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                                                                    EXHIBIT 4(e)
December 12, 2002


                     Company Order and Officers' Certificate
                     4.368% Senior Notes, Series C, Due 2007


Deutsche Bank Trust Company Americas, As Trustee
100 Plaza One - MSJCY03-0604
Jersey City, NJ 07310

Attn:  Corporate Trust Division

Ladies and Gentlemen:

Pursuant to Article Two of the  Indenture,  dated as of September 1, 1997 (as it
may be amended or supplemented,  the  "Indenture"),  from Kentucky Power Company
(the  "Company")  to  Deutsche  Bank Trust  Company  Americas,  as trustee  (the
"Trustee"),  and the Board  Resolutions  dated April 22,  2002,  a copy of which
certified by the  Secretary  or an  Assistant  Secretary of the Company is being
delivered  herewith  under Section 2.01 of the Indenture,  and unless  otherwise
provided  in a  subsequent  Company  Order  pursuant  to  Section  2.04  of  the
Indenture,

1.   The Company's  4.368%  Senior  Notes,  Series C, Due 2007 (the "Notes") are
     hereby  established.  The Notes shall be in substantially the form attached
     hereto as Exhibit 1.

2.   The  terms  and  characteristics  of the  Notes  shall be as  follows  (the
     numbered clauses set forth below corresponding to the numbered  subsections
     of Section 2.01 of the  Indenture,  with terms used and not defined  herein
     having the meanings specified in the Indenture):

     (i)  the aggregate principal amount of Notes which may be authenticated and
          delivered under the Indenture shall be limited to $69,564,000,  except
          as contemplated in Section 2.01(i) of the Indenture;

     (ii) the Maturity Date (as defined in the  Indenture) of the Notes shall be
          December 12, 2007;

     (iii)interest  shall accrue from  December 10, 2002;  the Interest  Payment
          Dates on which  such  interest  will be  payable  shall be June 10 and
          December  10, and the  Regular  Record Date for the  determination  of
          Holders  (as  defined  below) to whom  interest is payable on any such
          Interest  Payment Date shall be the May 26 or November 26, as the case
          may be, next preceding such Interest  Payment Date;  provided  however
          that if the  Original  Issue  Date of a Note  shall be after a Regular
          Record  Date and  before  the  corresponding  Interest  Payment  Date,
          payment of interest shall commence on the second Interest Payment Date
          succeeding such Original Issue Date and shall be paid to the Person in
          whose name this Note was  registered  on the  Regular  Record Date for
          such second Interest Payment Date; and provided further, that interest
          payable on the Stated  Maturity Date or any  Redemption  Date shall be
          paid to the Person to whom principal shall be paid;

     (iv) the interest rate or rates at which the Notes, or any Tranche thereof,
          shall bear interest shall be 4.368%;

     (v)  the terms in addition to those  contained in the  Indenture  regarding
          the  redemption,  purchase or repayment  of such series,  shall be set
          forth in Section 4 hereof and in the Note;

     (vi) (a) the Notes  shall not be issued in the form of a Global  Note;  and
          (b) the  procedures  with  respect to transfer  and  exchange of Notes
          shall be as set forth in the form of Note attached hereto;

     (vii)the title of the Notes shall be "4.368%  Senior  Notes,  Series C, Due
          2007";

     (viii) the form of the Notes shall be as set forth in Paragraph 1 above;

     (ix) the  maximum  interest  rate of the Notes shall not exceed by 3.0% the
          yield to  maturity  at the date of pricing on United  States  Treasury
          Bonds of comparable maturity;

     (x)  the Notes shall not be subject to a Periodic Offering;

     (xi) not applicable;

     (xii)any other  information  necessary  to complete  the Notes shall be set
          forth in the Note or herein;

     (xiii) not applicable;

     (xiv) not applicable;

     (xv) not applicable;

     (xvi) the Notes shall not be issued as Discount Securities;

     (xvii) not applicable;

     (xviii) not applicable; and

     (xix) not applicable.

3.   (i)  The  Notes  shall  constitute  direct,  unsubordinated  and  unsecured
          obligations of the Company.

     (ii) The Notes shall rank equally  among  themselves  and at least  equally
          with all  other  unsecured  obligations  of the  Company,  except  for
          liabilities mandatorily preferred by law.

4.
     (i)  The  Company  may  redeem  all (but not some  only) of the  Notes of a
          Series in whole on an Interest Payment Date before their Maturity Date
          at their Early Redemption Amount (as defined below) if the Company has
          or will become required to increase

          (a)  the amount of a payment in respect of a Note under  Section 6(ii)
               below; or

          (b)  the amount of a payment to Ambac  Assurance  under the  Insurance
               Agreement (as defined below).

     (ii) The  Company  shall  redeem  all (but not some only) of the Notes of a
          Series  if:

          (a)  a law of any State,  a federal law, or rule or  regulation of any
               governmental agency requires the reorganization of the Company or
               the transfer of all or a substantial portion of its assets; and

          (b)  following such  reorganization or transfer,  all or a substantial
               portion of the business of the Company will be  unregulated  with
               respect to the rates it is entitled to charge its customers.

5.   If the  Company  elects or is  obligated  to  redeem  all of the Notes of a
     Series under Section 4:

     (i)  the  Company  must give at least 30 days'  (and no more than 60 days')
          notice to the Security Registrar,  the registered holders of the Notes
          (the "Holders"),  Ambac Assurance  Corporation,  a Wisconsin-domiciled
          stock  insurance  company  ("Ambac  Assurance")  and  Ambac  Financial
          Services, L.P.;

     (ii) before the Company gives such notice, the Company shall deliver to the
          Security Registrar:

          (a)  a certificate  signed by two authorized  officers of the Company;
               and

          (b)  an opinion of independent legal counsel of recognized standing of
               the Company (which may be Simpson  Thacher & Bartlett),  that the
               Company is entitled or obliged (as the case may be) to effect the
               aforementioned redemption;

     (iii)the amount payable by the Company on redemption at any time before the
          Maturity  Date of any  Notes  of a Series  is an  amount  (the  "Early
          Redemption Amount") equal to the sum of:

          (a)  the  aggregate  outstanding  principal  amount,  and any interest
               accrued, on those Notes to and including the date of redemption;

          (b)  the  aggregate  of any  additional  amounts  which the  Holder is
               required to pay under any related  swap  transaction  between the
               Holder and Ambac  Financial  Services  LP (or a  substitute  swap
               counterparty   under   a  swap   transaction   entered   into  in
               substitution of that related swap  transaction) in consequence of
               such redemption by the Company (as notified to the Holder and the
               Company by Ambac Financial Services LP); and

          (c)  the US$  equivalent  of the aggregate of any  additional  amounts
               which the Holder is required to pay to any investor in the Holder
               in order to enable  it to  discharge  fully any early  redemption
               amount payable by such investor, on any debt securities issued by
               it, in consequence of such redemption by the Company (as notified
               to the Holder and the Company by such investor).

