SECURITIES AND EXCHANGE COMMISSION
                         Washington, D. C.  20549


                                FORM 10-Q


(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934


               For the quarterly period ended June 30, 2000


                                    or


[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934

     Commission    Registrant, State of Incorporation,     IRS Employer
    File Number       Address, and Telephone Number     Identification No.

      1-10568               LG&E Energy Corp.               61-1174555
                         (A Kentucky Corporation)
                           220 West Main Street
                              P.O. Box 32030
                          Louisville, Ky. 40232
                              (502) 627-2000

      2-26720      Louisville Gas and Electric Company      61-0264150
                         (A Kentucky Corporation)
                           220 West Main Street
                              P.O. Box 32010
                          Louisville, Ky. 40232
                              (502) 627-2000

       1-3464           Kentucky Utilities Company          61-0247570
                  (A Kentucky and Virginia Corporation)
                            One Quality Street
                      Lexington, Kentucky 40507-1428
                              (606) 255-2100

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

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

                            LG&E Energy Corp.
       129,677,030 shares, without par value, as of July 31, 2000.

                   Louisville Gas and Electric Company
        21,294,223 shares, without par value, as of July 31, 2000,
                      all held by LG&E Energy Corp.

                        Kentucky Utilities Company
        37,817,878 shares, without par value, as of July 31, 2000,
                      all held by LG&E Energy Corp.

This combined Form 10-Q is separately filed by LG&E Energy Corp.,
Louisville Gas and Electric Company and Kentucky Utilities Company.
Information contained herein related to any individual registrant is filed
by such registrant on its own behalf.  Each registrant makes no
representation as to information relating to the other registrants.  In
particular, information contained herein related to LG&E Energy Corp. or
any of its direct or indirect subsidiaries other than Louisville Gas and
Electric Company or Kentucky Utilities Company is provided solely by LG&E
Energy Corp., not Louisville Gas and Electric Company or Kentucky Utilities
Company, and shall be deemed not included in the Form 10-Q of Louisville
Gas and Electric Company or the Form 10-Q of Kentucky Utilities Company.
<PAGE>

                        TABLE OF CONTENTS

                             PART I

Item 1 Financial Statements

          LG&E Energy Corp. and Subsidiaries
            Consolidated Statements of Income                   1
            Consolidated Balance Sheets                         3
            Consolidated Statements of Cash Flows               5
            Consolidated Statements of Retained Earnings        7
            Consolidated Statements of Comprehensive Income     8

          Louisville Gas and Electric Company
            Statements of Income                                9
            Balance Sheets                                     10
            Statements of Cash Flows                           12
            Statements of Retained Earnings                    13
            Statements of Comprehensive Income                 14

          Kentucky Utilities Company
            Statements of Income                               15
            Balance Sheets                                     16
            Statements of Cash Flows                           18
            Statements of Retained Earnings                    19

          Notes to Financial Statements                        20

Item 2 Management's Discussion and Analysis of Results of
          Operations and Financial Condition                   27

Item 3 Quantitative and Qualitative Disclosures About
          Market Risk                                          37

                             PART II

Item 1 Legal Proceedings                                       38

Item 4 Submission of Matters to a Vote of Security Holders     39

Item 6 Exhibits and Reports on Form 8-K                        40

       Signatures                                              41

<PAGE>

      Part I.  Financial Information - Item 1.  Financial Statements

                    LG&E Energy Corp. and Subsidiaries
                    Consolidated Statements of Income
            (Unaudited - Thousands of $ Except Per Share Data)

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  2000       1999       2000        1999

REVENUES:
Electric utility               $ 376,606  $ 406,258 $  742,496 $  767,931
Gas utility                       29,979     23,652    118,295     99,431
International and
 non-utility                     199,706    193,747    370,890    355,560
  Net revenues                   606,291    623,657  1,231,681  1,222,922

OPERATING EXPENSES:
Fuel and power purchased         206,509    250,994    409,705    456,082
Gas supply expenses               88,675     56,920    207,903    151,984
Utility operation and
 maintenance                      98,257    115,192    202,115    218,897
International and non-
 utility operation
 and maintenance                  56,210     47,434    104,748     92,398
Depreciation and
 amortization                     56,802     53,479    115,175    108,215
Asset impairment charge
 (Note 4)                         45,000          -     45,000          -
Non-recurring charges
 (Notes 2 and 3)                  14,676          -     35,389          -
  Total operating expenses       566,129    524,019  1,120,035  1,027,576

Equity in earnings
 of unconsolidated
 ventures (Note 6)                10,760     12,051     16,690     33,707

OPERATING INCOME                  50,922    111,689    128,336    229,053

Other income                       5,707      2,611     10,716      8,999
Interest charges and
 preferred dividends              36,919     32,243     71,884     62,763
Minority interest                  4,520      3,842      6,014      5,413

Income before income taxes        15,190     78,215     61,154    169,876

Income taxes                       3,841     28,250     19,923     63,132

Income from continuing
 operations                    $  11,349  $  49,965 $   41,231 $  106,744



                                   - 1 -
<PAGE>

                    LG&E Energy Corp. and Subsidiaries
                Consolidated Statements of Income (cont.)
            (Unaudited - Thousands of $ Except Per Share Data)

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  2000       1999       2000        1999

Income from continuing
 operations                    $  11,349  $  49,965 $   41,231 $  106,744

(Loss) income from disposal of
 discontinued operations, net of
 income tax benefit (expense)
 of $94,476 and ($328)
 (Note 5)                       (155,000)         -   (155,000)       788

NET INCOME (LOSS)              $(143,651) $  49,965 $ (113,769)$  107,532

Average common shares
 outstanding                     129,677    129,677    129,677    129,677

Earnings (loss) per share -
 basic and diluted:
  Continuing operations        $     .09  $     .39  $      .32  $     .82
  (Loss) income from dis-
   posal of discontinued
   operations                      (1.20)       .00       (1.20)       .01

   Total                       $   (1.11) $     .39  $     (.88) $     .83

The accompanying notes are an integral part of these financial statements.


