<PAGE>

                                                                   EXHIBIT 10.42

THIS AGREEMENT shall be effective as of the 1st day of November, 1996, by and
between TENNESSEE GAS PIPELINE COMPANY, a Delaware Corporation, hereinafter
referred to as "Transporter" and LOUISVILLE GAS & ELECTRIC O., a KENTUCKY
Corporation, hereinafter referred to as "Shipper." Transporter and Shipper shall
collectively be referred to herein as the "Parties."

                                    ARTICLE I

                                   DEFINITIONS

1.1      TRANSPORTATION QUANTITY (TQ) - shall mean the maximum daily quantity of
         gas which Transporter agrees to receive and transport on a firm basis,
         subject to Article II herein, for the account of Shipper hereunder on
         each day during each year during the term hereof, which shall be 30,000
         dekatherms. Any limitations of the quantities to be received from each
         Point of Receipt and/or delivered to each Point of Delivery shall be as
         specified on Exhibit "A" attached hereto.

1.2      EQUIVALENT QUANTITY - shall be as defined in Article I of the General
         Terms and Conditions of Transporter's FERC Gas Tariff.

                                   ARTICLE II

                                 TRANSPORTATION

Transportation Service - Transporter agrees to accept and receive daily on a
firm basis, at the Point(s) of Receipt from Shipper or for Shipper's account
such quantity of gas as Shipper makes available up to the Transportation
Quantity, and to deliver to or for the account of Shipper to the Point(s) of
Delivery an Equivalent Quantity of gas.

                                   ARTICLE III

                        POINT(S) OF RECEIPT AND DELIVERY

The Primary Point(s) of Receipt and Delivery shall be those points specified on
Exhibit "A" attached hereto.

                                   ARTICLE IV
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All Facilities are or shall be in place as of the service commencement date to
render the service provided for in this Agreement.

                                   ARTICLE V

              QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENT

For all gas received, transported and delivered hereunder the Parties agree to
the Quality Specifications and Standards for Measurement as specified in the
General Terms and Conditions of Transporter's FERC Gas Tariff Volume No. 1.

                                   ARTICLE VI

                    RATES AND CHARGES FOR GAS TRANSPORTATION

6.1      TRANSPORTATION RATES - Commencing upon the effective date hereof, the
         rates, charges, and surcharges to be paid by Shipper to Transporter for
         the transportation service provided herein shall be in accordance with
         Transporter's Rate Schedule FT-A and the General Terms and Conditions
         of Transporter's FERC Gas Tariff.

6.2      INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter for any
         filing or similar fees, which have not been previously paid for by
         Shipper, which Transporter incurs in rendering service hereunder.

6.3      CHANGES IN RATES AND CHARGES - Shipper agrees that Transporter shall
         have the unilateral right to file with the appropriate regulatory
         authority and make effective changes in (a) the rates and charges
         applicable to service pursuant to Transporter's Rate Schedule FT-A, (b)
         the rate schedule(s) pursuant to which service hereunder is rendered,
         or (c) any provision of the General Terms and Conditions applicable to
         those rate schedules. Transporter agrees that Shipper may protest or
         contest the aforementioned filings, or may seek authorization from duly
         constituted regulatory authorities for such adjustment of Transporter's
         existing FERC Gas Tariff as may be found necessary to assure
         Transporter just and reasonable rates.

                                   ARTICLE VII

                              BILLINGS AND PAYMENT

Transporter shall bid and Shipper shall pay all rates and charges in accordance
with Articles V and VI, respectively, of the General Terms and Conditions of
Transporter's FERC Gas Tariff.


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<PAGE>

                                  ARTICLE VIII

                          GENERAL TERMS AND CONDITIONS

This Agreement shall be subject to the effective provisions of Transporter's
Rate Schedule FT-A and to the General Terms and Conditions incorporated therein,
as the same may be changed or superseded from time to time in accordance with
the rules and regulations of the FERC.