     (iv) Any notice of redemption given under this section is irrevocable,  and
          the Company must redeem all of the Notes of the relevant Series on the
          Interest  Payment date specified in the notice  delivered  pursuant to
          this Section 5.

     (v)  The Company and any of its subsidiaries may at any time purchase Notes
          in the open market or otherwise  and at any price.  If  purchases  are
          made by tender, tenders must be available to all Holders alike.

     (vi) All Notes  redeemed by the Company or purchased by or on behalf of the
          Company  or  any  of its  subsidiaries  under  this  section  must  be
          cancelled immediately.

6.   With respect to certain taxes that may be applicable to the Notes:

     (i)  Payments in respect of principal and interest are subject in all cases
          to applicable  provisions of any applicable laws and regulations.  All
          payments in respect of the Notes must be made in full without  set-off
          or  counterclaim,  and without any withholding or deduction in respect
          of taxes unless required by law.

     (ii) Subject to the following  paragraph,  if a law requires the Company to
          withhold  or deduct an amount in  respect  of taxes  from a payment in
          respect of the Notes such that the Holder would not  actually  receive
          on the due date the full amount provided for under the Notes, then:

          (a)  the  Company  agrees to deduct  the amount for the taxes (and any
               further  withholding  or  deduction  applicable  to  any  further
               payment due under paragraph (b) below); and

          (b)  if the amount deducted or withheld is in respect of taxes imposed
               by the United States ("US Tax"),  the amount payable is increased
               so that,  after  making  the  deduction  and  further  deductions
               applicable to any additional amounts payable by the Company under
               this section ("Additional Amounts"), each Holder who is a "Non-US
               Holder"  (as  defined  below) is entitled to receive (at the time
               the  payment  is due) the  amount it would  have  received  if no
               deductions had been required.

     (iii)The Company is not  required to pay an  Additional  Amount  under this
          section  if the  obligation  to do so arises as a result of any one or
          more of the following:

          (a)  any US Tax which would not have been imposed on the Non-US Holder
               but for:

               (1)  the  existence of any present or former  connection  between
                    such Non-US Holder (or between an agent, fiduciary, settlor,
                    beneficiary,  member,  or shareholder  of, or possessor of a
                    power  over,  such  Non-US  Holder  (each,  an  "Attribution
                    Person")) and the United States,  including, but not limited
                    to, such Non-US Holder (or an  Attribution  Person) being or
                    having been  present in the United  States,  being or having
                    been a citizen or  resident  thereof,  being or having  been
                    engaged in a trade or  business  therein or having or having
                    had a permanent establishment therein;

               (2)  the failure of such Non-US Holder or any Attribution  Person
                    to  comply  with  any   certification,   identification   or
                    information reporting requirements under the income tax laws
                    and  regulations  of the  United  States  or  any  political
                    subdivision or taxing authority thereof or therein necessary
                    to  establish  entitlement  to relief or an  exemption  from
                    withholding or;

               (3)  the  presentation  of a Note for  payment  after a specified
                    time period;

          (b)  any estate, inheritance,  gift, sales, transfer, excise, personal
               property, or any similar US Tax;

          (c)  any  US  Tax  that  is  payable  other  than  by  withholding  or
               deduction;

          (d)  with respect to a Non-US  Holder other than ACE Funding  American
               Electric Power Subsidiaries Series 2002-2 MTN Trust (the "Trust")
               or the holder of the Trust's investor unit, any US Tax imposed by
               reason of such Non-US Holder's or any  Attribution  Person's past
               or present  status as a  "passive  foreign  investment  company",
               "personal holding company", "foreign personal holding company" or
               "controlled foreign corporation" within the meaning of the United
               States  federal  income  tax laws,  or as a  corporation  that is
               subject to the  "accumulated  earning  tax" within the meaning of
               such laws;

          (e)  with  respect  to a Non-US  Holder  other  than the  Trust or the
               holder of the Trust's investor unit, any US Tax imposed by reason
               of such  Non-US  Holder's  or any  Attribution  Person's  past or
               present status as a bank making a loan in the ordinary  course of
               its business;

          (f)  with  respect  to a Non-US  Holder  other  than the  Trust or the
               holder  of the  Trust's  investor  unit,  any US Tax  imposed  on
               interest  received by or deemed received by (1) a 10% shareholder
               (as defined in Section  871(h)(3)(B) of the Internal Revenue Code
               and the  regulations  that may be promulgated  thereunder) of the
               Company or (2) a "controlled foreign corporation" with respect to
               the Company within the meaning of the Internal Revenue Code;

          (g)  any combination of items (a), (b), (c), (d), (e) or (f); or

          (h)  any tax that is not a US tax.

     (iv) In addition,  Additional  Amounts will not be paid with respect to any
          Note to a person that is not the beneficial owner thereof of such Note
          to the extent that the  beneficial  owner  thereof would not have been
          entitled to the payment of such Additional Amounts had such beneficial
          owner been the legal holder of such Note.

     (v)  In this section:

          Non-US Holder means:

          (A)  an individual who is a non-resident alien from the perspective of
               United States Federal income tax ("USFIT") law who has not become
               generally  subject  to  USFIT by  virtue  of  extensive  physical
               presence in the United States ("US");

          (B)  a  corporation  - or entity  taxable as a  corporation  for USFIT
               purposes - organised or created under non-US law;

          (C)  an estate that is not taxable in the US on its worldwide  income;
               or

          (D)  a trust if:

               (I)  no  court  within  the  US  is  able  to  exercise   primary
                    jurisdiction over its administration; or

               (II) no US person nor combination of US persons has the authority
                    to control all its substantial decisions.

     (vi) Each  Non-US  Holder  shall  deliver or cause to be  delivered  to the
          Company and Ambac  Assurance,  a properly  completed and duly executed
          U.S.  Internal  Revenue  Service ("IRS") Form W-8BEN (or any successor
          thereto) on behalf of itself and, with respect to the Trust, on behalf
          of the holder of its investor  unit on or before the date it becomes a
          Holder.  In addition,  each Non-US Holder shall deliver or cause to be
          delivered  to the Company and Ambac  Assurance  such IRS Forms  W-8BEN
          promptly upon or before the expiration,  obsolescence or invalidity of
          any such  documents  previously  delivered  by such Non-US  Holder.  A
          Non-US  Holder  that  provides  IRS Forms  W-8BEN  without a  taxpayer
          identification  number must provide a new form upon the  expiration of
          every third  succeeding  calendar year.  Each Non-US Holder  providing
          forms  or   certificates   pursuant  to  this  paragraph  (vi)  hereby
          represents,  covenants  and warrants  the accuracy of the  information
          provided therein.