                                   - 2 -
<PAGE>

                    LG&E Energy Corp. and Subsidiaries
                       Consolidated Balance Sheets
                             (Thousands of $)

                                  ASSETS

                                                    (Unaudited)
                                                      June 30,    Dec. 31,
                                                        2000        1999

CURRENT ASSETS:
Cash and temporary cash investments                  $  57,291  $  91,413
Marketable securities                                    8,558     10,126
Accounts receivable - less reserve                     313,139    318,914
Materials and supplies - primarily at average cost:
 Fuel (predominantly coal)                              82,669     91,931
 Gas stored underground                                 25,340     49,038
 Other                                                  96,186     90,259
Prepayments and other                                   46,955     54,038
 Total current assets                                  630,138    705,719

UTILITY PLANT:
At original cost                                     6,021,543  5,916,905
Less:  reserve for depreciation                      2,603,334  2,503,851
 Net utility plant                                   3,418,209  3,413,054

OTHER PROPERTY AND INVESTMENTS - LESS RESERVES:
Investment in unconsolidated
 ventures (Note 6)                                     243,948    249,455
Non-utility property and plant, net                    430,336    477,442
Other                                                   50,926     25,596
 Total other property and investments                  725,210    752,493

DEFERRED DEBITS AND OTHER ASSETS                       263,805    262,491

Total assets                                        $5,037,362 $5,133,757

The accompanying notes are an integral part of these financial statements.


                                   - 3 -
<PAGE>

                    LG&E Energy Corp. and Subsidiaries
                   Consolidated Balance Sheets (cont.)
                             (Thousands of $)

                         CAPITAL AND LIABILITIES

                                                    (Unaudited)
                                                      June 30,    Dec. 31,
                                                        2000        1999

CURRENT LIABILITIES:
Current portion of long-term debt                   $  375,506 $  411,810
Notes payable                                          413,660    449,578
Accounts payable                                       192,382    220,460
Net liabilities of discontinued opera-
 tions (Note 5)                                        291,905    158,222
Other                                                  226,031    248,841
 Total current liabilities                           1,499,484  1,488,911

Long-term debt                                       1,404,441  1,299,415

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
 taxes                                                 587,722    585,880
Investment tax credit, in
 process of amortization                                81,849     85,828
Regulatory liability                                    96,799    104,795
Other                                                  172,840    182,357
 Total deferred credits and other liabilities          939,210    958,860

Minority interests                                     106,379    109,952

Cumulative preferred stock                             142,640    135,328

COMMON EQUITY:
Common stock, without par value -
 129,677,030 shares outstanding                        777,013    777,013
Other                                                   (1,926)    (1,956)
Retained earnings                                      170,121    366,234
 Total common equity                                   945,208  1,141,291

Total liabilities and capital                       $5,037,362 $5,133,757

The accompanying notes are an integral part of these financial statements.


                                   - 4 -
<PAGE>

                    LG&E Energy Corp. and Subsidiaries
                  Consolidated Statements of Cash Flows
                       (Unaudited - Thousands of $)

                                                            Six Months
                                                              Ended
                                                             June 30,
                                                        2000        1999

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                  $  (113,769)$  107,532
Items not requiring cash currently:
 Depreciation and amortization                         115,175    108,215
 Deferred income taxes - net                            (7,288)    (2,157)
 Asset impairment charge (Note 4)                       45,000          -
 Non-recurring charges (Notes 2 and 3)                  35,389          -
 Loss (income) from disposal of dis-
  continued operations (Note 5)                        155,000       (788)
 Other                                                  (5,530)   (24,170)
Change in net current assets                           (35,224)    40,018
Other                                                  (40,973)    26,223
 Net cash flows from operating activities              147,780    254,873

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities                                   (339)      (652)
Proceeds from sales of securities                        1,635      7,871
Construction expenditures                             (157,273)  (199,770)
Investments in unconsolidated
 ventures (Note 6)                                      (2,125)   (74,498)
Proceeds from sales of investments
 in affiliates (Note 6)                                 22,507     33,821
  Net cash flows from investing activities            (135,595)  (233,228)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of debt                                       187,900    150,000
Retirement of debt                                    (120,913)         -
Short-term borrowings                                5,031,905    756,132
Repayment of short-term borrowings                  (5,070,355)  (813,132)
Issuance of preferred stock                              7,500          -
Redemption of preferred stock                                -     (1,202)
Payment of common dividends                            (82,344)   (79,752)
 Net cash flows from financing activities              (46,307)    12,046

CHANGE IN CASH AND TEMPORARY
 CASH INVESTMENTS                                      (34,122)    33,691

BEGINNING CASH AND TEMPORARY
 CASH INVESTMENTS                                       91,413    105,604

ENDING CASH AND TEMPORARY
 CASH INVESTMENTS                                  $    57,291 $  139,295



                                   - 5 -
<PAGE>

                    LG&E Energy Corp. and Subsidiaries
              Consolidated Statements of Cash Flows (cont.)
                       (Unaudited - Thousands of $)

                                                            Six Months
                                                              Ended
                                                             June 30,
                                                        2000        1999

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION:
 Cash paid during the period for:
  Income taxes                                     $    31,985 $    9,375
  Interest on borrowed money                            52,650     53,857

For the purposes of these statements, all temporary cash investments
purchased with a maturity of three months or less are considered cash
equivalents.

The accompanying notes are an integral part of these financial statements.


                                   - 6 -
<PAGE>

                    LG&E Energy Corp. and Subsidiaries
               Consolidated Statements of Retained Earnings
                       (Unaudited - Thousands of $)

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  2000       1999       2000        1999

Balance at beginning
 of period                     $ 354,944  $ 483,970  $ 366,234  $ 466,279
Net income (loss)               (143,651)    49,965   (113,769)   107,532
Cash dividends declared on
 common stock ($.3175, $.3075,
 $.6350 and $.6150 per share)     41,172     39,876     82,344     79,752

Balance at end of period       $ 170,121  $ 494,059  $ 170,121  $ 494,059

The accompanying notes are an integral part of these financial statements.


