating to that
meeting. A shareholder submitting a proposal or nominating a person to serve as
director must comply with procedures set forth in the Company's By-laws. In
general, the By-laws provide that for business to be considered at an annual
meeting

                                      -177-