     (vii)The Company  shall not be required  to pay any  Additional  Amounts to
          any  Non-US  Holder  under  this  Section  6 to the  extent  that  the
          obligation  to pay such  Additional  Amounts would not have arisen but
          for a failure by such Non-US  Holder to comply with the  provisions of
          paragraph (vi) above.

7.   For purposes of the Notes of this Series:

     (i)  The term  "Business  Day"  shall  mean only  those  Business  Days (as
          defined  in the  Indenture  on  which  commercial  banks  and  foreign
          exchange  markets are open to settle payments and for general business
          in New York.  If any payment is  scheduled to be made on a day that is
          not a  Business  Day,  such  payment  will be made on the  immediately
          preceding Business Day.

     (ii) For the  purpose of  Section  6.01  (a)(1)-(3)  of the  Indenture  and
          notwithstanding anything therein to the contrary, the Company shall be
          entitled  to no more  than  two  Business  Days  with  respect  to any
          continuance  of default  or period in which to remedy a default  after
          receipt of a Notice of Default,  as the case may be, before such event
          becomes an Event of Default.

     (iii)In addition to the  provisions  governing  transfer of notes set forth
          in Section 2.05 of the Indenture,  the following provisions shall also
          be applicable to the Notes:

          (a)  Except  with  respect  to  Ambac  Assurance,  Notes  may  only be
               transferred  within,  to  or  from  Australia  if  the  aggregate
               consideration  payable by the  transferee at the time of transfer
               is at least A$500,000 (disregarding moneys lent by the transferor
               or its  associates to the  transferee) or the offer or invitation
               giving  rise to the  transfer  does  not  constitute  an offer or
               invitation  for  which  disclosure  is  required  to be  made  to
               investors  under  Part  6D.2  of the  Corporations  Act  2001  of
               Australia.

          (b)  (A) Any Note issued prior to the forty day  restricted  period as
               defined in Regulation S promulgated  under the  Securities Act of
               1933,  as  amended  (the  "Restricted  Period"),  shall  bear the
               following legend:

THE SECURITY (OR ITS PREDECESSOR)  EVIDENCED  HEREBY WAS ORIGINALLY  ISSUED IN A
TRANSACTION  EXEMPT  FROM  REGISTRATION  UNDER  SECTION 5 OF THE  UNITED  STATES
SECURITIES  ACT OF 1933,  AS AMENDED (THE  "SECURITIES  ACT"),  AND THE SECURITY
EVIDENCED  HEREBY  MAY NOT BE  OFFERED,  SOLD OR  OTHERWISE  TRANSFERRED  IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF
THE SECURITY  EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT DURING
THE FORTY DAY  RESTRICTED  PERIOD (AS DEFINED IN REGULATION S OF THE  SECURITIES
ACT) SUCH SECURITY MAY BE RESOLD,  PLEDGED OR  TRANSFERRED  ONLY (A) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION  MEETING THE  REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT OR (B) TO AMBAC ASSURANCE AFTER THE OCCURRENCE
OF AN EVENT OF DEFAULT IF AMBAC ASSURANCE  PROMPTLY  NOTIFIES THE COMPANY OR ITS
PAYING AGENT OF SUCH RESALE,  PLEDGE OR TRANSFER,  AND THE HOLDER WILL, AND EACH
SUBSEQUENT  HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER  FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE  RESTRICTIONS SET FORTH ABOVE.  PRIOR TO ANY SUCH
TRANSFER, THE TRANSFEROR WILL FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS,  LEGAL
OPINIONS,  OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING SO MADE.

               (B)  All Notes will bear the following legend:

ANY UNITED STATES PERSON WHO HOLDS THIS SECURITY WILL BE SUBJECT TO  LIMITATIONS
UNDER THE UNITED STATES INCOME TAX LAWS,  INCLUDING THE LIMITATIONS  PROVIDED IN
SECTIONS 165(J) AND 1287(A) OF THE INTERNAL REVENUE CODE.

          (c)  Notes may not be  transferred  to persons that are "United States
               persons"  within  the  meaning  of  Section  7701(a)(30)  of  the
               Internal  Revenue  Code  (other  than Ambac  Assurance)  and each
               Holder,  by  acceptance  of a Note,  agrees that it is prohibited
               from making such transfers.

          (d)  Neither  the Notes nor any  beneficial  interest  therein  may be
               offered,   sold  or  otherwise  transferred  in  the  absence  of
               registration under the Securities Act or an applicable  exemption
               therefrom. The Holders shall not, during the forty day restricted
               period as defined in Regulation S of the Securities Act,  resell,
               pledge or transfer such Notes or any beneficial  interest therein
               except (1)  outside  the United  States to a person  other than a
               U.S.  Person (as the term is defined in the Securities  Act) in a
               transaction  meeting  the  requirements  of Rule  904  under  the
               Securities Act or (2) to Ambac  Assurance after the occurrence of
               an Event of  Default if Ambac  Assurance  promptly  notifies  the
               Company or its paying agent of such  resale,  pledge or transfer,
               and the Holder shall, and each subsequent  Holder is required to,
               notify any purchaser from it of the resale restrictions set forth
               above. Prior to any such transfer, the transferor will furnish to
               the  Trustee  such  certifications,   legal  opinions,  or  other
               information as the Company may reasonably require to confirm that
               such transfer is being so made.

          (e)  Any  request for the  transfer of any Note during the  Restricted
               Period  shall be  accompanied  by a  certification  signed by the
               transferor in the form of Exhibit 2.

     (iv) In addition to the limits  contained in Section 9.02 of the Indenture,
          no  supplemental  indenture  set forth in the first  paragraph of such
          section,  which may be adopted  with the consent of the holders of not
          less  than a  majority  in the  aggregate  principal  of the  relevant
          Securities,  may change the time,  currency or basis of calculation of
          any amount payable, or of any associated definition.

     (v)  Any  provision  of this  Company  Order,  any  Note  or the  Indenture
          (collectively,  the "Financing  Documents")  expressly  recognizing or
          granting  rights in or to Ambac  Assurance  may not be  amended in any
          manner  which  affects  the  rights of Ambac  Assurance  hereunder  or
          thereunder without the prior written consent of Ambac Assurance.

