**EXHIBIT3.06**

 

**BY-LAWS**

 

**OF**

 

**KENTUCKYUTILITIES COMPANY**

 

 

**ARTICLE I**

 

**STOCK TRANS****FERS**

 

Section 1.  Eachholder of fully paid stock shall be entitled to a certificate or certificatesof stock stating the number and the class of shares owned by such holder, providedthat, the Board of Directors may, by resolution, authorize the issue of some orall of the shares of any or all classes or series of stock withoutcertificates.  All certificates of stockshall, at the time of their issuance, be signed by the Chairman of the Board,the President or a Vice-President and by the Secretary or Assistant Secretary,and may be authenticated and registered by a duly appointed registrar.  If the stock certificate is authenticated bya registrar, the signatures of the corporate officers may be facsimiles.  In case any officer designated for thepurpose who has signed or whose facsimile signature has been used on any stockcertificate shall, from any cause, cease to be such officer before thecertificate has been delivered by the Company, the certificate may neverthelessbe adopted by the Company and be issued and delivered as though the person hadnot ceased to be such officer.

 

Section 2.  Sharesof stock shall be transferable only on the books of the Company and upon properendorsement and surrender of the outstanding certificates representing thesame.  If any outstanding certificate ofstock shall be lost, destroyed or stolen, the officers of the Company shallhave authority to cause a new certificate to be issued to replace suchcertificate upon the receipt by the Company of satisfactory evidence that suchcertificate has been lost, destroyed or stolen and of a bond of indemnitydeemed sufficient by the officers to protect the Company and any registrar andany transfer agent of the Company against loss which may be sustained by reasonof issuing such new certificate to replace the certificate reported lost,destroyed or stolen; and any transfer agent of the Company shall be authorizedto issue and deliver such new certificate and any registrar of the Company isauthorized to register such new certificate, upon written directions signed bythe Chairman of the Board, the President or a Vice-President and by theTreasurer or the Secretary of the Company.

 

Section 3.  Allcertificates representing each class of stock shall be numbered and a record ofeach certificate shall be kept showing the name of the person to whom thecertificate was issued with the number and the class of shares and the datethereof.  All certificates exchanged orreturned to the Company shall be cancelled and an appropriate record made.

 

Section 4.  TheBoard of Directors may fix a date not exceeding seventy days preceding the dateof any meeting of shareholders, or the date fixed for the payment of anydividend or distribution, or the date of allotment of rights, or, subject tocontract rights with respect thereto,

 

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the date when any changeor conversion or exchange of shares shall be made or go into effect, as arecord date for the determination of the shareholders entitled to notice of andto vote at any such meeting, or entitled to receive payment of any suchdividend, or allotment of rights, or to exercise the rights with respect to anysuch change, conversion or exchange of shares, and in such case onlyshareholders of record on the date so fixed shall be entitled to notice of andto vote at such meeting, or to receive payment of such dividend or allotment ofrights or to exercise such rights, as the case may be, notwithstanding anytransfer of shares on the books of the Company after the record date fixed asaforesaid.  The Board of Directors mayclose the books of the Company against transfer of shares during the whole orany part of such period.  When adetermination of shareholders entitled to notice of and to vote at any meetingof shareholders has been made as provided in this section, such determinationshall apply to any adjournment thereof except as otherwise provided by statute.

 

**ARTICLE II**

 

**MEETINGS OF STOCKHOLDERS**

 

Section 1.  AnAnnual Meeting of Stockholders of the Company shall be held at such date andtime as shall be designated from time to time by the Board of Directors.  Each such Annual Meeting shall be held atthe principal office of the Company in Kentucky or at such other place as theBoard of Directors may designate from time to time.

 

Section 2.  Specialmeetings of the stockholders may be called by the Board of Directors or by theholders of not less than 51% of all the votes entitled to be cast on each issueproposed to be considered at the special meeting, or in such other manner asmay be provided by statute.  Businesstransacted at special meetings shall be confined to the purposes stated in thenotice of meeting.

