SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.   20549

                                      Form 10-K

          X      ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)

                 For the fiscal year ended     December 31, 1995

                 TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
           For the transition period from            to

                            Commission file number 1-3464

                             KENTUCKY UTILITIES COMPANY
               (Exact name of Registrant as specified in its charter)

               Kentucky and Virginia                     61-0247570
             (State of Incorporation)                 (I.R.S. Employer
                                                     Identification No.)
                One Quality Street
                Lexington, Kentucky                         40507
     (Address of principal executive offices)            (Zip Code)

         Registrant's telephone number, including area code:   606-255-2100
             Securities registered pursuant to Section 12(b) of the Act:

                                                  Name of Each Exchange on
                Title of Each Class                    Which Registered
        Preferred Stock, 4 3/4% cumulative,   Philadelphia Stock Exchange, Inc.
           stated value  $100 per share

             Securities registered pursuant to Section 12(g) of the Act:
              Preferred stock, cumulative, stated value $100 per share
                                  (Title of Class)

     Indicate by check mark  whether the Registrant (1)  has filed all  reports
     required to  be filed by Section   13 or 15(d) of  the Securities Exchange
     Act of  1934 during the  preceding 12 months  (or for such  shorter period
     that the Registrant was required  to file such reports), and (2)  has been
     subject to such filing requirements for the past 90 days. Yes  X   No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
     405 of Regulation S-K is not contained herein, and will  not be contained,
     to  the best of Registrant's knowledge, in definitive proxy or information
     statements incorporated  by reference in Part III of this Form 10-K or any
     amendment to this Form 10-K.  ( X )
     Aggregate market  value of the voting  stock held by nonaffiliates  of the
     Registrant:   None

     Number of shares of Common Stock outstanding at March 8, 1996:  37,817,878
     shares (owned by the  parent - KU Energy Corporation).

                     Documents Incorporated by Reference:  None

     Exhibit Index appears on page 43.


                                         -1-
<PAGE>
                             KENTUCKY UTILITIES COMPANY

                                      Form 10-K

               Annual Report to the Securities and Exchange Commission
                        For the Year Ended December 31, 1995
                                    _____________

                                  TABLE OF CONTENTS

     Item                                                              Page
                                       PART I

     1. Business   . . . . . . . . . . . . . . . . . . . . . . . . . . .  3

     2. Properties   . . . . . . . . . . . . . . . . . . . . . . . . . .  9

     3. Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . 10

     4. Submission of Matters to a Vote of Security Holders  . . . . . . 10

        Executive Officers of the Registrant   . . . . . . . . . . . . . 11


                                       PART II

     5. Market for Registrant's Common Equity and Related
          Stockholder Matters  . . . . . . . . . . . . . . . . . . . . . 13

     6. Selected Financial Data  . . . . . . . . . . . . . . . . . . . . 14

     7. Management's Discussion and Analysis of Financial Condition
          and Results of Operations  . . . . . . . . . . . . . . . . . . 16

     8. Financial Statements and Supplementary Data  . . . . . . . . . . 24

     9. Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure   . . . . . . . . . . . . . . . . . . 41

                                      PART III

    10. Directors and Executive Officers of the Registrant   . . . . . . 41

    11. Executive Compensation   . . . . . . . . . . . . . . . . . . . . 41

    12. Security Ownership of Certain Beneficial Owners and Management   41

    13. Certain Relationships and Related Transactions   . . . . . . . . 41

                                       PART IV

    14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 42

        Exhibit Index  . . . . . . . . . . . . . . . . . . . . . . . . . 43

        Signatures   . . . . . . . . . . . . . . . . . . . . . . . . . . 48




                                         -2-
<PAGE>
                                       PART I
     Item 1.  Business

     General

     Kentucky Utilities Company (KU) is a wholly owned subsidiary of KU Energy
     Corporation (KU Energy).  KU is a public utility engaged in producing and
     selling electric energy.   KU provides electric service to  about 425,500
     customers in over 600  communities and adjacent suburban and  rural areas
     in  77 counties  in central,  southeastern and  western Kentucky,  and to
     about  28,600 customers  in  5 counties  in  southwestern Virginia.    In
     Virginia, KU  operates under the name Old Dominion Power Company.  Of the
     Kentucky communities,  161 are  incorporated municipalities  served under
     unexpired   municipal  franchises   and   the  rest   are  unincorporated
     communities  where no franchises are required.  Service has been provided
     in Virginia  without franchises  for  a number  of years.    The lack  of
     Virginia franchises is not expected to  have a material adverse effect on
     KU's operations.  KU  also sells electric energy at wholesale  for resale
     in 12 municipalities.

     The territory served by KU has an aggregate population estimated at about
     1,000,000.  The  largest  city  served  is   Lexington,  Kentucky.    The
     population  of the  metropolitan  Lexington area  is  estimated at  about
     225,000.   The populations of the next 10 largest cities served at retail
     range from about 21,000 to 9,000.  The territory served  includes most of
     the Blue  Grass Region of central  Kentucky and parts of  the coal mining
     areas  in southeastern  and western  Kentucky and  southwestern Virginia.
     Lexington is the  center of the Blue Grass Region,  in which thoroughbred
     horse,  burley  tobacco and  bourbon  whiskey  distilling industries  are
     located.  Among the principal industries in the territory served are coal
     mining, automotive and related  industries, the manufacture of  paper and
     paper products and of  electrical and other machinery and  primary metals
     processing.

     Revenues

     KU's  sources of electric revenues and the respective percentages of total
     revenues for the three years 1993-1995 were as follows:
<TABLE>
<CAPTION>
          Year Ended December 31,              1995               1994              1993
                                              Amount  %          Amount   %        Amount   %
                                                         (dollars in thousands)

<S>                                       <C>        <C>    <C>         <C>     <C>       <C>
          Residential                     $ 232,760  34     $ 213,574    34     $ 210,759  35
          Commercial                        151,778  22       142,207    22       138,271  23
          Industrial                        130,066  19       120,043    19       111,857  18
          Mine Power                         36,076   5        36,498     6        34,977   6
          Public Authorities                 54,161   8        49,869     8        48,142   8
          Wholesale                          50,699   7        47,961     7        46,898   8
          Opportunity                        25,241   4        41,704     7        15,565   2
          Miscellaneous Revenues              5,649   1         4,181     -         3,428   -
          Provision for Refund -
            Litigation Settlement                 -   -       (19,385)   (3)       (3,309)  -
               Total                      $ 686,430 100     $ 636,652   100     $ 606,588 100
</TABLE>

     The electric utility business  is affected by seasonal weather  patterns.
     As a result,  operating revenues (and associated  operating expenses) are
     not  generated  evenly throughout  the year.    See Item  7, Management's
     Discussion and Analysis of Financial Condition and Results of Operations -
     Sales and Revenues  for information related to revenues  including those
     from opportunity sales.

                                        -3-

<PAGE>
     Operations

     KU's  net generating capability was 3,509 megawatts at December 31, 1995.
     An additional  110-megawatt combustion turbine peaking  unit is scheduled
     to be  placed into  commercial operation  in  1996.   The net  generating
     capability available for  operation at any time  may be lower  because of
     periodic outages of generating units due to inspection, maintenance, fuel
     restrictions,  or  modifications required  by  regulatory  agencies.   KU
     obtains  power  from  other  utilities  under  bulk  power  purchase  and
     interchange  contracts.   At December 31,  1995, KU's  system capability,
     including purchases from others, was 3,903 megawatts. On August 16, 1995,
     an all-time   system peak demand, on a one-hour integrated basis, was set
     at 3,341 megawatts.   This peak  was surpassed on  February 5, 1996 by  a
     3,391  megawatt   peak.    See  Item 2,   Properties-Construction  for  a
     discussion of KU's plans to add additional peaking capacity.

     The percentage of KU's  system output which was internally  generated and
     purchased for the periods indicated was as follows:

                                              1995      1994       1993
               Internally Generated             82%       83 %       89 %
               Purchased                        18%       17 %       11 %


     KU is one of 28 members of the East Central Area Reliability Coordination
     Agreement,  the purpose  of which is  to augment  the reliability  of the
     members' bulk power supply through coordination of planning and operation
     of  generation and transmission facilities.   The members  are engaged in
     the generation, transmission and sale of electric power and energy in the
     east central area of the  United States, which covers all or  portions of
     Michigan, Indiana, Ohio, Kentucky, Pennsylvania, Virginia, West  Virginia
     and Maryland.  KU also has interconnections and contractually established
     operating arrangements with neighboring utilities and cooperatives.

     Under  a contract with Owensboro Municipal Utilities (OMU), KU has agreed
     to  purchase  from  OMU  the  surplus  output  of  the  150-megawatt  and
     250-megawatt generating units  at OMU's Elmer  Smith station.   Purchases
     under  the  contract  are made  under  a  contractual  formula which  has
     resulted  in costs which  were and are  expected to be  comparable to the
     cost of other power purchased or  generated by KU. Such power constituted
     about  8% of KU's net system output during 1995.  See Note 4 of the Notes
     to Financial Statements.

     KU  owns 20%  of the common  stock of Electric  Energy, Inc. (EEI), which
     owns  and  operates  a  1,000-megawatt generating  station  in   southern
     Illinois.   KU's  entitlement is  20% of  the available  capacity of  the
     station.  Purchases from EEI  are made under a contractual formula  which
     has resulted in costs which were and are expected to be comparable to the
     cost of other power purchased or generated by KU.  Such power constituted
     about 8% of  KU's net system output in 1995.   See Note 4 of the Notes to
     Financial Statements.

     KU had approximately 2,230 employees at December 31, 1995, of which about
     300 are covered by union contracts expiring August 1996.



                                        -4-
<PAGE>

     Fuel Matters

     Coal-fired  generating units provided more than 99% of KU's net kilowatt-
     hour generation for 1995.  The remainder of KU's net  generation for 1995
     was  provided by  hydroelectric plants,  oil and/or  natural gas  burning
     units.   The average  delivered cost of  coal purchased, per  ton and per
     million BTU  (MBTU), and the  percentage of  spot coal purchases  for the
     periods indicated were as follows:

                                                   1995      1994     1993


        Per ton - all sources                   $ 28.37   $ 28.91   $ 27.92
        Per MBTU - all sources                  $  1.16   $  1.19   $  1.15

        Per ton - spot purchases only           $ 26.84   $ 28.33   $ 26.23
        Per MBTU - spot purchases only          $  1.10   $  1.16   $  1.08
        Spot purchases as % of all sources           30 %      46 %      44 %


     KU maintains its fuel  inventory at levels  estimated to be necessary  to
     avoid  operational  disruptions  at  its  coal-fired   generating  units.
     Reliability of  coal deliveries can  be affected from  time to time  by a
     number of factors, including  coal mine labor strikes and  other supplier
     or transporter operating difficulties.

     KU  believes there are adequate reserves available to supply its existing
     base-load generating units with the quantity and quality of coal required
     for those  units throughout  their useful  lives.  KU  intends to  meet a
     substantial portion  of  its coal  requirements  with 3-year  and  5-year
     contracts.  KU anticipates  that coal supplied under such  contracts will
     represent  about two-thirds  of the  requirements over  the next  several
     years.   As part of this  strategy, KU is currently  negotiating and will
     continue to negotiate replacement contracts as contracts expire.  KU does
     not  anticipate any  problems negotiating  new contracts for  future coal
     needs.   The  balance of  coal  requirements  will be  met  through  spot
     purchases.   See Note 4  of  the Notes  to Financial  Statements for  the
     estimated obligations under existing fuel contracts for each of the years
     1996 through 2000.

     KU has  no long-term contracts in  place for the purchase  of natural gas
     for  its  combustion  turbine  peaking  units.    KU  has   met  its  gas
     requirements through spot purchases.  KU does not anticipate encountering
     any significant problems acquiring  an adequate supply of fuel  necessary
     to  operate its peaking units.  See Item 2, Properties-Construction for a
     discussion of KU's plans to add additional peaking capacity.

     Environmental Matters

     Federal   and  state  agencies   have  adopted  environmental  protection
     standards  which apply  to  the  electric  operations  of  KU.    Capital
     expenditures   to  comply   with  these   standards  amounted   to  about
     $193 million during the 1991-1995 time period.

     KU's  generating  units  are operated  in  compliance  with the  Kentucky
     Natural Resources  and Environmental Protection Cabinet's (Cabinet) State
     Implementation   Plan  (KYSIP)  and   New  Source  Performance  Standards
     developed under the  Clean Air Act.   The KYSIP  is a federally  approved


                                        -5-
<PAGE>

     plan  for the attainment of  the national ambient  air quality standards.
     The  KYSIP  contains  standards  relating  to  the  emissions of  various
     pollutants (sulfur  dioxide, particulates and nitrogen  oxides) from KU's
     fossil-fuel  fired  steam  electric  generating units.    These  emission
     standards are of varying stringencies and compliance with these standards
     is attained  through  a variety  of  air pollution  control  technologies
     (scrubbers, electrostatic precipitators, and low NOx burners) and the use
     of low-sulfur coal.   KU's operations are in substantial  compliance with
     current emission standards.

