PSI ENERGY, INC.

                                       AND

                              THE FIFTH THIRD BANK,
                                     Trustee



                          Third Supplemental Indenture

                           Dated as of March 15, 1998

                                       To

                                    Indenture

                          Dated as of November 15, 1996



        7.25% JUnior Maturing Principal Securities ("JUMPS-SM-") Due 2028


         THIRD SUPPLEMENTAL  INDENTURE,  dated as of March 15, 1998, between PSI
Energy,  Inc., a corporation  duly  organized and existing under the laws of the
State of Indiana (herein called the "Company"),  having its principal  office at
1000 East Main Street,  Plainfield,  Indiana 46168, and The Fifth Third Bank, an
Ohio banking  corporation,  as Trustee  (herein called the "Trustee")  under the
Indenture dated as of November 15, 1996 between the Company and the Trustee,  as
supplemented (the "Indenture").

                             Recitals of the Company

         The Company has executed and  delivered the Indenture to the Trustee to
provide for the issuance from time to time of its unsecured debentures, notes or
other evidences of indebtedness (the "Securities"),  to be issued in one or more
series as provided in the Indenture.

Pursuant to the terms of the Indenture,  the Company  desires to provide for the
establishment  of a new series of its Securities to be known as its 7.25% JUnior
Maturing  Principal  Securities   ("JUMPS-SM-")  Due  2028  (herein  called  the
"Debentures"), in this Third Supplemental Indenture.

         All things necessary to make this Third Supplemental  Indenture a valid
agreement of the Company have been done.

         Now, Therefore, This Third Supplemental Indenture Witnesseth:

         For  and in  consideration  of the  premises  and the  purchase  of the
Debentures  by the Holders  thereof,  it is mutually  agreed,  for the equal and
proportionate benefit of all Holders of the Debentures, as follows:


                                   ARTICLE ONE

                             Terms of the Debentures

Section 101.  There is hereby  authorized a series of Securities  designated the
"7.25% JUnior Maturing Principal Securities  ("JUMPS-SM-") Due 2028", limited in
aggregate principal amount to $100,000,000 (except as provided in Section 301(2)
of the  Indenture).  The Debentures  shall mature and the principal shall be due
and payable  together with all accrued and unpaid interest  thereon on March 15,
2028 and shall be issued in the form of a  registered  Global  Security  without
coupons,  registered  in the name of Cede & Co.,  as nominee  of the  Depository
Trust Company (the "Depositary").

         Section 102. The provisions of Section 305 of the Indenture  applicable
to Global Securities shall apply to the Debentures.

         Section  103.  Interest  on each of the  Debentures  shall  be  payable
semiannually  on March  15 and  September  15 in each  year  (each an  "Interest
Payment  Date"),  commencing  on  September  15,  1998,  at the rate  per  annum
specified in the  designation of the Debentures from March 15, 1998, or from the
most  recent  Interest  Payment  Date to which  interest  has been  paid or duly
provided for. The interest so payable, and punctually paid or duly provided for,
on any  Interest  Payment  Date will be paid to the  Person  in whose  name such
Debenture (or one or more Predecessor  Securities) is registered at the close of
business  on the  Regular  Record  Date for such  interest,  which  shall be the
Business Day  immediately  preceding  such Interest  Payment Date. The amount of
interest  payable for any period will be computed on the basis of a 360-day year
of twelve 30-day  months.  As used herein,  "Business  Day" means any day, other
than a Saturday or Sunday,  or a day on which banking  institutions in New York,
New York are authorized or obligated by law or executive order to be closed.

         Section 104.  Subject to agreements with or the rules of the Depositary
or any successor  book-entry  security  system or similar system with respect to
Global  Securities,  payments  of interest  will be made by check  mailed to the
Holder of each  Debenture  at the address  shown in the Security  Register,  and
payments of the principal  amount of each  Debenture will be made at maturity by
check  against  presentation  of the  Debenture  at the  office or agency of the
Trustee.

         Section 105. The Debentures  shall be issued in denominations of $1,000
or any integral multiple of $1,000.