                                   ARTICLE IX

                                   REGULATION

9.1      This Agreement shall be subject to all applicable and lawful
         governmental statutes, orders, rules and regulations and is contingent
         upon the receipt and continuation of all necessary regulatory approvals
         or authorizations upon terms acceptable to Transporter. This Agreement
         shall be void and of no force and effect if any necessary regulatory
         approval is not so obtained or continued. All Parties hereto shall
         cooperate to obtain or continue all necessary approvals or
         authorizations, but no Party shall be liable to any other Party for
         failure to obtain or continue such approvals or authorizations.

9.2      The transportation service described herein shall be provided subject
         to Subpart G, Part 284, of the FERC Regulations provided however, that
         Transporter shall initiate and provide service to Shipper under Subpart
         B, Part 284, of the FERC Regulations until such time as the Commission
         authorizes service under Subpart G.

                                    ARTICLE X

                      RESPONSIBILITY DURING TRANSPORTATION

Except as herein specified, the responsibility for gas during transportation
shall be as stated in the General Terms and Conditions of Transporter's FERC Gas
Tariff Volume No. 1.

                                   ARTICLE XI

                                   WARRANTIES

11.1     In addition to the warranties set forth in Article IX of the General
         Terms and Conditions of Transporter's FERC Gas Tariff, Shipper warrants
         the following:


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<PAGE>

         (a)      Shipper warrants that all upstream and downstream
                  transportation arrangements are in place, or will be in place
                  as of the requested effective date of service, and that it has
                  advised the upstream and downstream transporters of the
                  receipt and delivery points under this Agreement and any
                  quantity limitations for each point as specified on Exhibit
                  "A" attached hereto. Shipper agrees to indemnify and hold
                  Transporter harmless for refusal to transport gas hereunder in
                  the event any upstream or downstream transporter fails to
                  receive or deliver gas as contemplated by this Agreement.

         (b)      Shipper agrees to indemnify and hold Transporter harmless from
                  all suits, actions, debts, accounts, damages, costs, losses
                  and expenses (including reasonable attorneys fees) arising
                  from or out of breach of any warranty by Shipper herein.

11.2     Transporter shall not be obligated to provide or continue service
         hereunder in the event of any breach of warranty.

                                   ARTICLE XII

                                      TERM

12.1     This Agreement shall be effective as of the 1st day of November, 1996,
         the service commencement date, and shall remain in force and effect
         until the 31st day of October, 2001, ("Primary Term") and on a year to
         year basis thereafter unless terminated by Shipper upon at least one
         year prior written notice to Transporter. If the FERC or other
         governmental body having jurisdiction over the service rendered
         pursuant to this Agreement authorizes abandonment of such service, this
         Agreement shall terminate on the abandonment date permitted by the FERC
         or such other governmental body. Tennessee warrants that it will not
         file for abandonment of this service during the Primary Term or any
         renewal term for a period of at least five years after the expiration
         of the Primary Term.

12.2     Any portions of this Agreement necessary to resolve or cash-out
         imbalances under this Agreement as required by the General Terms and
         Conditions of Transporter's FERC Gas Tariff Volume No. 1, shall survive
         the other parts of this Agreement until such time as such balancing has
         been accomplished; provided, however, that Transporter notifies Shipper
         of such imbalance no later than twelve months after the termination of
         this Agreement.


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<PAGE>

12.3     This Agreement will terminate automatically upon written notice from
         Transporter in the event Shipper fails to pay all of the amount of any
         bill for service rendered by Transporter hereunder in accord with the
         terms and conditions of Article VI of the General Terms and Conditions
         of Transporter's FERC Tariff.

                                  ARTICLE XIII

                                     NOTICE

Except as otherwise provided in the General Terms and Conditions applicable to
this Agreement, any notice under this Agreement shall be in writing and mailed
to the post office address of the Party intended to receive the same, as
follows:

TRANSPORTER:      TENNESSEE GAS PIPELINE COMPANY
                  P.O. Box 2511
                  Houston, Texas 77252-2511
                  Attention: Transportation Marketing

SHIPPER:

NOTICES:          LOUISVILLE GAS & ELECTRIC CO.
                  P.O. BOX 32020

                  LOUISVILLE, KY 40232
                  Attention: CLAY MURPHY, MGR - GAS SUPPLY

BILLING:          LOUISVILLE GAS & ELECTRIC CO.
                  P.O. BOX 32020

                  LOUISVILLE, KY 40232
                  Attention: CLAY MURPHY, MGR - GAS SUPPLY

or to such other address as either Party shall designate by formal written
notice to the other.