     The acid  rain control provisions of  the 1990 Clean  Air Act Amendments,
     which are effective  in two  phases, require KU  to further decrease  the
     emissions  of sulfur  dioxide and  nitrogen oxides  from  its fossil-fuel
     fired  steam  electric  generating units.    Ghent  Unit 1,  E. W.  Brown
     Units 1, 2 and 3, and Green River Unit 4 have been designated  as Phase I
     affected units which were required to comply with sulfur dioxide emission
     reduction obligations beginning January 1, 1995.  In order to comply with
     these sulfur  dioxide emission limitations,  KU has installed  a scrubber
     and related facilities on Ghent Unit 1 and  switched to lower sulfur coal
     on some  other Phase I affected  units.   In addition,  these units  were
     retrofitted with  low NOx  burners  in order  to comply  with  applicable
     nitrogen  oxide limitations under  United States Environmental Protection
     Agency (EPA) regulations.   The  EPA issued final  acid rain permits  for
     each of KU's  Phase I affected units.  The EPA's approval of KU acid rain
     compliance  plan  was accompanied  by  bonus allowances  awarded  for the
     installation  of the  scrubber on Ghent  Unit 1 and  an extension  of the
     Phase I  effective date to January 1,  1997, for certain  portions of the
     sulfur  dioxide emission  limitations.   KU's current  emission allowance
     strategy, in part, includes the banking of unused sulfur dioxide emission
     allowances.   These unused  allowances result from  the bonus  allowances
     received from the EPA  and the expected reduced sulfur  dioxide emissions
     from  the  installation  of  the  Ghent  Unit 1  scrubber.    The  banked
     allowances  are  expected  to  allow  KU  to delay  capital  expenditures
     associated with   KU's Phase II acid  rain compliance obligations,  which
     are  effective January 1,  2000.   KU's Phase II compliance  strategy, in
     addition  to utilizing  banked  allowances, may  include additional  fuel
     switching  or the installation of additional scrubbers.  However, KU will
     continue to  reassess its options  for complying  with Phase II  emission
     reduction  requirements to determine an overall least cost strategy.  See
     Item 7, Management's  Discussion and Analysis of  Financial Condition and
     Results  of Operations  - Construction  Requirements and  - Environmental
     Matters for additional discussion.

     During  1990,   each  of  KU's  five  fossil-fuel  fired  steam  electric
     generating stations  was re-issued a  wastewater discharge permit  by the
     Cabinet  under  the  Clean   Water  Act's  National  Pollutant  Discharge
     Elimination  System.   These  5-year  permits  place water  quality-based
     effluent limitations (i.e., thermal  and chemical limits) on each  of the
     power plant's discharges.   KU's operations are in substantial compliance
     with the conditions in the permits.  KU is in the process of renewing the
     required permits that expired in 1995, which continue in effect until new
     permits are issued.

     Pursuant to  the Resource Conservation  and Recovery Act,  utility wastes
     (fly  ash, bottom  ash  and scrubber  sludge)  have been  categorized  as
     special  wastes (i.e.,  wastes  of large  volume,  but low  environmental
     hazard).   The EPA  has concluded  that the  disposal of  coal combustion
     byproducts by practices common  to the utility industry are  adequate for


                                        -6-
<PAGE>

     the protection of  human health  and the environment.   The Cabinet  also
     regulates utility  wastes as special  wastes under  its waste  management
     program.

     Under  the Toxic  Substances  Control Act,  the  EPA regulates  the  use,
     servicing,  repair,  storage   and  disposal   of  electrical   equipment
     containing  polychlorinated  biphenyls  (PCB).    To  comply  with  these
     regulations,  KU  has  implemented  procedures  to  be  followed  in  the
     handling, storage  and disposal of  PCBs.  In addition,  KU has completed
     the mandated phase out of all of its pole-class PCB capacitors and has no
     vault-type PCB transformers in use, in or near commercial buildings.

     On February 13,  1990, KU received a  letter from the EPA  identifying KU
     and  others as  potentially responsible  parties under  the Comprehensive
     Environmental   Response  Compensation  and   Liability  Act  (CERCLA  or
     Superfund) for a disposal  site in Daviess County, Kentucky.   The letter
     also  asked  KU  and  the  other persons  or  entities  named  to proceed
     voluntarily with a  remediation program at the site.   Under Superfund, a
     responsible party  may be  liable  for all  or a  portion  of all  monies
     expended by  the government to take  corrective action at the  site.  The
     EPA  has turned  over responsibility  for investigation  of the  site and
     development  of  a  remediation  plan  to  a  group  (not  including  KU)
     originally named as potentially responsible parties.  KU has entered into
     an agreement  with the group as  to the portion of  the investigation and
     development costs to  be borne by  KU in connection with  the site.   The
     agreement does  not cover costs which may  be incurred in connection with
     any remediation plan.  A remediation plan is before the EPA for approval.
     KU does not believe that any liability with respect to the site will have
     a material impact on its financial position or results of operations.

     Regulation

     KU  is subject  to  the  jurisdiction  of  the  Kentucky  Public  Service
     Commission (PSC)  and the Virginia State Corporation  Commission (SCC) as
     to  retail rates  and service,  accounts, issuance  of securities  and in
     other  respects.   The Federal  Energy Regulatory  Commission (FERC)  has
     jurisdiction under the  Federal Power  Act over certain  of the  electric
     utility facilities  and operations, wholesale  sale of power  and related
     transactions and  accounting  practices  of  KU,  and  in  certain  other
     respects as provided in the Act.  The FERC has classified KU as a "public
     utility" as  defined in the  Act.   By reason of  owning and operating  a
     small  amount of  electric utility  property in  one county  in Tennessee
     (having a gross book value of about  $212,000), KU may also be subject to
     the  jurisdiction of the Tennessee Public Service Commission as to retail
     rates, accounts, issuance  of securities  and in other  respects.   Since
     1992,  utilities  in  Kentucky  have  had the  option  to  use  either  a
     historical test period or a forward-looking test period in rate filings.

     KU's fuel  adjustment clause  for Kentucky  customers, which operates  to
     reflect changes in the cost of fuel in billings to customers, is designed
     to conform to  a general regulation providing for a  uniform monthly fuel
     adjustment clause for all  electric utilities in Kentucky subject  to the
     jurisdiction  of the PSC.   The clause is based  on a formula approved by
     the  FERC but  with  certain modifications,  including  the exclusion  of
     excess fuel expense attributable to certain forced outages, the filing of
     fuel procurement  documentation, a procedure  for billing over  and under
     recoveries  of  fuel  cost fluctuations  from  the  base  rate level  and
     provision for  periodic public  hearings to  review past adjustments,  to


                                        -7-
<PAGE>

     make  allowance for any past adjustments found not justified, to disallow
     any improper expenses and to re-index base  rates to include current fuel
     costs.   The fuel adjustment clause mechanism for Virginia customers uses
     an average fuel  cost factor based primarily on  projected test year fuel
     costs.  The fuel cost factor  is adjusted annually for the over  or under
     collection of fuel costs from the previous year.

     Rate  regulation in  Kentucky allows  each electric  utility with  a PSC-
     approved  environmental compliance  plan and  environmental  surcharge to
     recover  on a current basis the cost  of complying with federal, state or
     local environmental requirements, including the  Federal Clean Air Act as
     amended,  which applies to  coal combustion  wastes and  by-products from
     facilities utilized for the production of energy from coal.  During 1994,
     the PSC approved KU's environmental surcharge, which is designed to allow
     KU to recover compliance related operating expenses and to earn a  return
     on those compliance related capital expenditures  not already included in
     existing rates through  the application  of the surcharge  each month  to
     customers'  bills.  Surcharge billings are subject to periodic PSC review
     of the level of environmental expenditures and reconciliation of previous
     surcharge  billings  with  actual  costs.    For  additional  information
     regarding  the environmental surcharge,  including information concerning
     pending  legal  proceedings,  see  Note 9  of  the  Notes  to   Financial
     Statements, "Environmental Cost Recovery."

     Integrated resource planning regulations  in Kentucky require KU  and the
     other major utilities to make triennial filings with the PSC, of  various
     historical  and  forecasted  information  relating  to  forecasted  load,
     capacity  margins and demand-side management  techniques.  KU is required
     to make its next filing on April 22, 1996.

     Pursuant to  Kentucky law, the PSC has  established the boundaries of the
     service  territory or area of  each retail electric  supplier in Kentucky
     (including KU), other than municipal corporations, within which each such
     supplier  shall  have  the  exclusive  right to  render  retail  electric
     service.

     The SCC requires each Virginia utility to make annual filings of either a
     base rate change or an Annual Informational Filing consisting of a set of
     standard financial schedules.  These filings are subject to review by the
     SCC Staff.  The SCC issues a Staff Report, which includes any findings or
     recommendations to the SCC relating to the individual utility's financial
     performance during  the historic  12-month  period, including  previously
     accepted adjustments.

     KU is  presently exempt  from all  the provisions  of the  Public Utility
     Holding Company  Act  of  1935, except  Section  9(a)(2)  thereof  (which
     relates to the acquisition of securities of public utility companies), by
     virtue  of  the  exemption granted  by  an order  of  the  Securities and
     Exchange Commission dated  April 19, 1949 and,  absent further action  by
     the Commission, by virtue of annual exemption statements filed by KU with
     the Commission pursuant to Rule 2 prescribed under the Act.

     National Energy Policy Act

     See Item 7,  Management's Discussion and Analysis  of Financial Condition
     and Results of Operation - Utility Issues -  Competition.


                                        -8-
<PAGE>
     Transmission Services and Power Services Tariffs

     In March 1995, the FERC issued a Notice of Proposed  Rulemaking (NOPR) by
     which  the FERC  will  require  public  utilities  that  own  or  control
     facilities used  for the  transmission of electric  energy in  interstate
     commerce   to   offer   "open   access"   transmission   service   on   a
     nondiscriminatory basis.   The FERC  also proposes to  allow, in  certain
     circumstances,  the collection of  charges for  the recovery  of stranded
     costs when customers  change power suppliers.  The FERC  expects to issue
     final  rules in 1996.   For further discussion,  see Item 7, Managements'
     Discussion and Analysis of Financial Condition and Results of Operation -
     Utility Issues- Competition.

     KU placed a Transmission Services  (TS) Tariff into effect in 1994  and a
     Power Services (PS)  Tariff into effect  in 1995.   The TS Tariff  covers
     wholesale  transactions involving  the use  of KU's  transmission system.
     The PS tariff  allows KU to  sell wholesale power at  market-based rates.
     The  FERC staff, intervenors and KU are engaged in settlement discussions
     designed to settle all outstanding issues.   Both tariffs are subject  to
     refund pending final FERC approval.

     Although these  new tariffs did not  have a material impact  on KU's 1995
     revenues   or  net  income,  they  are  indicative  of  the  increasingly
     competitive environment in which KU and other utilities operate.

     Item 2.  Properties
<TABLE>

     KU owns and operates the following electric generating stations:
<CAPTION>
                                                              Nameplate      Effective
                                                             Rating (KW)  Capability (KW)
      <S>               <C>             <C>                  <C>               <C>
      Steam:            Ghent           Ghent, Ky              2,226,060        1,976,000
                        Green River     South Carrollton, Ky     263,636          242,000
                        E. W. Brown     Burgin, Ky               739,534          661,000
                        Tyrone          Tyrone, Ky               137,500          136,000
                        Pineville       Four Mile, Ky             37,500           34,000
      Hydro:            Dix Dam &
                        Lock #7         Burgin, Ky                30,297           24,000
      Gas/Oil Peaking:  Haefling        Lexington, Ky             62,100           59,000
                        E.W. Brown      Burgin, Ky               357,000          377,000
                                                               3,853,627        3,509,000
</TABLE>

     Substantially all properties  are subject  to the lien  of KU's  Mortgage
     Indenture.

     Construction

     Three 110-MW combustion  turbine peaking units  have been installed  over
     the past  two years.  The  first peaking unit was  placed into commercial
     operation in  late 1994.   The second  and third units  were placed  into
     commercial operation  in February  1995 and December  1995, respectively.
     The total construction expenditures  for the years 1996 through  2000 are
     estimated  at  $547 million.    Such expenditures  include  an  estimated
     $190 million  for generating  facilities,  $83 million  for  transmission
     facilities  and $274 million  for  distribution  and general  facilities.
     Included in total construction expenditures  for the 1996-2000 period are
     $120 million  for 485 MW of  peak generating capacity to  be added during
     1996-2000 (including  one substantially  complete unit with  an effective
     capability of 110-MW scheduled for commercial operation in 1996.)  KU has
     no plans to  install coal-fired baseload generating capacity before 2010.

                                        -9-
<PAGE>
     Construction  expenditures for  the  years 1991  through 1995  aggregated
     about $647 million.  See Note 4 of the  Notes to Financial Statements for
     the  estimated amounts of construction expenditures for each of the years
     1996 through 2000.

     KU  frequently   reviews  its   construction  program   and  construction
     expenditures, which may  be affected by  numerous factors, including  the
     rate   of  load  growth,  changes  in   construction  costs,  changes  in
     environmental  regulations, least  cost  planning, the  adequacy of  rate
     relief  and  KU's  ability to  raise  necessary  capital.   (See  Item 7,
     Management's Discussion  and Analysis of Financial  Condition and Results
     of  Operations.)    KU's  planned additions  to  its  electric generating
     capacity are based on future load projections using estimated load growth
     rates.   Consideration  is  also  given  to  projections  by  neighboring
     utilities  of their  future loads  and capacity.   However,  forecasts of
     future loads  are subject  to numerous uncertainties,  including economic
     conditions and effectiveness of energy conservation measures.


     Item 3.  Legal Proceedings

     Environmental Cost Recovery

     See  Note 9 of  the Notes  to Financial  Statements, "Environmental  Cost
     Recovery," for a discussion of environmental surcharge legal proceedings.

     Fuel Matters

     As previously reported in Item 3 of the Quarterly Report on Form 10-Q for
     the period ending June 30, 1995,  a former coal supplier of KU  initiated
     arbitration proceedings to recover  on-going reclamation costs claimed to
     have been incurred during  mining operations at the supplier's  mine used
     to supply  KU under a  contract that expired in  1988.  In  addition, the
     supplier  also was seeking to recover final reclamation costs which began
     in 1994 and  were estimated to continue for four more years.  This matter
     was settled in December 1995 resulting in no obligation to KU.

     Item 4.  Submission of Matters to a Vote of Security Holders

     None.








                                        -10-
<PAGE>

     Executive Officers of the Registrant
                              Current      Positions Held During at Least the
      Name and Age         Positions Held  Last 5 Years


      Michael R. Whitley   Chairman and    Chairman of the Board of KU since
      Age 52               President*      August 1995 and President from
                                           November 1994.  Director of KU
                                           since March 1992.  Senior Vice-
                                           President of KU from March 1987 to
                                           November 1994.  Secretary of KU
                                           from July 1978 to November 1992.

      James M. Allison     Senior Vice-    Senior Vice-President of KU since
      Age 42               President       November 1994.  Vice-President of
                                           KU from February 1993 to November
                                           1994.  President and Chief
                                           Operating Officer of Wheeling
                                           Power Company from October 1989 to
                                           January 1993.

