**EXHIBIT 12**

 

LOUISVILLE GAS AND ELECTRIC COMPANY AND SUBSIDIARY

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(Thousands of $)

 
|                                                   |   | **2003** |   | **2002** |   | **2001** |   | **2000** |    | **1999** |   |
|--------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|---------|----------|--------|
|                                                   |   |     |   |     |   |     |   |     |    |     |   |
| Earnings:                                              |   |     |   |     |   |     |   |     |    |     |   |
| Net Income                                             |   | $        | 90,839 |     | $      | 88,929   |   | $        | 106,781 |     | $      | 110,573 |   | $ | 106,270 |   |
|                                                   |   |     |   |     |   |     |   |     |    |     |   |
| Add:                                                   |   |     |   |     |   |     |   |     |    |     |   |
| Federal income  taxes - current                        |   | 25,768   |   | 24,564   |   | 41,127   |   | 30,425   |    | 54,198   |   |
| State income  taxes - current                          |   | 10,003   |   | 7,653    |   | 8,185    |   | 4,450    |    | 13,650   |   |
| Deferred Federal  income taxes - net                   |   | 16,793   |   | 20,258   |   | 12,595   |   | 24,233   |    | (4,564   | )      |
| Deferred State  income taxes - net                     |   | 1,716    |   | 4,357    |   | 3,840    |   | 6,787    |    | (715     | )      |
| Investment tax  credit - net                           |   | (4,207   | )      | (4,153   | )      | (4,290   | )      | (4,274   | )       | (4,289   | )      |
| Fixed charges                                          |   | 31,378   |   | 30,551   |   | 38,755   |   | 46,438   |    | 40,026   |   |
| Earnings                                               |   | 172,290  |   | 172,159  |   | 206,993  |   | 218,632  |    | 204,576  |   |
|                                                   |   |     |   |     |   |     |   |     |    |     |   |
| Fixed Charges:                                         |   |     |   |     |   |     |   |     |    |     |   |
| Interest Charges  per statements of income             |   | 30,647   |   | 29,805   |   | 37,922   |   | 43,218   |    | 37,962   |   |
| Add:                                                   |   |     |   |     |   |     |   |     |    |     |   |
| One-third of  rentals charged to operating expense (1) |   | 731      |   | 746      |   | 833      |   | 3,220    |    | 2,064    |   |
| Fixed charges                                          |   | $        | 31,378 |     | $      | 30,551   |   | $        | 38,755  |     | $      | 46,438 |   | $ | 40,026 |   |
|                                                   |   |     |   |     |   |     |   |     |    |     |   |
| Ratio of  Earnings to Fixed Charges                    |   | 5.49     |   | 5.64     |   | 5.34     |   | 4.71     |    | 5.11     |   |

 

NOTE:

 

----

(1)          In the Company’s opinion, one-third of rentals represents a reasonableapproximation of the interest factor.

 

----

 

KENTUCKY UTILITIESCOMPANY AND SUBSIDIARYCOMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(Thousands of $)

 
|                                                   |   | **2003** |   | **2002** |   | **2001** |   | **2000** |   | **1999** |   |
|--------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|
| Earnings:                                              |   |     |   |     |   |     |   |     |   |     |   |
| Net Income                                             |   | $        | 91,402 |     | $      | 93,384   |   | $        | 96,278 |     | $      | 95,524 |   | $ | 106,558 |   |
|                                                   |   |     |   |     |   |     |   |     |   |     |   |
| Add:                                                   |   |     |   |     |   |     |   |     |   |     |   |
| Federal income taxes - current                         |   | 29,118   |   | 37,839   |   | 57,389   |   | 45,276   |   | 51,997   |   |
| State income taxes - current                           |   | 11,322   |   | 10,509   |   | 13,197   |   | 9,400    |   | 13,513   |   |
| Deferred Federal income taxes -  net                   |   | 11,378   |   | 3,272    |   | (12,117  | )      | (3,376   | )      | (4,651   | )      |
| Deferred State income taxes -  net                     |   | 904      |   | 1,459    |   | (1,118   | )      | 927      |   | 887      |   |
| Investment tax credit - net                            |   | (2,641   | )      | (2,955   | )      | (3,446   | )      | (3,674   | )      | (3,727   | )      |
| Undistributed income of  Electric Energy, Inc.         |   | (3,644   | )      | (5,382   | )      | 258      |   | 70       |   | 33       |   |
| Fixed charges                                          |   | 25,980   |   | 26,756   |   | 35,215   |   | 40,834   |   | 40,101   |   |
| Earnings                                               |   | 163,819  |   | 164,882  |   | 185,656  |   | 184,981  |   | 204,711  |   |
|                                                   |   |     |   |     |   |     |   |     |   |     |   |
| Fixed Charges:                                         |   |     |   |     |   |     |   |     |   |     |   |
| Interest Charges per statements  of income             |   | 25,249   |   | 25,727   |   | 34,043   |   | 39,484   |   | 38,904   |   |
| Add:                                                   |   |     |   |     |   |     |   |     |   |     |   |
| One-third of rentals charged to  operating expense (1) |   | 731      |   | 1,029    |   | 1,172    |   | 1,350    |   | 1,197    |   |
| Fixed charges                                          |   | $        | 25,980 |     | $      | 26,756   |   | $        | 35,215 |     | $      | 40,834 |   | $ | 40,101 |   |
|                                                   |   |     |   |     |   |     |   |     |   |     |   |
| Ratio of Earnings to Fixed  Charges                    |   | 6.31     |   | 6.16     |   | 5.27     |   | 4.53     |   | 5.10     |   |

 

NOTE:

 

----

(1)          In the Company’s opinion, one-third of rentals represents a reasonableapproximation of the interest factor.

 

----