                                   - 7 -
<PAGE>

                    LG&E Energy Corp. and Subsidiaries
             Consolidated Statements of Comprehensive Income
                       (Unaudited - Thousands of $)

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  2000       1999       2000        1999

Net income (loss)              $(143,651)  $ 49,965  $(113,769)  $107,532

Unrealized holding gains (losses)
 on available-for-sale securities
  arising during the period         (205)      (155)      (517)        37

Reclassification adjustment for
 realized gains and (losses) on
 available-for-sale securities
 included in net income               26       (163)        40       (158)

Other comprehensive loss,
 before tax                         (179)      (318)      (477)      (121)

Income tax benefit related to
 items of other comprehensive
 income                               38        110        151         46

Comprehensive income (loss)    $(143,792)  $ 49,757  $(114,095)  $107,457

The accompanying notes are an integral part of these financial statements.


                                   - 8 -
<PAGE>

                   Louisville Gas and Electric Company
                           Statements of Income
                               (Unaudited)
                             (Thousands of $)

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  2000       1999       2000        1999

OPERATING REVENUES:
Electric                        $179,752   $190,445   $341,079   $341,286
Gas                               29,979     23,652    118,295     99,431
 Total operating revenues        209,731    214,097    459,374    440,717

OPERATING EXPENSES:
Fuel for electric generation      38,650     39,380     78,576     71,838
Power purchased                   24,346     30,858     46,100     53,884
Gas supply expenses               18,688     13,395     82,082     63,887
Non-recurring charges (Note 3)         -          -      8,141          -
Other operation expenses          30,547     39,457     67,522     79,649
Maintenance                       17,442     20,227     31,323     34,930
Depreciation and amortization     23,901     24,143     48,050     48,285
Federal and state
 income taxes                     14,397     12,079     24,066     21,634
Property and other taxes           4,475      3,962      9,637      8,998
 Total operating expenses        172,446    183,501    395,497    383,105

NET OPERATING INCOME              37,285     30,596     63,877     57,612

Other income                       1,850        234      3,369      1,312
Interest charges                  11,126      8,790     21,816     17,968

NET INCOME                        28,009     22,040     45,430     40,956

Preferred stock dividends          1,317      1,086      2,482      2,176

NET INCOME AVAILABLE
 FOR COMMON STOCK               $ 26,692   $ 20,954   $ 42,948   $ 38,780

The accompanying notes are an integral part of these financial statements.


                                   - 9 -
<PAGE>

                   Louisville Gas and Electric Company
                              Balance Sheets
                             (Thousands of $)

                                  ASSETS

                                                    (Unaudited)
                                                      June 30,    Dec. 31,
                                                        2000        1999

UTILITY PLANT:
At original cost                                    $3,125,138 $3,065,839
Less:  reserve for depreciation                      1,267,106  1,215,032
 Net utility plant                                   1,858,032  1,850,807

OTHER PROPERTY AND INVESTMENTS -
 less reserve                                            1,161      1,224

CURRENT ASSETS:
Cash and temporary cash investments                     39,579     54,761
Marketable securities                                    5,527      6,936
Accounts receivable - less reserve                     107,534    113,859
Materials and supplies - at average cost:
 Fuel (predominantly coal)                              15,964     17,350
 Gas stored underground                                 14,648     38,780
 Other                                                  34,919     35,010
Prepayments and other                                    2,996      2,775
 Total current assets                                  221,167    269,471

DEFERRED DEBITS AND OTHER ASSETS:
Unamortized debt expense                                 5,607      5,607
Regulatory assets                                       29,999     31,443
Other                                                   18,682     12,900
 Total deferred debits and other assets                 54,288     49,950

Total assets                                        $2,134,648 $2,171,452

The accompanying notes are an integral part of these financial statements.


                                  - 10 -
<PAGE>

                   Louisville Gas and Electric Company
                          Balance Sheets (cont.)
                             (Thousands of $)

                      CAPITALIZATION AND LIABILITIES

                                                    (Unaudited)
                                                      June 30,    Dec. 31,
                                                        2000        1999

CAPITALIZATION:
Common stock, without par value -
 Outstanding 21,294,223 shares                      $  425,170 $  425,170
Retained earnings                                      269,179    259,231
Other                                                   (1,184)    (1,025)
 Total common equity                                   693,165    683,376
Cumulative preferred stock                              95,140     95,328
Long-term debt                                         335,600    380,600
 Total capitalization                                1,123,905  1,159,304

CURRENT LIABILITIES:
Current portion of long-term debt                      271,200    246,200
Notes payable                                          131,757    120,097
Accounts payable                                        83,784    113,008
Provision for rate refunds                                   -      8,962
Dividends declared                                      17,817     24,236
Accrued taxes                                           39,632     23,759
Accrued interest                                         6,798      9,265
Other                                                   16,830     15,725
 Total current liabilities                             567,818    561,252

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
 taxes                                                 261,967    255,910
Investment tax credit, in
 process of amortization                                65,111     67,253
Accumulated provision for pensions
 and related benefits                                   39,454     38,431
Customer advances for construction                       9,965     11,104
Regulatory liability                                    55,080     58,726
Other                                                   11,348     19,472
 Total deferred credits and other liabilities          442,925    450,896

Total capital and liabilities                       $2,134,648 $2,171,452

The accompanying notes are an integral part of these financial statements.


                                  - 11 -
<PAGE>

                   Louisville Gas and Electric Company
                         Statements of Cash Flows
                       (Unaudited - Thousands of $)

                                                            Six Months
                                                              Ended
                                                             June 30,
                                                        2000        1999

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                           $  45,430  $  40,956
Items not requiring cash currently:
 Depreciation and amortization                          48,050     48,285
 Deferred income taxes - net                               246     (3,982)
 Investment tax credit - net                            (2,142)    (2,145)
 Other                                                   4,264      3,585
Changes in current assets and liabilities                8,036     10,050
Other                                                   (4,508)     6,319
 Net cash flows from operating activities               99,376    103,068

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities                                   (194)      (495)
Proceeds from sales of securities                        1,520      7,861
Construction expenditures                              (64,560)   (59,757)
 Net cash flows from investing activities              (63,234)   (52,391)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of pollution control bonds                     25,000          -
Retirement of first mortgage and
 pollution control bonds                               (46,083)         -
Short-term borrowings                                1,432,256          -
Repayment of short-term borrowings                  (1,420,596)         -
Payment of dividends                                   (41,901)   (46,257)
 Net cash flows from financing activities              (51,324)   (46,257)

CHANGE IN CASH AND TEMPORARY
 CASH INVESTMENTS                                      (15,182)     4,420

CASH AND TEMPORARY CASH INVESTMENTS AT
 BEGINNING OF PERIOD                                    54,761     31,730

CASH AND TEMPORARY CASH INVESTMENTS AT
 END OF PERIOD                                       $  39,579  $  36,150

SUPPLEMENTAL DISCLOSURES:
 Cash paid during the period for:
  Income taxes                                       $   4,396  $  16,065
  Interest on borrowed money                            17,876     16,657

For the purposes of these statements, all temporary cash investments
purchased with a maturity of three months or less are considered cash
equivalents.