      O. M. Goodlett       Senior Vice-    Senior Vice-President of KU since
      Age 48               President*      November 1992.  Vice-President of
                                           KU from April 1982 to November
                                           1992.

      Wayne T. Lucas       Senior Vice-    Senior Vice-President of KU since
      Age 48               President       November 1994.  Vice President of
                                           KU from November 1986 to November
                                           1994.

      George S. Brooks II  General         Corporate Secretary of KU since
      Age 45               Counsel and     November 1992, and General Counsel
                           Corporate       since January 1988.
                           Secretary*

      Gary E. Blake        Vice-President  Vice-President of KU since
      Age 42                               November 1992.  Western Division
                                           Manager of KU from October 1991 to
                                           November 1992.  Assistant Western
                                           Division Manager of KU from March
                                           1990 to October 1991.  Field
                                           Operations Coordinator for KU from
                                           April 1986 to March 1990.

      William E. Casebier  Vice-President  Vice-President of KU since May
      Age 53                               1988.




                                        -11-
<PAGE>

      Executive Officers of the Registrant (continued)

                              Current      Positions Held During at Least the
      Name and Age         Positions Held  Last 5 Years

      Linda M. DiMascio    Vice-President  Vice-President of KU since
      Age 41                               February 1995. Director of Human
                                           Resources of Tucker Housewares
                                           from September 1994 to February
                                           1995.  Senior Area Coordinator for
                                           U.S. Manufacturing Department of
                                           Mobil Oil Corporation from April
                                           1992 to September 1994.  Assistant
                                           Employee Relations Manager,
                                           Torrance Refinery of Mobil Oil
                                           Corporation from October 1989 to
                                           April 1992.

      Gary L. Hawley       Vice-President  Vice President of KU since January
      Age 47                               1996.  Director of Bulk Power
                                           Planning from November 1986 to
                                           January 1996.
      Robert M. Hewett     Vice-President  Vice-President of KU since January
      Age 48                               1982.

      Ronald L. Whitmer    Vice-President  Vice-President of KU since
      Age 63                               November 1992.  Director of
                                           Production and Generation
                                           Construction of KU from May 1985
                                           to November 1992.  (Retired
                                           effective January 1996.)

      William N. English   Treasurer*      Treasurer of KU since April 1982.
      Age 45

      Michael D. Robinson  Controller*     Controller of KU since August
      Age 40                               1990.

      John J. Maloy, Jr.   Assistant       Assistant Treasurer of KU since
      Age 41               Treasurer       August 1984.
                                           (Not an Executive Officer)

     Note: Officers are elected annually by the Board of Directors.   There is
           no family relationship between any executive officer  and any other
           executive officer or any director.

     *     Certain  executive  officers of  KU  may  be considered  "executive
           officers" of  KU Energy for  certain purposes.   Identified persons
           hold  positions with  the same titles  at KU  Energy.   Refer to KU
           Energy's  Annual Report  on  Form 10-K  for  information concerning
           positions  held   during  the  last  five   years  and  information
           concerning KU Energy executive officers.



                                        -12-
<PAGE>

                                      PART II


     Item 5. Market  for Registrant's  Common Equity  and Related  Stockholder
             Matters

     All of the outstanding common stock of KU is held by KU Energy.

     The  following table sets forth  the cash distributions  (in thousands of
     dollars) on common stock paid by KU for the periods indicated:


                                        1995          1994
               First Quarter         $ 15,789      $ 15,411
               Second Quarter        $ 15,789      $ 15,411
               Third Quarter         $ 15,789      $ 15,411
               Fourth Quarter        $ 15,883      $ 15,411



     See Note 5 of the Notes to Financial Statements for information regarding
     dividend restrictions.

























                                        -13-
<PAGE>
<TABLE>
     Item 6.  Selected Financial Data
<CAPTION>

      Year ended December 31,                   1995       1994      1993       1992      1991
                                                                                (in thousands)
      Operating Revenues:
<S>                                         <C>       <C>        <C>       <C>        <C>
        Residential                         $232,760  $ 213,574  $210,759  $ 194,817  $202,885
        Commercial                           151,778    142,207   138,271    133,519   137,653
        Industrial                           130,066    120,043   111,857    102,808    98,595
        Mine power                            36,076     36,498    34,977     36,696    37,093
        Public authorities                    54,161     49,869    48,142     45,570    46,332
          Total sales to ultimate
            consumers                        604,841    562,191   544,006    513,410   522,558
        Other electric utilities              75,940     89,665    62,463     58,979    61,542
        Miscellaneous revenues and other       5,649      4,181     3,428      3,432     3,560

        Provision for refund -
          litigation settlement                    -    (19,385)   (3,309)         -         -
          Total operating revenues           686,430    636,652   606,588    575,821   587,660
      Operating Expenses:
        Fuel used in generation (1)          189,845    170,654   178,910    168,470   183,167
        Electric power purchased              69,579     61,442    34,711     32,753    26,744
        Other operating expenses             121,426    112,712   104,930     93,915    91,779

        Maintenance                           62,592     66,134    59,451     61,118    58,590
        Depreciation                          75,080     65,259    60,800     58,849    57,337
        Federal and state income taxes        44,670     44,683    48,178     41,489    46,569
        Other taxes                           14,694     14,582    14,347     13,359    12,858
          Total operating expenses           577,886    535,466   501,327    469,953   477,044
      Net Operating Income                   108,544    101,186   105,261    105,868   110,616
      Other Income and Deductions              8,235      9,299     8,331     11,226    12,062
      Income Before Interest Charges
        and AFUDC                            116,779    110,485   113,592    117,094   122,678
      Interest Charges:
        Interest on long-term debt            36,095     32,147    31,650     39,571    36,559
        Other interest                         4,021      2,411     1,249      1,394     1,626
          Total interest charges              40,116     34,558    32,899     40,965    38,185
      AFUDC                                      179      1,585       593        169       262
      Net Income                            $ 76,842  $  77,512  $ 81,286  $  76,298  $ 84,755
      Preferred Stock Dividend
        Requirements                           2,256      2,384     2,558      2,518     3,031
      Net Income Applicable to Common
        Stock                               $ 74,586  $  75,128  $ 78,728  $  73,780  $ 81,724
      Common Dividends                      $ 63,250  $  61,644  $ 60,509  $ 108,996  $ 56,727

     (1) Amounts  for 1994  and 1993  reflect  reductions of  $23.1  million and  $4.1 million,
          respectively, associated with refunds  to customers related to a litigation settlement
          with a former coal supplier.
</TABLE>

                                                 -14-
<PAGE>
<TABLE>

     Item 6.  Selected Financial Data
             (continued)
<CAPTION>
                                            1995        1994        1993        1992        1991
<S>                                    <C>        <C>         <C>         <C>         <C>
     Assets (in thousands)             $1,659,988 $1,618,100  $1,523,274  $1,408,453  $1,412,961
     Capitalization: (in thousands)
        Bonds                          $  545,830  $ 495,830  $  441,830  $  443,330  $  407,330
        Notes                                  64         86         107         128         149
        Unamortized premium on
          long-term debt                       86         96         108         519         713
        Preferred stock                    40,000     40,000      40,000      40,000      40,000
        Preferred stock with mandatory
          redemption                            -          -           -           -           -
        Common stock equity               576,537    565,201     552,106     534,073     569,289
             Total capitalization      $1,162,517 $1,101,213  $1,034,151  $1,018,050  $1,017,481
     % Total Capitalization
        Represented by:
        Long-term debt                       47.0       45.1        42.7        43.6        40.1
        Preferred stock                       3.4        3.6         3.9         3.9         3.9
        Common stock equity                  49.6       51.3        53.4        52.5        56.0
     Kilowatt-hours Generated,
        Purchased and Sold:
        (in thousands)
        Power generated                15,223,851 15,524,844  14,934,839  13,700,313  14,183,713
        Power purchased                 3,254,861  3,066,917   1,926,299   2,032,110   1,464,812
        Power interchanged - net           (6,569)     2,638       1,556       3,393     (10,725)
             Total                     18,472,143 18,594,399  16,862,694  15,735,816  15,637,800
        Less - losses and company use   1,054,589    998,010   1,066,251     876,862     906,468
        Remainder - kilowatt-hours
          sold                         17,417,554 17,596,389  15,796,443  14,858,954  14,731,332
        Sales classified:
          Residential                   5,016,012  4,706,058   4,702,697   4,278,098   4,385,670
          Commercial                    3,403,054  3,272,370   3,217,504   3,080,045   3,122,156
          Industrial                    3,850,647  3,641,469   3,409,213   3,093,113   2,874,016
          Mine power                      926,873    974,233     933,317     977,032     955,410
          Public authorities            1,297,913  1,225,668   1,199,893   1,123,494   1,133,176
             Total sales to
               ultimate consumers      14,494,499 13,819,798  13,462,624  12,551,782  12,470,428
          Other electric utilities      2,923,055  3,776,591   2,333,819   2,307,172   2,260,904
             Total                     17,417,554 17,596,389  15,796,443  14,858,954  14,731,332

     Average Number of Customers          449,144    440,590     432,636     425,403     419,340
     Residential Sales (per customer):
        Average kilowatt-hours             13,377     12,781      12,995      12,007      12,471
        Average revenue                $   620.75  $  580.05  $   582.41  $   546.80  $   576.93

     System Capability - Megawatts:
        Kentucky Utilities' plants          3,509      3,265       3,164       3,163       3,162
        Purchased contracts                   394        540         365         293         254
          Total system capability           3,903      3,805       3,529       3,456       3,416
     Net System Maximum Demand -
        Megawatts                           3,341      3,127       3,176       2,845       2,894
     Load Factor (%)                         58.7       59.8        57.7        59.4        58.4
     Heat Rate (BTU per KWH) (1)           10,377     10,306      10,367      10,344      10,350
     Fuel - Average Cost per Ton(1)    $    28.49  $   28.84  $    28.31  $    27.88  $    29.67
     Average Cost per Million BTU(1)   $     1.18  $    1.19  $     1.17  $     1.18  $     1.24
     (1) Based on coal consumed
</TABLE>
                                                  -15-

<PAGE>
     Item 7. Management's Discussion  and Analysis of Financial  Condition and
             Results of Operations

     KU, an electric utility, is a wholly owned subsidiary of KU Energy.

     RESULTS OF OPERATIONS

     1995 Compared to 1994

     Net Income Applicable to Common Stock

     Net  income applicable  to  common stock  in  1995 was  $74.6 million  as
     compared  to $75.1 million in 1994 (which includes a one-time recovery of
     about $1.9 million  associated  with the  resolution of  a coal  contract
     dispute).   Refer  to  Note 1  of  the  Notes  to  Financial  Statements,
     "Operating Revenues and Fuel Costs."
<TABLE>

     Sales and Revenues
                                                                Increase (Decrease)
                                                                  From Prior Years
<CAPTION>

                                                             1995                 1994
                                                      kWh      Revenues      kWh    Revenues
                                                      (%)       (000's)       (%)    (000's)
<S>                                                    <C>     <C>            <C>  <C>
            Residential                                 7      $ 19,186        -    $ 2,815
            Commercial                                  4         9,571        2      3,936
            Industrial                                  6        10,023        7      8,186
            Mine Power & Public
             Authorities                                1         3,870        3      3,248
                  Total Retail Sales                    5        42,650        3     18,185

            Wholesale                                   5         2,738        2      1,063
            Opportunity                               (42)      (16,463)     176     26,139
                  Total Other Electric Utilities      (23)      (13,725)      62     27,202

            Miscellaneous Revenues
             and Other                                  -         1,468        -        753
                  Total Before Refund                  (1)       30,393       11     46,140
            Provision for Refund -
              Litigation Settlement                     -        19,385        -    (16,076)
                  Total                                (1)     $ 49,778       11    $30,064
</TABLE>

     Kilowatt-hour  (kWh) sales  in 1995  were 1%  below sales  in 1994.   The
     decrease  was largely  due to a  42% decline  in opportunity  sales which
     reflects a return to more normal levels from the unusually high levels of
     opportunity sales in 1994.

     Sales  to residential customers  increased by 7%  in 1995 as  a result of
     favorable weather  in the second  half of 1995,  continued growth  in the
     number of residential customers and the impact of KU's marketing efforts.
     Industrial sales rose 6% as a result of continued economic growth in KU's
     service area.   About  29% of the increase  in industrial sales for  1995
     was  due to  greater sales  to Toyota  Motor Manufacturing,  KU's largest
     customer.

     Operating revenues  for 1995  were $686.4 million, up  $30.4 million (5%)


                                        -16-
<PAGE>
     from  1994, excluding the impact  of the refunds  to customers associated
     with  the   above  mentioned  resolution  of  a  coal  contract  dispute.
     Operating  revenues in 1994 were reduced by about $19.4 million, and fuel
     expense was reduced by about $23.1 million as a result of the refunds.

     The  increase in 1995  revenues was largely  due to the  growth in retail
     sales described  above and  to amounts  recovered under an  environmental
     surcharge (about $17.9 million in 1995 compared to $3.5 million in 1994).
     Refer to Note 9 of the Notes to Financial Statements, "Environmental Cost
     Recovery."

     1995 kWh Sales by Classification

     Year Ended December 31,                                          1995
     Residential                                                       29%
     Commercial                                                        20%
     Industrial                                                        22%
     Mine Power & Public Authorities                                   13%
     Opportunity                                                        7%
     Wholesale                                                          9%
        Total                                                         100%

     Operating Expenses

     Fuel expense  for 1995 was  $189.8 million, a $3.9 million  (2%) decrease
     from 1994, excluding the effect  of the 1994 refunds to customers.   This
     decrease  was due to  a 1%  decline in annual  coal consumption and  a 1%
     decrease in the average price per ton of coal consumed.

     Purchased  power  expense increased  $8.1 million  (13%) in  1995  due to
     increased  demand ($2.5 million)  and energy  costs ($5.6 million).   The
     increase in  energy costs reflects a 6% increase in kWh purchases as well
     as  higher  prices.     The  increase  in  kWh  purchases   is  primarily
     attributable  to the  significant  demand for  electricity  in the  third
     quarter of 1995 due to unusually warm weather.

