AMENDMENT NO. 3 TO
                              KENTUCKY UTILITIES COMPANY
                         DIRECTOR RETIREMENT RETAINER PROGRAM


                    The Kentucky Utilities Company Director Retirement

          Retainer Program, as heretofore amended (the "Plan"), is hereby

          further amended, effective as of November 1, 1996, in the

          following respects:

                    1.   By deleting Section 4.4 of the Plan and inserting

          in lieu thereof the following:

                         "4.4 Change in Control.  For purposes of the Plan,
                    a "Change in Control" shall have occurred if at any
                    time on or after November 1, 1996, any of the following
                    events shall occur:

                              (a)  The Company or the Parent (as
                         defined below) 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-
                         outstanding securities entitled to vote
                         generally in the election of directors
                         (the "Voting Stock") of the Parent
                         immediately prior to such transaction;

                              (b)  The Company or the Parent
                         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 Parent
                         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 Securities Exchange Act

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                         of 1934, as amended (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 the Parent; 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 the Parent 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 the Parent, a "Change in
                    Control" shall not be deemed to have occurred for
                    purposes of the Plan solely because (i) the Parent,
                    (ii) an entity in which the Company or the Parent
                    directly or indirectly beneficially owns 50% or more of
                    the voting securities (a "Subsidiary"), or (iii) any
                    Company-sponsored, Parent-sponsored or Subsidiary-
                    sponsored employee stock ownership plan or any other
                    employee benefit plan of the Company, the Parent 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 the Parent, whether in excess of 10% or
                    otherwise.  For purposes of this Section 4.4, "Parent"
                    shall mean KU Energy Corporation."

                    IN WITNESS WHEREOF, Kentucky Utilities Company has

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

          of the Board, President and Chief Executive Officer and its

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          Corporate Seal to be hereunto affixed, attested by its Secretary,

          as of the 16th day of December, 1996.



                                             KENTUCKY UTILITIES COMPANY



                                             By:/s/Michael R. Whitley
                                                Chairman of the Board,
                                                President and Chief
                                                Executive Officer
          [CORPORATE SEAL]

          ATTEST:

          /s/George S. Brooks II











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