EXHIBIT 99.03

Common Stock present or represented at the meeting, and entitled to vote at
the meeting. For purposes of action on the Long Term Incentive Plan Proposal
and Annual Performance Incentive Plan Proposal, an abstention is the
equivalent of a "no" vote on the proposal.

  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 7, 1997, 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 CG
Trust Company, c/o Cigna Retirement and Investment Services, Routing Code M-
122, 350 Church Street, Hartford, Connecticut 06103, Attention: Bruce
Beckmann.

                             Election of Directors

GENERAL

  Three 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 Milton W. Hudson, John T. Newton
and William L. Rouse, Jr. as directors of the Company. The nominees will hold
office until the 2000 Annual Meeting of Shareholders of the Company or until
their respective successors shall have been duly elected and qualified except
that pursuant to the Board of Director's policy on retirement, Mr. Hudson will
retire from the Board at the 1998 Annual Meeting. 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, 1997.

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

              MILTON W. HUDSON, 69, has been an economic consultant
              (Washington, DC) since 1991. He was Managing Director and Senior
              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 1,210 shares
              of Common Stock of the Company.
LOGO

                                      -266-
<PAGE>
<PAGE>

              JOHN T. NEWTON, 66, retired in 1995 as Chairman of the Board and
              Chief Executive Officer of the Company and Kentucky Utilities,
              positions 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.
LOGO

              WILLIAM L. ROUSE, JR., 64, was Chairman of the Board and Chief
              Executive Officer and a director of First Security Corporation
              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 3,937
              shares of Common Stock.
LOGO

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

              MIRA S. BALL, 62, is Secretary-Treasurer and Chief Financial
              Officer of Ball Homes, Inc., a single-family residential
              developer and property management company. She has been a
              director of the Company and Kentucky Utilities since 1992. Ms.
              Ball beneficially owns 6,057 shares of Common Stock of the
              Company. Her term expires in 1999.
LOGO

              CAROL M. GATTON, 64, is Chairman of Area Bancshares, Inc., a
              bank holding company in Owensboro, Kentucky. He is also involved
              in real estate ventures and automobile dealerships. Mr. Gatton
              beneficially owns 1,000 shares of Common Stock of the Company.
              His term expires in 1998.
LOGO

              HARRY M. HOE, 71, is President and a director of J. R. Hoe &
              Sons, Inc., Middlesboro, Kentucky, a foundry and casting
              company. He has been a director of the Company since 1991 and a
              director of Kentucky Utilities since 1979. Mr. Hoe beneficially
              owns 16,745 shares of Common Stock of the Company which include
              5,394 shares held solely by his wife. His term expires in 1998.
LOGO

                                    -267-
<PAGE>
<PAGE>

              FRANK V. RAMSEY, JR., 65, is President and Director of Dixon
              Bank, Dixon, Kentucky, and a farm owner and operator. He has
              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. His term expires in
              1999.
LOGO

              CHARLES L. SHEARER, PH.D., 54, is President of Transylvania
              University, Lexington, Kentucky. He has been a director of the
              Company since 1991 and a director of Kentucky Utilities since
              1987. Dr. Shearer beneficially owns 1,460 shares of Common Stock
              of the Company which include 200 shares held solely by his wife
              and 14 shares held by his children. His term expires in 1999.
LOGO

              LEE T. TODD, JR., PH.D., 50, is President and Chief Executive
              Officer of DataBeam Corporation, a Kentucky-based, high-
              technology firm. He was elected a director of the Company and
              Kentucky Utilities in 1995. Dr. Todd beneficially owns 500
              shares of Common Stock of the Company. His term expires in 1999.
LOGO

              MICHAEL R. WHITLEY, 54, has been Chairman, President and Chief
              Executive Officer of the Company and Kentucky Utilities since
              August 1, 1995. He was President and Chief Operating Officer of
              the Company and Kentucky Utilities from November 1, 1994 to
              August 1, 1995. 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. He is a director of PNC Bank
              Kentucky, Inc., a wholly owned subsidiary of PNC Bank Corp.,
              Inc. Mr. Whitley has been a director of the Company and Kentucky
              Utilities since 1992. He beneficially owns 30,985 shares of
              Common Stock of the Company which include 6,300 shares held
              jointly with his wife and 964 shares held solely by his wife.
LOGO          His term expires in 1998.

