____________________________________ IN THE UNITED STATES DISTRI CT COURT FOR T H E E A STER N DISTRICT OF KENT UC KY CENT RAL DIVISION LEXINGTON

) UNITED S TATES OF AMERICA, ) ) P l a i n t i f f, ) ) v. ) Civil Action No. 5:07-CV-0075-KSF ) KENT UCKY UTILITIES COMP ANY, ) ) Defendant. ) ) ____________________________________)

CONSENT DECREETABLE OF CONTENTS

I. JURISDICTION AND VENUE .................................................................................3 II. APPLICABILITY .......................................................................................................3 III. DEFINITIONS ............................................................................................................4 IV. NO x EMISSION REDUCTIONS .............................................................................11 A. NO x Em ission Controls ....................................................................................11 B. General NO x Provisions ...................................................................................11 C. Use and Surrender of NO x Allowances ...........................................................12 V. SO 2 EMISSION REDUCTIONS ..............................................................................15 A. SO 2 Em ission Controls ....................................................................................15 B. General SO 2 Provisions....................................................................................15 C. Use and Surrender of SO 2 Allowances ............................................................15 VI. PM EMISSION REDUCTIONS ..............................................................................17 A. PM Controls .....................................................................................................17 B. PM Em ission Rate............................................................................................18 C. PM Em issions Monitoring ...............................................................................18 D. Installation and Operation of PM CEMs .........................................................19 E. PM Reporting ...................................................................................................20 VII. PROHIBITI ON OF NETTING CREDITS OR OFFSETS .......................................21 VIII. ENVIRONMENTAL MITIGATION PROJECTS ...................................................21 IX. CIVIL PENALTY .....................................................................................................23 X. RESOLUTI ON OF CERTAIN CIVIL CLAIMS OF THE UNITED STATES .......24 XI. PERIODIC REPORTING .........................................................................................26 XII. REVIEW AND APPROVAL OF SUBMITTALS ...................................................29XIII. STIPULATED PENALTIES ....................................................................................30 XIV. FORCE MAJEURE ..................................................................................................35 XV. DISPUTE RESOLUTION ........................................................................................40 XVI. PERMITS ..............................................................................................................42 XVII. INFORMATION COL LECTION AND RETE NTION ...........................................45 XVIII. NOTICES ..............................................................................................................46 XIX. SALES OR TRANSFERS OF OWNERSHIP INTERESTS ....................................48 XX. EFFECTIVE DATE ..................................................................................................49 XXI. RETENTI ON OF JURISDICTION ..........................................................................49 XXII. MODIFICATION .....................................................................................................50 XXIII. GENERAL PROVISIONS .......................................................................................50 XXIV. SIGNAT ORIES AND SERVICE .............................................................................52 XXV. PUBLIC COMMENT ...............................................................................................52 XXVI. CONDITIONAL TE RM INATION UNDE R DE CREE ...........................................53 XXVII. FINAL JUDGMENT ................................................................................................54 APPENDIXWHEREAS, the United States of Am erica (“the United States”), on behalf of the United Stat e s Environmental P r ote c tion Agency (“EPA”), h as f iled a c o m p laint ag ainst Kentucky Utilities Company (“Kentucky Utilitie s”) pursuan t to Sections 113(b) and 167 of the Clean Air Act ("the Act"), 42 U.S.C. §§ 7413(b) and 7477, for injunctive relief and the assessm e nt of ci vil penalties for vi olations of the Prevention of Significant Deterioration ("PSD") provisions of the Ac t, 42 U.S.C. §§ 7470-92; the New Source Perform a nce Standards (“NSPS”) of the Act, 42 U.S.C. § 7 411; Title V of the Act, 42 U.S.C. §§ 7661-7661f; and the State Imple m en tation Plan adopted by the Comm onwealth of Kentucky and approved by EPA pursuant to Section 110 of the Act, 42 U.S.C. § 7410; W H EREAS, in its comp lain t, the United S t ate s a llege s, in ter alia , that Kentucky Utilitie s m o dif i ed and thereaf te r operated an electri c gener a ting unit at the Brown Power Plant witho u t obtain i n g the neces sary perm its or installing and operating the best available control technology to cont rol em issions of nitrogen oxides (“NO x ”), sulfur dioxide (“SO 2 ”), and/or particulate m a tter (“P M”), as the Act requires; that Kentucky Utilitie s m o dif i ed and thereaf te r op erated th is Unit -- Bro w n Unit 3 -- in a m anner tha t resulted in em issions of NO x , SO 2 , and/or PM in violation of applicable New Source Perform a nce Standards; and that Kentucky Utili ties operated Brown Un it 3 at a heat input rate in excess of 4128 m illion Btu s (“M MBtu s ”) per hou r, in v i olatio n of a cond ition contained in the plant’s operating perm it ; W H EREAS, Kentucky Utilities sou ght a nd ob tained, on March 1, 2005, a Title V operating permit that rem oved the 4128 MMBtu per hour heat input rate as an enforceable lim it at Brown Unit 3 without go ing throughthe approp riate permitting procedures, including PSD review;

1WHEREAS, the United States ’ complaint alleges claim s upon which relief can be granted against Kentucky Utilities u nder Section s 113 and 167 of the Act, 42 U.S.C. §§ 7413 & 7477; W H EREAS, the United States providedKentucky Utilities and the Commonwealth of Kentucky with actual notice of alleged v i olations in accordan ce with Section 113(a)(1) of the Act, 42 U.S.C. § 7413(a)(1 ), and provided notice of the commencement of su it to the Commonwealth of Kentucky as requiredby Section 113(b) of the Act, 42 U.S.C. § 7413(b); WHEREAS, the United States and Kentucky Utilities (col le ctively, the “Parties”) have agreed that settlem e nt of this a c tion is in the best inter e st of the Parties andinthe public interest, and that entry of this C onsent Decree without litig ation is th e most appropriate m eans of resolving th is m atter; WHEREAS, the Parties rec ognize, and the Court by entering this Consent Decree finds, that this Consent Decree has been negotiated in good fa ith and at arm ’ s length and that th is Consent Decre e is f air, re a sonable, con sisten twith the goals of the Act, an d in the public interest; WHEREAS, the actions to be taken and the e m ission reductions to beach i eved by Kentucky Utilities under this C onsent Decree are for purpose s of resolving the claim s alleged by the United S t ates, and are undertaken by Kentucky Utilities as part of its effort s to achieve compliance with the Clean Air Act at Bro w n Unit 3 ; W H EREAS, Kentucky Utilitie s de nies th e a l legation s inthe comp laint and

m aintains th at it has be e n and rem ains in co mp liance with the Act and is not liable f o r

2civil penalties or injunctive relief, and nothi ng herein shall constitute an adm i ssion of liab ility; WHEREAS, the Parties have consented to entry of this Consent Decree without trial of any issues; NOW, THEREFORE, without any adm i ssion of fact or law, it is hereby ORDE RED, ADJUDGE D, AND DE CREE D as follows: I. JURISDICTION AND VENUE 1. This Court has jurisdicti on over this action, the s ubject m a tter herein, and the Parties, pursuant to 28 U.S.C. §§ 1331, 1345, 1355, and 1367, and pursuant to Sections 111, 113 and 167 of the Act, 42 U.S.C. §§ 7411, 7413 and 7477. Venue is proper under Section 113(b) of the Act, 42 U.S.C. § 7413(b), and under 28 U.S.C. § 1391(b) and(c). Kentucky Utilities consents to , and shall not challeng e, entry of this Consent Decree and th is Court’ s ju risdiction to enter and enforce this Consent Decree

. Except as expressly provided for herein, this Cons ent Decree s hall not create any rights in any party other than the Parties to this Cons ent Decree. Except as pro vided in Section XXV (Public Co mm ent ) of this Consent Decree, the Parties consent to entry of this Consent Decree without further notice. II. APPLI CABILI T Y 2. Upon entry, the provisions of this C onsent Decree shall apply to and be binding upo n and inure to the bene f it of the United Stat es and Kentuc ky Utilitie s, and their successors and assigns, and upon their of ficers, employees, and agents, solely in their capacities as su ch. 3. Kentucky Utilities sh all pr ovide a copy of the pertin ent provisions of this Consent Decree to all vendors, s uppliers, consultants, contract ors, and agents, and to any

3other comp any or other organization retained to perform any of the wo rk required by this Consent Decree. Notwithstand i ng any retention of contractors, subcontractors, or agents to perf orm any work r equiredund er th is Con sent Decr ee , Kentucky Utilitie s sha ll be responsible for ensuring that all work is perform e d in ac cordance with th e requirem ents of

this Cons ent Dec r ee. In any a ctio n to en f orce this Consent Decree, Kentucky Utilities shall no t ass e rt as a d e fense the failure of their officers, directors, empl oyees, serv ants, agents, or contractors to take actions nece ssary to comp ly with this Consent Decree, unless Kentucky Utilities estab lish e s that su chf ailure r es u lted f r om a Force Ma jeur e Event, as defined in Section XIV of this Consent Decree. III. DEFI NITIONS 4. Every term expressly defined by th is Consen t Decree sh all hav e th e

m eaning given to that term by this Consen t Decree and, except as otherwise provided in this Consent Decree, ev ery other term used in this Consent Decree that is also a te rm under the Act or the regulations im plem enting the Act shall m ean in this Consent De cree what such term m eans under the Ac t or those implem enting regulations. “30-Day Rolling Average Em ission Rate” sh all be expressed in lb/MMBtu and calcu lated in accordance with the following procedure: (1) sum the total pounds of NO x or SO 2 em itted f r om the Unit during the curr en t Operating D ay and the p r evious twe n tynine (29) Operating Days; (2) sum the total heat input to the Unit in MMBtu during the current Operating Day and the previous twenty -nine (29) O perating Days; and (3) divide the total number of pounds of NO x or SO 2 em itted during th e thirty (30 ) Operating Days by the total heat inpu t d u ring the th irty ( 30) Operating Days. A new “30-Day Rolling Average Emission Rate” for NO x and for SO 2 shall b e calculated for each new Operatin g Day. Exce pt as provided for in this definition and in Paragraphs 76 through 78

4(Malfunctio n ), each 30-Day Rolling Average Em ission Rat e for NO x or SO 2 shall include all emissions that occur during all periods within each Operating Day: (i) Kentucky Utilitie s m ay exclud e e m issions th at oc cur du ring a pe rio dof Malf u n ctionf r om the calcu lation of the 30-D ay Rolling Average E mission Rate f o r NO x or SO 2 if Kentucky Utilitie s m eets the requ irem ents of Paragraphs 76 and 77 ; (ii) Kentu cky Utilities may exclude em issions during start up(s) of Br own Unit 3 following a m a jor outage or during the comm is sioning of new equipment; provide d, however, that this s t art up ex clu sion

m ay not occur m o re frequently than once every five (5) calen d ar years an d the exclud ed period m ay not exceed f i ve (5) cons ecutiv e Days. “30-Day Rolling Avera ge SO 2 Removal Efficie n cy” m eans the percen t reductio n in the m a ss of SO 2 achieved by the Unit’s F l ue Gas De sulfurization (“F GD”) system over a 30-Operating Day period and shall be calculated as follows: (1) sum the total pounds of SO 2 em ittedf r om the Unit dur ing the curren tOperating D ay and the previous tw entynine (29) Operating Days as m easured at th e o u tle t of the FGD system f o r the Unit; (2 )

sum the total pounds of SO 2 delive r ed to the in let of th e FGD system f

o r th e Unit d u ring the current Operating D a y and the p r evious twenty-nin e (29 ) Operating Days as m e asured at the inle t to the FGD system f

o r that Un it (this shall be calcu lated by m e asuring the ratio of the lb/MMBtu SO 2 inle t to the lb/M M B tu SO 2 outlet and mu ltiplying the outle t pounds of SO 2 by that ratio ); (3) su btrac tthe ou tle t SO 2 em issions calcu l ated in s t ep one f rom the inlet SO 2 em issions calculated in step two; (4 ) div i de the rem ainder calcula tedin step th ree b y the in let SO 2 em issions calculated in step tw o; and (5) mu ltip ly the quotient calculated in step four by 100 to express as a percentage of re m oval efficiency. A new 30-Day Rolling Average SO 2 Removal Efficiency shall b e calcu latedfor each new