     Other  operating expenses  increased  $8.7 million (8%)  in  1995 due  to
     increased generating plant  operations expenses   (primarily attributable
     to costs associated with environmental compliance) and administrative and
     general expenses.

     Maintenance expense decreased  $3.5 million (5%) in  1995.    Maintenance
     expense for 1994 included additional costs for damage from two severe ice
     storms in the first quarter of 1994.

     Depreciation  expense increased  $9.8 million (15%).   This  increase was
     related to the Ghent Unit 1 scrubber,  which was placed into service late
     in 1994, and  two combustion  turbine peaking units  placed into  service
     late in 1994 and early in 1995.

     Interest Charges

     Interest charges rose $5.9 million (17%) in 1995  reflecting the issuance
     of  $54 million of  long-term  debt in  the fourth  quarter of  1994, $50
     million of long-term  debt in the second quarter of  1995 and an increase

                                        -17-
<PAGE>
     in the average  amount of  short-term debt outstanding  during the  first
     half of 1995.

     1994 Compared to 1993

     Net Income Applicable to Common Stock

     Net  income applicable  to  common stock  in  1994 was  $75.1 million  as
     compared  to $78.7 million  in  1993.   The  decline was  largely  due to
     increased operating expenses which  primarily related to purchased power.
     The benefits  of weather in  the first half  of 1994  were offset by  the
     impact of  milder weather in the  third and fourth quarters  of the year.
     Earnings  for 1994  include  a one-time  recovery  of about  $1.9 million
     associated with  the resolution  of a coal  contract dispute.   Refer  to
     Note 1 of the Notes to Financial Statements, "Operating Revenues and Fuel
     Costs."

     Sales and Revenues

     Sales in  1994  increased 11%  from  sales in  1993.   The  increase  was
     primarily  due to  greater opportunity  sales and  to increased  sales to
     industrial  customers.    Opportunity sales  rose  176%  in  1994 due  to
     increased demand  for power from neighboring  utilities. Industrial sales
     rose  7%  in  1994  reflecting  a  continued  trend  of   growth  in  the
     manufacturing sector of  KU's service area.  About  42% of the industrial
     sales  increase  for  1994  was due  to  greater  sales  to Toyota  Motor
     Manufacturing.  In March 1994, Toyota  completed an $800 million assembly
     plant expansion.  Residential sales were flat as compared to 1993.

     Excluding  the effect  of  the refunds  to  customers, revenues  in  1994
     increased  $46.1 million  (8%) over  1993 as  a  result of  increased kWh
     sales.

     Operating Expenses

     Fuel expense, excluding  the effect  of the above  referenced refunds  to
     customers, increased  $10.7 million (6%) in 1994.  This increase was  due
     to  a 3% increase in annual coal  consumption attributable to greater kWh
     generation and  to a 2%  increase in  the average price  per ton  of coal
     consumed.

     Purchased  power  expense increased  $26.7 million (77%)  in 1994  due to
     higher  demand  costs  ($13.8 million)   and  increased  energy   charges
     ($12.9 million).  The higher demand costs are related to KU's decision to
     increase  purchased power commitments as  part of its  strategy to obtain
     the most  economical sources of  energy supply, which allows  KU to delay
     the need for additional baseload capacity.  Effective January 1, 1994, KU
     elected  to increase  from 5%  to 20%  its  entitlement to  the available
     capacity of a 1,000-megawatt generating station owned by Electric Energy,
     Inc. (EEI).  KU is a 20% owner  of EEI.  The increase in power  purchases
     was primarily from EEI.

     Maintenance  expense for  1994 was  $6.7 million (11%)  above 1993.   The
     increase was  primarily due to damage  from two severe ice  storms in the
     first quarter of  1994 and  to scheduled maintenance  at KU's  generating
     stations.

                                        -18-
<PAGE>
     LIQUIDITY AND CAPITAL RESOURCES

     Financial Condition

     KU continues  to maintain a  strong financial  position.  At  the end  of
     1995,  common stock  equity  represented 49.6%  of total  capitalization,
     while  long-term debt  was 47.0%  and  preferred stock  was  3.4%.   KU's
     financial strength is  reflected in  high quality credit  ratings.   KU s
     senior debt securities have ratings of AA  (Duff & Phelps), Aa2 (Moody's)
     and AA- (Standard & Poor's).
<TABLE>

      As of December 31,                 1995       1994        1993        1992         1991
<CAPTION>

<S>                                    <C>        <C>         <C>         <C>          <C>
      Capitalization (in millions)     $1,163     $1,101      $1,034      $1,018       $1,017

      Long-Term Debt                     47.0%      45.1%       42.7%       43.6%       40.1%
      Preferred Stock                     3.4%       3.6%        3.9%        3.9%        3.9%
      Common Stock Equity                49.6%      51.3%       53.4%       52.5%       56.0%
</TABLE>


     Cash from  operations accounted for  78% of cash requirements  in 1995 as
     compared  to 55%  in  1994 and  67% in  1993.   For these  purposes, cash
     requirements  exclude  optional  debt refinancings  and  redemptions  and
     optional preferred stock redemptions.

     Financing

     Taking  advantage  of  lower interest  rates,  KU  issued  $36 million of
     Series S First Mortgage Bonds at a rate of 5.99% in January 1996 and used
     the proceeds to redeem the $35.5 million of Series K First Mortgage Bonds
     which carried a rate of 7 3/8%.

     In  June 1995,  KU issued  $50 million of  Series R First  Mortgage Bonds
     bearing interest at 7.55%.  The proceeds were used primarily to refinance
     short-term   indebtedness  incurred   to  finance   ongoing  construction
     expenditures and general corporate requirements.

     In 1994, $54 million of Variable Rate Collateralized Solid Waste Disposal
     Facility Revenue Bonds were issued on behalf of KU.  In 1993, $50 million
     of 5 3/4% Collateralized Solid Waste Disposal Facility Revenue Bonds were
     issued.  Proceeds from  the sale of these tax exempt issues  were used to
     fund  a  portion   of  the  costs  of  certain  environmental  compliance
     facilities at KU's Ghent Generating Station.

     In  1993,   KU  refinanced  $120 million  of  first   mortgage  bonds  at
     significantly lower interest rates.

     KU also issued  $20 million of  6.53% preferred stock  in December  1993.
     Proceeds  from the  sale of  this issue  were used  to redeem  KU's 7.84%
     preferred stock in February 1994.

     To  provide working capital for operations,  KU began issuing  commercial
     paper in  1994.  At  the end  of 1994, KU  had $76.3 million  outstanding
     under its  commercial  paper  program. KU's  commercial paper balance was
     lowered to  $55.6 million by year-end 1995 through refinancing with long-

                                        -19-
<PAGE>
     term debt.

     KU's financial  strength is enhanced by  its low cost of  capital.  Shown
     below  are KU's embedded  costs of long-term debt  and preferred stock at
     the end of 1995, 1994 and 1993.

     Embedded Cost                                1995      1994      1993
     Long-Term Debt                               7.15%     7.06%     7.23%
     Preferred Stock                              5.64%     5.64%     6.37%

     Construction Requirements

     Construction expenditures  were $124.5 million  in 1995. Of  that amount,
     about   $23.1 million  related  to  construction  of  combustion  turbine
     generating  units  (peaking units),  $11.7 million related  to compliance
     with  the 1990  Clean  Air  Act  Amendments  and  $5.6 million  to  other
     environmental compliance measures.

     Projected  construction   expenditures  for  the   1996-2000  period  are
     $547.3 million.  Included in this amount is $120.4 million for additional
     peaking  units.  Also included  in  the 1996-2000  construction  total is
     $9.7 million for environmental compliance measures.

     KU  expects  to   provide  about  92%   of  its  1996-2000   construction
     requirements through internal sources of funds with the balance primarily
     from long-term debt.

<TABLE>

     Construction Expenditures by Function - Actual 1995 and Estimated 1996-2000
<CAPTION>

                                             Actual                Estimated
      (in millions of dollars)                1995    1996     1997     1998    1999     2000

<S>                                          <C>     <C>      <C>      <C>     <C>      <C>
      Total Construction Expenditures        $ 125   $ 108    $ 143    $ 115   $  97    $  84
      Generation                                42%     32%      48%      35%     33%      19%
      Distribution                              38%     43%      32%      42%     43%      53%
      Transmission & Other                      20%     25%      20%      23%     24%      28%
</TABLE>

     UTILITY ISSUES

     Competition

     The utility  industry continues to  move to  a more competitive  and less
     regulated operating  environment. Competition at the  wholesale level was
     set  in motion with the National Energy Policy Act of 1992 (NEPA).  Under
     NEPA, the Federal Energy Regulatory Commission (FERC) was given authority

                                        -20-
<PAGE>
     to order utilities  to open  their transmission lines  to third  parties.
     NEPA  also  removed  long-standing constraints  on  the  development   of
     wholesale power  generation by  establishing a  new class  of independent
     power  producers  which are  generally  exempt  from traditional  utility
     regulation.   In  March of  1995, the  FERC issued  a Notice  of Proposed
     Rulemaking  (NOPR)   which   would  require  electric utilities  to  file
     nondiscriminatory open  access transmission  tariffs that would  apply to
     all  wholesale  buyers and  sellers  of  electricity as  well  as to  the
     utility's  own wholesale  sales and  purchases.   A natural  outgrowth of
     NEPA,  the NOPR  also proposes  to allow,  in certain  circumstances, the
     collection of charges  for the  recovery of stranded  costs (fixed  costs
     which would likely be  unrecoverable in a fully competitive  market) when
     customers change  power suppliers.  The FERC expects to issue final rules
     in 1996.

     For KU,   the risks  associated with stranded costs  are small.    A 1995
     study by Moody's Investors Service estimated that  stranded costs for the
     U.  S.  investor-owned  utility  industry  total  some $135 billion.    A
     significant  portion  of  these   costs  would  become  unrecoverable  at
     competitive market prices.  KU was identified in the Moody's study as one
     of the best-positioned companies with no stranded costs.

     KU placed a  Transmission Services (TS) Tariff into effect  in 1994 and a
     Power  Services  (PS) Tariff  into effect   in  1995.   Both  tariffs are
     subject to  refund pending  final FERC  approval.   The TS Tariff  covers
     wholesale  transactions involving  the use  of KU's  transmission system,
     while the  PS  Tariff allows  KU  to leverage  its low-cost  position  by
     selling wholesale power at market-based rates.

     While  NEPA  prohibits  the  FERC  from  ordering  utilities  to  provide
     transmission access  to retail customers, several  states are considering
     proposals  that would allow retail wheeling.   Regulators and legislators
     have  not pushed for retail  wheeling in KU's  service territory, largely
     because rates  in the  area  are already  among the  very  lowest in  the
     country.   There  is also  some concern  that  retail wheeling  might put
     upward pressure on rates for some customer classes.

     KU  believes  that competition  and change  will  continue to  impact the
     industry going  forward.  With utility rates that are among the lowest in
     the  nation,  KU  believes  it  is well-positioned  for  an  increasingly
     competitive environment.

     KU  has launched  a  series of  innovative  marketing programs  that  are
     increasing  KU's market share.   In addition, KU  has developed strategic
     initiatives  to  increase opportunity   sales  and  to expand  its market
     through economic development.

     Environmental Matters

     Clean Air Act

     The Clean  Air Act Amendments  of 1990  require a two-phase  reduction in
     emissions  of sulfur  dioxide  and nitrogen  oxide.  KU met  its  Phase I
     requirements (which were effective January 1, 1995) primarily through the
     addition of a  flue gas  desulfurization system (scrubber)  on Unit 1  of

                                        -21-
<PAGE>

     KU's Ghent  Generating Station.  The scrubber  began commercial operation
     late in 1994.

     KU  estimates  capital  costs  for  the   scrubber  and  other  equipment
     modifications  related to  Clean  Air Act  compliance to  be $145 million
     through the year 1999.   Substantially all of this amount had  been spent
     through the end of 1995.

     KU's current strategy for Phase II requirements (which  will be effective
     January 1,  2000)  is to  use  accumulated emission  allowances  to delay
     additional  capital expenditures.  These allowances will  accumulate from
     saved emission  allowances as  a result of   reduced  emissions from  the
     Ghent Unit 1  scrubber and allowances received  through the Environmental
     Protection Agency's Phase I Extension Plan Program.

     KU's  future compliance plans are  contingent upon many factors including
     developments in the emission allowance market and the fuel market as well
     as  regulatory  and  legislative  actions  and  advances   in  clean  air
     technology.  KU will continue to  review and revise  its compliance plans
     accordingly to ensure that  its environmental obligations are met  in the
     most efficient and cost-effective manner.


     Environmental Cost Recovery

     In  August 1994, KU implemented an environmental cost recovery  mechanism
     (surcharge).   Authorized by  a 1992  state statute  and approved  by the
     Kentucky Public Service  Commission (PSC), the  surcharge is designed  to
     recover  certain  environmental compliance  costs,    including costs  to
     comply with  the Federal Clean Air Act as amended, through a surcharge on
     customers' bills.

     The  constitutionality of the surcharge  was challenged in  a state court
     action brought against KU and the PSC by the Attorney General of Kentucky
     and joined  by representatives  of consumer  groups.  In  July 1995,  the
     state  court  upheld the  constitutionality of the  surcharge statute but
     disallowed   recovery  of expenditures  incurred before  January 1, 1993.
     All  parties  (including  KU) have  appealed  to  the  Kentucky Court  of
     Appeals.    Refer  to  Note 9  of  the  Notes  to  Financial  Statements,
     "Environmental Cost Recovery."

     Other

     In  1990, KU received a  letter from the  Environmental Protection Agency
     (EPA) identifying KU and others as potentially  responsible parties under
     the Comprehensive Environmental  Response Compensation and  Liability Act
     of 1980  for a disposal  site in Daviess  County, Kentucky.   The EPA has
     turned over responsibility for investigation  of the site and development
     of  a remediation plan to a group  (not including KU) originally named as
     potentially responsible parties.   KU has entered into an  agreement with
     the group as to the portion of the investigation and development costs to
     be borne by KU in connection with the site.  A remediation plan is before
     the EPA awaiting approval. Even when  the final plan is approved, KU does
     not  believe that  any liability  with respect  to the  site will  have a
     material impact on its financial position or results of operations.