     (vi) Any reorganization or liquidation plan under applicable  bankruptcy or
          similar law with  respect to the Company must be  acceptable  to Ambac
          Assurance.  In the event of any such  reorganization  or  liquidation,
          Ambac  Assurance shall have the right to vote on behalf of all Holders
          who hold  Ambac  Assurance-insured  Notes  absent a  default  by Ambac
          Assurance under the applicable  Financial  Guaranty  Insurance  Policy
          insuring such Notes.

     (vii)Ambac  Assurance's  consent  shall,  with  respect  to the  Notes,  be
          required  in  addition  to  Holder  consent,  when  required,  for the
          following  purposes:  (A) execution  and delivery of any  supplemental
          indenture for which the consent of any of the Holders is required,  or
          any  amendment,  supplement  or  change  to  or  modification  of  any
          Financing  Document  (except as otherwise  provided by Section 9.01 of
          the  Indenture),  (B) removal of the  Trustee or any paying  agent and
          selection and  appointment  of any successor  trustee or paying agent;
          and (C)  initiation  or approval of any action not described in (A) or
          (B) above which requires Holder consent.

     (viii) So long as the Financial  Guaranty  Insurance Policy issued by Ambac
          Assurance  in  connection  with the Notes in favor of the Holders (the
          "Policy")  is in effect  with  respect to the  Notes,  except for U.S.
          federal,  state and local income and  franchise  tax  purposes,  Ambac
          Assurance shall be deemed to be the owner of all outstanding Notes for
          all purposes (including,  without limitation, all approvals, consents,
          requests,   waivers,    authorizations,    directions,    inspections,
          appointments  and  the  institution  of any  action),  provided,  that
          nothing in this clause  (viii)  shall impair the rights of the Holders
          to receive all payments due under the Notes. Anything in any Financing
          Document to the  contrary  notwithstanding,  upon the  occurrence  and
          continuance of an Event of Default,  Ambac Assurance shall be entitled
          to  control  and  direct the  enforcement  of all rights and  remedies
          granted to the  Holders or the  Trustee for the benefit of the Holders
          under the Financing Documents,  including, without limitation: (A) the
          right to  accelerate  the  principal  of the Notes as described in the
          Indenture, and (B) the right to annul any declaration of acceleration,
          and Ambac  Assurance  shall also be entitled to approve all waivers of
          Events of  Default.  The  Company  and each  Holder  by such  Holder's
          acquisition of a Note agree that for United States federal,  state and
          local  income and  franchise  tax  purposes  (i) the Notes  constitute
          indebtedness  of the  Company,  (ii) the  Holders  are the  beneficial
          owners of the  Notes,  and (iii)  they  will  file  their tax  returns
          consistent with such characterization.

     (ix) While the  Policy is in effect or the  Reimbursement  Obligations  (as
          defined below) remain unpaid,  the Company (and/or the Trustee,  where
          indicated below) shall furnish to Ambac Assurance (to the attention of
          the Surveillance Department, unless otherwise indicated):

          (a)  as soon as practicable  after the filing  thereof,  a copy of any
               financial  statement  of the  Company and a copy of any audit and
               annual report of the Company;

          (b)  such additional information it may reasonably request;

          (c)  a copy of any notice to be given to the registered  owners of the
               Notes, including, without limitation, notice of any redemption of
               the Notes, and any certificate rendered pursuant to any Financing
               Document  relating to the Notes,  which obligation shall bind the
               Trustee as well as the Company;

          (d)  notice (attention: General Counsel) by the Trustee of any failure
               of the Company to provide relevant  notices,  certificates,  etc.
               under the Financing Documents; and

          (e)  notwithstanding  any other  provision of any Financing  Document,
               immediate  notice  (attention:  General  Counsel)  if at any time
               there are  insufficient  moneys to make any payments of principal
               and/or interest on the Notes as required and immediate  notice of
               the occurrence of any Event of Default,  which  obligation  shall
               bind the Trustee as well as the Company.

     (x)  The  Company  will permit  Ambac  Assurance  to discuss  the  affairs,
          finances  and  accounts  of  the  Company,  or any  information  Ambac
          Assurance may reasonably request regarding the Notes, with appropriate
          officers of the Company.

     (xi) Notwithstanding  anything herein or in any other Financing Document to
          the contrary,  in the event that the principal  and/or interest due on
          the Notes shall be paid by Ambac Assurance  pursuant to the Policy (i)
          the Notes shall remain "outstanding" for all purposes, not be defeased
          or otherwise satisfied and not be considered paid by the Company, (ii)
          except as expressly stated herein, (A) the Paying Agent, if any, shall
          have no duties or  obligations  relating to any payments made by Ambac
          Assurance and (B) the Trustee shall not be deemed to have knowledge of
          any  default  unless the  Trustee  shall have  written  notice of such
          default,  unless otherwise agreed,  (iii) all covenants agreements and
          other  obligations  of the  Company to the Holders  shall  continue to
          exist and shall run to the benefit of Ambac Assurance,  and (iv) Ambac
          Assurance shall be subrogated to the rights of such Holders.

     (xii)As long as the Policy shall be in full force and effect,  the Company,
          the  Trustee and any Paying  Agent agree to comply with the  following
          provisions:

          (a)  at least  one (1) day  prior to all  Interest  Payment  Dates the
               Trustee or Paying  Agent,  if any, will  determine  whether there
               will be  sufficient  funds  available to pay the  principal of or
               interest  on the  Notes on such  Interest  Payment  Date.  If the
               Trustee or Paying Agent,  if any,  determines  that there will be
               insufficient  funds  available,  the Trustee or Paying Agent,  if
               any, shall so notify Ambac  Assurance.  Such notice shall specify
               the amount of the anticipated deficiency, the Notes to which such
               deficiency is applicable and whether such Notes will be deficient
               as to principal or  interest,  or both.  If the Trustee or Paying
               Agent,  if any, has not so notified Ambac  Assurance at least one
               (1) day prior to an Interest  Payment Date,  Ambac Assurance will
               make  payments of  principal  or interest  due on the Notes on or
               before the first (1st) day next following the date on which Ambac
               Assurance  shall  have  received  notice of  nonpayment  from the
               Trustee or Paying Agent, if any.

          (b)  the Trustee or Paying Agent, if any,  shall,  after giving notice
               to Ambac  Assurance as provided in (a) above,  make  available to
               Ambac Assurance and, at Ambac Assurance's direction,  to The Bank
               of New York,  in New York,  New York,  as  insurance  trustee for
               Ambac   Assurance  or  any  successor   insurance   trustee  (the
               "Insurance  Trustee"),  the  registration  books  of the  Company
               maintained  by the  Trustee  or  Paying  Agent,  if any,  and all
               records  relating to the funds and accounts  maintained under the
               Indenture.