5Operating Day. Except as provided for in Paragraphs 76 through 78 (Malfunction ) , each 30-Day Rolling Averag e Rem oval Efficiency for SO 2 shall inc l ude all em issions that occur during all periods within ea c h Operating Day

. Kentucky Utilities m a y exclude

em issions that occur during a period of Malfunction from the calculatio n of the 30- Day Rolling Av erage Rem oval Efficiency for SO 2 if Kentucky Utilities m e ets the requirem e nts of Paragraphs 76 and 77. “Brown Power Plant” m eans Units 1, 2 and 3 of the E.W. Brown Power Station located in Mercer County, Kentucky. “Brown Unit 3” m eans Unit 3 of the Brown Power Plant. “Business D a y” shall m ean any Day othe r than Saturday, Sunday, or a federally recognized holiday. “CEMS” or “Continuous Em ission Monitoring System ,” means, for obligations involving N O x and SO 2 under this Consent Decree, the devices defined in 40 C.F.R. § 72.2, the inlet SO 2 lb/MMBtu monitors, and the co mputer system for recording, calculating, and storing data and equati ons required by this C onsent Decree. “Clean Air Act” or “Act” m eans the federal Clean Air Act, 42 U.S.C. §§ 7401- 7671q, and its implem enting regulations. “Comm o nwealth” m eans the Commonwealth of Kentucky. “Consent Decree” or “D ecree” m eans this Consent Decree. “Continuously Operate” or “Continuous Oper ation” m eans that when an em ission

contro l device, such as a SCR, low NO x burner, over-fire air, FGD, or ESP, is used at Brown Unit 3, such control device s hall be op erated at all ti m es the Unit is inope ra tion, except during a Malfunction of such control de vice, consistent withthe technological

6lim itations, m a nufacturers’ specifications , and good engineering and m a intenance practices for such device and the Unit so as to m i nimize em issions to the extent practicab le. “Day” m eans calend ar d ay, unless o therwise specified as a B u siness Day. “Em i ssion Rate” for a given pollutant m eans the num ber of pounds of that pollutant emitted per m illion British therm a l un its of heat input (lb/MMBtu), m easured in accordan ce with this Co nsent Decree. “EPA” m eans the United States Env i ronm ental Protec tion A g ency. “ESP” m eans an electros t atic precipitator, which is a pollu tio n control device for the redu ctio n of particu l ate m atter. “FGD” m e a ns Flue Gas Desulfurizati on System, which is a pollution control device that employs flue gas desulf uriza tion technology, including an absorber utilizing lim e, flyash, or lim estone slurry for the reduction of sulfur dioxide em issions. “Fossil Fuel” m eans any hydrocarbon fuel , including coal, petroleum coke , petroleum oil, or natural gas. “Kentucky Utilitie s” means the d e f e ndant, Kentucky Utilitie s Company. “lb/MMB tu ” m eans one pound of a pollutant per million British therm al units of heat input. “Malfunction” m eans malfunction as that term is defined under 40 C.F.R. § 60.2. “MW ” m eans a m egawatt o rone m illion W atts. “NO x ” m eans oxides of nitrogen, measured in accordance with the provisions of this Consen t Decree.

7“NO x Allowance” m eans an authorization or credit to em it a specified amount of NO x during the Ozone S eason that is allocated or issued by Kentucky. This definition shall not apply to any allowance issued by Kentucky related to program s authorizing

em issions of NO x on an annual basis notwithstanding th at such annual allowance includes the r i ght to e m it NO x during the Ozone Season. “Operating Day” m eans any calendar day on which the Unit f i res fossil fuel. “Ownership Interest” means part or all of Kentucky Utilities’ legal or equitable ownership interest in Brown Unit 3. “Ozone Season” shall m ean the period beginning May 1 st and ending Septem ber 30 th of any calendar year. “Parties” means the United Stat es and Kentucky Utilitie s Com p any. “Party ”

m eans one of the nam e d “Parties.” “PM” m eans total filterable particulate m a tter, m easured in accordan ce with th e provisions of this Consent Decree. “Prevention of Significant Deteriora tion” or “PSD” m eans the prevention of significant deterioration of air quality program under Part C of Subchapter I of the Clean Air Act, 42 U.S.C. §§ 7470-7492, and 40 C.F.R. Part 52. “Project Dollars” m eans Kentucky U tilities’ expenditures and paym ents incurred

or m ade in carry ing out the Environ m ental M itigation Proje cts iden tifie d in SectionVIII (Environm ental M itig ation Projec ts ) of this Consent Decr ee to the e x tent th at s u ch expenditures or paym ents both: ( a) c o mp ly with the requ irem en ts s et f o rth in Se ctionVIII (Environm ental Mitigation Projects) and Appe ndix A of t his Consent Decree, and (b)

8constitute K e ntucky Utilities’ direct paym ents f o r such pr oje c ts, or Kentucky Utilities’

extern al cos t s for contractor s, vendors, and equipm ent. “SCR” m eans selective catal ytic reduction system , whic h is a pollution control device that em ploys selective catalytic reduction technology for the reduction of NO x

em issions. “SO 2 ” m eans sulfur dioxide, m easured in acco rdance with the provision s of this Consent Decree. “SO 2 Allowance” m eans “allowance” of SO 2 as defined at 42 U.S.C. § 7651a(3): “an authorization, allocatedto an affected Unit by th e Adm i nistrator of EPA under Subchapter IV of the A c t, to em it, during o raf ter a spe cif ied calendar year, one ton of sulfur dioxide.” “Surrende r” m eans, with regard to SO 2 and NO x Allowance s, com p lying with th e procedures set forth herein so that such Allo wances cannever be u sed to m eet any

comp liance requirem e nt under the Clean Ai r Act or a state implem entation plan. “Surplus N O x Allowance” m eans any NO x Allowance issued by Kentucky for Brown Unit 3 that Kentucky Utilities does not ne ed to m eet the federal and/or s t ate Clean Air Act reg u lato ry requ irem ents f o r that Unit during the O z one Season

. The num b er of NO x Allowances tha tar e surplus to Kentucky Utilitie s’ Clean Air Act NO x Allowance holding requirem ents shall be equal to the amount by which the NO x Allowances allocated to Brown Unit 3 for a particular Ozone Season are greater than the total am ount of NO x e m is sions from t h at Unit for the sam e Ozone Season. “Title V Perm it” m eans the pe rm it requi red of Kentucky Utilities’ Brown Power Plant under Subchapter V of the Act, 42 U.S.C. §§ 7661-7661e.

9“Unit” m e a n s, for the purposes of this Consent Decree, collectiv ely, at Brown Unit 3, the Brown Unit 3 coal crusher, stationary equipm ent that f eeds c o al to the bo ile r, the bo iler th at p r oduces steam for th e steam turb ine, the stea m turbine, the gene rato r , the equipm ent necessary to operate the generator, steam turbine and boiler, and all anc i llary equipm ent, including pollu tion control equipm ent and system s necessary for the production of electricity. An electric utility steam generating station m ay comp rise one

or m ore Uni t s. “Unit Annual NO x Tonnage Limitation” m eans the limitation, as specified in this Consent Decree, on the total num ber of tons of NO x em itte d f r om Brown Unit 3 d u ring the relevan t calend ar y e ar ( i.e. , J a nu ary 1 throug h Decem ber 31). Comp liance withthe Unit Annual NO x Tonnage Lim itatio n shall be calcul ated for each new calendar year and such calculation shall in clude all N O x em itted f rom B row n U n it 3 as reported in the electronic data reports required under Title IV of the Clean Air Act during all periods of operation during the rele vant calendar year. “Unit Annual SO 2 Tonnage Limitation” m eans the lim itation, as specified in this Consent Decree, on the tota l num ber of tons of SO 2 em itted f rom Brown Unit 3 during the relevan t calend ar y e ar ( i.e. , J a nu ary 1 throug h Decem ber 31). Comp liance withthe Unit Annual SO 2 Tonna ge Lim itatio n shall be calcul ated for each new calendar year and such calcu lation shall include all SO 2 em itted from Brown Unit 3 as reported in the electronic data reports required under Title IV of the Clean Air Act during all periods of operation during the rele vant calendar year.

10IV. NO x EMISSION REDUCTI O NS A. NO x Emission Controls 5. By no later than December 31, 2012, Kentucky Utilities s h all install an SCR at Brown Unit 3. 6. Beginning no later than Decem be r 31, 2012, Kentucky Utilities shall commence Continuous Operation of the SCR so as to achieve and thereafter m a intain at Brown Unit 3 a 30-Day Rolling Average Em ission Rate for NO x of no greater than 0.070 lb/MMBtu, except as provided in Para graph 7 of this Consent Decree. 7. Beginning no later than Dece m ber 31, 2012, during any 30-Day period used to calc u late a 30

- D ay Rolling Average Emission Rate for NO x , if the dispatch of Brown Unit 3 requires the operation of Brown Unit 3 at a loadleve l th at results influe gas temperature so low that it b ecomes techn i cally infeasible to Continuously Operate the SCR, despite best ef f

o rts by Kentucky Utilities to do so, Ke ntucky Utilities shall achieve and m a intain at Brown Unit 3 a 30- Day Rolling Average E m ission Rate f o r NO x of no greater than 0.080 lbs/MMBtu. 8. Beginning thirty (30) days from entry of this Consent Decree, Kentucky Utilitie s sha ll Continuo usly Oper ate the ex isting low NO x burners and over-fire air at Brown Unit 3. 9. During calendar years 2009 through 2012, Kentucky Utilities shall not exceed a Un it Annual N O x Tonnage Lim itation at Brown Unit 3 of 4,072 tons of NO x per calendar year. B. General N O x Provisions 10. In determ ining em ission rates for NO x , Kentucky Utilitie s sha l l use CEMS in acco rdance with th e reference m e thods specified in 40 C.F.R. Part 75, except that NO x

11em issions data need not be bias-adjus ted. At least one hundred eighty (180) days prior to commencing operation of the SCR, and no later than June 30, 2012, Kentucky Utilities shall submit to EPA for review andapproval, a plan for th e placem ent and installation of NO x CEMS at B r own Unit 3 for the purpose of m easuring NO x em issions from only Brown Unit 3, and not Brown Units 1 and 2. Kentucky Utilities shall ins t all and commence continuous operation of such CEMS within one hundred tw enty (120) days of receiving E P A’s approval of the plan. C. Use and Surrender of NO x Allow a nces 11. Except as m ay be necessary to c o mp ly with Section XIII (Stipu l ate d Penalties), Kentucky Utilitie s sh all no t use NO x Allowances to comp ly with any requirem e nt of this Consent Decree, includi ng c o m p liance with any emissionlim ita tion, by using, tendering, or otherwise applying NO x Allowance s to ach ieve com p liance or offset any em issions above the lim its specified in this Consent Decree. 12. Except as provided in this Consent Decree, Ke ntucky Utilities sha ll no t sell, trade, or tran sfer any NO x Allowances a lloca ted to Brown Unit 3 that would otherwise b e available for sale, trade, or tr ans f er as a res u lt of the a ctions takenby Kentucky Utilities to co mply with the requ irem ents of th is C onsent Decree. The NO x Allowances alloc a ted to Brown Unit 3 m a y be used by Kentucky Utilitie s only to m eet its own federal and/or state Clean Air Act regu latory requirem e nts for that Unit. 13. For each calendar year b eginning with calendar y ear 2009 and continuing through calendar year 2020, Kentuc ky Utilities shall su rrender to EPA, or transfer to a non-profit third party as provided herein, Surplus NO x Allowances, except as provided in Paragraph 1 7. Kentucky Utilities s h all sur r end er such Surplus NO x Allowances w ithin sixty (60 ) days of the end of each calendar year.