 

Section 3.  Noticeof the time and place of each annual or special meeting of stockholders shallbe sent by mail to the recorded address of each stockholder entitled to votenot less than ten or more than sixty days before the date of the meeting,except in cases where other special method of notice may be required by statute,in which case the statutory method shall be followed.  The notice of special meeting shall state the object of themeeting.  Notice of any meeting of thestockholders may be waived by any stockholder.

 

Section 4.  At an Annual Meeting of the Stockholders, only such business shall beconducted as shall have been properly brought before the meeting in accordancewith the procedures set forth in these By-laws.  To be properly brought before the Annual Meeting, business mustbe (a) specified in the notice of meeting (or any supplement thereto)given by or at the direction of the Board of Directors, (b) otherwiseproperly brought before the meeting by or at the direction of the Board ofDirectors, or (c) otherwise be a proper matter for consideration andotherwise be properly requested to be brought before the meeting by astockholder as hereinafter provided. For business to be properly requested to be brought before an AnnualMeeting by a stockholder, a stockholder of a class of shares of the Company entitledto vote upon the matter requested to be brought before the meeting (or hisdesignated proxy as provided below) must have given timely and proper noticethereof to the Secretary.  To be timely,a

 

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stockholder’s notice mustbe given by personal delivery or mailed by United States mail, postage prepaid,and received by the Secretary not fewer than sixty calendar days prior to themeeting; provided, however, that in the event that the date of the meeting isnot publicly announced by mail, press release or otherwise or disclosed in apublic report, information statement, or other filing made with the Securitiesand Exchange Commission, in either case, at least seventy calendar days priorto the meeting, notice by the stockholder to be timely must be received by theSecretary, as provided above, not later than the close of business on the tenthday following the day on which such notice of the date of the meeting or suchpublic disclosure or filing was made. To be proper, a stockholder’s notice to the Secretary must be in writingand must set forth as to each matter the stockholder proposes to bring beforethe Annual Meeting (a) a description in reasonable detail of the businessdesired to be brought before the Annual Meeting and the reasons for conductingsuch business at the Annual Meeting, (b) the name and address, as theyappear on the Company books, of the stockholder proposing such business orgranting a proxy to the proponent or an intermediary, (c) a representationthat the stockholder is a holder of record of stock of the Company entitled tovote at such meeting and intends to appear in person or by proxy at the meetingto nominate the person or persons specified in the notice, (d) the nameand address of the proponent, if the holder of a proxy from a qualifiedstockholder of record, and the names and addresses of any intermediate proxies,(e) the class and number of shares of the Company which are beneficiallyowned by the stockholder, and (f) any material interest of the stockholderor the proponent in such business.  Thechairman of an Annual Meeting shall determine whether business was properlybrought before the meeting, which determination absent manifest error will beconclusive for all purposes.

 

Section 5.  TheChairman of the Board, if present, and in his absence the President, and theSecretary of the Company, shall act as Chairman and Secretary, respectively, ateach stockholders meeting, unless otherwise provided by the Board of Directorsprior to the meeting.  Unless otherwisedetermined by the Board of Directors prior to the meeting, the Chairman of thestockholders’ meeting shall determine the order of business and shall have theauthority in his discretion to regulate the conduct of any such meeting,including, without limitation, by imposing restrictions on the persons (otherthan stockholders of the Company or their duly appointed proxies) who mayattend any such stockholders’ meeting, by determining whether any stockholderor his proxy may be excluded from any stockholders’ meeting based upon anydetermination by the Chairman, in his sole discretion, that any such person hasunduly disrupted or is likely to disrupt the proceedings thereat, and byregulating the circumstances in which any person may make a statement or askquestions at any stockholders’ meeting.

 

Section 6.  TheCompany shall be entitled to treat the holder of record of any share or sharesas the holder in fact thereof and, accordingly, shall not be bound to recognizeany equitable or other claim to or interest in such share on the part of anyother person whether or not it shall have express or other notice thereof,except as expressly provided by law.

