EXHIBIT 10.26






                                KU ENERGY CORPORATION

                         DIRECTOR DEFERRED COMPENSATION PLAN

                         (As Amended and Restated Effective
                               As Of January 1, 1997)










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                                KU ENERGY CORPORATION
                         DIRECTOR DEFERRED COMPENSATION PLAN

              (As Amended and Restated Effective As Of January 1, 1997)


                                      ARTICLE I

                                       Purpose

                    The KU Energy Corporation Director Deferred

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

          1992, to provide eligible directors of KU Energy Corporation 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 KU Energy Corporation.  The terms and

          conditions of the Plan, as amended and restated effective as of

          January 1, 1997, 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)  Act:  The Securities Exchange Act of
                    1934, as amended from time to time.

                         (b)  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.

                         (c)  Accounting Date:  Except as
                    otherwise provided herein, each March 31,
                    June 30, September 30 and December 31 of each
                    calendar year.  The first Accounting Date
                    under the Plan was June 30, 1992.

                         (d)  Beneficiary:  The person or persons
                    (natural or otherwise) designated, in

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                    accordance with Section 5.4, to receive the
                    distribution of a Participant's Account
                    balance in the event of the Participant's
                    death.

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

                         (f)  Change in Control:  The occurrence of
                    any of the events provided in Section 5.7.

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

                         (h)  Company:  KU Energy Corporation, a
                    corporation organized and existing under the
                    laws of the Commonwealth of Kentucky.

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

                         (j)  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.

                         (k)  Effective Date:  May 1, 1992.

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

                         (m)  KU:  Kentucky Utilities Company.

                         (n)  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.

                         (o)  Plan:  The KU Energy Corporation
                    Director Deferred Compensation Plan set forth
                    in this instrument, as it may be amended from
                    time to time.

                         (p)  Service:  An individual's service
                    on the Board and on the boards of KU or any
                    other Subsidiary.




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                         (q)  Subsidiary:  An entity in which the
                    Company, KU or one or more other Subsidiaries
                    directly or indirectly beneficially owns 50%
                    or more of the voting securities.


                                     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

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          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

          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 filing with the

          Company written notice of such change prior to the effective date

          of such change.  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



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

          payable only as provided in Article V.

                    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 was allocated to

          Subaccount I unless the Participant had elected otherwise as of

          such date as then provided in the Plan.  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 occurring on or

          after December 1, 1996 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 in which such Accounting Date occurs
                    shall be added to or subtracted from, as the
                    case may be, the applicable Subaccounts as of
                    the first day of such calendar quarter.


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                         (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
                    period ending on such Accounting Date that
                    follows the next preceding 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
                    Company 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 on and after December 1, 1996, 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 applicable Accounting Date
                    shall be equal to the interest that would be

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                    earned on the average of the balances in
                    Subaccount I of the Participant's Account at
                    the end of each calendar month ending during
                    the period following the next preceding
                    Accounting Date and ending on the applicable
                    Accounting Date, at a rate per annum which
                    equals the average prime rate charged by
                    banks as reported in the Federal Reserve
                    Bulletin published on or next prior to the
                    applicable Accounting Date.

                         (b)  Subaccount II Adjustments:
                    Subaccount II of a Participant's Account
                    shall be adjusted as of an applicable
                    Accounting Date 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 Company Common Stock
                    allocated to Subaccount II of the
                    Participant's Account as of such Accounting
                    Date.  The number of hypothetical shares of
                    Company Common Stock allocated to Subaccount
                    II of a Participant's Account as of any date
                    shall be equal to the number of shares of
                    Company 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 Company'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
                    Section 4.3 of the Plan as then in effect was
                    invested in the Company's Common Stock at the
                    average Fair Market Value on trading days
                    during the month of December, 1994, (iii) any
                    other balance transferred from Subaccount I
                    due to a change in election under this
                    Section 4.3 was invested in the Company's
                    Common Stock at Fair Market Value on the
                    trading day that is coincident with or next
                    following the effective date of such change,
                    (iv) cash dividends on the shares of Company
                    Common Stock treated as allocated to
                    Subaccount II of the Participant's Account
                    were automatically reinvested in the
                    Company's Common Stock at Fair Market Value
                    on the trading day that is coincident with or

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                    next following the applicable dividend
                    payment date, and (v) any transfers to
                    Subaccount I due to a change in election
                    under this 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 Company 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 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 was a Participant as of December 31, 1994 failed to

          make an election hereunder as of January 1, 1995, he was 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 provided in this Section 4.3 from time to time.