1214. For all Surplus NO x Allowances required to be surrendered to EPA, Kentucky Utilities or th e third-p art y recipient( s) (as the case m ay be) shall first sub m it a NO x Allowance transfer request form to EPA’ s Office of Air and Ra diation’s Clean Air Markets Division directing th e transfer of such Surplus NO x Allowances to the EPA Enforcem ent Surrender Account or to any other EPA accou nt th at EPA m a y direct in writing. As part of sub m itting thes e tran sfer requests, Kentucky Utilities or th e th irdparty recipient(s) shall irrevocably author ize the tran sf er of the se Surplus NO x Allowances and identify – by nam e of acc ount and any applicable serial or other identificatio n num b ers or station n a m es – the source and location of the Surplus NO x Allowances being surrendered. 15. If any Surplus NO x Al lowances required to be surrendered under this Consent Decree are transferre d to a non-profit third party, Kentucky Utilities shall include a d escrip tiono f such tr ans f er in the n ext r eport s u bm itted to EPA pursuant to Section XI (Periodic Reporting) of this Consen t Decree. S u ch repo rt s h all: (a) p r o v ide the identity of the non-profit third party r ecipient(s) of the Surplus NO x Allowances and a listing of the serial num bers of the transferred Surplus NO x Allowances; and (b) inclu de a certif i cationby the th ird

- party r ecip i ent(s ) s t atin g tha tth e r e cipien t(s ) will no t s ell, tr ade, or othe rwise exchange a ny of the allowances an d will not u se any of th e Surplus NO x Allowances to m eet any obligation imposed by any environmental law. No later tha n the third periodic report due after the transfer of any Surplus NO x Allowances, Kentucky Utilitie s sha l l inc l ude a s t atem ent tha tthe third-p arty rec i pien t(s) surr ende red th e Surplus NO x Allowances for perm anent surrender to EPA in accordance with the provision s of Paragraph 1 4 within one year af te r Kentucky Utilities transf erred the Surplus NO x

13Allowances to them

. Kentucky Utiliti es sha l l n ot have complied with the Surplus NO x Allowance s u rrende r r eq u irem ents of this Parag r aph until all third-party re cipien t(s ) sh all have actually surrendered the transferred Surplus NO x Allowances to EP A. 16. The requir e m ents in this Consent Decree pe rta i ning to Kentucky Utilitie s’ use and surrender of Ozone Season NO x Allowances (Paragraphs 11, 12, 13, 14, 15 and 17) are p e rm anent injunctions that are not su b j ect to any term inati on provision of this Consent Decree, and sh all surv ive any term in ation of this Consent Decree as lon g as Kentucky continues to allocate NO x Allowances for the Oz one Season. This Paragraph and the requirem ents in Paragraphs 11, 12, 13, 1 4, 15 and 17 shall not apply to any future

em issions trading program involving only annual NO x lim its and/or annual N O x allowance s. 17. Nothing in this Consen t Decree sh all pr eclud e Kentucky Utilitie s f r om selling or transferring N O x Allowances allocated to Brow n Unit 3 that becom e available f

o r sale or tr ade solely a s a result of the achiev e m ent and mainten ance o f a NO x e m i ssion rate below a 30-Day Rolling Av erage Em ission Rate f o r NO x of 0.070 lb/MMBtu. Kentucky Utilitie s mu st tim ely report the g enera tion of such super-com pliant NO x Allowances in acco rdance with Section XI (P erio dic Reportin g ) of this Consent Decre e . 18. Nothing in this Consen t Decree sh all p r even t Kentucky Utilities f r om purchasing or othe rwise obtaining NO x Allowances from another source for purposes of

comp lying with state or federal Clean Air Act requirem e nts to the extent otherwise allowed by law.

14V. SO 2 EMISSION RE DUCTIONS A. SO 2 Emission Controls 19. Beginning no later than Decem be r 31, 2010, Kentucky Utilities shall install a FG D at Brown Unit 3. 20. Beginning no later than Decem be r 31, 2010, Kentucky Utilities shall commence Continuous Operation of the FGD s o as to achieve and thereafter m a intain a 30-Day Rolling Average Em ission Rate for SO 2 of no greater than 0.100 lb/MMBtu or a 30-Day Rolling Average SO 2 Re m oval Efficiency of not lower than 97%. 21. During calendar years 2009 and 2010, Kentucky Utilities shall not exceed a Unit Annual SO 2 Tonnage Lim itation at Brown Unit 3 of 31,998 tons of SO 2 per calendar year. 22. Beginning with calendar year 2011, a nd continuing annually on a calendar year basis thereafter, K e ntucky Utilit ies shall not exceed a Unit Annual SO 2 Tonnage Lim itation at Brown Unit 3 of 2,300 tons of SO 2 per calendar year. B. General S O 2 Provisions 23. In determ ining Em ission Rates and Re m ova l Efficiencies for SO 2 , Kentucky Utilities sh all use CEMS in accord an ce with those reference methods sp ecified in 40 C.F.R. Part 75. Inlet pounds of SO 2 will be calcu lated a s describ ed in the def i nition of 30-Day Rolling Average SO 2 Re moval Efficiency. C. Use and Surrender of SO 2 Allow a nces 24. Except as m ay be necessary to c o mp ly with Section XIII (Stipu l ate d Penalties), Kentucky Utilitie s sh all no t use SO 2 Allowances to comp ly with any requirem e nt of this Consent Decree, includi ng c o m p liance with any emissionlim ita tion,

15by using, tendering, or otherwise applying SO 2 Allowance s to achieve com p liance or offset any em issions above the lim its specified in this Consent Decree. 25. By March 1, 2009, or thirty (30) days after entry of the Consent Decree, whichever is later, Kentu cky Utilities shall perm anently sur re nder to EPA, or transf er to a non-profit third party, a total of 53,000 SO 2 Allowances of 2008 or earlier vintage. 26. If any SO 2 Allowances required to be surrendered under this Consent Decree are transferreddirectly to a non-profit third party, Ke ntucky Utilities sh all in clude a desc rip tio n of such tra n sf er in the next r eport s u bmitted to EPA pursuant to Sectio n XI (Period i c Re porting ) of this C onsent Decree. Such report shal l: ( i ) p r ovide the id entity of the non-profit third party recipient(s) of the SO 2 Allowance s and a lis ting of the serial

num b ers of the tran sferred SO 2 Allowances; and(ii) includ e a certif ication by the third party recipient(s ) s t atin g that th e recipien t(s ) w ill not sell, trade, o r o th erwise exch ange any of the allowances an d will not u s e any of the SO 2 Allowances to m eet any obligation im posed by any environ m ental law. No late r th an the third period ic r ep o rt due af ter the transfer of any SO 2 Allowances, Kentucky Utilities shall include a statement that the third party recipient(s) surrendered the SO 2 Allowances f o r per m anent surrender to EP A in accordan ce with the pro v isions of Paragraph 27 within one year after K e ntucky Utilities transferred the SO 2 Allowances to them

. Kentucky Util ities shall not h a ve comp lied with the SO 2 Allowance surrender requirem ents of this Paragraph until all third party recip i ent(s) shall h ave actually surrendered the transferred S O 2 Allowances to EPA. 27. For all SO 2 Allowances surrendered to EP A, Kentucky U tilities o rth e third part y r ecipient( s) ( as the case m ay be) shall f i rst submit an SO 2 Al lowance transfer requestform t o EP A’s Offi ce of Ai r a nd Radiation’s Clean Air Markets Divisio n

16directing th e transfer of such SO 2 Allowanc es to the EPA Enf o rcem ent Surrender Account or to any other EPA account that E P A m ay direct in writing. As part of submitting these tran sf er reques t s, Kentucky Utilities or th e third party recipient(s) shall irrevo cably authorize th e transfer o f these SO 2 Allowances and identify – by nam e o f account and any applicable seri al or other identification nu mbers or station nam e s – the source and location of the SO 2 Allowances being surrendered. 28. Nothing in this Consen t Decree sh all p r even t Kentucky Utilities f r om purchasing or otherwise obtaining S O 2 Allowances from another source for purposes of

comp lying with state or federal Clean Air Act requirem e nts to the extent otherwise allowed by law. VI. PM E M ISSION REDUCTI O NS A. PM Controls 29. Beginning thirty (30) days after en try of this Consent Decree, and continuing thereafter, Kentucky Utilities sh all C ontinuously Operate the ESP at Brown Unit 3 to m axim i ze PM emission reductions at all tim es when the Unit is in operation, provided that such operation of the ESP is c onsistent with the technological lim itations,

m a nufacturer’s specifications and good engineering and m a intenance practices for the ESP. Except as required during correlation testing under 40 C.F.R. Part 60, Appendix B, Perform a nce Specification 11, andQuality A ssurance Requirem e nts u nder Appen dix F, Procedure 2, as required by this Consent Decree, Kentucky Util ities sha ll, at a m i nimum : (a) fully en ergize each s ection of th e ESP; (b) o p erate auto m atic contro l system s on the ESP, including the plate-cleaning and discharg e electrode cleaning system s, to m a xi m i ze PM collec t ion ef f i cienc y ; (c) m aintain power le vels delivered to the ESP, consistent with

m a nufacturers’ specifications, the operati onal design of the Unit, and good engineering

17practices ; an d (d) inspect the ESP forany ope nings or leakage in ESP cas ings, ductwork, and expansion joints, and m ake repairs to a ny section of the ESP needing repair during the next scheduled or unscheduled outage. B. PM Emission Rate 30. No later than Dece m ber 31, 2010, and continuing thereafter, Kentucky Utilities shall Continuou sly Op erate the ESP at Brown Unit 3 to achieve a PM Emission Rate no greater than 0.030 lb/MMB tu. Co mpliance with the 0.030 lbs/MMBtu em ission rate shall be dem onstrated by stack tests in accordance with Paragraphs 31-32. C. PM Emissions Monito ring 31. Beginning in calendar year 2011, and continu i ng in eachcalendar year thereafter, Kentucky Utilities shall conduct a stack test for PM on the common stack servicing B r own Unit 3 at least one tim e each calendar year, with eachstack tes t conducted at least six (6) m onths apart. The stack test requirem e nt imposed by this Paragraph m ay be satisfied by stack tests cond ucted by Kentucky Utilities as required by its perm its held for Brown Unit 3 for any year that such stack tests are required under the perm its. 32. The reference m e thods and procedures for determ ining compliance with PM Emission Rates shall be those specified in 40 C.F.R. Part 60, Appendix A, Method 5, 5B, or 17, or an alternative m e thod requestedfor use by Kentucky Utilities, and appro ved for use herein by EPA. The alternative m e thod must conform to the EPA requirem e nts specified in 40 C.F.R. Part 60, Appendix A and 40 C.F.R. § 60.50Da, or any federallyapproved m e thod contained in th e Kentucky State Imple m entati on Plan. Eachtest shall consist of three separate runs perform e d underrepresen tative operatin g conditions not includ ing periods of startup, shutdo wn, or Malfunction. Th e samp ling tim e for each run

18shall be at least 120 m i nutes andth e volum e of each run sh all b e 1.70 dr y standardcubic

m eters (60 dry stand ardcubic f eet). Kentucky Utilitie s sha ll ca lculate the PM Emission Rates from t h e stack test results in accord ance with 40 C.F.R. § 60.8(f), and shall report the results o f each PM stack test to E P A within forty-five (4 5 ) days of co mpletion of each

test. D. Installation and Operation of PM CEMS 33. Kentucky Utilities sh all insta ll, cor r ela t e, ope r a te, andm a inta in a P M CEMS at the common stack serv icin g Brown Un it 3, as specified below. The PM CEMS shall be comprised of (a) a continuous particle m a ss m o nito r that m easures particulate

m a tter concentrations, directly or indirec tly, on an hourly average basis and (b) a CO 2 diluent m o nitor used to conve rt the concentration to un its of lb/MMBtu. Kentucky Utilities shall m a intain, in an electronic database, the hourly average em ission values produced by the PM CEMS in lb/MMBtu. Ke ntucky Utilities shall use best efforts to keep the PM CEMS running and producing datawhenever Brown Unit 3 is in operation. All periods of m onitor m a lfuncti on, m a intenance or repair sha ll be noted as such in the electronic database. 34. At least two hundred seventy (270) da ys prior to commencing operation of PM CEMS as set forth in Paragraph 35, and no later than Septem ber 30, 2010, Kentucky Utilitie s sh all subm it to EPA pursuant to Section XI I (Review an d Approval of Subm ittals ) of this Consent Decree : (a) a planf o r the installation and certif i cation of a PM CEMS, and (b) a proposed Quality Assura nce/Quality Control (“QA/QC”) proto c ol that Kentuc ky Utilities shall f o llow in corre latin g the PM CEMS. In developing both the plan for installation and certif ic ation of the PM CEM S and the QA/QC protocol, Kentucky Utilities sh all use th e c r iteria se t forth in 40 C.F.R. Part 60, Appendix B,