 

Section 7.  TheBoard of Directors may postpone and reschedule any previously scheduled annualor special meeting of stockholders and may adjourn any convened meeting ofstockholders to another date and time as specified by the chairman of themeeting.

 

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**ARTICLE III**

 

**BOARD OF DIRECTORS**

 

Section 1.  The Board shall be composed of such number of Directors as shall be set byresolution of the Board.  The number ofDirectors may be changed from time to time by resolution of the Board ofDirectors or by amendment to these By-laws, but no decrease in the number ofDirectors shall have the effect of shortening the term of any incumbentDirector.  Unless a Director dies,resigns or is removed, he shall hold office until the next annual meeting ofthe shareholders or until a successor is elected, whichever is later.  Directors need not be shareholders of thecorporation or residents of the Commonwealth of Kentucky or of the Commonwealthof Virginia.  Except as otherwiseexpressly provided by the Articles of Incorporation, the Board of Directors mayfill, until the first annual election thereafter and until the necessaryelection shall have taken place, vacancies occurring at any time in themembership of the Board by death, resignation or otherwise.  Written notice of such resignation shall bemade as provided by law.

 

Section 2.  Nominationsfor the election of directors may be made by the Board of Directors or acommittee appointed by the Board of Directors or by any stockholder entitled tovote in the election of directors generally. However, any stockholder entitled to vote in the election of directorsgenerally may nominate one or more persons for election as directors at ameeting only if the stockholder has given timely and proper notice thereof tothe Secretary.  To be timely, astockholder's notice must be given by personal delivery or mailed by UnitedStates mail, postage prepaid, and received by the Secretary not fewer thansixty calendar days or more than ninety calendar days prior to the meeting;provided, however, that in the event that the date of the meeting is notpublicly announced by mail, press release or otherwise or disclosed in a publicreport, information statement or other filing made with the Securities andExchange Commission, in either case, at least seventy calendar days prior tothe meeting, notice by the stockholder to be timely must be so received by theSecretary, as provided above, not later than the close of business on the tenthday following the day on which such notice of the date of the meeting or suchpublic disclosure or filing was made. To be proper, a stockholder’s notice of nomination to the Secretary mustbe in writing and must set forth as to each nominee:  (a) the name and address, as they appear on the Companybooks, of the stockholder who intends to make the nomination or granting aproxy to the proponent or an intermediary; (b) the name and address of theperson or persons to be nominated; (c) a representation that thestockholder is a holder of record of stock of the Company entitled to vote atsuch meeting and intends to appear in person or by proxy at the meeting tonominate the person or persons specified in the notice; (d) a descriptionof all arrangements or understandings between the stockholder and each nomineeand any other person or persons (naming such person or persons) pursuant towhich the nomination or nominations are to be made by the stockholder;(e) such other information regarding each nominee proposed by suchstockholder as would be required to be included in a proxy statement filedpursuant to the proxy rules of the Securities and Exchange Commission, had thenominee been nominated, or intended to be nominated, by the Board of Directors,provided that (i) such information does not in any way violate anyapplicable Securities and Exchange Commission regulation, including regulationsconcerning public availability of information, and (ii) any informationwithheld on such basis shall be provided by separate notice

 

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at such time as would notbe in violation of any applicable Securities and Exchange Commissionregulation, such notice to be a supplement to the notice otherwise requiredherein; (f) the class and number of shares of the Company which arebeneficially owned by the stockholder; and (g) the signed consent of eachnominee to serve as a director of the Company if so elected.

 

Section 3.  Ifthe Chairman of the meeting for the election of Directors determines that anomination of any candidate for election as a director at such meeting was notmade in accordance with the applicable provisions of these By-laws, suchnomination shall be void.

 

Section 4.  TheBoard of Directors may adopt such special rules and regulations for the conductof their meetings and the management of the affairs of the Company as they maydetermine to be appropriate, not inconsistent with law or these By-laws.