         Section 106.  Principal and interest on the Debentures shall be payable
in the coin or currency of the United States of America,  which,  at the time of
payment, is legal tender for public and private debts.

         Section 107. The Debentures shall be subject to defeasance and covenant
defeasance,  at the Company's  option, as provided for in Sections 1302 and 1303
of the Indenture.

Section  108.  Subject  to the terms of  Article  Eleven of the  Indenture,  the
Company shall have the right to redeem the Debentures, in whole but not in part,
from time to time and at any time (such  redemption,  an "Optional  Redemption",
and the date thereof,  the "Optional  Redemption  Date"),  upon not less than 30
days' notice to the holders,  at a redemption  price equal to the sum of (A) the
greater of (i) 100% of the principal  amount of the Debentures to be redeemed or
(ii) the sum of the present values of the Remaining  Scheduled  Payments thereon
discounted to the Optional  Redemption  Date on a semiannual  basis  (assuming a
360-day year  consisting of twelve  30-day  months) at the Treasury Rate plus 20
basis  points,  less  the  Applicable  Accrued  Interest  Amount  plus  (B)  the
Applicable Accrued Interest Amount.

         "Applicable  Accrued Interest Amount" means, at the Optional Redemption
Date, the amount of interest  accrued and unpaid from the prior interest payment
date to the Optional  Redemption Date on the Debentures  subject to the Optional
Redemption determined at the rate per annum shown in the title thereof, computed
on the basis of a 360-day year of twelve 30-day months.

         "Comparable  Treasury Issue" means the United States Treasury  security
selected by an Independent  Investment Banker as having a maturity that would be
utilized,  at the time of selection and in accordance  with customary  financial
practice,  in pricing new issues of  corporate  debt  securities  of  comparable
maturity to the remaining term of the Debentures to be redeemed  pursuant to the
Optional Redemption.  "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Trustee after consultation with the Company.

         "Comparable  Treasury  Price"  means,  with  respect  to  the  Optional
Redemption  Date, the average of the Reference  Treasury  Dealer  Quotations for
such Optional Redemption Date.

         "Reference  Treasury  Dealer" means each of Salomon Brothers Inc, First
Chicago  Capital  Markets,  Inc.,  and their  respective  successors;  provided,
however,  that  if  any  of the  foregoing  shall  cease  to be a  primary  U.S.
Government  securities dealer in New York City (a "Primary Treasury Dealer") the
Company will substitute  therefor another Primary  Treasury  Dealer.  "Reference
Treasury  Dealer  Quotations"  means,  with respect to each  Reference  Treasury
Dealer and any redemption  date, the average,  as determined by the Trustee,  of
the bid and asked prices for the Comparable  Treasury  Issue  (expressed in each
case as a percentage of its principal  amount)  quoted in writing to the Trustee
by such  Reference  Treasury  Dealer at 5:00  p.m.  on the  third  Business  Day
preceding such redemption date.

         "Remaining  Scheduled  Payments" means,  with respect to any Debenture,
the remaining  scheduled  payments of the  principal  thereof to be redeemed and
interest  thereon that would be due after the Optional  Redemption  Date but for
the Optional Redemption.

         "Treasury Rate" means, with respect to the Optional Redemption Date (if
any), the rate per annum equal to the semiannual equivalent yield to maturity of
the Comparable  Treasury  Issue,  assuming a price for the  Comparable  Treasury
Issue  (expressed  as a  percentage  of  its  principal  amount)  equal  to  the
Comparable Treasury Price for such Optional Redemption Date.

         Section 109. The Company  shall have the right,  at any time during the
term of the Debentures,  from time to time to extend the interest payment period
of such Debentures for up to the earlier of 10 consecutive semiannual periods or
the maturity of the Debentures (the "Extended Interest Payment Period"),  at the
end of which  period  the  Company  shall pay all  interest  accrued  and unpaid
thereon (together with interest thereon at the rate specified for the Debentures
to the extent permitted by applicable law);  provided that, during such Extended
Interest  Payment Period,  the Company shall not declare or pay any dividend on,
or purchase,  acquire or make a liquidation  payment with respect to, any of its
capital  stock or make any  guarantee  payments  with respect to the  foregoing.
Prior to the  termination  of any such Extended  Interest  Payment  Period,  the
Company may further extend such period,  provided that such period together with
all such further extensions  thereof shall not exceed 10 consecutive  semiannual
periods or extend beyond the maturity of the Debentures. Upon the termination of
any  Extended  Interest  Payment  Period and upon the payment of all accrued and
unpaid interest then due, the Company may select a new Extended Interest Payment
Period,  subject to the  foregoing  requirements.  No interest  shall be due and
payable during an Extended Interest Payment Period, except at the end thereof.