          (c)  the  Trustee  or  Paying  Agent,  if  any,  shall  provide  Ambac
               Assurance  and the  Insurance  Trustee with a list of  registered
               owners  of  Notes  entitled  to  receive  principal  or  interest
               payments from Ambac Assurance under the terms of the Policy,  and
               shall,  pursuant to arrangements made with the Insurance Trustee,
               (i) mail  checks  or  drafts  to the  registered  owners of Notes
               entitled to receive full or partial interest  payments from Ambac
               Assurance and (ii) to pay principal upon Notes surrendered to the
               Insurance  Trustee by the registered  owners of Notes entitled to
               receive full or partial principal payments from Ambac Assurance.

          (d)  the  Trustee  or  Paying  Agent,  if any,  shall,  at the time it
               provides notice to Ambac Assurance pursuant to (a) above,  notify
               registered  owners of Notes  entitled  to receive  the payment of
               principal or interest  thereon from Ambac Assurance (1) as to the
               fact of such entitlement,  (2) that Ambac Assurance will remit to
               them,  through the Insurance  Trustee or pursuant to arrangements
               made with the  Insurance  Trustee,  through the Trustee or Paying
               Agent, if any, all or a part of the interest payments next coming
               due upon proof of Holder  entitlement  to interest  payments  and
               delivery to the Insurance  Trustee,  in form  satisfactory to the
               Insurance Trustee, of an appropriate assignment of the registered
               owner's  right to  payment,  (3) that  should they be entitled to
               receive full payment of principal from Ambac Assurance, they must
               surrender  their Notes (along with an  appropriate  instrument of
               assignment  in form  satisfactory  to the  Insurance  Trustee  to
               permit  ownership of such Notes to be  registered  in the name of
               Ambac Assurance) for payment to the Insurance Trustee,  who shall
               then pass such Notes on to the Trustee or Paying  Agent,  if any,
               for payment of principal upon such Notes and (4) that should they
               be entitled to receive  partial  payment of principal  from Ambac
               Assurance,  they must surrender  their Notes for payment  thereon
               first to the Trustee or Paying  Agent,  if any, who shall note on
               such Notes the  portion of the  principal  paid by the Trustee or
               Paying  Agent,  if any,  and  then,  along  with  an  appropriate
               instrument of assignment  in form  satisfactory  to the Insurance
               Trustee,   to  the  Insurance  Trustee,   which  will  then  make
               arrangements  with the Trustee or Paying  Agent,  if any, for the
               payment of the unpaid portion of principal upon such Notes.

          (e)  in the event that the Trustee or Paying Agent, if any, has notice
               that any payment of  principal of or interest on a Note which has
               become Due for  Payment  (as  defined in the Policy) and which is
               made to a Holder by or on behalf of the Company has been deemed a
               preferential   transfer  and   theretofore   recovered  from  its
               registered owner pursuant to the United States Bankruptcy Code by
               a  trustee  in   bankruptcy   in   accordance   with  the  final,
               nonappealable order of a court having competent jurisdiction, the
               Trustee  or  Paying  Agent,  if any,  shall,  at the  time  Ambac
               Assurance  is  notified   pursuant  to  (a)  above,   notify  all
               registered  owners that in the event that any registered  owner's
               payment is so recovered,  such registered  owner will be entitled
               to payment from Ambac Assurance to the extent of such recovery if
               sufficient funds are not otherwise available,  and the Trustee or
               Paying  Agent,  if any,  shall  furnish  to Ambac  Assurance  its
               records  evidencing  the payments of principal of and interest on
               the Notes which have been made by the Trustee or Paying Agent, if
               any, and  subsequently  recovered from registered  owners and the
               dates on which such payments were made.

          (f)  in addition to those rights  granted  Ambac  Assurance  under the
               Financing  Documents,  Ambac  Assurance  shall,  to the extent it
               makes  payment  of  principal  of or  interest  on Notes,  become
               subrogated  to the rights of the  recipients  of such payments in
               accordance  with the terms of the Policy,  and to  evidence  such
               subrogation  (1) in the case of subrogation as to claims for past
               due  interest,  the Trustee or Paying Agent,  if any,  shall note
               Ambac Assurance's rights as subrogee on the registration books of
               the Company  maintained by the Trustee or Paying  Agent,  if any,
               upon  receipt  from Ambac  Assurance  of proof of the  payment of
               interest  thereon to the registered  owners of the Notes, and (2)
               in the case of  subrogation  as to claims for past due principal,
               the Trustee or Paying Agent, if any, shall note Ambac Assurance's
               rights  as  subrogee  on the  registration  books of the  Company
               maintained by the Trustee or Paying Agent, if any, upon surrender
               of the Notes by the registered owners thereof together with proof
               of the payment of principal thereof.

     (xiii) The Trustee or Paying Agent,  if any, may be removed at any time, at
          the  request of Ambac  Assurance,  for any  breach of its  obligations
          under the Financing Documents.

     (xiv)Ambac  Assurance shall receive prior written notice of any Trustee (or
          Paying Agent) resignation.

     (xv) Every successor Trustee appointed pursuant to the Indenture shall be a
          trust  company or bank in good  standing  located  in or  incorporated
          under the laws of any State of the  United  States  of  America,  duly
          authorized  to exercise  trust  powers and subject to  examination  by
          federal or state  authority,  having a reported capital and surplus of
          not less than  $75,000,000  and  acceptable  to Ambac  Assurance.  Any
          successor  Paying Agent, if applicable,  shall not be appointed unless
          Ambac approves such successor in writing.

     (xvi)Notwithstanding  any other  provision of the Financing  Documents,  in
          determining  whether  the  rights  of the  Holders  will be  adversely
          affected by any action taken  pursuant to the terms and  provisions of
          the Financing Documents,  the Trustee (or Paying Agent) shall consider
          the effect on the Holders as if there were no Policy.

     (xvii)  Notwithstanding  any other  provision of the  Financing  Documents,
          while  the  Policy  is  outstanding  or any  Reimbursement  Obligation
          (defined below) remains unpaid, no removal, resignation or termination
          of the Trustee (or Paying  Agent) shall take effect until a successor,
          acceptable to Ambac Assurance, shall be appointed.

     (xviii) To the extent that the Financing  Documents  confer upon or give or
          grant to Ambac Assurance any right,  remedy or claim  thereunder or by
          reason  thereof,  Ambac Assurance is hereby  explicitly  recognized as
          being a third-party  beneficiary  thereunder  and may enforce any such
          right remedy or claim conferred, given or granted thereunder.