19Perform a nce Specification 11, and Appendix F, Procedure 2. Following approval by EPA of the protocol, Kentucky Utilities sh all thereafter operate each PM CEMS i n accordan ce with the app r oved proto c ol. 35. W ithin one hundred eighty (180) ca lendar days following comm ence m e nt of

operationof the FGD, Kentucky Utilitie s sha ll install, co r r ela t e, m a intain, andope rate a PM CEMS on the Unit, in accordance with th e PM CEMS insta lla tion plan and QA/QC protoco l ap proved by EPA pursuant to the pr eceding Paragraph. No later than ninety (90) days af ter Kentucky Utilities b e gins ope ration of the P M CEMS, Kentucky Utilities shall conduct perform a nce specification te sts of the PM CEMS to dem onstr ate

comp liance with the P M CEMS installati on and certif i c ation plan submitted to and approved by EPA in accordance with Section X II (Rev iew and Approval of Subm ittals ) and shall report such infor m ation to EPA no la t e r th an fort y-fi ve (4 5) days after such

tests. E. PM Reporting 36. Following the ins t allation of the PM CEMS, Kentucky Utilitie s sha l l report to EP A, pursuant to Section XI (Peri odic Reporting), the datarecor d ed by th e PM CEMS in the comm on stack for Brown Units 1, 2 and 3, expressed in electronic format in lb/MMBtu o n a 6-hour and 24 - hour rolling average basis. 37. Although stack tests shall be used fo r dem onstrating compliance with the PM Em ission Rate im posed by this Consent D ecree, no thing in this C onsent Decree is intended to, or shall, alter or waive any appl icable law, including but not limited to any def enses, entitlem ents, challeng es, or clarif icatio ns related to the Credible Evidence Rule, 62 Fed. Reg. 8314 (Feb. 24, 1997), concerning the use of data for any purpose under the Act.

20VII. PROHIBITION ON NETTING CREDITS OR OFFSETS 38. Em ission reductions that result from actions to be taken by Kentucky Utilitie s af ter entry of this Consen t Decree to comp ly with the requirem ents of this Consent Decree shall not be considered as a creditable contempor aneous em i ssion decrease for the purpose of obtaining a netting credit or offs et under the Clean Air Act’s Nonattainm e nt NSR and PSD program s. 39. The lim itation on the generation and use of netting credits or offsets set forth in the previous Paragraph does not apply to em ission reductions achieved by Brown Unit 3 that are greater than those required under this Consent Decree. For purposes of this Paragraph, em ission reducti ons from Brown Unit 3 are gr eater than those required under this Consent Decree if they result fro m Kentucky Utilities ’ com p liance with federally en forceable em ission rates or rem oval efficiencie s that are m o re stringen t than those limits im posed on Brown Unit 3 under th is Consent Decree and under applicable provisions of the Clean Air Act and the Kentucky State Impl em entation Plan. 40. Nothing inthis Consen t Decre e is intend ed to prec lude the emissio n reductions generated under th is Consent Decree from being considered by the Commonwe a lth of Kentucky or EP A as credit able con t emporaneous em ission decreases for the purpose of attain m ent de monstrations sub m itted pursuant to § 110 of the Act, 42 U.S.C. § 7410, or in determ ining impacts on NAAQS, PSD increm ent, or air quality related values, including visi bility, in a Class I area. VIII. ENVIRONMENTAL MITI GATION PROJECTS 41. Kentucky Utilities shall implem ent th e Environm ental Mitigation Projects (“Proje cts ”) describ ed in Appendix A to this Consent Decree in com p lianc e withthe approved plans and schedules for such Project and other term s of this Consent Decree.

2142. Kentucky Utilities shall subm it plans for eacho f the Projects to EPA for review and approval pur suant to Sec tion XII (Re v iew and Approval of Subm ittals) o f this Consent Decree in acco rdance with the schedules set forth inAppendix A to this Consent Decree. Inimplem enting the Pro j ects, Ke n tu c ky Utilitie s shall spe nd no les s than $3,000,000. Kentucky Utilities sh all m a intain , and present to EPA upon reques t , all docum ents to substantiate the Project Dollars expended and shall provide these docum ents to EPA within thirty (30) days of a request by EPA for such docum entation. 43. All plans a nd reports prepar ed by Kentucky Utilitie s pur suant to th e requir em ents of this Section of the Consent Decree and req u ired to be s u bm itted to EPA shall be publicly available from Kentucky Utilities without charge. 44. Kentucky Utilities sh all certify, as p art of eachp l an subm itte d to EPA for any Projec t, that Ken tu cky Utilitie s is no t oth erwise requ ired by law to perf orm the Project described in the plan, that K e ntucky Utilities is una ware of any other person who is required by law to perform the Project, an dtha tKentu c ky Utilities will not us e an y Project, or portion thereof, to satisfy a ny obligations that it m a y ha ve under other applicable requirem e nts of law. 45. Kentucky Utilitie s sh all us e go od f aith ef f

o rts to s e cure as much environm ental benefit as possible for the Pr ojec t Dollars ex pended, consisten twith the applic able r equirem ents and lim its o f this Consent Decree. 46. If Kentucky Utilities elec ts (whe re suchanelectionis allowed ) to undertake a Project by contributing funds to another person or entity that will carry out the Project in lieu of Ke ntucky Utilities, but not including Kentucky U tilities’ ag en ts or contractors, that personor ins trum e ntality mu st, in writi ng: (a ) iden tif y its lega l au thor ity

22for acceptin g such funding; and (b ) identify it s legal au thority to conduct the Pro j ect for which Kentucky Utilities contributes the funds

. Regardless of whether Kentucky Utilities elected (where such election is allo wed) to und ertak e a P r o j ect by itself or to do so by contributing funds to another pers on or inst ru m entality th at will carry out the Project, Kentucky Utilities acknowledges th at it will receive credit for the exp e nditu re of such funds only if Kentucky Utilities demonstrates that th e funds have b een actually spent by eithe r Kentu c ky Utilities or by the pe rson or ins trum entality receiv i ng the m , and that s u ch expenditu res m et all requ irem en ts of this Consent Decree. 47. Beginning six (6) m o nths after entry of this Consent Decree, and continu i ng until com p letion of ea ch Projec t (inc luding any applicab le per i ods of dem onstration or testing ) , Kentucky Utilitie s shall prov ide EP A with sem i -annual upd ates

concern i ng the progres s of each Project. 48. W ithin sixty (60) day s following the comp letion of each Pro j ect requ ired under this C onsent Decree (including any applic able periods of de m onstration or testing), Kentucky Utilities shall subm it to EPA a report that docum ents the date that the Pro j ect

was com p leted, Kentuc ky Utilities’ resu lts of implem enting the Pro j e ct, in clud in g the

em ission reductions or other environm ental benefits achieved, and the total Project Dollars expended by Kentucky Utilities in implem enting the Project. IX. CIVIL PENALT Y 49. W ithin thirty (30) ca le ndar days af ter entry of this Consent Decr ee , Kentucky Utilitie s sha ll pay to the United States a civil penalty in the am ount of $1,400,000. The civil penalty shall be paid by El ectronic F unds Transfer (“EFT”) to the United States Department of Justice, in acco rdance withcurrent E F T procedures, referencing USAO File No. 2007V00233, DOJ Case No. 90-5-1-1-07915, and the civil

23action case nam e and case num ber of this ac tion. The costs of such EFT shall be Kentucky Utilities’ responsibility. Paym en t shall be m ade in a ccordance with instru ctions provided to Kentucky Utilities by th e Financia l Litiga tion U n it of the U.S. Attorney’s Office for the East ern District of Kentucky. A ny funds received after 2:00 p.m . EDT shall be cred ited on the n ext Busi ness Day. At the tim e of paym ent, Kentucky Utilitie s sha ll p r ovide n o tice of pay m ent, ref e re ncing the U S AO F ile Num b er, the DOJ Case Num b er, and th e civil action case nam e and case number, to the Departm e nt of Justic e and to EPA in accordance with Section XVIII (Notice s) of this Co nsent Decre e . 50. Failur e to tim ely pay the civ il pen alt y shall sub j ect Kentu c ky Utilities to inte rest acc ru ing f r om the date p ayment is due u n til the da te paym ent is m ade at the rate prescribed by 28 U.S.C. § 1961, and shall rende r Kentucky Utilities liable for all charges, costs, fees, and penalties established by law for the benefit of a cred ito r or of the U n ited States in securing paym ent. 51. Paym ents made pursu an t to this Sec tion ar e p en alties withinthe m eanin g of Section 162(f) of the Internal R e venue Code, 26 U.S.C. § 162(f), and are not taxdeductible expenditures for purposes of federal law. X. RESOL U TION OF CERTAIN CIVIL CL AIMS OF THE UNIT E D ST AT E S 52. Entry of this Decree sh all resolv e a ll c i vil claim s of the United Sta t es agains t Kentucky Utilitie s that ar ose f r om any modif i cations c o mm enced at Brown Unit 3 prior to the Date of Lodging of this Consent Decree, includ ing but not lim ited to those modif i cation s alleged inthe UnitedStates’ Co mplaint in this civil ac tion and in the Notices of Violation issued to Kentuc ky Utilities on April 25, 2006, a nd Dece m b er 5, 2006, under:

24a. Sections 502(a) and 504(a) of Title V of the Clean Air Act, 42 U.S.C §§ 7611(a) and 7611(c), but only to the extent that such claim s are based on (i) Kentucky Utilities’ f ailu re to obtain an operating p erm it that reflects app l icable requ irem ents imposed under Parts C or D of Subchapter I, or Section 111 of the Clean Air Act, and (ii) Kentucky Utilitie s’ op eration of Brown Unit 3 at a heat input in excess of the valu e listed in the July 20, 1993 Brown Unit 3 Ope r ating Perm it No. O-86-0 68 (Revision 2) and its March 1, 2005 Brown Power Plant Title V perm it No. V-03-034; b. Parts C or D of Subchapter I of the Clean Air Act, 42 U. S.C. §§ 7470-7492, 7501- 7515, including any claim s arising from deletion of enforceable heat input lim its listedin the July 20, 1993 Brown Unit 3 Operating Perm it No. O-86-068 (R evision 2) from Kentucky U tilities’ March 1, 2005 Brown Power Plant T i tle V perm it No. V-03-034 ;

c. Section 111 of the Clean Air Act, 42 U.S.C. § 7411, a nd 40 C.F.R.§ 60.14; d. 401 KAR 51:017 and all relevantprior versions of these regulations , including any claim s arising from deletion of enforceable heat inpu t lim its listed in the July 2 0, 1993 Brown Unit 3 Operating Perm it No. O-86-068 (Revision 2) from Ke ntucky Utilities’ M arch 1, 2005 Brown Po wer Plan t T itle V perm it No. V03-034 ; and

25e. 401 KAR 52.020 and all relevant prior versions of these regulations, but only to the extent th at such claim s are based on (i) Kentucky Utilitie s’ f a ilur e to obtain an ope rating permit th at reflects applicable requirem ents imposed under Parts C or D of Subchapter I, or Section 111 of t he Clean Air Act, and ( ii ) Kentucky Utilities’ operation of Br o w n Unit 3 a ta hea tinp u t in excess of the value listed in the July 20, 1993 Brown Unit 3 Operating P e rm it No. O-86-068 (Revision 2) and its March 1, 2005 Brown Power Plant Title V perm it No. V-03-034. XI. PERIO D IC REPORTING 53. Compliance Report