         The Company  shall give the Holders of the  Debentures  and the Trustee
written  notice of its selection of such  Extended  Interest  Payment  Period 10
business days prior to the earlier of (i) the next succeeding  Interest  Payment
Date or (ii) the date the  Company is  required to give notice to Holders of the
Debentures  of the record or payment date of such interest  payment,  but in any
event not less than two business days prior to such record date.  The semiannual
period in which any notice is given pursuant to this paragraph shall  constitute
one of the 10 semiannual  periods which comprise the maximum  Extended  Interest
Payment Period.

         Section 110. The provisions of Article  Fourteen of the Indenture shall
apply with respect to the Debentures. Such Article provides, among other things,
that the payment of principal,  premium,  if any, and interest on the Debentures
are  subordinate and subject in right of payment to the prior payment in full of
all Senior Debt of the Company,  whether  outstanding  at the date of this Third
Supplemental Indenture or thereafter incurred.


                                   ARTICLE TWO

                             Form of the Debentures

Section 201. The  Debentures are to be  substantially  in the following form and
shall  include  substantially  the legend  shown so long as the  Debentures  are
Global Securities:


                           (FORM OF FACE OF DEBENTURE)


No. R-1                                                             $100,000,000

CUSIP No.  693627AE1

                                PSI ENERGY, INC.

            7.25% JUNIOR MATURING PRINCIPAL SECURITIES ("JUMPS-SM-")
                                    DUE 2028

UNLESS THIS  CERTIFICATE  IS PRESENTED BY AN  AUTHORIZED  REPRESENTATIVE  OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER,  EXCHANGE,  OR PAYMENT AND SUCH 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.

PSI ENERGY,  INC., a corporation  duly  organized and existing under the laws of
the State of Indiana  (herein  called the  "Company",  which term  includes  any
successor Person under the Indenture hereafter referred to), for value received,
hereby promises to pay to CEDE & CO., or registered  assigns,  the principal sum
of One Hundred Million and No/100 Dollars  ($100,000,000) on March 15, 2028, and
to pay  interest  thereon  from March 15, 1998 or from the most recent  Interest
Payment Date to which interest has been paid or duly provided for,  semiannually
(subject to deferral as set forth below),  on March 15 and September 15, in each
year,  commencing  September 15, 1998, at the rate of 7.25% per annum, until the
principal  hereof is paid or made available for payment.  The amount of interest
payable on any Interest Payment Date shall be computed on the basis of a 360-day
year of twelve 30-day months.  The interest so payable,  and punctually  paid or
duly  provided  for,  on any  Interest  Payment  Date will,  as  provided in the
Indenture,  be paid to the  Person in whose name this  Security  (or one or more
Predecessor  Securities)  is  registered at the close of business on the Regular
Record Date for such  interest,  which  shall be the  Business  Day  immediately
preceding such Interest  Payment Date. Any such interest not so punctually  paid
or duly  provided for will  forthwith  cease to be payable to the Holder on such
Regular  Record  Date and may  either be paid to the  Person in whose  name this
Security (or one or more  Predecessor  Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted  Interest to
be fixed by the Trustee,  notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special  Record  Date,  or be
paid  at any  time  in  any  other  lawful  manner  not  inconsistent  with  the
requirements  of any securities  exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange,  all as
more fully provided in the Indenture.

         Payment of the principal of (and premium,  if any) and interest on this
Security  will be made at the corporate  trust office of the Trustee  maintained
for that  purpose in the City of  Cincinnati,  in such coin or  currency  of the
United  States of America as at the time of payment is legal  tender for payment
of public  and  private  debts;  provided,  however,  that at the  option of the
Company  payment of interest  may be made by check  mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register.