     (xix)Nothing in the Financing Documents,  expressed or implied, is intended
          or shall be  construed  to confer  upon,  or to give or grant to,  any
          person  or  entity,  other  than  the  Company,  the  Trustee,   Ambac
          Assurance,  the Paying Agent, if any, and the registered owners of the
          Notes, any right,  remedy or claim under or by reason of the Financing
          Documents or any covenant,  condition or stipulation  thereof, and all
          covenants,  stipulations,  promises and  agreements  in the  Financing
          Documents  contained by and on behalf of the Company  shall be for the
          sole  and  exclusive  benefit  of  the  Company,  the  Trustee,  Ambac
          Assurance,  the Paying Agent, if any, and the registered owners of the
          Notes.

     (xx) Paragraphs (v)-(xix) of this Section shall only apply so long as Ambac
          Assurance is not in default of the Policy or the  Insurance  Agreement
          (as defined below).

     (xxi)Section  4.02 and Article XI of the  Indenture  shall not apply to the
          Notes.

     (xxii) The term  "Reimbursement  Obligation"  shall mean amounts payable by
          the Company to Ambac Assurance  pursuant to the terms of the Insurance
          Agreement,  dated as of December 5, 2002 (the "Insurance  Agreement"),
          between the Company and Ambac Assurance.

     (xxiii) Title to the Notes will pass only by transfer and  registration  in
          the Security Register.

     (xxiv) Section 8.03 of the  Indenture  shall be amended for purposes of the
          Notes to read:

               Section 8.03. The Company,  the Trustee, any paying agent and any
          Security  Registrar shall deem and treat the person in whose name such
          Security  shall  be  registered  upon  the  Security  Register  as the
          absolute owner of such Security (whether or not such Security shall be
          overdue and notwithstanding any notice of ownership or writing thereon
          made by anyone other than the Security  Registrar)  for the purpose of
          receiving payment of or on account of the principal of and premium, if
          any,  and  interest  (including  Defaulted  Interest,  if any) on such
          Security and for all other  purposes;  and neither the Company nor the
          Trustee  nor any  paying  agent nor any  Security  Registrar  shall be
          affected by any notice to the contrary.


     (xxv)No amounts  paid to a Holder on the Notes may be  credited to Holders'
          bank accounts within the United States of America or its  possessions,
          and no Holder  shall be entitled to make any demand for payment to the
          Company or its paying agent within the United States of America or its
          possessions;  provided,  however,  that if the  Company  or its paying
          agent receives  notification from Ambac Assurance that Ambac Assurance
          has  acquired any Notes after the  occurrence  of an Event of Default,
          payments on such Notes may be credited to a bank account in the United
          States and Ambac  Assurance  may make  demand for  payment  within the
          United States.

8.   It shall be an Event  of  Default  under  the  Indenture  if an  "Event  of
     Default"  shall  have  occurred  and  be  continuing  under  the  Insurance
     Agreement.

9.   You are hereby requested to authenticate,  from time to time after the date
     hereof  and  in  the  manner  provided  by the  Indenture,  such  aggregate
     principal  amount of the Notes  not to exceed  $69,564,000  as shall be set
     forth in the Note.

10.  Concurrently  with this Company Order, an Opinion of Counsel under Sections
     2.04 and 13.06 of the  Indenture is being  delivered to you with respect to
     the issuance and sale of up to $69,564,000  principal  amount of Notes and,
     prior  to  issuance  thereof,  a  subsequent  Opinion  of  Counsel  will be
     delivered to you with respect to the subsequent issuance and sale of Notes.

11.  The undersigned Geoffrey S. Chatas and Thomas G. Berkemeyer,  the Assistant
     Treasurer and Assistant Secretary,  respectively,  of the Company do hereby
     certify that:

     (i)  we have read the relevant portions of the Indenture, including without
          limitation the conditions  precedent  provided for therein relating to
          the action  proposed to be taken by the Trustee as  requested  in this
          Company Order and Officers'  Certificate,  and the  definitions in the
          Indenture relating thereto;

     (ii) we have read the Board  Resolutions  of the Company and the Opinion of
          Counsel referred to above;

     (iii)we have conferred  with other  officers of the Company,  have examined
          such records of the Company and have made such other  investigation as
          we deemed relevant for purposes of this certificate;

     (iv) in our opinion,  we have made such  examination or investigation as is
          necessary to enable us to express an informed opinion as to whether or
          not such conditions have been complied with; and

     (v)  on the  basis  of the  foregoing,  we are  of  the  opinion  that  all
          conditions  precedent  provided for in the  Indenture  relating to the
          action  proposed to be taken by the Trustee as  requested  herein have
          been complied with.

Kindly  acknowledge  receipt of this Company  Order and  Officers'  Certificate,
including the documents  listed herein,  and confirm the  arrangements set forth
herein by signing and returning the copy of this document  attached  hereto.  By
signing below, the Trustee agrees to the terms and conditions set forth herein.

Very truly yours,

KENTUCKY POWER COMPANY


By: /s/ Geoffrey S. Chatas
     Assistant Treasurer


And: /s/ Thomas G. Berkemeyer
     Assistant Secretary

Acknowledged and Agreed to by Trustee:


By: /s/ Susan Johnson
    Vice Presisdent


<PAGE>


                                                                       Exhibit 1

ANY UNITED STATES PERSON WHO HOLDS THIS SECURITY WILL BE SUBJECT TO  LIMITATIONS
UNDER THE UNITED STATES INCOME TAX LAWS,  INCLUDING THE LIMITATIONS  PROVIDED IN
SECTIONS 165(J) AND 1287(A) OF THE INTERNAL REVENUE CODE.

THE SECURITY (OR ITS PREDECESSOR)  EVIDENCED  HEREBY WAS ORIGINALLY  ISSUED IN A
TRANSACTION  EXEMPT  FROM  REGISTRATION  UNDER  SECTION 5 OF THE  UNITED  STATES
SECURITIES  ACT OF 1933,  AS AMENDED (THE  "SECURITIES  ACT"),  AND THE SECURITY
EVIDENCED  HEREBY  MAY NOT BE  OFFERED,  SOLD OR  OTHERWISE  TRANSFERRED  IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF
THE SECURITY  EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT DURING
THE FORTY DAY  RESTRICTED  PERIOD (AS DEFINED IN REGULATION S OF THE  SECURITIES
ACT) SUCH SECURITY MAY BE RESOLD,  PLEDGED OR  TRANSFERRED  ONLY (A) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION  MEETING THE  REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT OR (B) TO AMBAC ASSURANCE AFTER THE OCCURRENCE
OF AN EVENT OF DEFAULT IF AMBAC ASSURANCE  PROMPTLY  NOTIFIES THE COMPANY OR ITS
PAYING AGENT OF SUCH RESALE,  PLEDGE OR TRANSFER,  AND THE HOLDER WILL, AND EACH
SUBSEQUENT  HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER  FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE  RESTRICTIONS SET FORTH ABOVE.  PRIOR TO ANY SUCH
TRANSFER, THE TRANSFEROR WILL FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS,  LEGAL
OPINIONS,  OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING SO MADE.