                                        -22-
<PAGE>

     Meeting Future Power Needs

     KU's  energy supply  strategy  is designed  to  provide an  adequate  and
     reliable  supply of  electricity  in an  environmentally responsible  and
     cost-effective  manner.  KU  projects an annual growth  in sales and peak
     demand of 2.8% and 3.0%, respectively,  over the next 5 years.  KU  plans
     to  provide for the future power needs of its customers primarily through
     purchased power  and the  addition of  combustion turbine  peaking units.
     Three 110-megawatt  gas/oil-fired peaking units have  been installed over
     the past two years.  An additional 485 megawatts of peaking unit capacity
     is  planned through  2000  including a  110-megawatt  unit scheduled  for
     commercial operation in 1996.   There are  no plans for additional  coal-
     fired baseload capacity before 2010.

     Inflation

     KU's  rates  are  designed  to recover  operating  and  historical  plant
     investment costs.  Financial statements, which are prepared in accordance
     with generally accepted  accounting principles, report operating  results
     in terms of  historic costs and do not evaluate  the impact of inflation.
     Inflation  affects  KU's  construction  costs,  operating   expenses  and
     interest charges.  Inflation  can also impact KU's  financial performance
     if rate relief  is not granted on a timely  basis for increased operating
     costs.









                                        -23-
<PAGE>
     Item 8.  Financial Statements and Supplementary Data


                      REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

     To Kentucky Utilities Company:

     We  have  audited  the  accompanying balance  sheets  and  statements  of
     capitalization  of Kentucky  Utilities Company  (a Kentucky  and Virginia
     corporation) as of December 31, 1995 and 1994, and the related statements
     of income  and retained earnings,  and cash flows  for each of  the three
     years  in the period ended December 31, 1995.  These financial statements
     and  the  schedule  referred to  below  are  the  responsibility of  KU's
     management.    Our  responsibility is  to  express  an  opinion on  these
     financial statements and schedule based on our audits.

     We conducted  our audits in  accordance with generally  accepted auditing
     standards.  Those standards require that we plan and perform the audit to
     obtain reasonable  assurance about  whether the financial  statements are
     free of  material misstatement.  An  audit includes examining, on  a test
     basis, evidence supporting  the amounts and disclosures  in the financial
     statements.  An audit  also includes assessing the  accounting principles
     used  and significant estimates made by management, as well as evaluating
     the overall financial statement presentation.  We believe that our audits
     provide a reasonable basis for our opinion.

     In  our  opinion,  the  financial statements  referred  to  above present
     fairly, in  all material  respects,  the financial  position of  Kentucky
     Utilities  Company as of December 31,  1995 and 1994,  and the results of
     its operations  and its  cash flows for  each of the  three years  in the
     period  ended December 31,  1995, in  conformity with  generally accepted
     accounting principles.

     Our audits were  made for the purpose of forming an  opinion on the basic
     financial  statements taken  as a  whole.   The  schedule listed  in Item
     14(A)(2) is presented for  purposes of complying with the  Securities and
     Exchange  Commission's rules  and  is not  part  of the  basic  financial
     statements.   This schedule has been subjected to the auditing procedures
     applied in  the audits  of  the basic  financial statements  and, in  our
     opinion,  fairly  states, in  all material  respects, the  financial data
     required to  be set  forth therein  in relation  to  the basic  financial
     statements taken as a whole.


                                         /s/ Arthur Andersen LLP
                                         Arthur Andersen LLP

     Chicago, Illinois
     January 29, 1996




                                        -24-
<PAGE>
<TABLE>

      Statements of
      Income and
      Retained
      Earnings
                                     Kentucky Utilities Company

<CAPTION>

      Year Ended December 31, (in thousands of dollars)      1995          1994          1993

<S>                                                     <C>          <C>          <C>
      Operating Revenues (See Note 1)                   $ 686,430    $  636,652   $   606,588
      Operating Expenses:
         Fuel, principally coal, used in generation
          (See Note 1)                                    189,845       170,654       178,910
        Electric power purchased                           69,579        61,442        34,711
        Other operating expenses                          121,426       112,712       104,930
        Maintenance                                        62,592        66,134        59,451
        Depreciation                                       75,080        65,259        60,800
        Federal and state income taxes                     44,670        44,683        48,178
        Other taxes                                        14,694        14,582        14,347
          Total Operating Expenses                        577,886       535,466       501,327
      Net Operating Income                                108,544       101,186       105,261
       Other Income and Deductions:
        Interest and dividend income                        2,838         4,295         2,813
        Other income and deductions - net                   5,467         6,098         5,926
          Total Other Income and Deductions                 8,305        10,393         8,739
      Income Before Interest Charges                      116,849       111,579       114,000

       Interest Charges:
        Interest on long-term debt                         36,095        32,147        31,650
        Other interest charges                              3,912         1,920         1,064
          Total Interest Charges                           40,007        34,067        32,714

       Net Income                                          76,842        77,512        81,286
      Preferred Stock Dividend Requirements                 2,256         2,384         2,558
      Net Income Applicable to Common Stock             $  74,586    $   75,128   $    78,728


      Retained Earnings Beginning of Year               $ 257,656    $  244,429   $   226,210
      Add Net Income                                       76,842        77,512        81,286
                                                          334,498       321,941       307,496
      Deduct:
        Dividends on preferred stock                        2,256         2,384         2,558
        Dividends on common stock                          63,250        61,644        60,509
        Preferred stock redemption expense                      -           257             -
                                                           65,506        64,285        63,067
      Retained Earnings End of Year                     $ 268,992    $  257,656   $   244,429


      The  accompanying  Notes   to  Financial  Statements  are  an  integral  part  of  these
      statements.
</TABLE>

                                                -25-
<PAGE>
<TABLE>

      Statements of
      Cash Flows
                                       Kentucky Utilities Company

      Year Ended December 31, (in thousands of dollars)         1995         1994          1993

      Cash Flows from Operating Activities:
<CAPTION>

<S>                                                      <C>           <C>          <C>
        Net income                                       $    76,842   $    77,512  $    81,286
        Items not requiring (providing) cash currently:
          Depreciation                                        75,080        65,259       60,800
          Deferred income taxes                               15,502        (1,559)       5,725
          Investment tax credit deferred                      (4,095)       (4,110)      (4,131)
          Changes in current assets and liabilities:
             Change in fuel inventory                          6,214        (4,579)       7,694
             Change in accounts receivable                    (7,759)         (203)      (9,331)
             Change in accounts payable                      (11,517)        5,511       22,768
             Change in liability to ratepayers                  (310)      (29,958)      36,867
             Change in escrow funds                              312        30,841      (37,752)
          Other - net                                         (1,210)        3,250        2,643

      Net Cash Provided by Operating Activities              149,059       141,964      166,569

      Cash Flows from Investing Activities:

        Construction expenditures - utility                 (124,515)     (193,344)    (177,069)
        Nonutility property                                     (272)         (465)      (4,956)
        Other                                                    153           836          380

      Net Cash Used by Investing Activities                 (124,634)     (192,973)    (181,645)

      Cash Flows from Financing Activities:

        Short-term borrowings - net                          (20,700)       76,300            -
        Issuance of long-term debt                            49,288        53,305      171,581
        Funds deposited with trustee - net                    15,100            95      (18,268)
        Retirement of long-term debt, including premiums         (21)          (21)    (180,677)
        Retirement of preferred stock, including premiums          -       (20,302)           -
        Issuance of preferred stock                                -             -       20,000
        Payment of dividends                                 (65,506)      (64,089)     (63,027)

      Net Cash Provided (Used) by Financing Activities       (21,839)       45,288      (70,391)

      Net Increase (Decrease) in Cash and Cash Equivalents     2,586        (5,721)     (85,467)

      Cash and Cash Equivalents Beginning of Year              3,111         8,832       94,299


      Cash and Cash Equivalents End of Year              $     5,697   $     3,111  $     8,832

      Supplemental Disclosures
      Cash paid for:
        Interest on short- and long-term debt            $    37,961   $    31,864  $    33,860
        Federal and state income taxes                   $    31,974   $    45,270       42,483

      The  accompanying  Notes  to  Financial  Statements   are  an  integral  part  of  these
      statements.
</TABLE>

                                                  -26-
<PAGE>
<TABLE>

      Balance
      Sheets                           Kentucky Utilities Company

      As of December 31, (in thousands of dollars)                         1995           1994

      Assets
<CAPTION>

      Utility Plant:
<S>                                                                 <C>           <C>
         Plant in service, at cost                                  $ 2,394,018   $  2,238,926
         Less:  Accumulated depreciation                                997,366        933,394
                                                                      1,396,652      1,305,532

         Construction work in progress                                   61,410        104,385
              Total Utility Plant                                     1,458,062      1,409,917

      Current Assets:
         Cash and cash equivalents                                        5,697          3,111
         Escrow funds - coal contract litigation                          6,599          6,911
         Construction funds held by trustee                               3,743         18,553
         Accounts receivable, net of allowance
              for doubtful accounts                                      49,471         41,712
         Accrued utility revenues                                        27,900         24,227
         Fuel, principally coal, at average cost                         29,438         35,652
         Plant materials and operating supplies, at average cost         23,064         20,081
         Other                                                            8,121         10,616
              Total Current Assets                                      154,033        160,863

      Investments, Deferred Charges and Other Assets:
         Unamortized loss on reacquired debt                             11,304         12,324
         Other                                                           36,589         34,996
              Total Investments, Deferred Charges and Other Assets       47,893         47,320
              Total Assets                                          $ 1,659,988   $  1,618,100

      Capitalization and Liabilities
      Capitalization: (See Statements of Capitalization)
         Common stock equity                                        $   576,537   $    565,201
         Preferred stock                                                 40,000         40,000
          Long-term debt                                                545,980        496,012
              Total Capitalization                                    1,162,517      1,101,213

      Current Liabilities:
         Long-term debt due within one year                                  21             21
         Short-term borrowings                                           55,600         76,300
         Accounts payable                                                38,000         49,517
         Accrued interest                                                 7,556          7,328
         Accrued taxes                                                    5,201          9,422
         Customers' deposits                                              6,876          6,423
         Accrued payroll and vacations                                    8,706          8,207
         Liability to ratepayers - coal contract litigation               6,599          6,909
         Other                                                            6,752          6,275
              Total Current Liabilities                                 135,311        170,402

      Deferred Credits and Other Liabilities:
         Accumulated deferred income taxes                              231,717        214,892
         Accumulated deferred investment tax credits                     34,180         38,275
         Regulatory tax liability                                        57,726         60,788
         Other                                                           38,537         32,530
              Total Deferred Credits and Other Liabilities              362,160        346,485
              Total Capitalization and Liabilities                  $ 1,659,988   $  1,618,100


      The  accompanying  Notes  to  Financial  Statements   are  an  integral  part  of  these
      statements.
</TABLE>
                                                  -27-
<PAGE>
<TABLE>

      Statements of
      Capitalization
                                       Kentucky Utilities Company

      As of December 31, (in thousands of dollars)                               1995       1994

<CAPTION>

      Common Stock Equity:
          Common stock, without par value,
<S>                                                                        <C>        <C>
             outstanding 37,817,878 shares                                 $  308,140 $  308,140
          Capital stock expense and other                                        (595)      (595)
          Retained earnings                                                   268,992    257,656
             Total Common Stock Equity                                        576,537    565,201

      Preferred Stock, cumulative, without par value,$100 stated value
          4 3/4%, outstanding 200,000 shares                                   20,000     20,000
          6.53%, outstanding 200,000 shares                                    20,000     20,000
             Total Preferred Stock                                             40,000     40,000

      Long-Term Debt:
          First Mortgage Bonds:
             5.95%  Series Q, due June 15, 2000                                61,500     61,500
             7 3/8% Series K, due December 1, 2002                             35,500     35,500
             6.32%  Series Q, due June 15, 2003                                62,000     62,000
             7.92%  Series P, due May 15, 2007                                 53,000     53,000
             7.55%  Series R, due June 1, 2025                                 50,000          -
             8.55%  Series P, due May 15, 2027                                 33,000     33,000
                                                                              295,000    245,000
          First Mortgage Bonds, Pollution Control Series:
             7 3/8% Pollution Control Series 7, due May 1, 2010                 4,000      4,000
             7.45%  Pollution Control Series 8, due September 15, 2016         96,000     96,000
             6 1/4% Pollution Control Series 1B, due February 1, 2018          20,930     20,930
             6 1/4% Pollution Control Series 2B, due February 1, 2018           2,400      2,400
             6 1/4% Pollution Control Series 3B, due February 1, 2018           7,200      7,200
             6 1/4% Pollution Control Series 4B, due February 1, 2018           7,400      7,400
             7.60%  Pollution Control Series 7, due May 1, 2020                 8,900      8,900
             5 3/4% Pollution Control Series 9, due December 1, 2023           50,000     50,000
             Variable Rate Pollution Control Series 10, due
              November 1, 2024                                                 50,800     35,700
             Variable Rate County of Carroll, Kentucky, Collateralized
              Solid Waste Disposal Facility Revenue Bonds, due
              November 1, 2024                                                  3,200     18,300
                                                                              250,830    250,830
               Total First Mortgage Bonds                                     545,830    495,830

          Unamortized premium                                                      86         96
          8% secured note, due January 5, 1999 (net of current maturity)           64         86
             Total Long-Term Debt                                             545,980    496,012
             Total Capitalization                                          $1,162,517 $1,101,213

      The  accompanying  Notes  to  Financial  Statements  are  an  integral  part  of   these
      statements.
</TABLE>

                                                  -28-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     1.  Summary of Significant Accounting Policies

     General

     Kentucky  Utilities Company (KU) is the principal subsidiary of KU Energy
     Corporation.   The preparation of financial statements in conformity with
     generally  accepted  accounting principles  requires  management to  make
     estimates  and assumptions that affect the reported amounts of assets and
     liabilities and  disclosure of contingent  assets and liabilities  at the
     date of the financial statements and the reported amounts of revenues and
     expenses during the reporting  period.  Actual results could  differ from
     those  estimates.    Certain   amounts  from  prior  periods  have   been
     reclassified to conform with the current year presentation.