         Any payment on this Security due on any day which is not a Business Day
in the City of New York  need  not be made on such  day,  but may be made on the
next  succeeding  Business  Day with the same force and effect as if made on the
due date and no interest  shall  accrue for the period from and after such date,
unless such payment is a payment at maturity or upon  redemption,  in which case
interest shall accrue thereon at the stated rate for such additional days.

         As used herein,  "Business Day" means any day, other than a Saturday or
Sunday,  or a day on  which  banking  institutions  in New  York,  New  York are
authorized or obligated by law or executive order to be closed.

         Reference is hereby made to the further provisions of this Security set
forth  on  the  reverse  hereof  including,   without   limitation,   provisions
subordinating  the payment of the principal  hereof and any premium and interest
hereon to the  payment in full of all Senior  Debt as defined in the  Indenture,
which further  provisions  shall for all purposes have the same effect as if set
forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee
referred to on the reverse hereof by manual  signature,  this Security shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

         In Witness  Whereof,  the Company has caused this instrument to be duly
executed.

                                PSI ENERGY, INC.



                                 By.............




                          CERTIFICATE OF AUTHENTICATION

Dated:

         This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.

                              THE FIFTH THIRD BANK,
                                   as Trustee

                                By...............
                              Authorized Signatory




                         (FORM OF REVERSE OF DEBENTURE)


This  Security is one of a duly  authorized  issue of  securities of the Company
(herein called the "Securities"),  issued and to be issued in one or more series
under  an  Indenture,   dated  as  of  November  15,  1996  (herein  called  the
"Indenture",  which  term  shall  have  the  meaning  assigned  to  it  in  such
instrument),  between the Company and The Fifth Third Bank,  as Trustee  (herein
called the  "Trustee",  which term  includes  any  successor  trustee  under the
Indenture), and reference is hereby made to the Indenture for a statement of the
respective rights,  limitations of rights,  duties and immunities  thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the  Securities  are, and are to be,  authenticated  and  delivered.  This
Security  is  one of the  series  designated  on the  face  hereof,  limited  in
aggregate principal amount to $100,000,000.

The  indebtedness  evidenced by the  Securities of this series is, to the extent
and in the manner provided in the Indenture,  expressly  subordinate and subject
in right of  payment  to the prior  payment  in full of all  Senior  Debt of the
Company (as defined in the  Indenture)  whether  outstanding  at the date of the
Indenture or thereafter  incurred,  and this  Security is issued  subject to the
provisions of the Indenture with respect to such subordination.  Each holder and
owner of this Security,  by accepting the same,  agrees to and shall be bound by
such  provisions  and  authorizes  the Trustee in his or her behalf to take such
action as may be necessary or  appropriate to effectuate  the  subordination  so
provided and appoints the Trustee his or her attorney-in-fact for such purpose.

The  Indenture  contains  provisions  for  defeasance  at any time of the entire
indebtedness  of this  Security or certain  restrictive  covenants and Events of
Default with respect to this Security upon  compliance  with certain  conditions
set forth in the Indenture.

The Securities of this series are subject to optional  redemption,  in whole but
not in part,  from time to time and at any time (such  redemption,  an "Optional
Redemption",  and the date thereof,  the "Optional  Redemption Date"),  upon not
less than 30 days' notice to the holders, at a redemption price equal to the sum
of (A) the greater of (i) 100% of the principal amount of the Securities of this
series to be  redeemed or (ii) the sum of the  present  values of the  Remaining
Scheduled  Payments  thereon  discounted  to the Optional  Redemption  Date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Rate plus 20 basis points,  less the  Applicable  Accrued  Interest
Amount plus (B) the Applicable Accrued Interest Amount.

"Applicable Accrued Interest Amount" means, at the Optional Redemption Date, the
amount of interest  accrued and unpaid from the prior  interest  payment date to
the Optional  Redemption  Date on the  Securities of this series  subject to the
Optional Redemption determined at the rate per annum shown in the title thereof,
computed on the basis of a 360-day year of twelve 30-day months.