Financial  Guaranty Insurance Policy No. SF0582BE (the "Policy") with respect to
payments due for principal of and interest on this Note has been issued by Ambac
Assurance Corporation ("Ambac Assurance").  The Policy has been delivered to The
Bank of New York, New York, New York, as the Insurance Trustee under said Policy
and will be held by such Insurance Trustee or any successor  insurance  trustee.
The Policy is on file and  available for  inspection at the principal  office of
the Insurance  Trustee and a copy thereof may be secured from Ambac Assurance or
the Insurance  Trustee.  All payments required to be made under the Policy shall
be made in  accordance  with the  provisions  thereof.  The  owner of this  Note
acknowledges  and consents to the subrogation  rights of Ambac Assurance as more
fully set forth in the Policy.

No. R1
                             KENTUCKY POWER COMPANY
                     4.368% Senior Note, Series C, Due 2007

Stated Maturity Date: December 12, 2007   Original Issue Date: December 12, 2002

Principal Amount: $69,564,000                              Interest Rate: 4.368%

     KENTUCKY POWER COMPANY, a corporation duly organized and existing under the
laws of the Commonwealth of Kentucky (herein referred to as the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ACE Funding American Electric
Power Subsidiaries Series 2002-2 MTN Trust or registered assigns,  the Principal
Amount  specified above on the Stated Maturity Date specified  above, and to pay
interest on said Principal Amount from December 10, 2002 or from the most recent
interest  payment  date (each such date,  an "Interest  Payment  Date") to which
interest has been paid or duly provided for, semi-annually in arrears on June 10
and December 10 in each year,  commencing  (except as provided in the  following
sentence) with the Interest Payment Date next succeeding the Original Issue Date
specified  above,  at the Interest  Rate per annum  specified  above,  until the
Principal  Amount shall have been paid or duly provided for.  Interest  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, as provided in the Indenture,  as  hereinafter  defined,
shall  only be paid to the  Person  in  whose  name  this  Note  (or one or more
Predecessor  Securities)  shall have been registered at the close of business on
the Regular Record Date with respect to such Interest  Payment Date, which shall
be the May 26 or November 26  (whether or not a Business  Day),  as the case may
be, next  preceding  such Interest  Payment Date;  provided  however that if the
Original Issue Date of this Note shall be after a Regular Record Date and before
the corresponding  Interest Payment Date,  payment of interest shall commence on
the second  Interest  Payment Date succeeding such Original Issue Date and shall
be paid to the  Person in whose  name this Note was  registered  on the  Regular
Record Date for such second Interest  Payment Date; and provided  further,  that
interest  payable on the Stated  Maturity Date or any  Redemption  Date shall be
paid to the Person to whom  principal  shall be paid.  Any such  interest not so
punctually  paid or duly provided for shall forthwith cease to be payable to the
Holder  on such  Regular  Record  Date  and  shall be paid as  provided  in said
Indenture.

     If any payment is scheduled to be made on a day that is not a Business Day,
such payment will be made on the immediately  preceding Business Day. No amounts
paid to a Holder on the Notes may be credited to Holders' bank  accounts  within
the United States of America or its possessions, and no Holder shall be entitled
to make any demand for  payment to the  Company or its paying  agent  within the
United  States of America or its  possessions;  provided,  however,  that if the
Company  or  its  paying  agent  receives   notification  from  Ambac  Assurance
Corporation  ("Ambac  Assurance")  that Ambac  Assurance  has acquired any Notes
after the  occurrence  of an Event of  Default,  payments  on such  Notes may be
credited to a bank  account in the United  States and Ambac  Assurance  may make
demand for payment within the United States.

     This  Note is one of a duly  authorized  series  of  Notes  of the  Company
(herein sometimes referred to as the "Notes"),  specified in the Indenture,  all
issued or to be issued in one or more series  under and pursuant to an Indenture
dated as of September 1, 1997 duly  executed and  delivered  between the Company
and  Deutsche  Bank  Trust  Company  Americas,  a national  banking  association
organized and existing under the laws of the United States,  as Trustee  (herein
referred to as the  "Trustee")  (such  Indenture,  as  originally  executed  and
delivered and as thereafter  supplemented and amended being hereinafter referred
to as the  "Indenture"),  to which  Indenture  and all  indentures  supplemental
thereto or Company  Orders  reference  is hereby made for a  description  of the
rights, limitations of rights, obligations,  duties and immunities thereunder of
the  Trustee,  the  Company  and the  holders of the Notes.  By the terms of the
Indenture, the Notes are issuable in series which may vary as to amount, date of
maturity,  rate of interest and in other respects as in the Indenture  provided.
This Note is one of the series of Notes designated on the face hereof.

     This Note shall be  redeemable to the extent set forth in the Indenture and
relevant Company Order.

     The Company  shall not be required to (i) issue,  exchange or register  the
transfer of any Notes  during a period  beginning  at the opening of business 15
days  before the day of the mailing of a notice of  redemption  of less than all
the outstanding  Notes of the same Series and Tranche and ending at the close of
business  on the day of such  mailing,  nor (ii)  register  the  transfer  of or
exchange of any Notes of any series or portions thereof called for redemption.

     In the event of  redemption  of this Note in part only, a new Note or Notes
of this Series and Tranche,  of like tenor,  for the  unredeemed  portion hereof
will be issued in the name of the Holder hereof upon the surrender of this Note.

     In case an Event of  Default,  as  defined  in the  Indenture,  shall  have
occurred and be  continuing,  the principal of all of the Notes may be declared,
and upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.