 

Section 5.  Aregular meeting of the Board of Directors shall be held as soon as practicableafter the annual meeting of stockholders in each year.  In addition, regular quarterly meetings ofthe Board may be held at the general offices of the Company in Kentucky, or atsuch other place as shall be specified in the notice of such meeting on thelast Monday of January, July and October in each year.  Written notice of every regular meeting ofthe Board, stating the time of day at which such meeting will be held, shall begiven to each Director not less than two days prior to the date of the meeting.  Such notice may be given personally in writing,or by telegraph or other written means of electronic communication, or bydepositing the same, properly addressed, in the mail.

 

Section 6.  Specialmeetings of the Board may be called at any time by the Chairman of the Board,or the President, or by a Vice-President when acting as President, or by anytwo Directors.  Notice of such meeting,stating the place, day and hour of the meeting shall be given to each Directornot less than one day prior to the date of the meeting.  Such notice may be given personally inwriting, or by telegraph or other written means of electronic communication, orby depositing the same, properly addressed, in the mail.

 

Section 7.  Noticeof any meeting of the Board may be waived by any Director.

 

Section 8.  Amajority of the Board of Directors shall constitute a quorum for thetransaction of business at any meeting of the board, but a less number mayadjourn the meeting to some other day or sine die.  The Board of Directors shall keep minutes of their proceedings attheir meetings. The members of the Board may be paid such fees or compensationsfor their services as Directors as the Board, from time to time, by resolution,may determine.

 

Section 9.  The Chairman of the Board, if such person ispresent, shall serve as Chairman at each regular or special meeting of theBoard of Directors and shall determine the order of business at suchmeeting.  If the Chairman of the Boardis not present at a regular or special meeting of the Board of Directors, theVice Chairman of the Board shall serve as Chairman of such meeting and shalldetermine the order of business of such meeting.  The Board of Directors may elect one of its members as ViceChairman of the Board.

 

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**ARTICLE IV**

 

**COMMITTEES**

 

Section 1.  TheBoard of Directors may, by resolution passed by a majority of the whole Board,appoint an Executive Committee of not less than three members of the Board,including the Chairman of the Board, if there be one, and the President of the Company.  The Executive Committee may make its ownrules of procedure and elect its Chairman, and shall meet where and as providedby such rules, or by resolution of the Board of Directors.  A majority of the members of the Committeeshall constitute a quorum for the transaction of business.  During the intervals between the meetings ofthe Board of Directors, the Executive Committee shall have all the powers ofthe Board in the management of the business and affairs of the Company exceptas limited by statute, including power to authorize the seal of the Company tobe affixed to all papers which require it, and, by majority vote of all itsmembers, may exercise any and all such powers in such manner as such Committeeshall deem best for the interests of the Company, in all cases in whichspecific directions shall not have been given by the Board of Directors.  The Executive Committee shall keep regularminutes of its proceedings and report the same to the Board at meetingsthereof.

 

Section 2.  TheBoard of Directors may appoint other committees, standing or special, from timeto time from among their own number, or otherwise, and confer powers on suchcommittees, and revoke such powers and terminate the existence of suchcommittees at its pleasure.

 

Section 3.  Meetingsof any committee may be called in such manner and may be held at such times andplaces as such committee may by resolution determine, provided that a meetingof any committee may be called at any time by the Chairman of the Board or bythe President.  Notice of such meeting,stating the place, day and hour of the meeting shall be given to each Directornot less than one day prior to the meeting. Such notice may be given personally in writing, or by telegraph or otherwritten means of electronic communication, or by depositing the same, properlyaddressed, in the mail.  Members of allcommittees may be paid such fees for attendance at meetings as the Board ofDirectors may determine.