"Comparable  Treasury Issue" means the United States Treasury  security selected
by an Independent Investment Banker as having a maturity that would be utilized,
at the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate  debt  securities of comparable  maturity to the
remaining term of the  Securities of this series to be redeemed  pursuant to the
Optional Redemption.  "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Trustee after consultation with the Company.

"Comparable Treasury Price" means, with respect to the Optional Redemption Date,
the  average of the  Reference  Treasury  Dealer  Quotations  for such  Optional
Redemption Date.

"Reference  Treasury  Dealer" means each of Salomon  Brothers Inc, First Chicago
Capital Markets, Inc., and their respective successors;  provided, however, that
if any of the foregoing shall cease to be a primary U.S.  Government  securities
dealer  in New  York  City  (a  "Primary  Treasury  Dealer")  the  Company  will
substitute therefor another Primary Treasury Dealer.  "Reference Treasury Dealer
Quotations"  means,  with  respect  to each  Reference  Treasury  Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its  principal  amount)  quoted in writing to the  Trustee by such  Reference
Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption
date.

"Remaining  Scheduled  Payments"  means,  with respect to any Securities of this
series, the remaining scheduled payments of the principal thereof to be redeemed
and interest  thereon that would be due after the Optional  Redemption  Date but
for the Optional Redemption.

"Treasury  Rate" means,  with respect to the Optional  Redemption Date (if any),
the rate per annum equal to the semiannual  equivalent  yield to maturity of the
Comparable  Treasury Issue,  assuming a price for the Comparable  Treasury Issue
(expressed  as a percentage of its  principal  amount)  equal to the  Comparable
Treasury Price for such Optional Redemption Date.

If an Event of Default with respect to Securities of this series shall occur and
be  continuing,  the principal of the  Securities of this series may be declared
due and payable in the manner and with the effect provided in the Indenture.

The Company shall have the right, at any time during the term of the Securities,
from time to time to extend the interest  payment period of such  Securities for
up to the earlier of 10  consecutive  semiannual  periods or the maturity of the
Securities (the "Extended Interest Payment Period"),  at the end of which period
the Company shall pay all interest  accrued and unpaid  thereon  (together  with
interest  thereon  at the  rate  specified  for  the  Securities  to the  extent
permitted by applicable  law);  provided  that,  during such  Extended  Interest
Payment  Period,  the  Company  shall not  declare  or pay any  dividend  on, or
purchase,  acquire or make a  liquidation  payment  with  respect to, any of its
capital  stock or make any  guarantee  payments  with respect to the  foregoing.
Prior to the  termination  of any such Extended  Interest  Payment  Period,  the
Company may further extend such period,  provided that such period together with
all such further extensions  thereof shall not exceed 10 consecutive  semiannual
periods or extend beyond the maturity of the Securities. Upon the termination of
any  Extended  Interest  Payment  Period and upon the payment of all accrued and
unpaid interest then due, the Company may select a new Extended Interest Payment
Period,  subject to the  foregoing  requirements.  No interest  shall be due and
payable during an Extended Interest Payment Period, except at the end thereof.

The  Indenture  permits,  with  certain  exceptions  as  therein  provided,  the
amendment  thereof and the  modification  of the rights and  obligations  of the
Company  and the rights of the  Holders of the  Securities  of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal  amount of the  Securities  at
the time Outstanding of each series to be affected.  The Indenture also contains
provisions  permitting  the  Holders of a majority  in  principal  amount of the
Securities of each series at the time  Outstanding,  on behalf of the Holders of
all Securities of such series,  to waive  compliance by the Company with certain
provisions of the  Indenture  and certain past defaults  under the Indenture and
their  consequences.  Any such consent or waiver by the Holder of this  Security
shall be conclusive  and binding upon such Holder and upon all future Holders of
this  Security  and of any  Security  issued upon the  registration  of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.