     KU is a public utility engaged in producing and  selling electric energy.
     KU  provides  electric service  to about  425,500  customers in  over 600
     communities  and  adjacent suburban  and rural  areas  in 77  counties in
     central, southeastern and western Kentucky  and to about 28,600 customers
     in 5 counties in southwestern Virginia.

     Regulation

     KU is subject  to regulation  by the Kentucky  Public Service  Commission
     (PSC), the  Virginia State Corporation  Commission (SCC) and  the Federal
     Energy Regulatory Commission (FERC).  With respect to accounting matters,
     KU  maintains its  accounts  in accordance  with  the Uniform  System  of
     Accounts  as defined by these agencies.  KU's accounting policies conform
     to generally accepted accounting  principles applicable to rate regulated
     enterprises and reflect  the effects  of the ratemaking  process.   Other
     than  the unamortized loss on reacquired debt, KU's regulatory assets are
     insignificant.

     Utility Plant

     Utility  plant is stated at the original  cost of construction.  The cost
     of  repairs and  minor  renewals is  charged  to maintenance  expense  as
     incurred.     Property   unit  replacements   are  capitalized   and  the
     depreciation reserve is charged with the cost, less net salvage, of units
     retired.

     Depreciation

     Provision for  depreciation of  utility plant is  based on  straight-line
     composite rates applied to  the cost of depreciable property.   The rates
     approximated 3.5% in 1995, 3.4% in 1994, and 3.3% in 1993.

     Cash and Cash Equivalents

     For  purposes  of  reporting  cash  flows,  KU  considers  highly  liquid
     investments  with a  maturity of three  months or  less from  the date of
     purchase to be cash equivalents.



                                        -29-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     KU  utilizes a cash management mechanism that funds certain bank accounts
     for checks  as they are presented  to those banks.   KU classified checks
     written but not presented to those banks, which amounted to $10.5 million
     and  $11.5  million  at  December 31, 1995  and  1994,  respectively,  in
     accounts payable.

     Financial Instruments

     KU's temporary  cash investments  are classified as  held-to-maturity and
     are reported under the caption "Cash and cash equivalents" on the Balance
     Sheet.

     Unamortized Loss on Reacquired Debt

     KU defers costs (primarily call premiums) arising from  the reacquisition
     or retirement of long-term  debt.  Costs  related to refinanced debt  are
     amortized over  the lives  of  the new  debt issues.    Costs related  to
     retired  debt not  refinanced  are  amortized  over  the  period  to  the
     scheduled maturity of the retired debt.

     Operating Revenues and Fuel Costs

     Revenues  are recorded  based  on services  rendered  to customers.    KU
     accrues an estimate of  revenues for electric service furnished  from the
     meter reading dates to  the end of each accounting period.   Cost of fuel
     used in  electric  generation  is  charged to  expense  as  the  fuel  is
     consumed.  Fuel adjustment clauses  adjust operating revenues for changes
     in  the  level  of  fuel costs  charged  to  expense.   An  environmental
     surcharge  for  Kentucky retail  customers,  implemented  in August 1994,
     permits the  utility to  recover certain  ongoing  operating and  capital
     costs  of   compliance  with   federal,  state  or   local  environmental
     requirements  associated  with  the   production  of  energy  from  coal,
     including the Federal Clean Air Act as amended.   See Note 9 of the Notes
     to  Financial Statements, "Environmental Cost Recovery," for an update of
     environmental surcharge legal proceedings.

     Pursuant  to regulatory orders, KU  has been refunding  fuel cost savings
     related to the resolution of a coal contract dispute.   Refunds were made
     to  Virginia  retail  customers  during the  period  August 1993  through
     June 1994.    Refunds   were  made  to  wholesale   customers  under  the
     jurisdiction of the FERC in lump sum payments in September 1993.  Refunds
     to Kentucky retail customers commenced  in July 1994.  A portion  remains
     to be  refunded to Kentucky  customers who  have not filed  claims.   Any
     amounts  not claimed  within  seven years  of  the initial  refunds  will
     escheat to the state.

     Operating   revenues  and   fuel  expense  for   1994  were   reduced  by
     $19.4 million and $23.1 million, respectively,  resulting from the above-
     mentioned refunds.  Operating  revenues and fuel expense were  reduced by
     $3.3 million and $4.1 million, respectively, in 1993.   The refunding had
     no impact on operating revenues or fuel expense for 1995.  The difference
     between the reduction  in operating  revenues and the  reduction in  fuel


                                        -30-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     expense  is attributed to  incurred litigation  costs, fuel  cost savings
     related  to opportunity sales and costs incurred to administer the refund
     plan.   These  amounts were  allowed  to be  retained by  KU pursuant  to
     regulatory orders.

     Income Taxes

     KU  establishes deferred tax assets  and liabilities, as appropriate, for
     all temporary differences,  and adjusts deferred tax  balances to reflect
     changes in  tax rates expected  to be  in effect during  the periods  the
     temporary  differences reverse.    Investment tax  credits resulted  from
     provisions  of  the tax  law  which  permitted a  reduction  of KU's  tax
     liability based on certain construction  expenditures.  Such credits have
     been deferred in  the accounts and are  being amortized as reductions  in
     income tax  expense over the  life of the  related property.   Because of
     rate regulation, changes  in tax rates are deferred  and amortized as the
     temporary differences reverse.


     2.  Income Taxes

     KU is  included in  the consolidated  federal  tax return  of its  parent
     company,  KU  Energy.   Income  taxes  are  allocated  to the  individual
     companies,  including KU,  based  on their  respective taxable  income or
     loss.

     The accumulated deferred  income taxes as set forth  in the Balance Sheet
     arise from the following temporary differences:
<TABLE>

      As of December 31, (in thousands of dollars)                        1995         1994
<CAPTION>

      Deferred Tax Assets:
        Unamortized investment tax credit and other property
<S>                                                                   <C>          <C>
          related differences                                         $ 31,667     $ 31,805

        Other                                                           15,990       17,363
        Less:  Amounts included in current assets                        4,985        6,726
                                                                        42,672       42,442

      Deferred Tax Liabilities:
        Accelerated depreciation and other property
          related differences                                          268,203      251,282
        Other                                                            6,186        6,052
                                                                       274,389      257,334

      Net accumulated deferred income tax liability                   $231,717     $214,892
</TABLE>


                                                -31-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company
<TABLE>

      The components of income tax expense are as follows:

      Year Ended December 31, (in thousands of dollars)         1995          1994         1993
<CAPTION>

      Income taxes charged to Operating Income:
<S>                                                         <C>           <C>          <C>
      Current   - federal                                   $ 23,597      $ 37,058     $ 35,893
                - state                                        5,134         8,812        9,484
                                                              28,731        45,870       45,377
      Deferred  - federal                                     12,165        (1,114)       2,837
                - state                                        3,845            13           71
                                                              16,010        (1,101)       2,908
      Deferred investment tax credit                             (71)          (86)        (107)
                                                              44,670        44,683       48,178

      Income taxes charged to Other Income and Deductions:
      Current   - federal                                        854         1,537       (2,056)
                - state                                          190           344         (560)
                                                               1,044         1,881       (2,616)
      Deferred  - federal                                       (406)         (365)       2,261
                - state                                         (102)          (93)         556
                                                                (508)         (458)       2,817
      Amortization of deferred investment tax credit          (4,024)       (4,024)      (4,024)
                                                              (3,488)       (2,601)      (3,823)
      Total income tax expense                              $ 41,182      $ 42,082     $ 44,355
</TABLE>

     KU's  effective income tax rate,  determined by dividing  income taxes by
     the  sum of such taxes and net income,  was 34.9% in 1995, 35.2% in 1994,
     and 35.3% in  1993.  The  difference between the  effective rate and  the
     statutory  federal  income  tax rate  is  attributable  to  the following
     factors:
<TABLE>
<CAPTION>

      Year Ended December 31, (in thousands of dollars)        1995          1994          1993

<S>                                                      <C>           <C>          <C>
      Federal income tax computed at 35%                 $    41,308   $    41,858  $    43,974
      Add (Deduct):
      State income taxes, net of federal
        income tax benefit                                     5,894         5,899        6,208
      Amortization of deferred investment tax credit          (4,095)       (4,110)      (4,131)
      Other, net                                              (1,925)       (1,565)      (1,696)
      Total income tax expense                           $    41,182   $    42,082  $    44,355
</TABLE>


     3.  Retirement Benefits

     Pensions

     KU  has   a  noncontributory   defined  benefit  pension   plan  covering
     substantially all of  its employees.  Benefits under  this plan are based
     on years  of service, final average base pay and age at retirement.  KU's
     funding policy is to  make such contributions as are necessary to finance
     the  benefits provided  under  the plan.    KU's contributions  meet  the

                                        -32-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     funding  standards set forth  in the Employee  Retirement Income Security
     Act  of 1974.    The  plan assets  consist  primarily  of common  stocks,
     corporate bonds and U.S. Government Securities.

     KU  also  has  a  Supplemental  Security  Plan   for  certain  management
     personnel.   Retirement benefits under  this plan  are based on  years of
     service,  earnings  and age  at  retirement.   The  plan  has  no advance
     funding.    Benefit  payments are  made  to  retired  employees or  their
     beneficiaries from the general assets of KU.

     The  reconciliation of the funded status of  the retirement plans and the
     pension liability recorded by KU is as follows:
<TABLE>
<CAPTION>

     As of December 31, (in thousands of dollars)                         1995           1994

<S>                                                                  <C>            <C>
      Fair value of plan assets                                      $  179,203     $  154,314
      Projected benefit obligation                                     (183,795)      (169,599)
      Plan assets less than projected benefit obligation                 (4,592)       (15,285)
      Unrecognized net (gain)/loss from past
         experience different than that assumed                          (5,907)         5,246
      Unrecognized prior service cost                                     4,344          4,705
      Unrecognized net asset                                             (1,649)        (1,799)
      Regulatory effect recorded                                         (1,634)        (3,229)
      Pension liability                                              $   (9,438)    $  (10,362)

      Accumulated benefit obligation (including vested benefits
         of $139,250 and $124,094, respectively)                     $  141,531    $   126,146
</TABLE>

<TABLE>

      Components of Net Pension Cost:
<CAPTION>

      Year Ended December 31, (in thousands of dollars)       1995          1994          1993

<S>                                                       <C>           <C>          <C>
      Service cost (benefits earned during the period)    $   6,060     $   6,017    $   5,036
      Interest cost on projected benefit obligation          13,560        12,366       12,311
      Actual return on plan assets                          (27,064)       (3,723)     (13,229)
      Net amortization and deferral                          14,608        (8,765)       1,785
      Regulatory effect recorded                             (1,595)       (1,916)          56
      Net pension cost                                    $   5,569     $   3,979    $   5,959
</TABLE>

<TABLE>
<CAPTION>
      Assumptions Used in Determining Actuarial Valuations:

                                                           1995           1994            1993
      <S>                                                 <C>            <C>           <C>
      Weighted average discount rate used to
        determine the projected benefit obligation        7 3/4 %        8 1/4 %        7 1/2%

      Rate of increase for compensation levels (1)        4 3/4 %        5 1/2 %        4 3/4%

      Weighted average expected long-term rate
        of return on assets                               8 1/4 %        8 1/4 %        8 1/4%

      (1)4 3/4%, 6% and 5 1/4%, respectively, used for the Supplemental Security Plan valuation.
</TABLE>


                                        -33-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     Other Postretirement Benefits

     KU provides certain health  care and life insurance benefits  to eligible
     retired employees and  their dependents.   KU accrues,  during the  years
     that the employee renders  service, the expected cost of  providing these
     benefits   for  retired  employees,   their  beneficiaries   and  covered
     dependents.   The  postretirement health  care plan  is contributory  for
     employees who retired after December 31, 1992, with retiree contributions
     indexed annually  based upon the  experience of retiree  medical expenses
     for the preceding year.  Pre-1993 retirees are not required to contribute
     to the plan.  KU's employees become eligible for retiree medical benefits
     after 15  years of service and attainment of  age 55.  The life insurance
     plan  is noncontributory  and is  based on  compensation levels  prior to
     retirement.

     In  1993, KU  began  funding, in  addition  to current  requirements  for
     benefit payments, the maximum  tax-favored amount allowed through certain
     tax  deductible funding vehicles.  KU  anticipates making similar funding
     decisions  in future  years,  but will  consider  and make  such  funding
     decisions on the basis  of tax, regulatory and other  relevant conditions
     in effect  at such times.   The plan  assets consist primarily  of equity
     investments.

     The   reconciliation  of  the  funded   status  of  the   plans  and  the
     postretirement benefit liability recorded by KU is as follows:
<TABLE>
<CAPTION>

     As of December 31, (in thousands of dollars)                   1995                  1994

      Accumulated postretirement benefit obligation:
<S>                                                           <C>                   <C>
        Retirees                                              $   (28,575)          $   (31,992)
        Fully eligible active plan participants                    (8,250)               (8,287)
        Other active plan participants                            (26,831)              (25,578)
                                                                  (63,656)              (65,857)
      Plan assets at fair value                                    10,427                 5,341
      Accumulated postretirement benefit obligation
        in excess of plan assets                                  (53,229)              (60,516)
      Unrecognized net (gain)/loss from past
        experience different from that assumed                    (18,773)              (11,353)
      Unrecognized transition obligation                           56,801                60,142
      Accrued postretirement benefit liability                $   (15,201)          $   (11,727)
</TABLE>

<TABLE>

      Components of the net periodic postretirement benefit cost are as follows:
<CAPTION>

      Year Ended December 31, (in thousands of dollars)       1995          1994           1993
      Service cost (benefits attributed to service
<S>                                                     <C>           <C>           <C>
        during the period)                              $    1,918    $    2,105    $     2,048
      Interest cost on accumulated postretirement
        benefit obligation                                   4,926         4,926          5,730
      Actual return on plan assets                          (1,722)          (80)             -
      Net amortization and deferral                            792          (118)             -
      Amortization of transition obligation                  3,341         3,341          3,341
      Regulatory effect recorded                                 -           689           (689)
      Net periodic postretirement benefit cost          $    9,255    $   10,863    $    10,430
</TABLE>


                                                 -34-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company
<TABLE>
<CAPTION>

      Assumptions Used in Determining Actuarial Valuations:   1995          1994           1993
      <S>                                                   <C>           <C>
      Weighted average discount rate used to                                             <C>
        determine the projected benefit obligation          7 3/4%        8 1/4%         7 1/2%

      Rate of increase for compensation levels              4 3/4%        5 1/2%         4 3/4%

      Weighted average expected long-term rate of
        return on assets                                    8    %        8 1/4%              -
</TABLE>

     For measurement  purposes, a  7.5% annual  rate  of increase  in the  per
     capita cost of  covered health care  benefits is assumed  for 1996.   The
     health care  cost trend rate  is assumed  to decrease gradually  to 4.75%
     through  2003  and remain  at that  level  thereafter over  the projected
     payout  period of the benefits.   Increasing the assumed health care cost
     trend  rates  by one percentage  point in  each  year would  increase the
     accumulated postretirement benefit obligation as of December 31, 1995, by
     $10.6 million  (17%) and the aggregate  of the service  and interest cost
     components of the net  periodic postretirement benefit cost for  the year
     by $1.4 million (20%).