                    A Participant may change his or her election or deemed

          election under this Section 4.3 effective, beginning on or after

          January 1, 1997, as of the first day of any calendar quarter by

          filing with the Company written notice of such change at least 15

          days prior to the effective date of such change.  Any change

          shall direct that either or both of (i) that the balance credited

          to Subaccount I or Subaccount II of the Participant's Account as

          of the immediately preceding Accounting Date be transferred, in


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          specified multiples of 10%, to the other Subaccount or (ii)

          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 as of the first day of the

          calendar quarter elected and shall remain in effect until further

          changed as provided herein.

                    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 or a termination to which

          Section 5.6 applies, the Company shall pay, or commence to pay,

          to the Participant in cash the amount credited to his or her

          Account.  Payment shall be made in accordance with Payment


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          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 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.

                         (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
                    KU or other Subsidiary (but not counting any
                    such calendar quarter more than once).  The
                    amount of each installment shall be equal to
                    the quotient obtained by dividing the balance
                    credited to Participant's Account as of the
                    Accounting Date coincident with or next
                    preceding the date of such installment
                    payment 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 KU or other
                    Subsidiary (but not counting any such
                    calendar year more than once).  The amount of
                    each installment shall be equal to the
                    quotient obtained by dividing the balance
                    credited to Participant's Account as of the
                    Accounting Date coincident with or next
                    preceding the date of such installment
                    payment 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.

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                    A Participant may change his or her elected method of

          payment from time to time by filing with the Company written

          notice of such change, except that no election change shall be

          effective under the Plan if it is filed with the Company after

          the date which is one year prior to the date on which the

          Participant terminates his or her Service.

                    An election or change in election as to the method of

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

          Company.

                    Notwithstanding a Participant's election under, or the

          foregoing provisions of, this Section 5.1, if a Change in Control

          occurs after a Participant terminates his or her Service but

          prior to the complete distribution under the Plan of the balance

          credited to his or her Account, the amount credited to the

          Participant's Account as of the New York Stock Exchange trading

          date next preceding the date on which the Change in Control

          occurs (such amount to be determined as if the trading date next

          preceding the date on which the Change in Control occurs were an

          Accounting Date) increased by the amount of any Compensation

          deferred under the Plan by the Participant not previously

          credited to his or her Account, shall be paid in cash in a lump

          sum to the Participant (or, in the event of the Participant's

          death after his termination of Service, to his or her

          Beneficiary) within 15 days after the date on which the Change in

          Control occurs, such payment to be made effective as of the date

          on which the Change in Control occurs.

                    5.2  Death:  Upon the death of a Participant, whether

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

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          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.  If, however, a Change in Control

          shall occur either before or after the Participant's death but

          prior to the complete distribution of the balance credited to the

          Participant's Account, distribution shall be made to the

          Beneficiary as provided in the last paragraph of Section 5.1 or

          in Section 5.6, whichever is applicable, rather than as provided

          in this Section 5.2.  The foregoing sentence shall not apply if

          the Participant's termination of Service occurs on or after the

          third anniversary of the date on which the Change in Control

          occurs.

                    5.3  Hardship Distribution:  With the prior written

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

          Accounting Date prior to termination of Service, from his or her

          Account a cash amount not in excess of the balance credited to

          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 first to Subaccount I of the Participant's

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          Account and then, to the extent Subaccount I is insufficient, to

          Subaccount II.

                    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.

                    5.5  Delay In And Approval Of Distribution:

          Notwithstanding anything to the contrary herein, the distribution

          of all or any portion of a Participant's Account will be delayed

          for a period not to exceed seven months or may be subject to

          prior approval by the Committee or the Board to the extent that

          the Committee determines that such delay or approval is necessary


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          or desirable to ensure that any transaction under the Plan will

          qualify for an exemption from the liability provisions imposed on

          the Participant under Section 16(b) of the Act or any rules and

          regulations issued thereunder.  In the event of any such delay,

          the undistributed portion of the Participant's Account shall

          continue to be subject to adjustment as provided in Section 4.2

          until distribution is made.

                    5.6  Certain Terminations On or After a Change in

          Control:  If a Participant terminates his or her Service on or

          after the date on which a Change in Control occurs but prior to

          the third anniversary of the date on which the Change in Control

          occurs, the amount credited to the Participant's Account as of

          the date of his or her termination of Service (such amount to be

          determined as if the date on which the Participant terminates

          Service were an Accounting Date) increased by the amount of any

          Compensation deferred under the Plan by the Participant not

          previously credited to his or her Account shall be paid in cash

          in a lump sum to the Participant (or, in the event of the

          Participant's death, to his or her Beneficiary) within 15 days

          after the Participant's termination of Service.