The accompanying notes are an integral part of these financial statements.


                                  - 12 -
<PAGE>

                   Louisville Gas and Electric Company
                     Statements of Retained Earnings
                               (Unaudited)
                             (Thousands of $)

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  2000       1999       2000        1999

Balance at beginning
 of period                      $258,987   $243,288   $259,231   $247,462
Net income                        28,009     22,040     45,430     40,956
 Subtotal                        286,996    265,328    304,661    288,418

Cash dividends declared on stock:
5% cumulative preferred              269        269        538        538
Auction rate cumulative
 preferred                           681        450      1,210        904
$5.875 cumulative preferred          367        367        734        734
Common                            16,500     22,000     33,000     44,000
 Subtotal                         17,817     23,086     35,482     46,176

Balance at end of period        $269,179   $242,242   $269,179   $242,242

The accompanying notes are an integral part of these financial statements.


                                  - 13 -
<PAGE>

                   Louisville Gas and Electric Company
                   Statements of Comprehensive Income
                       (Unaudited - Thousands of $)

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  2000       1999       2000        1999

Net income available
 for common stock                $26,692    $20,954    $42,948    $38,780

Unrealized holding losses on
 available-for-sale securities
 arising during the period          (107)      (178)      (266)       (94)

Income tax benefit related
 to unrealized holding
 gains and losses                     43         72        107         38

Comprehensive income             $26,628    $20,848    $42,789    $38,724

The accompanying notes are an integral part of these financial statements.


                                  - 14 -
<PAGE>

                        Kentucky Utilities Company
                           Statements of Income
                               (Unaudited)
                             (Thousands of $)

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  2000       1999       2000        1999

OPERATING REVENUES              $205,324   $225,794   $423,102   $443,143

OPERATING EXPENSES:
Fuel for electric generation      51,466     49,412    107,081    107,567
Power purchased                   43,464     51,606     82,308     90,923
Non-recurring charges (Note 3)         -          -     11,030          -
Other operation expenses          24,167     31,812     53,015     58,955
Maintenance                       17,078     15,944     31,228     28,464
Depreciation and amortization     24,493     22,158     48,825     44,149
Federal and state
 income taxes                     11,368     16,077     22,734     33,221
Property and other taxes           4,376      3,788      9,216      7,901
 Total operating expenses        176,412    190,797    365,437    371,180

NET OPERATING INCOME              28,912     34,997     57,665     71,963

Other income                       2,654      1,993      3,979      4,162
Interest charges                  10,034      9,233     19,938     18,740

NET INCOME                        21,532     27,757     41,706     57,385

Preferred stock dividends            564        564      1,128      1,128

NET INCOME AVAILABLE
 FOR COMMON STOCK               $ 20,968   $ 27,193   $ 40,578   $ 56,257

The accompanying notes are an integral part of these financial statements.


                                  - 15 -
<PAGE>

                        Kentucky Utilities Company
                              Balance Sheets
                             (Thousands of $)

                                  ASSETS

                                                    (Unaudited)
                                                      June 30,    Dec. 31,
                                                        2000        1999

UTILITY PLANT:
At original cost                                    $2,896,405 $2,851,066
Less:  reserve for depreciation                      1,336,228  1,288,819
 Net utility plant                                   1,560,177  1,562,247

OTHER PROPERTY AND INVESTMENTS -
 less reserve                                           14,688     14,349

CURRENT ASSETS:
Cash and temporary cash investments                        484      6,793
Accounts receivable - less reserve                      96,165     88,549
Materials and supplies - at average cost:
 Fuel (predominantly coal)                              27,980     30,225
 Other                                                  28,015     26,213
Prepayments and other                                    3,106      3,743
 Total current assets                                  155,750    155,523

DEFERRED DEBITS AND OTHER ASSETS:
Unamortized debt expense                                 4,665      4,827
Regulatory assets                                       20,787     23,033
Other                                                   26,118     25,111
 Total deferred debits and other assets                 51,570     52,971

Total assets                                        $1,782,185 $1,785,090

The accompanying notes are an integral part of these financial statements.


                                  - 16 -
<PAGE>

                        Kentucky Utilities Company
                          Balance Sheets (cont.)
                             (Thousands of $)

                      CAPITALIZATION AND LIABILITIES

                                                    (Unaudited)
                                                      June 30,    Dec. 31,
                                                        2000        1999

CAPITALIZATION:
Common stock, without par value -
 Outstanding 37,817,878 shares                      $  308,140 $  308,140
Retained earnings                                      320,048    329,470
Other                                                     (595)      (595)
 Total common equity                                   627,593    637,015
Cumulative preferred stock                              40,000     40,000
Long-term debt                                         430,830    430,830
 Total capitalization                                1,098,423  1,107,845

CURRENT LIABILITIES:
Current portion of long-term debt                       54,000    115,500
Notes payable                                           29,931          -
Accounts payable                                       144,792    116,546
Provision for rate refunds                               7,981     20,567
Dividends declared                                      25,188     19,150
Accrued taxes                                           34,319     10,502
Accrued interest                                         7,127      7,329
Other                                                   18,285     18,617
 Total current liabilities                             321,623    308,211

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
 taxes                                                 239,461    243,620
Investment tax credit, in
 process of amortization                                16,738     18,575
Accumulated provision for pensions
 and related benefits                                   48,369     48,285
Regulatory liability                                    41,161     46,069
Other                                                   16,410     12,485
 Total deferred credits and other liabilities          362,139    369,034

Total capital and liabilities                       $1,782,185 $1,785,090

The accompanying notes are an integral part of these financial statements.