. Af ter entry of this Decree , Kentucky Utilitie s sha l l subm it to EPA a sem i -annual report, within sixty (60) days after the en d of each half of the calendar year (January th roughJune and July through D ecem ber). The report shall include the f o llowing:

a. Inform ation, including m ilestone dates, regarding the design and installation of the F GD and the SCR required under this C onsent Decree, including any problem s encountered or anticipated, together with imple m ented or proposed solutions; b. Any information indicating that the insta lla tionor comm encem ent of operation of a pollution control device m i ght be delayed, includ ing th e nature andcause of the delay, and any steps taken by Kentucky Utilities to m i tigate such delay;

c. Beginning with the f i rst repo rt filed after June 30, 2013, inf o rm ation to dem onstrate com p liance with the 30-Day Rolling

26Average Em ission Rate for NO x during the preced ing six-m onth reporting period; d. Beginning with the f i rst repo rt filed after June 30, 2013, inform ation identifying the am ount of tim e, if any, during the preced ing six-m onth reporting period in which the dispatch of Brown Unit 3 requires operation of Brown Uni t3 at a load level that r esults in flue gas tem p erature so low that it becom e s technically inf easible to Continuously Operate the SCR;

e. Beginning with the f i rst repo rt filed after June 30, 2011, inf o rm ation to dem onstrate com p liance with the 30-Day Rolling Average E m ission Rate for SO 2 o r30-Day R olling Aver age SO 2 Rem oval Efficiency during th e p r eced ing six-m onth reporting period; f. Beginning Decem ber 31, 2011, for each sem i -annual report subm itted a f ter the en d of a calendar ye ar, inf o rm ation to dem onstrate comp lianc e with the Unit Annual SO 2 Tonnage Lim itation in Paragraph 22 duri ng the preceding calendar year; g. For the first sem i -annual report to be subm itted u nder th is Co nsent Decree, and continuing annually th ereafter, demonstration of the surrende r o f all SO 2 and NO x allowances required to be surrendered under this Consent Decree, as well as any supercompliant NO x allo wances;

27h. All data recorded by the PM CEMs in the common stack for Brown Units 1, 2 and 3 as required by Paragraph 36, including data, if any, from all periods of m onit or m a lfunction, m a intenance, or repair as provided in Paragraph 33; and i. All othe r inf o rm ation necessary to d eterm ine co mpliance with the requirem e nts of this Consent Decree. 54. Deviations Report

. In addition to the reports required by the previous Paragraph, if Kentucky Utilities violates or dev i ates from any provision of this Consent Decree, Kentucky Utilities shall sub m it to th e United States a report on the violation or deviation within ten Bus i ness Days after Ke ntucky Utilities kn ew or should have kno wn of

the event. In the report, Kentuc ky Utilit ies shall exp l ain the cause or causes of the violation or deviation an d any m easures taken or to be taken by Kentucky Utilities to cure the reported violation or deviati on or to prevent such violation or deviatio ns in the f u ture. For PM em i ssions m easured by PM CEMS, the requirem e nts of this Paragraph shall be satisfied by comp liance with the reporti ng requirem e nts set forth in Paragraph 36. 55. Each Kentucky Utilities report shall be signed by Kentucky Utilities’ Director, Environm ental Affairs, or his or her equivalent or designee of at least the rank of Vice President, and sh all con t ain the following certification : This information was prepared either by m e orunder my direction or supervis io n in accordance witha system designed to assure that qualif ied personnel properly gather and evalua te the inf o rm ation subm itted. Based on my evaluation, or the direction and my inquiry of the person(s) who m a nage the system , or the person(s) directly responsible for gathering the inform ation, I hereby certify under penalty of law that, to th e best of my knowledge and belief, this infor m ation is true, accurate, and complete. I understand that there are significant penalties for

28subm itting f alse, inac cu rate, or inc o mp lete inf o rm ation to the United S t ate s. 56. If any allow a nces are surrendered to any third party pursuant to Section IV.C (Use and Surren der of NO x Allowances) or V.C (Use and Surrender of SO 2 Allowances) , the third p arty’ s certif ication sh all be signed by a m a naging officer of the third party, and shall contain the following language: I certify under penalty of law that _____________ [nam e of

third p arty] will not sell, tr ade, or othe rwis e exchang e any of the allowances and will not use any of the allowances to m eet any obligation impose dby any environm ental law. I understa ndth at th ere are significan t penalties for m aking misreprese ntations to or m i sleading the United S t ate s.

XII. REVI EW AND APPROVAL OF SUBMITTALS 57. Kentucky U tilities shall subm it to EP A each subm ission required to be submitted by Kentucky Utilitie s f o r review or ap proval. EP A m ay approve the sub mittal or decline to approve it and provide written comm ents expl aining the bases for declining such appro v al. W ithin sixty (60 ) days of receiv i ng written comments from EPA, Kentucky Utilitie s sha ll either : (a ) revis e the subm ittal consistent with the written comments and provide the revis ed s u bm ittal to EPA; or (b) subm it the m atter f o r dispute resolution, including the period of infor m al negotiations, under Section XV (Dispute Resolution ) of this Consent Decre e . 58. Upon receip tof EPA’s final app r oval of the subm ittal, or up on comp letion of

the submittal pursua n t to dispute resolu tion, Kentucky Utilitie s sha ll implem ent the approved su bm ittal in ac cordance with the s ched u le spec if iedthere i n.

29XIII. STIP ULATED P E NALTIES 59. For any f a ilure by Kentucky Utilities to comp ly with the term s of this Consent Decree, and su bject to the provisions of Sections XIV (Force Majeure) an d XV (Dispute Resolution), K e ntucky Utilities shall pay, withinthirty (30) d ay s af ter rec eipt of written dem a nd to Kentucky Utilities by the United States, the f ollowing stipu l ate d penalties to the United States :

Consent Decree Viola t ion Stipulated Penalty

a. Failur e to pa y the civ il p enalty as spe cif ied in Section X (Civil Penalty) of this Consent Decr e e $10,000 per Day

b. Failure to comply with any applicable 30- Day Rolling Average E m ission Rate f o r NO x , where th e viola tion is less than 5 % in excess of the lim it set f o rth in this Consen t Decree $2,500 per Day per violation

c. Failur e to co mply with a ny applic able 30- Day Rolling Average E m ission Rate f o r NO x , where th e violation is equal to or greater than 5% but less than 10% in excess of th e lim it set f o rth in this C onsent Decr ee $5,000 per Day per violation

d. Failure to comply with any applicable 30- Day Rolling Average E m ission Rate f o r NO x , where th e violation is equal to or greater than 10% in excess of the lim it set f o rth in this Co nsent Decr e e $10,000 per Day per violation

e . Failure to comply with any applicable 30- Day Rolling Average Re moval Ef f i ciency or 30- Day Rolling Average Em ission Rate for SO 2 where the violation is les s than 5% in exc e s s of the 30- Day Rolling Average Em ission Rate for SO 2 or is less than 5% below the 30-Day Rolling Average Rem oval Efficiency for SO 2 in this Consent Decree $2,500 per Day per violation

f

. Failur e to co mply with a ny applic able 30-

30Consent Decree Viola t ion Stipulated Penalty Day Rolling Average Re moval Ef f i ciency or 30- Day Rolling Average Em ission Rate for SO 2 where the violation is m o re than 5% but less than 10% in excess of the 30-Day Rolling Average Em ission Rate for SO 2 or is more than 5% but less than 10% below the 30-Day Rolling Average Rem oval Efficiency for SO 2 in this Consent Decree $5,000 per Day per violation

g . Failure to comply with any applicable 30- Day Rolling Average Re moval Ef f i ciency or 30- Day Rolling Average Em ission Rate for SO 2 where the violation is greater than 10% in ex cess of the 30-Day Rolling Average Emission Rate for SO 2 or is greater than 10% below the 3 0 -Day Rolling Average Rem oval Efficiency for SO 2 in this Consent Decree $10,000 per Day per violation

h. Failur e to comp ly with the Unit-Specif i c Annual Tonnage Lim itation for SO 2 for Brown Unit 3 The surrender of SO 2 Allowances in an am ount equal to four tim es the num ber of tons by which the im itation w as exceed ed l

i

. Failure to install, comm e nce operation, or continue operation of the NO x or SO 2 pollution control devices on any Unit as required under this Consent Decree $10,000 per Day per violation during the first 30 days; $32,500 per Day per violation thereafter j

. Failure to install or operate CEMS as required in this Consent Decree $1,000 per Day per violation

k

. Failure to apply for any perm it required by Section XVI (Perm its) $1,000 per Day per violation

l

. Failure to tim ely subm it, m odify, or imple m ent, as approved, the repo rts, plans, stud ies, analyses, protocols, or othe r subm ittals requ ir ed by this Consent Decree $750 per Day per violation during the first ten days, $1,000 per Day per vio l ationthereafter

m . Failure to surrender NO x Allowances as required by this Consent Decree (a) $32,500 per Day plus (b) $1,000 per NO x Allowance not

31Consent Decree Viola t ion Stipulated Penalty surrendered, and $5,000 per NO x Allowance for each NO x Allowance used, sold, or transferred in violation of this Consent Decree

n . Failure to surrender SO 2 Allowances as required by this Consent Decree (a) $32,500 per Day plus (b) $1,000 per SO 2 Allowance not surrendered, and $5,000 per SO 2 Allowance for each SO 2 Allowance used, sold, or transferred in violation of this Consent Decree

o . Failure to demons trate th e third-party surrender of a NO x Allowance or SO 2 Allowance in accordan ce with this Co nsent Decree $2,500 per Day per violation

p . Failure to undertake and complete an Environm ental M i tigatio n Proj ect in accordan ce with this Consent Decree $1,000 per Day per violation during the first 30 days, $5,000 per Day per violation thereafter

q . Any other violation of this Consent Decree $1,000 per Day per violation

60. Violation of any lim it based on a 30-Day Rolling Average constitutes thirty (30) days of violation, but where such a violation of the sam e pollutant recurs at Brown Unit 3 within a p e riod of less than thir ty (30) days, Kentucky Utilities shall not be obligated to pay a daily stipulated penalty for any Day of the recurrence for which a stipulated penalty has already been paid. 61. All stipu l ated penalties shall be g i n to accru e on the Day after the perform a nce is due or on the Day a violatio n occurs, whichever is app licab le, and shall continue to accrue un til perform ance is satis factorily comp leted or un til the vio l ation

32ceases, whichever is applicab le. Nothing in this Consen t Decree sh all p r even t th e simu ltaneous accrual of separate stipulated p e nalties for separate viola tions of this Consent Decree. 62. Kentucky Utilities sha l l pay all s tip ul ated pen alties to the United States within thirty (30) d ays of rece ipt of written dem and to Kentu c ky Utilities f r om the United States, and shall continue to m ake such paym ents every th irty (30) days thereafter until the violation(s) no longer continues, unless Kentucky Utilities elects, w i thin twenty days of receipt of written dem and for stipulated penalties from the United State s, to dispute the accrual of stipulated pen a lties in accordan ce with the provis i ons in Section XV (Dispute Resolution ) of this Consent Decre e . 63. Stipulated p e nalties shall continu e to accrue as provided in accordance with Paragraph 61 and this Paragraph 63 durin g any dispute, with interest on accrued stipulatedp e nalties p a y able andcalculated at th e ra te es tab l ished by the Secre t ary o f the Treasury, pu rsuant to 28 U.S.C. § 1961, but neednot be paid until the following:

a. If the dispu t e is resolv edby ag reem ent, or by a decision of United States pursu ant to Sectio n XV (Dis pute Resolution) of this Consent Decree tha tis not appea l ed to th is Court, Kentucky Utilities shall pay all accrued stipulated penaltie s agreed or determ ined to be owing, together with accrued interest , within thirty (30) days of the effective date of the agreem ent or of the receipt of the United States’ decision; b. If the d i spu t e is app ealed to th is Court, andthe United States prevails in whole or in part, Kentucky Utilities shall pay all