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, 1997 an aggregate of 189,117
shares of Common Stock of the Company, representing in the aggregate 0.5% 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

                                     -268-
<PAGE>
<PAGE>

Compensation Committee in the grant or payment of awards to the director or
executive under incentive or other plans maintained by the Company. The Board
of Directors of the Company may amend or terminate the Equity Ownership
Guidelines at any time or from time to time.

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. An additional annual retainer of
$1,200 is paid to each non-employee director who is a chairperson of a
committee of either Board. However, if a non-employee director is a
chairperson of the same Board committee of the Company and Kentucky Utilities,
only one such additional annual retainer is paid.

  In addition to an annual retainer, the Company and Kentucky Utilities pay
each non-employee director a $1,000 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 $1,000 fee is paid for both
meetings. Similarly, if the same committee of the Boards of the Company and
Kentucky Utilities meets on the same day, only one $1,000 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
(excluding the additional annual retainer for chairpersons). 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 60% 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-

                                    -269-
<PAGE>
<PAGE>

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, such
elections to be made in accordance with and subject to the terms of the
Director Deferred Compensation Plans. 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. In the event of a change in
control of the Company or Kentucky Utilities, any director who terminated prior
to the change in control whose deferred amounts have not been distributed would
receive, within 15 days of the change in control, a lump sum payment of the
undistributed amounts. In the event of a change in control, each director who
terminates thereafter within three years of the date of the change in control
would be paid, within 15 days after termination, a lump sum payment of the
director's deferred amounts. Change in control has essentially the same meaning
as under the Director Retirement Plans described above. 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.

                                     -270-
<PAGE>
<PAGE>

EXECUTIVE COMPENSATION

  General. 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 1994 through 1996 in all capacities, to the Chief
Executive Officer 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
                                       SALARY  BONUS  COMPENSATION   PAYOUTS    COMPENSATION
NAME AND PRINCIPAL POSITION       YEAR   ($)   ($)(1)    ($)(2)       ($)(3)       ($)(4)
---------------------------       ---- ------- ------ ------------   -------    ------------
<S>                               <C>  <C>     <C>    <C>          <C>          <C>
MICHAEL R. WHITLEY;               1996 387,737 99,741    2,164        79,798       6,242
 Chairman of the Board, President 1995 318,467 73,476      116             0       4,686
 & Chief Executive Officer &      1994 245,490 67,157      481        50,508       5,560
 Director of the Company &
 Kentucky Utilities
JAMES W. TIPTON;                  1996 230,750 38,304    2,004        77,882       5,670
 Senior Vice President            1995 227,591 39,942    1,445             0       4,667
 of the Company                   1994 214,043 63,210    1,373        50,508       5,537
O. M. GOODLETT;                   1996 231,840 51,994        0        52,560       5,181
 Senior Vice President of the     1995 210,195 44,550        0             0       4,500
 Company & Kentucky Utilities     1994 200,251 56,889        0        30,246       4,500
WAYNE T. LUCAS;                   1996 208,137 49,043      749        33,124       6,361
 Senior Vice President            1995 194,553 42,160      711             0       4,692
 of Kentucky Utilities            1994 159,699 33,754      523        22,658       5,522
JAMES M. ALLISON;                 1996 175,749 43,208        0           N/A       5,056
 Senior Vice President            1995 169,405 38,160        0           N/A       4,527
 of Kentucky Utilities            1994 133,674 29,131        0           N/A       4,500
 (Resigned Feb. 21, 1997)
</TABLE>
--------
(1) Bonuses are paid under the Incentive Plans. Any bonus earned but deferred
    under the Executive Deferred Compensation Plans is included in the Table.
(2) Other annual compensation consists of amounts for group term life
    insurance and related taxes.
(3) Reflects payouts under the Performance Share Plans 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 1995 in the table above. Amounts shown for 1994 and
    1996 reflect a payout in the form of restricted shares of the Company's
    Common Stock of 75% and 100%, respectively, of the contingent grant for
    the applicable Performance Cycle. Such restricted stock will be forfeited
    if the officer terminates employment prior to January 1, 2001 (for amounts
    shown for 1994) and January 2, 2003 (for amounts shown for 1996) for any
    reason other than retirement, disability or death. In the event of a
    change in control, the restrictions lapse immediately.
(4) All other compensation includes: (a) above-market-rate interest earned on
    deferred compensation; and (b) the employer matching contribution made to
    the officer's account in the 401(k) Employee Savings Plan. Such amounts
    for 1996 are shown in the following table.