                                  - 17 -
<PAGE>

                        Kentucky Utilities Company
                         Statements of Cash Flows
                       (Unaudited - Thousands of $)

                                                            Six Months
                                                              Ended
                                                             June 30,
                                                        2000        1999

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                           $  41,706  $  57,385
Items not requiring cash currently:
 Depreciation and amortization                          48,825     44,149
 Deferred income taxes - net                            (7,478)    (2,214)
 Investment tax credit - net                            (1,837)    (1,839)
Changes in current assets and liabilities               38,445    (23,820)
Other                                                   (1,049)     7,658
 Net cash flows from operating activities              118,612     81,319

CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures                              (48,403)   (44,282)
 Net cash flows from investing activities              (48,403)   (44,282)

CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings                                   69,773          -
Repayment of short-term borrowings                     (39,842)         -
Issuance of pollution control bonds                     12,900          -
Retirement of pollution control bonds                  (74,785)         -
Payment of dividends                                   (44,564)   (37,128)
 Net cash flows from financing activities              (76,518)   (37,128)

CHANGE IN CASH AND TEMPORARY
 CASH INVESTMENTS                                       (6,309)       (91)

CASH AND TEMPORARY CASH INVESTMENTS AT
 BEGINNING OF PERIOD                                     6,793     59,071

CASH AND TEMPORARY CASH INVESTMENTS AT
 END OF PERIOD                                       $     484  $  58,980

SUPPLEMENTAL DISCLOSURES:
 Cash paid during the period for:
  Income taxes                                       $  19,949  $  30,273
  Interest on borrowed money                            18,654     17,632

For the purposes of these statements, all temporary cash investments
purchased with a maturity of three months or less are considered cash
equivalents.

The accompanying notes are an integral part of these financial statements.


                                  - 18 -
<PAGE>

                        Kentucky Utilities Company
                     Statements of Retained Earnings
                               (Unaudited)
                             (Thousands of $)

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  2000       1999       2000        1999

Balance at beginning
 of period                      $324,080   $310,231   $329,470   $299,167
Net income                        21,532     27,757     41,706     57,385
Subtotal                         345,612    337,988    371,176    356,552

Cash dividends declared on stock:
4 75% preferred                      237        237        475        475
6.53% preferred                      327        327        653        653
Common                            25,000     18,000     50,000     36,000
 Subtotal                         25,564     18,564     51,128     37,128

Balance at end of period        $320,048   $319,424   $320,048   $319,424

The accompanying notes are an integral part of these financial statements.


                                  - 19 -
<PAGE>

                    LG&E Energy Corp. and Subsidiaries
                   Louisville Gas and Electric Company
                        Kentucky Utilities Company

                      Notes to Financial Statements
                               (Unaudited)

1. The unaudited consolidated financial statements include the accounts of
   LG&E Energy Corp. and its wholly-owned subsidiaries.  In the opinion of
   management, all adjustments, including those of a normal recurring
   nature, have been made to present fairly the consolidated financial
   position, results of operations and cash flows for the periods
   indicated.  Certain information and footnote disclosures normally
   included in financial statements prepared in accordance with generally
   accepted accounting principles have been condensed or omitted pursuant
   to SEC rules and regulations, although the Company believes that the
   disclosures are adequate to make the information presented not
   misleading.

   See the Company's, LG&E's and KU's Reports on Form 10-K for 1999 for
   information relevant to the accompanying financial statements,
   including information as to the significant accounting policies of the
   Company.

2. On February 28, 2000, the Company announced that its Board of Directors
   accepted an offer to be acquired by Powergen for cash of approximately
   $3.2 billion or $24.85 per share and the assumption of $2.2 billion of
   the Company's debt.  Pursuant to the acquisition agreement, among other
   things, LG&E Energy will become a wholly owned subsidiary of Powergen
   and its U.S. headquarters.  The Utility Operations of the Company will
   continue their separate identities and serve customers in Kentucky and
   Virginia under their present names.  The preferred stock and debt
   securities of the Utility Operations will not be affected by this
   transaction.  The acquisition is expected to close 9 to 12 months from
   the announcement, shortly after all of the conditions to consummation
   of the acquisition are met.  It is possible that the remaining
   regulatory approvals may be received in time to permit a closing during
   the fourth quarter of 2000.  Those conditions include, without
   limitation, the approval of the holders of a majority of the
   outstanding shares of common stock of each of LG&E Energy and Powergen,
   the receipt of all necessary governmental approvals and the making of
   all necessary governmental filings, including approvals of various
   regulators in Kentucky and Virginia under state utility laws, the
   approval of the FERC under the FPA, the approval of the SEC under the
   PUHCA of 1935, and the filing of requisite notifications with the
   Federal Trade Commission and the Department of Justice under the Hart-
   Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act),
   and with the Committee on Foreign Investment in the United States under
   the Exon-Florio Provisions of the Omnibus Trade and Competitiveness Act
   of 1988 (E-F Act) and the expiration of all applicable waiting periods
   thereunder.  The Company expensed approximately $14.7 million and $15.4
   million related to the Powergen transaction during the three- and six-
   month periods ended June 30, 2000, respectively.  The foregoing
   description of the acquisition does not purport to be complete and is
   qualified in its entirety by reference to LG&E Energy's current reports
   on Form 8-K, filed February 29, 2000, with the SEC.

   Through mid-August 2000, a number of approval steps have been completed
   by the Company and Powergen.  Shareholders of the Company and of
   Powergen approved the merger transaction in separate meetings held in
   June 2000.  Further, approvals were received from the Kentucky
   Commission in May 2000, the FERC in June 2000 and the Virginia
   Commission in July 2000.  The parties submitted the requisite filings
   under the HSR Act and the E-F Act in late July and early August 2000,
   respectively, which trigger 30 day waiting periods due to expire in
   late August and early September, respectively, absent any further
   inquiry or investigation by the applicable regulatory authority.

                                  - 20 -
<PAGE>

   The parties' joint application for approval to the SEC under PUHCA was
   submitted in April 2000.  While the Company and Powergen believe that
   they will receive the requisite regulatory approvals for the merger in
   sufficient time to complete the transaction on the schedule mentioned
   above, there can be no assurance as to the timing of such approvals or
   the ability to obtain such approvals on satisfactory terms or
   otherwise.