 

**ARTICLE V**

 

**OFFICERS**

 

Section 1.  The officers of the Company shall be a ChiefExecutive Officer, President, Chief Operating Officer, Chief Financial Officer,Chief Administrative Officer, one or more Vice Presidents, Secretary,Treasurer, Controller or such other officers (including, if so directed by aresolution of the Board of Directors, the Chairman of the Board) as the Boardor the Chief Executive Officer may from time to time elect or appoint.  Any two of the offices may be combined inone person, but no officer shall execute, acknowledge, or verify any instrumentin more than one capacity.  Ifpracticable, officers are to be elected or appointed by the Board of Directorsor the Chief Executive Officer at the first meeting of the Board following theannual

 

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meeting of stockholdersand, unless otherwise specified, shall hold office for one year or until theirsuccessors are elected and qualified. Any vacancy shall be filled by the Board of Directors or the ChiefExecutive Officer.  Except as providedbelow, officers shall perform those duties usually incident to the office or asotherwise required by the Board of Directors, the Chief Executive Officer, orthe officer to whom they report.  Anofficer may be removed with or without cause and at any time by the Board ofDirectors or by the Chief Executive Officer.

 

Section 2.  The Chief Executive Officer of the Companyshall have full charge of all of the affairs of the Company and shall reportdirectly to the Board of Directors.

 

Section 3.  The President, should that office be createdand filled, shall exercise such functions as may be delegated by the ChiefExecutive Officer and shall exercise the functions of the Chief ExecutiveOfficer during the absence or disability of the Chief Executive Officer.

 

Section 4.  The Chief Operating Officer, should thatoffice be created and filled, shall have responsibility for the management anddirection of the Company, subject to the direction and approval of the ChiefExecutive Officer.

 

Section 5.  The Chief Financial Officer, should thatoffice be created and filled, shall have responsibility for the financialaffairs of the Company, including maintaining accurate books and records,meeting all financial reporting requirements and controlling Company funds,subject to the direction and approval of the Chief Executive Officer.

 

Section 6.  The Chief Administrative Officer, shouldthat office be created and filled, shall have responsibility for the generaladministrative and human resources operations of the Company, subject to thedirection and approval of the Chief Executive Officer.

 

Section 7.  The Vice President or Vice Presidents,should such offices be created and filled, may be designated as Vice President,Senior Vice President or Executive Vice President, as the Board of Directors orChief Executive Officer may determine.

 

Section 8.  The Secretary shall be present at and recordthe proceedings of all meetings of the Board of Directors and of thestockholders, give notices of meetings of Directors and stockholders, have custodyof the seal of the Company and affix it to any instrument requiring the same,and shall have the power to sign certificates for shares of stock of theCompany.

 

Section 9.  The Treasurer, should that office be createdand filled, shall have responsibility for all receipts and disbursements of theCompany and be custodian of the Company’s funds.

 

Section 10.  The Controller, should that office becreated and filled, shall have responsibility for the accounting records of theCompany.

 

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**ARTICLE VI**

 

**MISCELLANEOUS**

 

Section 1.  Thefunds of the Company shall be deposited to its credit in such banks or trustcompanies as are selected by the Treasurer, subject to the approval of thechief executive officer.  Such fundsshall be withdrawn only on checks or drafts of the Company for the purpose ofthe Company, except that such funds may be withdrawn without the issuance of acheck or draft (a) to effect a transfer of funds between accountsmaintained by the Company at one or more depositaries; (b) to effect thewithdrawal of funds, pursuant to resolution of the Board of Directors, for thepayment of either commercial paper promissory notes of other entities orgovernment securities purchased by the Company; (c) to effect a withdrawalof funds by the Company pursuant to the terms of any agreement or otherdocument, approved by the Board of Directors, which requires or contemplatespayment or payments by the Company by means other than a check or draft; or (d) toeffect a withdrawal of funds for such other purpose as the Board of Directorsby resolution shall provide.  All checksand drafts of the Company shall be signed in such manner and by such officer orofficers or such individuals as the Board of Directors, from time to time byresolution, shall determine.  Onlychecks and drafts so signed shall be valid checks or drafts of the Company.