     4.  Commitments and Contingencies
<TABLE>
<CAPTION>

     The effects of certain commitments made by KU are estimated below:

      (in thousands of dollars)      1996      1997       1998      1999       2000  1996-2000
      Estimated Construction
<S>                              <C>       <C>        <C>        <C>       <C>        <C>
       Expenditures              $108,000  $143,500   $114,700   $97,200   $ 83,900   $547,300
      Estimated Contract
       Obligations:
        Fuel                      152,500   114,800     77,000    39,800      4,600   388,700
        Purchased power            27,700    28,900     27,400    26,300     25,600   135,900
        Operating leases            2,800     2,800      2,800     2,700      2,700    13,800
      Sinking Fund Requirements:
        First mortgage bonds     $    376  $    376   $    376   $   376   $    355   $ 1,859
</TABLE>

     Construction Program

     KU  frequently  reviews  its  construction program  and  may  revise  its
     projections of related expenditures based  on revisions to its  estimated
     load growth and projections of its future load.

     See Management's Discussion and  Analysis - Construction Requirements for
     a discussion of future construction expenditures including those relating
     to  construction of peaking units  and compliance with  the Federal Clean
     Air Act as amended.

     Coal Supply

     Obligations  under  KU's coal  purchase  contracts are  stated  at prices
     effective January 1, 1996,  and are subject to changes as  defined by the
     terms of the contracts.


                                        -35-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     Purchased Power Agreements

     KU  has purchase  power arrangements  with Owensboro  Municipal Utilities
     (OMU),   Electric  Energy, Inc.  (EEI), and  Virginia Electric  and Power
     Company  (Virginia Power).   Under  the OMU  agreement, which  expires on
     January 1, 2020, KU purchases, on an economic basis, all of the output of
     a 400-MW generating station not required by OMU.  The amount of purchased
     power  available  to  KU  during  1996-2000,  which  is  expected  to  be
     approximately  8% of  KU's total  kWh requirements,  is dependent  upon a
     number  of   factors  including  the  units'   availability,  maintenance
     schedules, fuel  costs and OMU  requirements.  Payments are  based on the
     total costs  of the  station allocated per  terms of  the OMU  agreement,
     which generally  follows delivered kWh.   Included in the  total costs is
     KU's proportionate share of debt service  requirements  on $198.8 million
     of  OMU bonds  outstanding at  December 31, 1995.   The  debt service  is
     allocated  to KU based  on its annual allocated  share of capacity, which
     averaged approximately 49% in 1995.
     KU  has a  20% equity ownership  in EEI,  which is  accounted for  on the
     equity  method of  accounting.   KU's  entitlement, beginning  January 1,
     1994, is 20%  of the available capacity of a  1,000-MW station.  Payments
     are based  on the total  costs of the  station allocated per  terms of an
     agreement among the owners, which generally follows delivered kWh.

     KU has  contracted to purchase 110-MW of capacity from Virginia Power for
     the periods of June  1997 through September 1997 and January 1998 through
     February 1998.

     Sinking Fund Requirements

     Annual sinking fund requirements for KU's first mortgage bonds may be met
     with  cash or  expenditures  for bondable  property  as provided  in  the
     Mortgage  Indenture.    KU   intends  to  meet  the  1996   sinking  fund
     requirements with expenditures for bondable property.

     Lines of Credit

     KU  has aggregate  bank  lines of  credit of  $80 million,  all of  which
     remained  unused at December 31,  1995.  A portion  of these credit lines
     ($20 million) expires  in September  1996, and the  balance ($60 million)
     expires in  December 1997.    In support  of these  lines  of credit,  KU
     compensates the banks by paying a commitment fee.


     5.  Common Stock

     KU  is subject  to  restrictions  applicable  to all  corporations  under
     Kentucky  and  Virginia law  on the  use  of retained  earnings  for cash
     dividends on  common stock, as  well as  those contained in  its Mortgage
     Indenture and Articles  of Incorporation.   At  December 31, 1995,  there
     were no restricted retained earnings.

     6.  Preferred Stock

     Each series of preferred stock is redeemable at the  option of KU upon 30
     days' written notice as follows:

                                        -36-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company


                             Redemption Price per Share
      Series                 (plus accrued and unpaid dividends, if any)
      4 3/4%                 $101.00

      6.53%                  (Not redeemable prior to December 1, 2003.)
                             $103.265 through November 30, 2004, decreasing
                             approximately $.33 each twelve months thereafter to
                             $100 on or after December 1, 2013.


     As  of December 31, 1995, there were  5.3 million shares  of KU preferred
     stock,  having   a  maximum  aggregate  stated   value  of  $200 million,
     authorized for issuance.

     7.  Short-Term and Long-Term Debt

     KU's short-term financing requirements are  satisfied through the sale of
     commercial  paper.  The weighted  average interest  rate on  the year-end
     balance was 5.83% for 1995 and 6.07% for 1994.

     In 1994, KU  entered into a  loan agreement with  the County of  Carroll,
     Kentucky to finance the construction  of solid waste disposal facilities.
     The  County of Carroll issued $54 million of variable rate revenue bonds,
     with the proceeds held in a construction fund.  In 1994 and 1995, KU drew
     down  $35.7 million and  $15.1 million, respectively,  relating to  these
     bonds.  Kentucky  Utilities Pollution Control Series 10  Bonds are issued
     under KU's Mortgage Indenture.

     Under  the provisions for the variable  rate revenue bonds, KU can choose
     between various  interest rate  options.   Currently, the daily  interest
     rate option is  being utilized.  The average annual  interest rate on the
     bonds  during 1995 was 3.95% and  was 4.10% for 1994.   The variable rate
     bonds are  subject to tender for purchase at the option of the holder and
     to mandatory tender for  purchase upon the occurrence of  certain events.
     If tendered bonds  are not remarketed,  KU has available lines  of credit
     which may be used to repurchase the bonds.

     In June 1995,  KU issued  $50 million of Series R  First Mortgage  Bonds.
     The  proceeds were  used primarily  to refinance  short-term indebtedness
     incurred  to  finance  ongoing  construction  expenditures  and   general
     corporate requirements.

     Substantially all of KU's  utility plant is pledged  as security for  the
     First Mortgage Bonds.


     8.  Financial Instruments

     The  following methods  and assumptions  were used  to estimate  the fair
     value of each class of financial instruments  for which it is practicable
     to estimate that value:

                                        -37-
<PAGE>
     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     Cash and  cash equivalents, escrow funds,  construction funds, short-term
     borrowings,  commercial  paper and  customers'  deposits carrying  values
     approximate fair value because of the short maturity of these amounts.

     Long-term debt  fair values are  based on quoted  market prices for  KU's
     first mortgage bonds and on current rates available to KU for debt of the
     same remaining maturities for KU's pollution control bonds and promissory
     note.

     KU  has  an interest  rate  swap  agreement  with a  notional  amount  of
     $70 million.  Fair value of  this instrument is the estimated  amount the
     counter-party  would pay  to KU  to  terminate the  swap at  the date  of
     measurement.  This agreement expires  in early 1996.  KU has  no downside
     interest rate risk associated with this agreement.

     The estimated fair  values of KU's  financial instruments at  December 31
     are as follows:
<TABLE>
<CAPTION>

                                                      1995                    1994
                                             Carrying     Estimated    Carrying   Estimated
      (in thousands of dollars)               Amount      Fair Value     Amount   Fair Value

<S>                                         <C>         <C>          <C>          <C>
      Interest rate swap                    $       -   $      600   $        -   $   1,550

      Long-term debt                        $ 546,001   $  594,395   $  496,033   $ 475,976
</TABLE>

     If the difference between fair value and carrying value of KU's long-term
     debt  were settled at amounts  approximating those above, the anticipated
     regulatory treatment would require  return of or allow recovery  of these
     amounts in rates over a prescribed amortization period.  Accordingly, any
     settlement would not have a significant impact on KU's financial position
     or results of operations.

                                  -38-

<PAGE>



     Notes to
     Financial
     Statements
                             Kentucky Utilities Company

     9. Environmental Cost Recovery

     Since August 1994, KU has been collecting an environmental surcharge from
     its Kentucky retail  customers under a Kentucky  statute which authorizes
     electric  utilities  (including  KU) to  implement,  beginning January 1,
     1993, an environmental surcharge.   The surcharge is designed  to recover
     certain  operating and capital costs of compliance with federal, state or
     local environmental requirements associated with the production of energy
     from  coal,  including the  Federal  Clean  Air  Act  as amended.    KU's
     environmental surcharge was  approved by  the PSC  in July  1994 and  was
     implemented in August 1994.

     The constitutionality  of the  surcharge was  challenged in  the Franklin
     County  (Kentucky) Circuit Court in an action  brought against KU and the
     PSC by the Attorney General of  Kentucky and joined by representatives of
     consumer  groups.  In  July 1995,  the Circuit  Court entered  a judgment
     upholding the constitutionality of the statute, but vacating that part of
     the PSC's July 1994 order which the judgment describes as  allowing KU to
     recover, under  the surcharge, environmental expenditures incurred before
     January 1,   1993,  and  ordering  the  case  remanded  to  the  PSC  for
     determination in accordance with the Circuit Court judgment.

     The Attorney General and other  consumer representatives appealed to  the
     Kentucky  Court  of  Appeals that  part  of  the  Circuit Court  judgment
     upholding the constitutionality of the surcharge statute.  The PSC and KU
     appealed  that part  of the  judgment denying  recovery of  environmental
     expenditures incurred before  January 1, 1993.   On August 22, 1995,  the
     PSC ordered all surcharge revenues collected by KU from that date subject
     to  refund pending  final  determination  of  all  appeals.    The  total
     collections under the surcharge from August 22, 1995 through December 31,
     1995 were approximately $7 million.

     KU  believes the  constitutionality  of  the  surcharge statute  will  be
     upheld,  but it cannot  predict the outcome  of that part  of the Circuit
     Court  judgment  disallowing   recovery  of  environmental   expenditures
     incurred  before January 1,  1993.   If  the  Circuit Court  judgment  is
     ultimately upheld as  entered, KU estimates  that the amount it  would be
     required  to refund  (which  is based  solely  on costs  associated  with
     environmental expenditures incurred before January 1, 1993) for surcharge
     collections  through  December 31,  1995,   from  the  inception  of  the
     surcharge  would be  approximately $6 million,  and from  August 22, 1995
     would be approximately $2 million.  At this time, KU has not recorded any
     reserve for refund.

                                        -39-
<PAGE>
     Supplementary
     Quarterly
     Financial
     Information
     (Unaudited)
                             Kentucky Utilities Company

     Quarterly  financial results  for  1995 and  1994  are summarized  below.
     Generally, quarterly  results may  fluctuate due to  seasonal variations,
     changes  in fuel  costs and  other factors.   Operating revenues  for the
     third quarter of 1994 were reduced by $17.5 million related to refunds to
     customers of fuel  cost savings associated with the resolution  of a coal
     contract dispute.   Operating revenues  for other quarters  in 1994  were
     insignificantly impacted by the refunds.  The refunding had  no impact on
     operating revenues for 1995.   Refer to Note 1 of  the Notes to Financial
     Statements for additional information.
<TABLE>
<CAPTION>

     Quarter                                    4th           3rd          2nd           1st
                                                                   (in thousands of dollars)
      1995
<S>                                       <C>          <C>          <C>           <C>
      Operating Revenues                  $  170,152   $   194,373  $   154,757   $  167,148
      Net Operating Income                    30,626        33,073       18,283       26,562
      Net Income                              22,438        24,915       10,561       18,928
      Net Income Applicable
             to Common Stock                  21,874        24,351        9,997       18,364
      1994
      Operating Revenues                  $  159,586   $   156,512  $   154,026   $  166,528
      Net Operating Income                    20,835        29,737       20,034       30,580
      Net Income                              14,053        23,642       14,473       25,344
      Net Income Applicable
             to Common Stock                  13,489        23,078       13,909       24,652

      These  quarterly  amounts  reflect,  in  KU's  opinion,  all  adjustments
     (including  only  normal  recurring  adjustments) necessary  for  a  fair
     presentation.
</TABLE>








                                        -40-
<PAGE>

     Item 9. Changes in  and Disagreements with Accountants  on Accounting and
             Financial Disclosure

     None.

                                      PART III


     Item 10. Directors and Executive Officers of the Registrant

     Refer to KU  Energy's definitive proxy statement  (Proxy Statement) filed
     with the Securities and  Exchange Commission in connection with  its 1996
     Annual  Shareholder Meeting  under the  caption "Election  of Directors--
     General"  for  the  information  required  by  this  item  pertaining  to
     directors.  Such information  is incorporated herein by reference  and is
     also  filed herewith as Exhibit 99B.   Information required  by this item
     relating  to  executive officers  of KU  is  set forth  under  a separate
     caption in Part I hereof.