3. During the first quarter 2000, the Company took a $12.1 million ($.09)
   after-tax charge for the continued "One Utility" integration of the
   operations of LG&E and KU including their customer service centers and
   certain administrative elements of their retail electric and gas
   distribution operations.  The result of this consolidation was the
   elimination of approximately 400 positions most of which were taken by
   employees through the Company's voluntary enhanced severance program.

4. The Company previously announced its intention to sell its natural
   gas gathering and processing business in the near term.  Information
   gathered to date indicates that the Company will realize proceeds from
   the sale of this business below carrying value.  As a result, the
   Company recorded a pretax impairment charge of $45 million in the
   second quarter of 2000 to reduce the carrying value of this business to
   more appropriately reflect net realizable value.

5.  Effective June 30, 1998, the Company discontinued its merchant energy
    trading and sales business.  This business consisted primarily of a
    portfolio of energy marketing contracts entered into in 1996 and early
    1997, nationwide deal origination and some level of speculative trading
    activities, which were not directly supported by the Company's physical
    assets.  The Company's decision to discontinue these operations was
    primarily based on the impact that volatility and rising prices in the
    power market had on its portfolio of energy marketing contracts.
    Exiting the merchant energy trading and sales business enabled the
    Company to focus on optimizing the value of physical assets it owns or
    controls, and reduced the earnings impact on continuing operations of
    extreme market volatility in its portfolio of energy marketing
    contracts.  The Company continues to settle commitments that obligate
    it to buy and sell natural gas and electric power.  If the Company is
    unable to dispose of these commitments or assets it will continue to
    meet its obligations to buy and sell natural gas and electric power
    under the terms of the contracts until disposition or expiration.  The
    Company, however, has maintained sufficient market knowledge, risk
    management skills, technical systems and experienced personnel to
    maximize the value of power sales from physical assets it owns or
    controls, including LG&E, KU and WKE.

   As a result of the Company's decision to discontinue its merchant
   energy trading and sales activity, and the initial decision to sell the
   associated gas gathering and processing business, the Company recorded
   an after-tax loss on disposal of discontinued operations of $225
   million in the second quarter of 1998.  The loss on disposal of
   discontinued operations resulted primarily from several fixed-price
   energy marketing contracts entered into in 1996 and early 1997,
   including the Company's long-term contract with OPC.  Other components
   of the write-off included costs relating to certain peaking options,
   goodwill associated with the Company's 1995 purchase of merchant energy
   trading and sales operations and exit costs.

   In the fourth quarter of 1999, the Company received an adverse decision
   from the arbitration panel considering its contract dispute with OPC,
   which was commenced by the Company in April 1998.  As a result of this
   adverse decision, higher than anticipated commodity prices, increased
   load demands, and other factors, the Company increased its after-tax
   accrued loss on disposal of discontinued operations by $175 million.
   The additional write-off included costs related to the remaining
   commitments in its portfolio and exit costs expected to be incurred to
   serve those commitments.



                                  - 21 -
<PAGE>

   In the second quarter of 2000, the Company increased its after-tax
   accrued loss on disposal of discontinued operations by an additional
   $155 million primarily to reflect the most recent OPC load forecast,
   coupled with the increased demand experienced this summer, and new
   price forecasts for the OPC and other long-term contracts.  Although
   the Company used what it believes to be appropriate estimates for
   future energy prices, among other factors, to calculate the net
   realizable value of discontinued operations, there are inherent
   limitations in models to accurately predict future commodity prices,
   load demands and other events that could impact the amounts recorded by
   the Company.

   Operating results for the discontinued merchant energy trading and
   sales business follow.
                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  2000       1999       2000        1999

   Revenues                     $106,878   $156,345   $181,576   $289,782
   Loss before taxes             (32,944)   (25,468)   (43,559)   (37,544)
   Income (loss) from
     discontinued oper-
     ations, net of in-
     come taxes                  (20,469)   (16,692)   (27,063)   (20,480)

   Net assets of discontinued operations at June 30, 2000, follow.

   Accounts receivable                    $  44,249
   Price risk management assets              28,346
   Accounts payable                         (77,633)
   Other assets and liab-
     ilities, net                            16,070

   Net assets before balance
     of reserve for discontinued
     operations                              11,032

   Accrued loss on disposal
     of discontinued operations,
     net of income tax benefit
     of $184,647                           (302,937)

   Net liabilities of discon-
     tinued operations                    $(291,905)

   Total pretax charges against the accrued loss on disposal of
   discontinued operations through June 30, 2000, include $288.6 million
   for commitments prior to disposal, $69.6 million for transaction
   settlements, $11.1 million for goodwill, and $36.5 million for other
   exit costs.  While the Company has been successful in settling portions
   of its discontinued operations, significant assets, operations and
   obligations remain.  The Company continues to manage the remaining
   portfolio and believes it has hedged certain of its future obligations
   through various power purchase commitments and planned construction of
   physical assets.  Management cannot predict the ultimate effectiveness
   of these hedges.

   The pretax net fair value of the remaining commitments as of June 30,
   2000, are currently estimated to be approximately $112 million in 2000,
   $61 million to $98 million each year in 2001 through 2004 and $17
   million in the aggregate thereafter.


                                  - 22 -
<PAGE>

   As of June 30, 2000, the Company's discontinued operations were under
   various contracts to buy and sell power and gas with net notional
   amounts of 24.4 million Mwh's of power and 24.9 million Mmbtu's of
   natural gas with a volumetric weighted-average period of approximately
   34 and 38 months, respectively.  These notional amounts are based on
   estimated loads since various commitments do not include specified firm
   volumes.  The Company is also under contract to buy or sell coal and
   SO2 allowances in support of its power contracts.  Notional amounts
   reflect the nominal volume of transactions included in the Company's
   price risk management commitments, but do not reflect actual amounts of
   cash, financial instruments, or quantities of the underlying commodity
   which may ultimately be exchanged between the parties.