                                   ARTICLE XIV

                                   ASSIGNMENTS

14.1     Either Party may assign or pledge this Agreement and all rights and
         obligations hereunder under the provisions of any mortgage, deed of
         trust, indenture, or other instrument which it has executed or may
         execute hereafter as security for indebtedness. Either Party may,
         without relieving itself of its obligation under this Agreement, assign
         any of its rights hereunder to a company with which it is affiliated.
         Otherwise, Shipper shall not assign this 


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<PAGE>

         Agreement or any of its rights hereunder, except in accord with Article
         III, Section 11 of the General Terms and Conditions of Transporter's
         FERC Gas Tariff.

14.2     Any person which shall succeed by purchase, merger, or consolidation to
         the properties, substantially as an entirety, of either Party hereto
         shall be entitled to the rights and shall be subject to the obligations
         of its predecessor in interest under this Agreement.

                                   ARTICLE XV

                                  MISCELLANEOUS

15.1     The interpretation and performance of this Agreement shall be in
         accordance with and controlled by the laws of the State of Texas,
         without regard to the doctrines governing choice of law.

15.2     If any provisions of this Agreement is declared null and void, or
         voidable, by a court of competent jurisdiction, then that provision
         will be considered severable at either Party's option; and if the
         severability option is exercised, the remaining provisions of the
         Agreement shall remain in full force and effect.

15.3     Unless otherwise expressly provided in this Agreement or Transporter's
         Gas Tariff, no modification of or supplement to the terms and
         provisions stated in this agreement shall be or become effective until
         Shipper has submitted a request for change through the TENN-SPEED 2 of
         Transporter's agreement to such change.

15.4     Exhibit "A" attached hereto is incorporated herein by reference and
         made a part hereof for all purposes.

15.5     Notwithstanding Section XXX of the General Terms & Conditions of TGP's
         FERC Gas Tariff, in the event of a conflict between this Agreement or
         any modification thereto, and the General Terms & Conditions of TGP's
         FERC Gas Tariff, this Agreement or any modification thereto shall
         prevail.

15.6     This agreement shall be subject to modification by written agreement
         between Shipper and Transporter.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed.

TENNESSEE GAS PIPELINE COMPANY


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<PAGE>

By:      _______________________________
Its:     _______________________________

LOUISVILLE GAS & ELECTRIC CO.

By:      __________________________
Title:   __________________________
Date:    __________________________


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<PAGE>

                          GAS TRANSPORTATION AGREEMENT

                        (or Use Under oT-A Rate Schedule)

                                   Exhibit "A"
                  AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
                             DATED November 1, 1996
                                     BETWEEN
                         TENNESSEE GAS PIPELINE COMPANY
                                       AND
                          LOUISVILLE GAS & ELECTRIC CO.

                                                   LOUISVILLE GAS & ELECTRIC CO.
                                   EFFECTIVE DATE OF AMENDMENT: November 1, 1996
                                                             RATE SCHEDULE: FT-A
                                                          SERVICE PACKAGE: 10609
                                                  SERVICE PACKAGE TQ: 30,000 Dth
<TABLE>

<S>     <C>                            <C>                              <C>        <C>  <C>        <C>     <C>        <C>
METER   METER NAME                     INTERCONNECT PARTY NAME          COUNTY     ST   ZONE R/D   LEG     METER-TQ   BILLABLE-TQ
011306  CHANNEL-AGUA DULCE EXCH        CHANNEL INDUSTRIES GAS CO        NUECES     TX   00         R 100   18,000     18,000
020743  STA 834 POOLING POINT                                           FRANKLIN   LA   01         R 800   12,000     12,000
                                                                                         Total Receipt TQ: 30,000     30,000
020001  COLUMBIA UF-BR RUN COBB W VA   COLUMBIA GAS TRANSMISSION CORP   KANAWHA    WV   03         D 087   30,000     30,000
</TABLE>

                                            NUMBER OF RECEIPT POINTS AFFECTED: 2
                                           NUMBER OF DELIVERY POINTS AFFECTED: 1

Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date


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