     Item 11. Executive Compensation

     Refer  to  KU Energy's  Proxy Statement  under  the caption  "Election of
     Directors -- Directors' Compensation, and -- Executive Compensation" (but
     excluding any information  contained under the subheadings  -- "Report of
     Compensation Committee  on Executive  Compensation", and  -- "Performance
     Graph") for the  information required by this item.   Such information is
     incorporated  herein  by   reference  and  is  also  filed   herewith  as
     Exhibit 99B.

     Item 12. Security Ownership of Certain Beneficial Owners and Management

     Refer  to  KU Energy's  Proxy Statement  under  the caption  "Election of
     Directors--Voting  Securities Beneficially  Owned by  Directors, Nominees
     and Executive  Officers; Other Information" for  the information required
     by this item.   Such information is incorporated herein by  reference and
     is also filed herewith as Exhibit 99B.

     Item 13. Certain Relationships and Related Transactions

     None.







                                        -41-
<PAGE>
                                      PART IV


     Item  14.   Exhibits,  Financial  Statement  Schedules,  and  Reports  on
     Form 8-K

     (A)     The following  (1) financial statements,  (2) schedules, and  (3)
             exhibits, are filed as a part of this Annual Report.

             (1)  Financial Statements

                 Report of Independent Public Accountants,
                 Statements of Income and Retained Earnings for the three
                   years ended December 31, 1995,
                 Statements of Cash Flows for the three years ended
                   December 31, 1995,
                 Balance Sheets as of December 31, 1995 and 1994
                 Statements of Capitalization as of December 31, 1995 and
                  1994, and
                 Notes to Financial Statements.

             (2)  Schedules

                 Schedule II     Valuation and qualifying accounts.

             The  following Schedules  are omitted  as  not applicable  or not
             required under Regulation S-X:

                 I, III, IV, V.











                                        -42-
<PAGE>
    (3) Exhibits

      Number                         Description                        Page

        3.A    Amended and Restated Articles of Incorporation of
               Kentucky Utilities Company.  (Exhibits 4.03 and 4.04
               to Form 8-K Current Report of KU, dated December 10,
               1993).  Incorporated by reference.                         -

        3.B    By-laws of Kentucky Utilities Company dated
               December 14, 1992.  (Exhibit 3B to Form 10-K Annual
               Report of KU for the year ended December 31, 1992).
               Incorporated by reference.                                 -

        4.A    Indenture of Mortgage or Deed of Trust dated May 1,
               1947 between Kentucky Utilities Company and First
               Trust of Illinois National Association (successor to
               Bank of America Illinois, formerly Continental Bank,
               National Association and formerly Continental
               Illinois National Bank and Trust Company of Chicago)
               and a successor individual co-trustee, as Trustees
               (the Trustees) (Amended Exhibit 7(a) in File
               No. 2-7061), and Supplemental Indentures thereto
               dated, respectively, January 1, 1949 (Second Amended
               Exhibit 7.02 in File No. 2-7802), July 1, 1950
               (Amended Exhibit 7.02 in File No. 2-8499), June 15,
               1951 (Exhibit 7.02(a) in File No. 2-8499), June 1,
               1952 (Amended Exhibit 4.02 in File No. 2-9658),
               April 1, 1953 (Amended Exhibit 4.02 in File
               No. 2-10120), April 1, 1955 (Amended Exhibit 4.02 in
               File No. 2-11476), April 1, 1956 (Amended
               Exhibit 2.02 in File No. 2-12322), May 1, 1969
               (Amended Exhibit  2.02 in File No. 2-32602), April 1,
               1970 (Amended Exhibit 2.02 in File No. 2-36410),
               September 1, 1971 (Amended Exhibit 2.02 in File
               No. 2-41467), December 1, 1972 (Amended Exhibit 2.02
               in File No. 2-46161), April 1, 1974 (Amended
               Exhibit 2.02 in File No. 2-50344), September 1, 1974
               (Exhibit 2.04 in File No. 2-59328), July 1, 1975
               (Exhibit 2.05 in File No. 2-59328), May 15, 1976
               (Amended Exhibit 2.02 in File No. 2-56126), April 15,
               1977 (Exhibit 2.06 in File No. 2-59328), August 1,
               1979 (Exhibit 2.04 in File No. 2-64969), May 1, 1980
               (Exhibit 2 to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1980), September 15, 1982
               (Exhibit 4.04 in File No. 2-79891), August 1, 1984
               (Exhibit 4B to Form 10-K Annual Report of KU for the
               year ended December 31, 1984), June 1, 1985
               (Exhibit 4 to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1985), May 1, 1990
               (Exhibit 4 to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1990), May 1, 1991
               (Exhibit 4 to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1991), May 15, 1992
               (Exhibit 4.02 to Form 8-K of KU dated May 14, 1992),
               August 1, 1992 (Exhibit 4 to form 10-Q Quarterly


                                        -43-
<PAGE>

      Number                         Description                        Page

        4.A    Report of KU for the quarter ended September 30,
      (cont.)  1992), June 15, 1993 (Exhibit 4.02 to Form 8-K of KU
               dated June 15, 1993) and December 1, 1993
               (Exhibit 4.01 to Form 8-K of KU dated December 10,
               1993).  Incorporated by reference.                         -

       4.B     Supplemental Indenture dated March 1, 1992 between
               Kentucky Utilities Company and the Trustees,
               providing for the conveyance of properties formerly
               held by Old Dominion Power Company (Exhibit 4B to
               Form 10-K Annual Report of KU for the year ended
               December 31, 1992).  Incorporated by reference.            -

        4.C    Supplemental Indenture dated November 1, 1994 between
               Kentucky Utilities Company and the Trustees (Exhibit
               4C to Form 10-K Annual Report of KU for the year
               ended December 31, 1994).  Incorporated by reference.      -

        4.D    Supplemental Indenture dated June 1, 1995 between
               Kentucky Utilities Company and the Trustees
               (Exhibit 4 to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1995).  Incorporated by
               reference.                                                 -
        4.E    Supplemental Indenture dated January 15, 1996 between
               Kentucky Utilities Company and the Trustees.             49-72

       10.A    KU's Amended and Restated Performance Share Plan
               (Exhibit 10A to Form 10-Q Quarterly Report of KU for
               the quarter ended June 30, 1993).  Incorporated by
               reference.                                                 -

       10.B    KU's Annual Performance Incentive Plan (Exhibit 10B
               to Form 10-K Annual Report of KU for the year ended
               December 31, 1990).  Incorporated by reference.            -

       10.C    Amendment No. 1 to KU's Annual Performance Incentive
               Plan (Exhibit 10D to Form 10-K Annual Report of KU
               for the year ended December 31, 1991).  Incorporated
               by reference.                                              -

       10.D    Amendment No. 2 to KU's Annual Performance Incentive
               Plan (Exhibit 10H to Form 10-K Annual Report of KU
               for the year ended December 31, 1993).  Incorporated
               by reference.                                              -

       10.E    Amendment No. 3 to KU's Annual Performance Incentive
               Plan (Exhibit 10I to Form 10-K Annual Report of KU
               for the year ended December 31, 1993).  Incorporated
               by reference.                                              -

       10.F    KU's Executive Optional Deferred Compensation Plan
               (Exhibit 10C to Form 10-K Annual Report of KU for the
               year ended December 31, 1990).  Incorporated by
               reference.                                                 -

       10.G    Amendment No. 1 to KU's Executive Optional Deferred
               Compensation Plan (Exhibit 10F to Form 10-K Annual
               Report of KU for the year ended December 31, 1991).
               Incorporated by reference.                                 -


                                        -44-
<PAGE>

      Number                         Description                        Page

       10.H    Amendment No. 2 to KU's Executive Optional Deferred
               Compensation Plan (Exhibit 10J to Form 10-K Annual
               Report of KU for the year ended December 31, 1993).
               Incorporated by reference.                                 -

       10.I    KU's Supplemental Security Plan (Exhibit 10I to
               Form 10-K Annual Report of KU for the year ended
               December 31, 1991).  Incorporated by reference.            -

       10.J    Amendment No. 1 to KU's Supplemental Security Plan.
               (Exhibit 10J to Form 10-K Annual Report of KU for the
               year ended December 31, 1994).  Incorporated by
               reference.                                                 -

       10.K    Amendment No. 2 to KU's Supplemental Security Plan.
               (Exhibit 10K to Form 10-K Annual Report of KU for the
               year ended December 31, 1994).  Incorporated by
               reference.                                                 -

       10.L    KU's Director Retirement Retainer Program, and
               Amendment No. 1 (Exhibit 10G to Form 10-K Annual
               Report of KU for the year ended December 31, 1991).
               Incorporated by reference.                                 -

       10.M    KU's Amended and Restated Director Deferred
               Compensation Plan                                        73-90

        12     Computation of Ratio of Earnings to Fixed Charges         91

        21     List of Subsidiaries                                      92

        23     Consent of Independent Public Accountants                 93

        27     Financial Data Schedule (required for electronic
               filing only in accordance with Item 601(c)(1) of
               Regulation S-K).                                           -

       99.A    Description of Common Stock                              94-95

       99.B    Director and Executive Officer Information               96-106

         Note - Exhibit numbers 10.A through 10.M are management contracts
         or  compensatory plans or  arrangements required  to be  filed as
         exhibits to this Form 10-K.



                                        -45-
<PAGE>

     The following instruments defining the rights of holders of certain long-
     term debt  of KU  have not  been filed with  the Securities  and Exchange
     Commission but will be furnished to the Commission upon request.

         1.  Loan Agreement dated as of  May 1, 1990 between KU and the County
             of Mercer,  Kentucky, in  connection with  $12,900,000 County  of
             Mercer, Kentucky, Collateralized Solid  Waste Disposal   Facility
             Revenue  Bonds (KU  Project) 1990  Series A, due  May 1, 2010 and
             May 1, 2020.

         2.  Loan Agreement dated as of May 1,  1991 between KU and the County
             of Carroll,  Kentucky, in connection  with $96,000,000 County  of
             Carroll,  Kentucky,  Collateralized  Pollution  Control   Revenue
             Bonds (KU Project) 1992 Series A, due September 15, 2016.

         3.  Loan Agreement  dated as  of August 1,  1992 between  KU and  the
             County  of  Carroll,  Kentucky,  in  connection  with  $2,400,000
             County  of  Carroll,  Kentucky, Collateralized  Pollution Control
             Revenue Bonds (KU Project) 1992 Series C, due February 1, 2018.

         4.  Loan Agreement  dated as  of August 1,  1992 between  KU and  the
             County  of  Muhlenberg, Kentucky,  in connection  with $7,200,000
             County of Muhlenberg, Kentucky, Collateralized  Pollution Control
             Revenue Bonds (KU Project) 1992 Series A, due February 1, 2018.

         5.  Loan Agreement  dated as  of August 1,  1992 between  KU and  the
             County of Mercer, Kentucky, in connection  with $7,400,000 County
             of  Mercer, Kentucky,  Collateralized  Pollution  Control Revenue
             Bonds (KU Project) 1992 Series A, due February 1, 2018.

         6.  Loan Agreement  dated as  of August 1,  1992 between  KU and  the
             County  of  Carroll, Kentucky,  in  connection  with  $20,930,000
             County  of  Carroll,  Kentucky, Collateralized  Pollution Control
             Revenue Bonds (KU Project) 1992 Series B, due February 1, 2018.

         7.  Loan Agreement dated as of  December 1, 1993, between KU  and the
             County of  Carroll,  Kentucky,  in  connection  with  $50,000,000
             County  of Carroll, Kentucky, Collateralized Solid Waste Disposal
             Facilities  Revenue   Bonds  (KU   Project)  1993  Series A   due
             December 1, 2023.

         8.  Loan Agreement dated as of  November 1, 1994, between KU  and the
             County  of  Carroll,  Kentucky, in  connection  with  $54,000,000
             County   of  Carroll,  Kentucky,  Collateralized     Solid  Waste
             Disposal Facilities Revenue Bonds (KU Project)  1994 Series A due
             November 1, 2024.

     (B)   No reports  on Form 8-K were filed by KU during the last quarter of
           1995.





                                        -46-
<PAGE>
<TABLE>

                                                                                 SCHEDULE II


                                    KENTUCKY UTILITIES COMPANY

                                 VALUATION AND QUALIFYING ACCOUNTS
<CAPTION>




      Year Ended December 31,                                       1995      1994      1993
                                                                              (in thousands)
      Accumulated Provision for Uncollectible Accounts Receivable

<S>                                                              <C>       <C>       <C>
      Balance at beginning of year                               $   457   $   923   $ 1,033

      Balance at end of year                                     $   455   $   457   $   923





      Note-Other valuation and qualifying accounts are not significant.

</TABLE>








                                                -47-
<PAGE>
                                            SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
     Exchange Act  of 1934, the registrant  has duly caused this  report to be
     signed on its behalf by the undersigned, thereunto duly authorized, on
     March 8, 1996.

                                          KENTUCKY UTILITIES COMPANY


                                          /s/ Michael R. Whitley
                                          Michael R. Whitley
                                          Chairman and President

         Pursuant  to the requirements of the Securities Exchange Act of 1934,
     this report has  been signed below by the following  persons on behalf of
     the registrant in the capacities and on the date indicated.

         Signature                 Title

         /s/ Michael R. Whitley
         Michael R. Whitley        Chairman and President (Principal Executive
                                   Officer) and Director

         /s/ O. M. Goodlett
         O. M. Goodlett            Senior Vice-President (Principal Financial
                                   Officer)

         /s/ Michael D. Robinson
         Michael D. Robinson       Controller (Principal Accounting Officer)

         /s/ Mira S. Ball
         Mira S. Ball              Director

         /s/ Harry M. Hoe
         Harry M. Hoe              Director

         /s/ Milton W. Hudson
         Milton W. Hudson          Director

         /s/ John T. Newton
         John T. Newton            Director

         /s/ Frank V. Ramsey, Jr.
         Frank V. Ramsey, Jr.      Director

         /s/ Warren W. Rosenthal
         Warren W. Rosenthal       Director

         /s/ William L Rouse, Jr.
         William L. Rouse, Jr.     Director

         /s/ Charles L. Shearer
         Charles L. Shearer        Director

         /s/ Lee T. Todd, Jr.
         Lee T. Todd, Jr.          Director

     March 8, 1996

                                        -48-