<TABLE>
<CAPTION>
         EXECUTIVE                             INTEREST ON      401(K) MATCHING
          OFFICER                         DEFERRED COMPENSATION  CONTRIBUTION
         ---------                        --------------------- ---------------
      <S>                                 <C>                   <C>
      Michael R. Whitley.................        $1,742             $4,500
      James W. Tipton....................         1,170              4,500
      O. M. Goodlett.....................           681              4,500
      Wayne T. Lucas.....................         1,861              4,500
      James M. Allison...................           556              4,500
</TABLE>


                                     -271-
<PAGE>
<PAGE>

  Long Term Incentive Awards. Performance Shares contingently awarded under
the Performance Share Plans in 1996 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
                          NUMBER OF     PERIOD
                           SHARES,       UNTIL        ESTIMATED FUTURE PAYOUTS UNDER
                           UNITS OR   MATURATION      NON-STOCK PRICE-BASED PLANS(4)
                         OTHER RIGHTS     OR      --------------------------------------
NAME                         (#)       PAYOUT(3)  THRESHOLD($)   TARGET($)    MAXIMUM($)
----                     ------------ ----------- ------------ -------------- ----------
<S>                      <C>          <C>         <C>          <C>            <C>
Michael R. Whitley......   5,835 (1)        3           0      87,525-131,288  175,050
James W. Tipton.........   2,280 (1)        3           0       34,200-51,300   68,400
O.M. Goodlett...........   2,180 (1)        3           0       32,700-49,050   65,400
Wayne T. Lucas..........   1,950 (2)        3           0       29,250-43,875   58,500
James M. Allison........   1,730 (2)        3           0       25,950-38,925   51,900
</TABLE>
--------
(1) Constitutes Performance Shares contingently granted under the KUE
    Performance Share Plan in 1996.
(2) Constitutes Performance Shares contingently granted under the Kentucky
    Utilities Performance Share Plan in 1996.
(3) Number of years in Performance Cycle.
(4) 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, 1996.

  For the Performance Cycle commencing in 1996, 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 1996-1998 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.

  Retirement 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. Whitley, 32 years; Mr. Tipton, 29 years; Mr. Goodlett, 26 years;
Mr. Lucas, 27 years; and Mr. Allison, 2 years. All of the credited years of
service were computed as of December 31, 1996. Retirement Plan benefits depend
upon length of service, age at retirement and amount of compensation
(determined in accordance with the Retirement Plan).

                                     -272-
<PAGE>
<PAGE>

  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 1996, 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 1996 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,
103,607; Mr. Tipton, 95,146; Mr. Goodlett, 90,672; Mr. Lucas, 92,904; and Mr.
Allison, 53,737.

<TABLE>
<CAPTION>
                       ANNUAL BENEFIT AFTER SPECIFIED YEARS OF SERVICE(2)
 FINAL AVERAGE   --------------------------------------------------------------
  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.

  Supplemental Security Plan. 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

                                      -273-
<PAGE>
<PAGE>

age (age 65) for the individuals named in the Summary Compensation Table
(assuming 1996 base salary) are as follows: Mr. Whitley, 188,128; Mr. Tipton,
65,342; Mr. Goodlett, 63,821; Mr. Lucas, 43,389; and Mr. Allison, 64,991. 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.

  Change In Control Arrangements. 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 a change in control (or, if later, prior to the
consummation of the change in control transaction or its earlier abandonment)
for reasons other than cause, death or permanent disability; (ii) resignation
within two years of a change in control (or, if later, prior to the
consummation of the change in control transaction or its earlier abandonment)
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), the Senior Vice Presidents and the Corporate Secretary, in each
case of Kentucky Utilities, termination of employment for any reason during
the 30-day period commencing on the first anniversary of the consummation of a
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 in the case of 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 Incentive Plans, 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 payment in shares of Company Common Stock 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 Plans. 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. Under the Incentive Plans, after a change in control, whether
or not a participant is terminated, a participant, including a participant who
had terminated prior to the change in control by reason of retirement,
disability or death, will have a right to an immediate cash payment based on
actual base salary earned prior to the change in control and on the assumption
that established targets for the year had been met.

                                      -274-

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