     The Indenture contains  provisions  permitting the Company and the Trustee,
with the  consent  of the  Holders  of not less  than a  majority  in  aggregate
principal  amount of the Notes of each Series effected at the time  outstanding,
as defined in the Indenture,  to execute supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating  any of the
provisions of the Indenture or of any supplemental  indenture or of modifying in
any manner the rights of the Holders of the Notes;  provided,  however,  that no
such supplemental  indenture shall (i) extend the fixed maturity of any Notes of
any series, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon,  or reduce any premium payable upon the
redemption thereof, or reduce the amount of the principal of a Discount Security
that would be due and payable upon a declaration of acceleration of the maturity
thereof  pursuant  to the  Indenture,  without the consent of the holder of each
Note then  outstanding  and affected;  (ii) reduce the  aforesaid  percentage of
Notes,  the holders of which are  required  to consent to any such  supplemental
indenture,  or reduce the percentage of Notes, the holders of which are required
to waive any default and its consequences,  without the consent of the holder of
each Note then outstanding and affected  thereby;  or (iii) modify any provision
of Section  6.01(c) of the  Indenture  (except to  increase  the  percentage  of
principal amount of securities  required to rescind and annul any declaration of
amounts due and payable  under the Notes),  without the consent of the holder of
each Note then  outstanding  and affected  thereby.  The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount of
the Notes of all Series at the time outstanding  affected thereby,  on behalf of
the  Holders  of the  Notes of such  series,  to waive any past  default  in the
performance of any of the covenants  contained in the Indenture,  or established
pursuant to the  Indenture  with respect to such series,  and its  consequences,
except a default in the  payment of the  principal  of or  premium,  if any,  or
interest on any of the Notes of such  series.  Any such consent or waiver by the
registered  Holder of this Note  (unless  revoked as provided in the  Indenture)
shall be conclusive and binding upon such Holder and upon all future Holders and
owners  of this  Note and of any Note  issued in  exchange  herefor  or in place
hereof  (whether by  registration  of transfer or  otherwise),  irrespective  of
whether or not any notation of such consent or waiver is made upon this Note.

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

     As  provided  in the  Indenture  and  Company  Order and subject to certain
limitations  therein  set forth,  this Note is  transferable  by the  registered
holder hereof on the Security  Register of the Company,  upon  surrender of this
Note for  registration of transfer at the office or agency of the Company as may
be designated by the Company  accompanied by a written instrument or instruments
of transfer in form  satisfactory to the Company or the Trustee duly executed by
the registered  Holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Notes of authorized denominations and for the same
aggregate  principal  amount  and  series  will  be  issued  to  the  designated
transferee or transferees. No service charge will be made for any such transfer,
but the  Company  may require  payment of a sum  sufficient  to cover any tax or
other  governmental  charge payable in relation thereto.  Under no circumstances
may this  Note be  transferred  to a  United  States  holder  other  than  Ambac
Assurance Corporation.

     The Company, the Trustee, any paying agent and any Security Registrar shall
deem and treat the registered  Holder of this Note as the absolute owner of this
Note (whether or not this Note shall be overdue and  notwithstanding  any notice
of ownership or writing hereon made by anyone other than the Security Registrar)
for the purpose of receiving  payment of or on account of the  principal  hereof
and premium,  if any, and  interest due hereon and for all other  purposes,  and
neither  the  Company  nor the  Trustee  nor any paying  agent nor any  Security
Registrar shall be affected by any notice to the contrary.

     No  recourse  shall  be had  for the  payment  of the  principal  of or the
interest on this Note,  or for any claim based  hereon,  or otherwise in respect
hereof,  or based on or in respect of the Indenture,  against any  incorporator,
stockholder,  officer or  director,  past,  present or future,  as such,  of the
Company or of any predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise,  all such liability being, by the acceptance hereof and as
part  of the  consideration  for  the  issuance  hereof,  expressly  waived  and
released.

     The Notes of this  Series are  issuable  only in  registered  form  without
coupons. As provided in the Indenture and subject to certain limitations,  Notes
of this Series and  Tranche  are  exchangeable  for a like  aggregate  principal
amount  of  Notes  of  this  Series  and  Tranche  of  a  different   authorized
denomination, as requested by the Holder surrendering the same.

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

     This  Note  shall  not be  entitled  to any  benefit  under  the  Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of  Authentication  hereon shall have been signed by or on behalf of
the Trustee.

     IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.


Dated December 12, 2002
                                    KENTUCKY POWER COMPANY


                                    By:
                                       -------------------------
                                       Assistant Treasurer
Attest:


By:
   -------------------------
   Assistant Secretary

<PAGE>

                          CERTIFICATE OF AUTHENTICATION

     This is one of the Notes of the series of Notes  designated  in  accordance
with, and referred to in, the within-mentioned Indenture.

Dated: December 12, 2002

DEUTSCHE BANK TRUST COMPANY AMERICAS



By:
   -------------------------------
         Authorized Signatory


<PAGE>


FOR VALUE RECEIVED,  the undersigned  hereby sell(s),  assign(s) and transfer(s)
unto

(PLEASE INSERT SOCIAL SECURITY OR OTHER
   IDENTIFYING NUMBER OF ASSIGNEE)

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(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
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ASSIGNEE) the within Note and all rights thereunder, hereby
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irrevocably constituting and appointing such person attorney to
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transfer such Note on the books of the Company, with full
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power of substitution in the premises.



Dated:
      --------------------------------------



NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Note in every particular, without alteration
or enlargement or any change whatever and NOTICE: Signature(s) must be
guaranteed by a financial institution that is a member of the Securities
Transfer Agents Medallion Program ("STAMP"), the Stock Exchange Medallion
Program ("SEMP") or the New York Stock Exchange, Inc. Medallion Signature
Program ("MSP").


<PAGE>


                                                                       Exhibit 2

                       FORM OF CERTIFICATION OF TRANSFEROR

       Re: Kentucky Power Company 4.368% Senior Notes, Series C, Due 2007

     Reference  is hereby made to the  Indenture,  dated as of September 1, 1997
(the  "Indenture"),  between Kentucky Power Company (the "Company") and Deutsche
Bank Trust Company Americas, as trustee.  Capitalized terms used but not defined
herein shall have the meanings given them in the Indenture.

     _______________  (the  "Transferor"  owns  and  proposes  to  transfer  the
attached  Note  in  the  principal   amount  of  $________  in  such  Note  (the
"Transfer"),  to  _____________  (the  "Transferee").  In  connection  with  the
Transfer,  the Transferor  hereby  certifies that the Transfer is being effected
pursuant  to and in  accordance  with Rule 903 or Rule 904 under the  Securities
Act.  The  Transferor  further  certifies  that the  Transfer is being  effected
outside  of the United  States  and the  Transferee  is either  Ambac  Assurance
Corporation  or is not a "United  States  person"  within the meaning of Section
7701(a)(30) of the Internal Revenue Code.

     This  certification  and the statements  contained  herein are made for the
benefit of the Company.


                                          [NAME OF TRANSFEROR]


                                          By:_______________________

                                          Title:______________________
Dated:______________