   As of July 27, 2000, the Company estimates that a $1 change in
   electricity prices and a 10-cent change in natural gas prices across
   all geographic areas and time periods could change the value of the
   Company's remaining energy portfolio by approximately $10.8 million.
   In addition to price risk, the value of the Company's remaining energy
   portfolio is subject to operational and event risks including, among
   others, increases in load demand, regulatory changes, and forced
   outages at units providing supply for the Company.  As of July 27,
   2000, the Company estimates that a 1% change in the forecasted load
   demand could change the value of the Company's remaining energy
   portfolio by $11.7 million.

   The Company's discontinued operations maintain policies intended to
   minimize credit risk and revalue credit exposures daily to monitor
   compliance with those policies.  As of June 30, 2000, over 94% of the
   Company's price risk management commitments were with counterparties
   rated BBB equivalent or better.  As of June 30, 2000, six
   counterparties represented 76% of the Company's price risk management
   commitments.

6. In March 2000, the Company sold its interest in CEC-APL L.P., a
   partnership in which the Company owned a 49% interest, for
   approximately $18 million.  This sale resulted in a pretax gain of
   approximately $2 million.  In June 2000, the Company sold its interest
   in KUCC Cleburne Corporation, through which the Company owned a
   minority interest in one of the Tenaska limited partnerships, for $4.6
   million.  This sale resulted in a pretax gain of approximately $1.3
   million.

7. In March 2000, the 2000 Kentucky General Assembly passed House Bill 897
   that established requirements for cost allocations, affiliate
   transactions and a code of conduct governing the relationship between
   utilities and their non-utility operations and affiliates.  Management
   does not expect this matter to have a material adverse effect on the
   Company's financial position or results of operations.

   In March 2000, LG&E filed a Notice and Statement with the Kentucky
   Commission requesting an adjustment in LG&E's gas rates.  LG&E asked
   for a general adjustment in gas rates for a test year for the twelve
   months ended December 31, 1999.  The revenue increase applied for was
   $26.4 million.  The Commission subsequently suspended the effective
   date of the proposed new tariffs, and held hearings August 2, 2000,
   through August 4, 2000.  Under Kentucky law the Commission must issue a
   decision on LG&E's application no later than September 28, 2000.

   In May 2000, the Court upheld the Commission's February 1999 order that
   LG&E make FAC refunds, but reversed the Commission's determination that
   it was not appropriate to require LG&E to pay interest on the amounts
   to be refunded.  The Court remanded the case to the Commission for a
   determination of whether interest should be awarded to compensate
   ratepayers for LG&E's use of the money to be refunded.  On June 2,
   2000, LG&E filed a Notice of Appeal to the Kentucky Court of Appeals
   from the Franklin Circuit Court decision.



                                  - 23 -
<PAGE>

   In June 2000, the Commission acknowledged that the PBR Order issued in
   January 2000 contained errors and issued its Orders on rehearing which
   revised the rate reductions it had previously ordered.  LG&E's rate
   reduction was lowered to $26.3 million, and KU's reduction was lowered
   to $30.4 million.  No parties filed appeals from the Commission's
   orders within the time allowed by statute.

8. In May 2000, LG&E and KU issued new variable-rate pollution-control
   bonds for $25 million and $12.9 million, respectively.  At June 30,
   2000, the interest rates paid on the bonds equaled 4.40% for LG&E and
   4.45% for KU.  The new bonds replaced LG&E's 7.45% Series P bonds and
   KU's 7.375% Series 7 and 7.60% Series 7 bonds.  LG&E and KU called the
   old bonds in June 2000.

   In June 2000, Capital Corp. issued $150 million of floating-rate medium-
   term notes due June 2001.  The notes bear an interest rate of 7.4925%
   through September 18, 2000, and a rate equal to the three-month LIBOR
   plus 70 basis points thereafter.

   In August 2000, LG&E issued $83.3 million of variable-rate pollution-
   control bonds.  At August 9, 2000, the interest rates paid on the bonds
   equaled 4.40%.  The new bonds replaced LG&E's 7.625% Series Q bonds.
   LG&E fully defeased the Series Q bonds on August 9, 2000.

9. External and intersegment revenues and income from continuing
   operations by business segment for the three months ended June 30,
   2000, follow:

                                                       Income
                                                       (Loss)
                                            Inter-       from
                               External    segment      Cont.
                               Revenues   Revenues      Oper.

   LG&E electric                $175,420   $  4,333   $ 26,773
   LG&E gas                       29,979          -        (80)
   KU electric                   201,186      4,139     20,968
   Independent Power
     Operations                    5,938          -      8,037
   Western Kentucky
     Energy                       66,975          -      3,002
   Argentine Gas
     Distribution                 49,017          -      6,723
   Other Capital Corp.            77,776          -    (37,073)
   All Other                           -     (8,472)   (17,001)

   Consolidated                 $606,291   $      -   $ 11,349



                                  - 24 -
<PAGE>

   External and intersegment revenues and income from continuing
   operations by business segment for the six months ended June 30, 2000,
   follow:

                                                       Income
                                                       (Loss)
                                            Inter-       from
                               External    segment      Cont.
                               Revenues   Revenues      Oper.

   LG&E electric              $  330,539   $ 10,540   $ 43,078
   LG&E gas                      118,295          -       (129)
   KU electric                   411,957     11,146     40,578
   Independent Power
     Operations                   10,614          -     14,864
   Western Kentucky
     Energy                      127,729          -      2,501
   Argentine Gas
     Distribution                 79,759          -      5,992
   Other Capital Corp.           152,788          -    (47,063)
   All Other                           -    (21,686)   (18,590)

   Consolidated               $1,231,681   $      -   $ 41,231

   External and intersegment revenues and income from continuing
   operations by business segment for the three months ended June 30,
   1999, follow:

                                                       Income
                                                       (Loss)
                                            Inter-       from
                               External    segment      Cont.
                               Revenues   Revenues      Oper.

   LG&E electric                $185,519   $  4,927   $ 20,740
   LG&E gas                       23,652          -        213
   KU electric                   220,739      5,055     27,193
   Independent Power
     Operations                    6,197          -      7,097
   Western Kentucky
     Energy                       69,050          -       (464)
   Argentine Gas
     Distribution                 45,146          -      4,796
   Other Capital Corp.            73,354          -     (6,484)
   All Other                           -     (9,982)    (3,126)

   Consolidated                 $623,657   $      -   $ 49,965



                                  - 25 -
<PAGE>

   External and intersegment revenues and income from continuing
   operations by business segment for the six months ended June 30, 1999,
   follow:

                                                       Income
                                                       (Loss)
                                            Inter-       from
                               External    segment      Cont.
                               Revenues   Revenues      Oper.