33accrued stip ulated pen alties determined by this Court to be owing, together with interest accrued on such penalties determ ined by this Court to be owing, within sixty (60) days of receip t of the Court’s decision or order, except as provided in Subparagraph 63. c, below;

c. If the Court’s decis i on is appeal ed by any Party, Kentucky Utilities shall p ay all a ccru edstipu l atedpenalties determ ined by the appellate court to be ow ing, together with interest accrued on such stipulated penalties determ ined to be owing, within fifteen (15) days of receipt of the fi nal appellate court decision. Notwithstanding any other provision of this Consent Decree, the accrued stipu l ated penalties agr eed by the United State s and Kentucky Utilities, o r dete rmined by the United States through Dispute Resolution, to be owi ng m a y be les s than the stipulated penalty

am ounts set forth in Paragraph 59

. 64. All m onetary stipu l a t ed penalties sh a ll b e pa id in the m anner se t f o rthin Section IX (Civil Pen a lty) of this Consen t Decree. All a llowance su rrende r pen alties shall comp ly with the a l lowance surr ender p r ocedures set forth in th is Co nsent Decr e e . 65. Should Kentucky Utilities fail to pay stipulated penalties in com pliance with the ter m s of this Consent Decree, the U n ited Sta t es shall be e n titled to c o llec t interest on such penalties, as provided for in 28 U.S.C. § 1961. 66. The stipulated penalties provided f or in th is C onsent Decr ee shall be in addition to any other rights, rem e dies, or sanctions available to the United Sta t es by reason of Kentucky Utilities’ failure to comp ly with any requirem e nt of this Consent Decree or applicab le law, except th at for any violation of the Act for which this Consent

34Decree prov ides f o r pay m ent of a stipula t ed pen a lty, Ken tuc ky Utilities shall b e a llo wed a cred it for s tipulatedpenaltie s paid against any statutory pe nalties also imposed for such violation. XIV. FORCE MAJE URE 67. For purposes of this Consent Decree, a “Force Majeure Event” shall mean an event that has b een or will be caused by circ um stances beyond the control of Kentucky Utilities, its contrac t ors, or any entity controlledby Kentucky Utilities, that delays compliance with any provision of th is Consent D ecree or otherwise cau s es a violation of any provision of this Consent D ecree, despite K e ntucky Utilities’ best efforts to fulfill th e obligation. “Best efforts to fulf ill the obligatio n” includ e u sing best efforts to anticip a te any poten tial Force Majeure Ev ent and to addr ess the effects of any s uch event (a ) as it is occu rrin g and (b) after it has occurred, such that the delay or violation is

m i ni m i zed to the greatest extent possible. 68. Notice of F o rce M ajeu r e Events

. If any ev ent o ccurs o r h as occurred th at

m ay delay comp liance with or o therwise cau se a violationof any obligation under this Consent Decree as to which Kentucky Utilities intends to assert a claim of Forc e Majeur e, K e ntucky Utilities shall notif y th e United States inwr iting as soon as practicab le, but in no ev ent la ter tha n twenty -one (21) Business Days following the date Kentucky Utilities first knew, or by the exer cis e of due diligence should h a ve known, that the event caused or m a y cause such delay or violation. In this notice, Kentucky Utilities shall r ef eren ce this Para graph of this Cons ent Decree and describe the a n tic ipated le ngth of tim e that the delay or violation m a y pers ist, the cause or cau ses of the delay or violation, all m easures taken or to be taken by Kentucky Utilities to prevent or m i ni m i ze the delay or violation, the schedule by which Kentucky Utilities proposes to implem ent

35those m easures, and Kentucky Utilities’ rationale for attributing a delay or violation to a Force Majeure Event. Kentucky Utilities shall adopt all reas onable m easures to avoid or

m i ni m i ze such delays o r violations. Kentuc ky Utilities shall be de em e dto know of any circum stance which K e ntucky Utilities, its contractors, or any entity controlled by Kentucky Utilities knew or should have known. 69. Failur e to Give Notic e . If Kentucky Utilities fa ils to com p ly withth e notice requirem e nts of this Section, the Unite d States m a y void Kentucky Utilities’ clai m for Force Majeure as to the specific event fo r which Kentucky Utilities h a s failed to

comp ly with such notice requirem e nt. 70. United States’ Response

. EPA shall notify Kentucky Utilities in writing regarding Kentucky Utilities’ cl a i m of Force Majeur e within twenty Business Day s of receipt of the notice pr ovided under Paragraph 68

. If the United States agrees th at a delay in p er f o rm ance has been or will be c aus ed by a For ce Majeure Event, thenthe United States and Kentucky Utilities shall s tip ulate to an extens ion of deadline ( s) f o r perform a nce of the affected compliance requi rem e nt(s) by a period equal to the delay actually caused by the event. In such circum stances, the Parties shall m ake an appropriate modification of the deadline(s) pursuant to Section XXII (Modification) of this Consen t Decree. 71. Disagreem ent

. If the United States does no t accep t Ken tucky Utilities’ claim of For ce Majeu r e, or if EPA a nd Ke ntucky Utilities cannot agree on the length of the delay ac tually cause d by th e Force Ma jeure Event, the m atter shall be resolve din accordan ce with SectionXV (Dispute Reso lution ) of this Consent Decree.

3672. Burden of Proof

. In any dispute regarding Force Majeure, Kentucky Utilitie s sha ll bear the burden of proving thatany delay in perf orm ance or any o ther viola tion of any require m ent of this Consent Decree was caused by or will be caus ed by a Force Ma je ure Event. Kentucky Utilitie s sha ll a l so bear the burd enof proving that Kentucky Utilities gave the no tice required by this Section and the burden of proving the anticipated duration and extent of any delay at tributable to a Force Majeure Event. An extension of one compliance date based on a particular event m a y, but will not necessarily, result in an extensi on of a subsequent comp liance date. 73. Events Excluded

. Unanticipated o rincreas ed cos t s or expens es associated with the per f o rm ance of Kentucky Utilitie s’ ob liga tions un der th is Con sent Decr ee shall not constitute a Force Majeure Event. 74. Potential Fo rce Ma jeure Events

. The Parties agree that, depending upon the circum stances related to an event and Kentucky Utilities’ response to such circum stances, the kinds of events listed below are am ong those that could qualify as Force Majeure Events within the m eaning of this Section: construction, labor, or equipm ent delays; Malfunction of a Unit or emission control device; acts of God; acts of war or terrorism ; and orders by a govern m e nt official, governm e nt agenc y, other regulatory authority, or a regional transmission organizatio n , acting und er and autho r ized by applicable law, that requires Kentucky Util ities to supply electricity in response to a state-wide or regional em ergency. Depending upon the ci rcum stances and Kentucky Utilities’ response to s u ch circum stances, fa ilu r e of a perm itting auth ority to iss u e a

necessary p erm it in a tim ely f ashion m ay constitu te a For ce Majeure Event wher e the f

ailure of th e perm itting authority to act is beyo nd the contr o l of Kentucky Utilitie s and

37Kentucky Utilities has taken all ste p s availab l e to it to obtain the nec essary permit, including, but not lim ited to: submitting a co mplete perm it application; responding to requests f o r addition al inf o rm ation by the permitting autho rity in a timely f a shion; and accepting lawful perm it term s and conditions after exped i tiously exhau s ting any legal rights to app eal term s and conditions im posed by the permitting authority. 75. As part of the resolu tion of any m atter submitted to this Court under Section XV (Dispute R e solution) o f this C onsent Decree regarding a claim of Force Majeure, th e UnitedStates andKen tucky Utilit ies by agreem ent, or th is Court by order,

m ay in appropriate circum stances extend or m o dify the schedule for completion of work under this Consent Decree to accoun t for the delay in the work that occu rred as a resu lt of any delay agreed to by the UnitedStates andthe States or appr oved by the Court. Kentucky Utilities sha l l be liable f o r stipu l at e dpenalties f o r its f ailu re ther eaf ter to

com p lete the work in a ccordanc e with the ex tended or m odi fied schedule (provided that Kentucky Utilities shall not be precluded from m aking a further claim of Force Majeure with regard to m eeting any such extended or m o dified schedule). 76. Malf unctionEvents

. If Kentucky Utilities prop oses to exclude em issions during a period of Malfunction from the calculation of any 30-Day Rolling Average Em ission R a te or 30-Day Rolling Average SO Rem oval Efficiency, Kentucky Utilities shall notify the United S t ates in writing as s oon as practicable, but inno event later than twenty-one (21) days following the date the Ma lfunction occurs. In this notice, Kentucky Utilitie s sha l l desc ribe th e anticipa tedlength of tim e that the Malf unctionm ay persist, the cause or causes of the Malfunctio n, all m eas ures taken or to be taken by Kentucky Utilitie s to m i nim i ze the du ratio n of th e Malf unction , and the s chedule by which 2

38Kentucky Utilities proposes to implem ent thos e m easures. Kentucky Utilities shall adopt all reason ab le m easures to m i nim i ze the du ration of such Malfunctions, and to prevent the recurren ce of such Malfunction s in the futu re. 77. Kentucky Utilities m a y exclude NO x and SO e m issions data during a period of Malfunction, after approval fr om EPA pursuant to Paragraph 78, from calculation of the 30-D a y Rolling Average EmissionRate f or NO or S O or the 30-Day Rolling Average Rem oval Efficiency for SO , only if, in the notice req u i red pursu an t to Paragraph 7 6, Kentucky Utilitie s de monstrate s that: 2

x 2

2

a. The Malfunction did not result from the f ailu re of K e ntucky Utilities to properly operate and m a intain the equipm ent that experiencedthe Malfunction; b. Kentucky Utilities took all reas onable steps to correct, as expeditio usly as practicab le, the conditio n causing th e e missions to exceed th e 30-Day Rolling Average Emission Rate for NO or SO or 30- Day Rolling Average Re moval Ef f i ciency f or SO ; x 2 2

c. Kentucky Utilities took all reasonabl e steps to m i nim i z e em issions and their effect on air quality resul ting from the Malfunction; d. The ex cess em issions are no t part of a recurring patte rn ind i cativ e of inadequate design, operation, or m a intenance; and

e. The Malfunction w a s not caused entire ly or in part by poor m a intenance, careless operation, or any othe r preventable upset conditions or equipm ent breakdown. 78. EPA shall notify Kentucky Utilities of its d eterm inationof whethe r

em issions during the period of Malf unction m a y be excluded from calculation of the 30- Day Rolling Average Em ission Rate f or NO x or SO or the 30-Day Rolling Average 2

39Rem oval Efficiency for SO 2 as soon as practicable, but no late r than sixty (60) days after the date tha t all inf o rm ation requ ired by Paragrap hs 76 and 77 has been su bm itted. 79. A Malfunction does not constitute a Force Majeure Ev ent un less the Malfunction also m eets the definition of a Fo r ce Majeure Event, as provided in this Section. Conversely, a peri od of Malfunction m a y be ex cluded by Kentucky Utilities from the calculations of em ission rates and rem oval efficiencies, as allowed under this Paragraph, regardless of whether the Malf unction constitutes a Force Majeure Event. XV. DISP UTE RESO LUTION 80. The dispute resolution procedure provided by this Section shall be available to resolve all disputes arising under this Consent Decree, provided that the Party invoking such procedure has firs t made a good f a ith attempt to resolve the m a tter with the other Party. 81. The dispute resolution procedure requir ed herein shall be invoked by one Party givin g written n o tice to the other Party advising of a dispute pursuant to this Section. The notice shall describe the nature of the dispute and shall state the noticing Party’s position withregard to such disput e. The Party receiv i ng su ch a notice shall acknowledg e receipt of the notice, and the Parties in dispu t e shall exp e d itious ly schedule

a m eeting to discuss the disput e in f o rm ally no t late r th an twenty (20) Business Days following receipt of such notice. 82. Disputes su bm itted to d i spute resoluti on under this Sectionshall, in th e first instance, be the subject of inform al ne gotiations am ong the disputing Parties. Such period of inform al negotiations shall not exte nd beyond thirty (30) Days from the date of the first m eeting am ong the disputing Parties’ representatives unless they agree in writing to shorten or extend this period. D uring th e infor m al negotiations period, the disputing