               5.7  Change in Control:  For purposes of the Plan, a "Change

          in Control" shall have occurred if at any time on or after

          December 1, 1996, any of the following events shall occur:

                         (a)  The Company or KU is merged or
                    consolidated or reorganized into or with
                    another corporation or other legal person,
                    and as a result of such merger, consolidation
                    or reorganization less than 60% of the
                    combined voting power of the then-outstanding
                    securities of such corporation or person
                    immediately after such transaction is held in
                    the aggregate by the holders of the then-

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                    outstanding securities entitled to vote
                    generally in the election of directors (the
                    "Voting Stock") of the Company immediately
                    prior to such transaction;

                         (b)  The Company or KU sells or
                    otherwise transfers all or substantially all
                    of its assets to any other corporation or
                    other legal entity, and as a result of such
                    sale or transfer less than 60% of the
                    combined voting power of the then-outstanding
                    securities of such other corporation or
                    entity immediately after such sale or
                    transfer is held in the aggregate by the
                    holders of Voting Stock of the Company,
                    immediately prior to such sale or transfer;

                         (c)  There is a report filed on Schedule
                    13D or Schedule 14D-1 (or any successor
                    schedule, form or report or item therein),
                    each as promulgated pursuant to the Act,
                    disclosing that any person (as the term
                    "person" is used in Section 13(d)(3) or
                    Section 14(d)(2) of the Act) has become the
                    beneficial owner (as the term "beneficial
                    owner" is defined under Rule 13d-3 or any
                    successor rule or regulation promulgated
                    under the Act) of securities representing 10%
                    or more of the combined voting power of the
                    Voting Stock of the Company or the Voting
                    Stock of KU; or

                         (d)  If at any time during any period of
                    two consecutive years, individuals who at the
                    beginning of any such period constitute the
                    directors of the Company or KU cease for any
                    reason to constitute at least a majority
                    thereof, unless the election, or the
                    nomination for election by such company's
                    stockholders, of each director of such
                    company first elected during such period was
                    approved by a vote of at least two-thirds of
                    the directors of such company then still in
                    office who were directors of such company at
                    the beginning of any such period.

                    Notwithstanding the foregoing provisions of paragraph

          (c) above, unless otherwise determined in a specific case by

          majority vote of the Board of Directors of the Company and KU, a

          "Change in Control" shall not be deemed to have occurred for

          purposes of the Plan solely because (i) the Company, (ii) a

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          Subsidiary or (iii) any Company-sponsored, KU-sponsored or

          Subsidiary-sponsored employee stock ownership plan or any other

          employee benefit plan of the Company, KU or Subsidiary, either

          files or becomes obligated to file a report under or in response

          to Schedule 13D or Schedule 14D-1 (or any successor schedule,

          form or report or item therein) under the Act, disclosing

          beneficial ownership by it of shares of Voting Stock of the

          Company or KU, whether in excess of 10% or otherwise.


                                      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.


                                     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

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          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

          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 KU, including, but not limited to, the KU Energy

          Corporation Director Retirement Retainer Program or the Kentucky

          Utilities Company Director Retirement Retainer Program.



                                        -190-
<PAGE>

                    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.

                    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.



                                         -191-
<PAGE>

                    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

          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.





                                        -192-
<PAGE>

                    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.

                    9.9  Adjustments:  In the event of any stock dividend

          or split, recapitalization, reclassification, increase or

          decrease in the number of outstanding shares, merger,

          consolidation or exchanges in shares or other similar changes in

          the Company's Common Stock, appropriate adjustments shall be made

          in the Company Common Stock referenced in the Plan, including in

          the calculations under Section 4.3(b), to reflect any such

          change.


























                                        -193-
<PAGE>

                    IN WITNESS WHEREOF, KU Energy Corporation has caused

          this instrument to be executed in its name by its Chairman of the

          Board, President and Chief Executive Officer and its Corporate

          Seal to be hereunto affixed, attested by its Secretary, as of the

          28th day of January, 1997.


                                        KU ENERGY CORPORATION




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



          [Corporate Seal]


          ATTEST:


               /s/George S. Brooks II
                    Secretary













                                         -194-