As provided in and subject to the  provisions  of the  Indenture,  the Holder of
this Security shall not have the right to institute any proceeding  with respect
to the  Indenture  or for the  appointment  of a receiver  or trustee or for any
other  remedy  thereunder,  unless such Holder shall have  previously  given the
Trustee  written  notice of a  continuing  Event of Default  with respect to the
Securities of this series,  the Holders of not less than 35% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the  Trustee  to  institute  proceedings  in respect of such Event of
Default as Trustee and offered the Trustee  reasonably  satisfactory  indemnity,
and the  Trustee  shall not have  received  from the  Holders of a  majority  in
principal  amount  of  Securities  of this  series  at the  time  Outstanding  a
direction inconsistent with such request, and shall have failed to institute any
such proceeding,  for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this  Security for the  enforcement  of any payment of  principal  hereof or any
premium  or  interest  hereon on or after  the  respective  due dates  expressed
herein.

No reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional,  to pay the principal of and any premium and interest on this
Security  at the  times,  place and rate,  and in the coin or  currency,  herein
prescribed.

As provided in the  Indenture  and  subject to certain  limitations  therein set
forth,  the transfer of this Security is registrable  in the Security  Register,
upon  surrender of this Security for  registration  of transfer at the office or
agency of the  Company in any place where the  principal  of and any premium and
interest on this  Security are payable,  duly endorsed by, or  accompanied  by a
written  instrument  of  transfer  in form  satisfactory  to the Company and the
Security  Registrar  duly  executed by, the Holder  hereof or his attorney  duly
authorized in writing,  and thereupon one or more new  Securities of this series
and of like  tenor,  of  authorized  denominations  and for the  same  aggregate
principal amount, will be issued to the designated transferee or transferees.

The  Securities  of this series are  issuable  only in  registered  form without
coupons  in  denominations  of $1,000  and any  integral  multiple  thereof.  As
provided in the Indenture and subject to certain  limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of  Securities  of this  series  and of like  tenor  of a  different  authorized
denomination,  as  requested  by the Holder  surrendering  the same.  No service
charge shall be made for any such registration of transfer or exchange,  but the
Company  may  require  payment  of a sum  sufficient  to cover  any tax or other
governmental charge payable in connection therewith.

Prior to due  presentment  of this Security for  registration  of transfer,  the
Company,  the  Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this  Security is  registered  as the owner  hereof for all
purposes,  whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

All terms used in this Security  which are defined in the  Indenture  shall have
the meanings assigned to them in the Indenture.

                                  ARTICLE THREE

                          Original Issue of Debentures

         Section  301.   Debentures  in  the  aggregate   principal   amount  of
$100,000,000,  may, upon execution of this Third Supplemental Indenture, or from
time to time thereafter, be executed by the Company and delivered to the Trustee
for  authentication,  and the Trustee shall thereupon  authenticate  and deliver
said Debentures upon a Company Order without any further action by the Company.


                                  ARTICLE FOUR

                       Paying Agent and Security Registrar

Section  401.  The Fifth  Third  Bank  will be the  Paying  Agent  and  Security
Registrar for the Debentures.


                                  ARTICLE FIVE

                                Sundry Provisions

         Section  501.  Except as  otherwise  expressly  provided  in this Third
Supplemental Indenture or in the form of Debenture or otherwise clearly required
by the  context  hereof or  thereof,  all terms  used  herein or in said form of
Debenture  that are defined in the  Indenture  shall have the  several  meanings
respectively assigned to them thereby.

         Section 502. The Indenture,  as supplemented by this Third Supplemental
Indenture,   is  in  all  respects  ratified  and  confirmed,   and  this  Third
Supplemental  Indenture  shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided.

                               ------------------

         This instrument may be executed in any number of counterparts,  each of
which so executed shall be deemed to be an original,  but all such  counterparts
shall together constitute but one and the same instrument.

         In  Witness  Whereof,   the  parties  hereto  have  caused  this  Third
Supplemental  Indenture  to be duly  executed as of the day and year first above
written.

                                PSI ENERGY, INC.



                                              By       /s/ William L. Sheafer
                                                         William L. Sheafer
                                                    Vice President and Treasurer






                        THE FIFTH THIRD BANK, as Trustee




                                              By                /s/ Kerry Byrne
                                                                  Kerry Byrne
                                                                Vice President