40Parties m ay also subm it their dispute to a mutually agreed upon alternative dispute resolu tion ( “ ADR”) f o rum if the Parties ag r ee th at the ADR activ ities ca n be comp leted within the thirty (30 ) Day inf o rmal negotia tions period (or such longer period as the Parties m ay agree to in writing )

. 83. If the dispu t ing Parties are unable to reach ag reem ent during the inform al negotia tionperiod, the United States sha l l provide Kentucky Utilities with a written summary of its position regarding the disput e. The written position provided by the United States shall be considered binding unless, within forty-five (45) Days thereafter, Kentucky Utilities s eeks judic i al re s o lution of the dispute by fili ng a petition with the Court. The United S t ates m a y respond to the petition within forty-five (45) Days of filing. 84. The tim e periods se t out in this Sec tion m a y be shortened or lengthened upon m otion to the Court of one of the Parties to the dispute, explai ning the party’s basis for seeking such a scheduling m odification. 85. The Court shall not draw any inferen ces nor establish any presumptions adverse to any disputing Party as a result of invocation of this Section or the disputing Parties’ inab ility to reachagreem ent. 86. As part of the resolution of any dis pute under this Section, in appropriate circum stances the dispu ting Parties m ay agree, or the Court m a y order, an extension or modification of the schedule for the com ple tion of the ac tivities required under this Consent Decree to account for the delay that occurred as a result of dispute resolution. Kentucky Utilities sha l l be liable f o r stipu l at e dpenalties f o r its f ailu re ther eaf ter to

comp lete the work in accordanc e with the ex tended or m odified schedule, provided that

41Kentucky Utilities not be precl uded from asserting that a Fo rce Majeure Event has caused

or m a y cause a delay in comp lying with the extended or m o dified schedule. 87. The Court shall decide all disputes pur suant to applic able p r inc i ples of law for resolving such disputes

. In the i r initial f i lings w ith the Court, the dis puting Parties sha l l sta t e th eir respec tive p o sition s as to the applicable stand ard of law f o r resolv ing th e partic ular dispute. XVI. PERMITS 88. Unless exp r essly stated otherwise inth is Consen t Decree, in any ins t ance where otherwise applicable law or this C onsent Decree requires Ke ntucky Utilities to secure a permit to authorize construction or operation of any device contemplated herein, including all preconstruction, construction, and operating perm its required under state law, Kentuc ky Utilities shall m ake such application in a tim ely m a nner. Kentucky Utilities shall prov ide Notice to th e United States under Section XVIII (Notices ), that Kentucky Utilitie s ha s submitted an application f o r Br own Unit 3 f o r any permit described in this Paragraph. 89. Notwithstanding the previous Paragraph, nothing in this Consent Decree shall be construed to require Kentucky Utilities to appl y for or obtain a PS D or Nonattainm ent NSR permit for physical changes in, or changes in the m ethod of operation of Kentucky Utilitie s th a twould g i v e rise to c l a i m s resolve dby Sec tio n X, Paragraph 52 (Resolution of Certain Civil Claim s of the United States ) of this Consent Decree. 90. When per m its are required as described in this S ection, Kentucky Utilities shall comp lete and sub m it applications f o r suchpermits to the appropriate autho r itie s to allow tim e for all legally required processing and review of the perm it request, including

42requests f o r

additional inf o rm ation by the p e rm itting au thoritie s. Any f a ilur e by Kentucky Utilities to su bm it a tim ely perm it a pplication for Brown Uni t3 shall bar any use by Kentucky Utilitie s of Section XIV (Force Majeur e) of this Consent Decree, where a Force Ma jeure c l aim is based on pe rmitting delays. 91. Notwithstanding the reference to Title V perm its in this Consent Decree, the enforcem ent of such perm its sh all be in accordance with their own term s and th e Act. The Title V perm its shall no t b e en forceab le un der this Consen t Decree, although any

term or lim it established by or under this Cons ent Decree shall be enforceable under this Consent Decree regard less of whether such te rm has or wi ll becom e part of a Title V perm it, subject to the te rm s of Section XX VI (Conditional Term ination of Enforcem ent Under Decree) of this C onsent Decree. 92. W ithin one hundred eighty (180) days after entry of this Consent Decree, or at the time that Ken tu c ky Utilities submits its Brown Plant Title V pe r m it application to renew the existing Title V perm it that will expire on March 1, 2010, whichever is later, Kentucky Utilities sha ll apply to perm anently include a federally-enforceable num erical hourly heat input rate lim itation for Brown Uni t3 of no gr eater than 5300 MMBtu/hr in the Brown Plant Title V permit, such that th e hourly heat input rate lim itation becom e s and rem a ins an “applicable requirem ent” as th at term is defined in 40 C.F.R. § 70.2. Kentucky Utilities shall state in its applica tion th at it sha ll measure comp lianc e with the heat input limitation by calcula ting hourly heat input rates using hourly m a ss coal burned data and weekly compos ite fuel sampling anal ys is data co lle cted for Brown Unit 3. EPA will use be s tef f

o rts to expeditiously re view su ch application subm itted by Kentucky Utilitie s andwill not o b ject to amendm ent or renewal of Kentucky Utilitie s’ Title V

43permit based on that application to include, in accordance withthis Paragraph, that heat input rate as the federally enforceab le heat input limit for Brown Unit 3. 93. W ithin one-hundred eighty (180) days after entry of this Consent Decree, or at the time that Ken tu c ky Utilities submits its Brown Plant Title V pe r m it application to renew the existing Title V perm it that will expire on March 1, 2010, whichever is later, Kentucky Utilities shall a m end any applicab le Title V perm it application, or apply for

am endm ents of its Title V perm it, to includ e a schedule f o r all unit-spe cif ic and p l antspecific perfor m ance, operational, m a intena nce, and control technology requirem e nts established by this Consent Decree including, bu t not lim ited to, required em ission rates,

rem oval efficiencies, the Unit A nnual Tonnage Lim itations for SO 2 and NO x , and the requirem e nts pertaining to the use and surrender of NO x Allowances. 94. W ithin one (1) year from the comm ence m e nt of operation of the final pollution control device to be installed on th e U nit und er this Consent Decree, Kentu c ky Utilitie s sha ll apply to p erm anently include the r equirem ents and lim itations enum erated in th is Cons ent Decr ee into a federally-enforceable perm it, such that the requirem e nts and lim itations becom e and rem ain “applicab le r eq u irem ents” as that term is def i ned in 40 C.F.R. § 70.2. The perm it shall require comp lia nce with the following: (a) any applicable 30-Day Rolling Average Em ission Rate; (b) any applicable 30-D ay Rolling Average SO 2 Re m oval Efficiency; (c) the Unit Annual SO 2 Tonnage Limitation set forth in Paragraph 22 of this Consent Decree; and (d) the NO x Allowance restri ctions set f o rth in this Consent Decree. 95. Kentucky Utilities sh all provide EP A with a co py of each applicationto

am end its Title V permit for Brown Unit 3, as well as a copy of any permit proposed as a

44result of such application, to allow for ti m e ly participation in any public comm ent opportunity. 96. If Kentucky Utilities sell s or tran sfers to an entit y unrelatedto Kentucky Utilitie s (“T h ird Party Purchaser ”) part or all of its Ownership In ter est in the B r own Plant, Kentucky Utilities shall co mply with the requirem ents of Section XIX (Sales or Transfers of Ownership Interest s) with regardto thatUnit prior to a ny such sale or transf er un le ss, f o llowin g any such s ale o r transf er, Kentucky Utilities r e m ains the holde r of

the Title V perm it f o r such f acility. XVII. INF O RMATION COLL E C TION AND RE TENT I ON 97. Any authorized representative of the United States, including their attorneys, contractors, and consultants, upon presentation of credentials, shall have a right of entry upon the premises of the Brown Po wer Plan t a tany rea s o n able tim e f o r th e purpose of:

a. monitoring the progress of activities required under this C onsent Decree; b. verif y ing an y data o rinf o rm ation subm itted to the United S t ates in accordan ce with the term s of this Consent Decree;

c. obtaining samples and, upon request, splits of any sa mp les taken by Kentucky Utilities orits representatives, contractors, or consultants; and d. assess ing Kentucky Utilitie s’ c o m p liance with th is Consent Decree. 98. Kentucky Utilities shall retain, and in struct its contractors and agents to preserve, all non-identical copies of all r ecords and docum ents (including records and

45docum ents in electronic for m ) now in its or its contractors’ or agents’ possessionor contro l, andthat direc t ly re late to Kentucky Utilities’ pe rf orm a nce of its obligations under this C onsent Decree until Decem ber 31, 2017. This record retention requirement shall apply regardless of any corporate docum ent reten tion po licy to the contrary. 99. All inform ation and docum ents subm itted by Kentucky Utilities pursuant to th is Cons ent Decree shall be sub j ect to any requests under applicable law providing public disclosure of docum e nts unless (a) th e infor m ation and docum e nts are subject to legal privile g es or protection or ( b ) Kentucky Utilities claim s and substantiates in accordan ce with 40 C.F. R. Part 2 that the in form ation and do cum e nts contain confidential business inform ation. 100. Nothing in this Consent Decree sha ll lim it the authority of the EPA to conduct tests and inspections at Kentucky Ut ilities’ facilities under Section 114 of the Act, 42 U.S.C. § 7414, or any other applicable federal or state law s , regulations or perm its. XVIII. NOTICES 101. Unless otherwise provided herein, wh enever notifications, subm issions, or communications are required by this Consent D ecree, they s h all b e m ade in writing and addressed as follows:

As to the United States o f Am erica : Chief, Environm ental En f o rcem ent Section Environm ent and Natura l Resources Division U.S. Departm e nt of Just ice P.O. Box 7611, Ben Franklin Station Washington, D.C. 20044-7611

46DJ# 90-5-2-1-06837 and Directo r , Air Enforcem ent Divisio n Office of Enforcem ent and Comp liance Assuran ce U.S. Environm ental Protection Agency Ariel Rios B uilding [2242A] 1200 Pennsylvania Avenue, N.W

. Washington, DC 20460 and Directo r Air, Pesticides and Toxics Managem e nt Division U.S. EPA- Region 4 Sa m Nunn Atlanta Federal Center 61 Forsyth S treet, SW Atlanta, GA 30303-8960 As to Kentucky Utilities : General Cou n sel E.ON U. S. LLC 220 W e st Main Street Louisville, KY 40202 W illiam Bumpers Baker Botts LLP The W arner 1299 Pennsylvania Avenue, N.W

. Washington, DC 20004 102. All notifications, communications or subm issions m a de pursuant to this Section shall be sent either by: (a) overnig ht mail or overnight de liv ery servic e, or (b) certified or regis t ered mail, retu rn receip t requ ested. All n otifications, communications and transm issions (a) sent by overnight, certif ied or registered m a il shall be deem e d submitted on the date th ey are postm arked, or (b) sent by overnigh tdelivery serv ice shall be deem ed subm itted on the date they are de live r e dto the de livery serv ice.