 

Section 2.  Nodebt shall be contracted except for current expenses unless authorized by theBoard of Directors or the Executive Committee, and no bills shall be paid bythe Treasurer unless audited and approved by the Controller or some otherperson or committee expressly authorized by the Board of Directors or theExecutive Committee, to audit and approve bills for payment.  All notes of the Company shall be executedby two different officers of the Company. Either or both of such executions may be by facsimile.

 

Section 3.  Thefiscal year of the Company shall close at the end of December annually.

 

**ARTICLE VII**

 

**INDEMNIFICATION OF DIRECTORS, OFFICERS,**

**EMPLOYEES AND AGENTS**

 

Section 1.  Unlessprohibited by law, the Company shall indemnify each of its Directors, officers,employees and agents against expenses (including attorneys’ fees), judgments, taxes, fines and amounts paid insettlement, incurred by such person in connection with, and shall advanceexpenses (including attorneys’ fees) incurred by such person in defending anythreatened, pending or completed action, suit or proceeding (whether civil,criminal, administrative or investigative) to which such person was, is, or isthreatened to be made a party by reason of the fact that such person is or wasa Director, officer, employee or agent of another domestic or foreigncorporation, partnership, joint venture, trust, other enterprise, or employeebenefit plan.  Advancement of expensesshall be made upon receipt of a written statement of his good faith belief thathe has met the standard of conduct  asrequired by statute and a written undertaking, with such security, if any, asthe Board may reasonably require, by or on behalf of

 

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the person seekingindemnification, to repay amounts advanced if it shall ultimately be determinedthat such person is not entitled to be indemnified by the Company.

 

Section 2.  Inaddition (and not by way of limitation of) the foregoing provisions ofSection 1 of this Article VII and the provisions of the KentuckyBusiness Corporation Act, each person (including the heirs, executors,administrators and estate of such person) who is or was or had agreed to becomea Director, officer, employee or agent of the Company and each person(including the heirs, executors, administrators and estate of such person) whois or was serving or who had agreed to serve at the request of the Directors orany officer of the Company as a Director, officer, employee, trustee, partneror agent of another corporation, partnership, joint venture, trust, employeebenefit plan or other enterprise shall be indemnified by the Company to thefullest extent permitted by the Kentucky Business Corporation Act or any otherapplicable laws as presently or hereafter in effect.  Without limiting the generality or the effect of the foregoing, theCompany is authorized to enter into one or more agreements with any personwhich provide for indemnification greater or different than that provided inthis Article VII.  Any repeal ormodification of this Article by the stockholders of the Company shall notadversely affect any indemnification of any person hereunder in respect of anyact or omission occurring prior to the time of such repeal or modification.

 

Section 3.  TheCompany may purchase and maintain insurance on behalf of any person who is orwas entitled to indemnification as described above, whether or not the Companywould have the power or duty to indemnify such person against such liabilityunder this Article VII or applicable law.

 

Section 4.  Tothe extent required by applicable law, any indemnification of, or advance ofexpenses to, any person who is or was entitled to indemnification as describedabove, if arising out of a proceeding by or in the right of the Company, shallbe reported in writing to the stockholders with or before the notice of thenext stockholder’ meeting.

 

Section 5.  Theindemnification provided by this Article VII: (a) shall not be deemed exclusive of any other rights to which theCompany’s Directors, officers, employees or agents may be entitled pursuant to theArticles of Incorporation, any agreement of indemnity, as a matter of law orotherwise; and (b) shall continue as to a person who has ceased to be aDirector, officer, employee or agent and shall inure to the benefit of suchperson’s heirs, executors and administrators.

 

**ARTICLE VIII**

 

**AMENDMENT OR REPEAL OF BY-LAWS**

 

These By-laws maybe added to, amended or repealed at any meeting of the Board of Directors, andmay also be added to, amended or repealed by the stockholders.

 

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**BY-LAWS**

 

**OF**

 

**KENTUCKY UTILITIES COMPANY**

 

 

**Dated April 28, 1998**

**(as amended through June 2, 1999)**

**(as amended through December 16,2003)**

 

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