47103. Any Party m a y change either the notice recipient or the address for providing n o tice s to it by serv ing a ll o ther Parties with a n o tice se tting f o rth suchnew notice recipient or address. XIX. SALES OR TRANSFERS OF OWNERSHIP I N TERESTS 104. If Kentucky Utilities pro poses to sell or tran sfer an Ownership Interest to a Third Part y Purchase r, Kentucky Utilitie s sha ll adv i se th e ThirdPart y Purcha se r in writing of the exis tenc e of this Consent Dec r ee prio r to su ch sale or tr ansf er, and shall send a copy of such written no tif ica tion to the United Sta t e s pursuant to Section X V III (Notices) of this Consent Decr ee at least sixty (60) Days before such proposed sale or transfer. 105. No sale or transfer of an Ownership Interest shall take p l ace before the Third Party Purchaser and the United States have executed, and the Court has approved, a modif i cationpursuan t to Section XXI I (Mod if icat ion) of this Consen t Decree m aking the Third Party Purchaser a party to this Consent Decree, join tly and severally liable with Kentucky Utilities f o r all the r e quirem e nts of this Decree th at m ay be applicab le to the transferred o rpurchas ed Ownership Interes t

. 106. This Consent Decree sha ll not be construed to imp ede the transfer of any Ownership Interes tbetw een Kentucky Utilities a nd any Third Party Purchaser so lon g as the requirem e nts of this Cons ent Decree are m e t. This Consent Decree shall n o t be construedto prohibit a contra ctua l alloc ation– as betweenKentucky Utilitie s andany Third Party Purchaser of Ownership Interests – of the burdens of compl i ance with this Decree, p r o v ided th at both Kentu cky Utilities and such Third Party Purchaser shall

rem ain jointly and sever ally liable to the United States f o r the obligatio ns of the Decree applic able to the transf e rred or purchased Ownership Interest.

48107. If the United States ag rees, then th e United States, Kentucky Utilities, and the Third P arty Pu rchas er th at h as becom e a party to this Consen t Decree pursuant to Paragraph 105, m ay execute a m odification tha tr elie v e s Kentucky Utilitie s of its liability under this Consent Decree for, and m akes the Third Party Purchaser liable for, all obliga tions and liabilities app licab le to the purchased o r transferredOwnership In teres t

. Notwithstan ding the foregoing, however, Kentu c ky Utilities m a y not assign, and m a y not be released from , any obligation under this Consent Decree that is not specific to the purchased or transferred Ownership Intere st, including the obligations set forth in Sections VIII (Environm ental Mitigation P r oj ects) and IX (Civil Penalty). Kentucky Utilities m a y propose and the United States may agree to restrict the s c ope of the joint and several liability of any pur chas er or transferee for any obligations of this Consent Decree that are not specific to th e transfer red or purchased Ownership Interest, to the extent such obligations m a y be adequately separated in an enforceable m a nner. XX. EF FECTIVE DATE 108. The effective date of this Consent D ecree shall be the date upon which this Consent Decree is entered by the Co urt. XXI. RET E NTION O F JURISDI C TION 109. The Court shall retain jurisdiction of this case after entr y of this Consent Decree to enforce comp liance with the term s and conditions of this Consent Decree and to take any action necessary or appropriate for its interpretation, construction, execution, modification, or adjudication of disputes. Dur i ng the term of this Cons ent Decree, any Party to this Consent Decree m a y apply to the C ourt for any relief neces sary to cons true or effectuate this Consen t Decree. XXII. MODIFICATI O N

49110. The term s of this Consent Decree m a y be m odified only by a subsequent written agre em ent signed by the United Stat es and Kentucky Utilitie s. W h ere the modif i cationconstitutes a m aterial c h ange to an y term of this Decree, it shall be effective only upon approval by the Court. XXIII. GENERAL PROVISIONS 111. This Consent Decree is not a perm it. Compliance with the term s of this Consent Decree does not guarantee comp liance with a ll applicable federal , st ate, or local laws or regulations. The em ission rates set fo rth herein do not relie ve Kentucky Utilities from any obligation to comp ly with other state and federal requirem e nts under the C l ean Air Act, including K e ntucky Utilities’ ob ligation to satisfy any state m odeling requirem e nts set forth in the Kentucky State Impl em entation Plan. 112. This Consent Decree does not apply to any claim s of crim inal liability. 113. In any subsequent adm i nistrative or judicial action initiated by the United States for injunctive relief or civil penalti es r elating to the f acilities covered by this Consent Decree, Kentucky Utilities shall not assert any defense or claim based upon principles of waiver, res judicata, collatera l estoppel, issue precl usion, claim preclusion, or claim splitting, or any other defense base d upon the contention that the claim s raised by the United States in the subsequent pr oceeding were brought, or should have been brought, in the instant case; provided, however, that nothing in this Paragraph is intended to affect th e validity o f Section X(Resol u tionof Certa i n Civil Claims of the Un ited States ). 114. Nothing in this Consent Decree sh all relieve Kentucky Utilities of its obligation to com p ly with all applicable f ede ral, state, and local laws and regulations. Subject to the provisions in S ection X (Resolution of Certai n Civil Claim s of the United

50States), nothing contained in th is Co nsent Dec r e e shall be c onstrued to prevent or lim i t the rights of the United States to obtain pena lties or injunctive re lief under the Act or other federal, state, or local statutes, regulations, or perm its. 115. Nothing in this Consent Decree is inte nded to, or shall, alter or waive any applicable law (including but not lim ited to any defenses, entitlem ents, challenges , o r clarifications related to the Credible Evidence Rule, 62 Fed. Reg. 8314 (Feb. 24, 1997)) concerning the use of data for any purpose under the Act. 116. Each limit and/or other requirem ent established by or under this Decree is a separate, independent requirem e nt. 117. Perform ance standards, emissions lim its, and ot her quantitative standards set by or under this Consent Decree must be met to the number of sig nif icant digits in which the standard or lim it is expressed. For example, an Em ission Rate of 0.100 is not

m e t if the actual Em ission Rate is 0.101. Kentucky Utilities shall round the fourth signif i can t digit to the neares t third signif i can t digit, or th e third sign if ic ant digit to th e nearest second significant digit, depending upon whether the lim it is expressed to three or two significant digits. For exam pl e, if an actual Em ission Rate is 0.1004, that shall be reported as 0.100, and shall be in compliance wi th an Emission Rate of 0.100, and if an actual Em is sion Rate is 0.1005, that shall be reported as 0.101, and shall not be in

compliance with an Em i ssion Rate of 0.100. Kentucky Utilities shall report data to the

num ber of significant digits in whic h the standard or lim it is expressed. 118. This Consent Decree does not lim it, enlarge or affect the rights of any Party to this Consent Decree a s against any third parties.

51119. This Consent Decree constitutes th e final, complete and exclusive agreem ent and understanding am ong the Parties w ith respect to the settlem e nt e m bodied in this Consent Decree, and supersedes a ll prior agreem ents and understandings among the Parties rela ted to the subje ct m atter herein. N o docum ent, repr esentation, inducem ent, agreem ent, understanding, or prom i s e constitutes any part of this Decree or the s ettlem ent it repr ese n ts, nor sha l l th ey be used in construing the term s of this Consent Decree. 120. Each Party to this action shall bear its own costs and attorneys' fees. XXIV. SIG NATORIE S AND SE RVICE 121. Each undersigned representative of the Parties certifies th at he or she is f u lly author ized to en te r into the te rm s and conditions of this Consen t Decree an d to execute and legally bind to this docum e nt the Party he or she represents. 122. This Consent Decree m a y be signed in counterparts, and such counterpart signature pages shall be gi ven full force and effect. 123. Each Party hereby agrees to accept service of pr ocess by m a il with respect to all m atters arising under or relating to th is Consent Decree and to waive the form al servic e r e qu irem ents se t f o rth inRule 4 of the F e deral Rules of Civil P r ocedure and any applicable L ocal Rules of this Court includi ng, but not lim ited to, service of a summ ons . XXV. P U B L IC COMMENT 124. The Parties agree and acknowledge that final approval by the United States and entry of this Consent Decree is su bject to the procedures of 28 C.F.R. § 50.7, which provides for notice of the lodging of this Consent Decree in the Federal Register, an opportunity for public comm ent, and the ri ght of the United S t ates to withdraw or withhold consent if the comments disclose facts or considerati ons which indicate that the

52Consent Decree is inap propriate, improper or inadequa te. Kentucky Utilitie s sha ll not oppose entry of this Consent Decree by this Court or challenge any provision of this Consent Decree un less the United S t ates has notified Kentucky Utilities, in writing, that the United S t ates no longer supports entry of the C onsent Decree. XXVI. CONDITIONAL TE RMIN ATION UNDER DECREE 125. Term ination as to Co mpleted Ta sks

. As soon as Kentucky Utilities

completes a construction project or any other requirem e nt of this Conse n t Decr ee th at is not ongoin g or recu rring, Kentucky Utilities m a y, by motion to this Court, seek

term ination of the provision or provisions of this Conse n t Decree that im posed the requirem e nt. 126. Conditional Term ination of Enforcem ent Through the Consent Decree

. Af ter Kentucky Utilities :

a. has successfully compl e ted construction, and has m a intained operation, of all pollution controls as required by this Consent Decree for at least two (2) years; and b. has obtained a final T i tle V perm it ( i ) as requ ire dby the ter m s of this Consen t Decree; (ii) that covers Brown Unit 3; and (iii) that in clud e as app l icable requirem e nts all of the requirem e nts specified in Paragraphs 92 and 94 of this Consent Decree; then Kentuc ky Utilities m ay so certif y these f act s to the United States a nd this Court. If the United States does not object in writing with specific reas ons within forty-five (45) Days of re ceipt of Kentucky Utilities’ ce rtification, then, for any Consent Decree violations that occur after the filing o f notice, any en forcem ent action taken by the United States to res o lve those v i olations shall seek to enforce the requirem e nts contained in the

53Title V perm it through the applicab le Title V p e rm it and/or other enforcem ent authority and not through this Consent Decree. 127. Resort to E n forcem ent under this Consent Decree

. Notwithstanding the preced ing P aragraph, if enforcem ent of a prov ision in this Decree canno t be pursued by the United States under the applicable Title V perm it, or if a Decree requirem ent was intendedto be partof a Title V Permit and did not becom e or rem ain part of such p e rm it, then such requirem ent m ay be enforced by the United States under the term s of this Decree at an y tim e. XXVII. FI NAL J UDG MENT 128. Upon approval and entry of this Consent Decree by the Court, this Consent Decree shall co nstitu te a fin al judgm en t between the United States and Kentucky Utilitie s.

SO ORDERED, THIS _____ DAY OF ________________, 2009.

________________________________________ THE HONORABLE KARL S. FORESTER UNITED STATES DISTRICT JUDGE

54Signature Page for Consent Decree in: United States of America v. Kentucky U tilities Company, No. 5:07-CV-0075-KSF (E.D. Ky.)

FOR THE UNITE D S T AT ES OF AMERICA:

_________________________ JOHN C. C RUDE N Deputy Assistant Attorney General Environm ent and Natural Resources Division United States Departm e nt of Justice

_________________________ W. BE NJAMIN FISHEROW Deputy Section Chief ANDRE W C. HANSON Trial Attorn ey Environm ental Enforcem ent Section Environm ent and Natural Resources Division United States Departm e nt of Justice

55Signature Page for Consent Decree in: United States of America v. Kentucky U tilities Company, No. 5:07-CV-0075-KSF (E.D. Ky.)

_________________________ LEE GENTRY Assistan t United States Attorney Eastern District of Kentucky United States Departm e nt of Justice

56Signature Page for Consent Decree in: United States of America v. Kentucky Utilities Company, No. 5:07-CV-0075-KSF (E.D. Ky.)

_________________________ CATHERINE R. McCABE Acting Assistant Adm i nistrato r Office of Enforcem ent and Comp liance Assuran ce United States Environm ental Protection Agency

_________________________ MATTHEW M. MORRISON Acting Director, Air Enf o rcem ent Division Office of Enforcem ent and Comp liance Assuran ce United States Environm ental Protection AgencySignature Page for Consent Decree in: United States of America v. Kentucky Utilities Company, No. 5:07-CV-0075-KSF (E.D. Ky.)

_________________________ MARY W I LKES, Regi onal Counsel U.S. Environm ental Protection Agency Region 4 61 Forsyth S t ., S.W

. Atlanta, GA 30303

_________________________ JENNIFER LEW I S, Ass oci ate Regional Counsel U.S. Environm ental Protection Agency Region 4 61 Forsyth S treet, S.W

. Atlanta, GA 30303Signature Page for Consent Decree in: United States of America v. Kentucky Utilities Company , No. 5:07-CV-0075-KSF

FOR DEFE NDANT KENT UCKY UTILITIES COMP ANY:

B y : Na m e : Ralph Bowling Title: Vice Presid ent, Power Production E.ON U. S. LLC