   LG&E electric              $  333,845   $  7,441   $ 38,353
   LG&E gas                       99,431          -        427
   KU electric                   434,086      9,057     56,257
   Independent Power
     Operations                   13,101          -     21,277
   Western Kentucky
     Energy                      129,028          -     (1,488)
   Argentine Gas
     Distribution                 74,943          -      5,153
   Other Capital Corp.           138,488          -     (5,596)
   All Other                           -    (16,498)    (7,639)

   Consolidated               $1,222,922   $      -   $106,744

10.Reference is made to Part II, Legal Proceedings, below and Part I, Item
   3, Legal Proceedings, of the Company's, LG&E's and KU's (and Notes 18
   and 22 of the Company's Notes to Financial Statements) Annual Reports
   on Form 10-K for the year ended December 31, 1999, and Part II, Item 1,
   Legal Proceedings, of the Form 10-Q for the quarter ended March 31,
   2000.


                                  - 26 -
<PAGE>

Item 2.  Management's Discussion and Analysis of Results of Operations and
Financial Condition.

General

The Company's principal subsidiaries are LG&E, an electric and gas utility,
KU, an electric utility, LEM and Capital Corp., the holding company for all
non-utility investments other than trading operations.  LG&E's and KU's
results of operations and liquidity and capital resources are important
factors affecting the Company's consolidated results of operations and
capital resources and liquidity.

On February 28, 2000, the Company announced that its Board of Directors
accepted an offer to be acquired by Powergen for cash of approximately $3.2
billion or $24.85 per share and the assumption of $2.2 billion of the
Company's debt.  For more information, see Note 2 of Notes to Financial
Statements under Item 1.

Some of the matters discussed in the Notes to Consolidated Financial
Statements and Management's Discussion and Analysis may contain forward-
looking statements that are subject to certain risks, uncertainties and
assumptions.  Actual results may vary materially.  Factors that could cause
actual results to differ materially include, but are not limited to:
general economic conditions; business and competitive conditions in the
energy industry; future prices of power and natural gas; unusual weather;
regulatory decisions; and other factors described from time to time in the
Company's reports to the Securities and Exchange Commission, including
Exhibit 99.01 to the Form 10-K for the year ended December 31, 1999.

                          Results of Operations

The results of operations for LG&E, KU and Capital Corp.'s Argentine gas
distribution and WKE operations are affected by seasonal fluctuations in
temperature and other weather-related factors.  Because of these and other
factors, the results of one interim period are not necessarily indicative
of results or trends to be expected for the full year.

              Three Months Ended June 30, 2000, Compared to
                     Three Months Ended June 30, 1999

The Company's primary and diluted earnings per share from continuing
operations decreased to $.09 in 2000 from $.39 in 1999.  The decrease
resulted from an asset impairment charge taken on the Company's natural gas
gathering and processing business ($.21) and from recording expenses
related to the Powergen acquisition ($.09).  Excluding these nonrecurring
items, earnings per share from continuing operations remained unchanged at
$.39 as higher earnings at LG&E and WKE offset lower earnings at KU, an
increase in corporate expenses, and higher interest expense at Capital
Corp.

Including discontinued operations, the Company incurred a loss of $1.11 per
share in the second quarter of 2000.  These results include a $155 million
(after tax) charge related to an adjustment of the Company's reserve for
discontinued operations, primarily reflecting the most recent OPC load
forecast, coupled with the increased demand experienced this summer, and
new price forecasts for the OPC and other long-term contracts.

LG&E Results:

LG&E's net income increased $6.0 million (27%) for the quarter ended June
30, 2000, as compared to the quarter ended June 30, 1999, primarily because
of lower operations and maintenance expenses.  These expense savings were
partially offset by a decrease in electric retail rates ordered by the
Kentucky Commission.



                                  - 27 -
<PAGE>

A comparison of LG&E's revenues for the quarter ended June 30, 2000, with
the quarter ended June 30, 1999, reflects increases and decreases which
have been segregated by the following principal causes (in thousands of $):

                                                      Electric      Gas
Cause                                                 Revenues    Revenues

Retail sales:
 Fuel and gas supply adjustments                      $    664     $4,022
 Environmental cost recovery surcharge                    (310)         -
 Performance based rate reduction                       (1,096)         -
 Electric rate reduction                                (5,398)         -
 Merger surcredit                                         (481)         -
 Variation in sales volume, etc.                         3,186        806

 Total retail sales                                     (3,435)     4,828

Sales for resale                                        (7,958)     1,733
Gas transportation - net                                     -        (26)
Other                                                      700       (208)

Total                                                $(10,693)     $6,327

In January 2000, the Kentucky Commission ordered the termination of LG&E's
proposed PBR mechanism.  As a result, LG&E refunded certain amounts
collected from its customers during the nine months ended March 31, 2000.

The electric rate reduction resulted from the Kentucky Commission's January
2000 PBR order reducing LG&E's base electric rates.

Electric sales for resale decreased $8 million due to decreases in brokered
sales activities.

Fuel for electric generation and gas supply expenses comprise a large
segment of LG&E's total operating expenses.  LG&E's electric and gas rates
contain a fuel adjustment clause and a gas supply clause, respectively,
whereby increases or decreases in the cost of fuel and gas supply may be
reflected in retail rates, subject to the approval of the Kentucky
Commission.  Fuel for electric generation decreased $.7 million (2%) for
the quarter because of a lower cost of coal burned ($.9 million) partially
offset by an increase in volume of generation ($.2 million).  Gas supply
expenses increased $5.3 million (40%) due to an increase in the volume of
gas delivered to the distribution system ($2.6 million) and an increase in
net gas supply cost ($2.7 million).

Power purchased decreased $6.5 million primarily because of a decrease in
brokered sales activities ($10.1 million), partially offset by increased
purchases to support sales to other utilities ($3.6 million).

Other operations expenses decreased $8.9 million (22.5%) in 2000, as
compared to 1999, primarily as a result of lower administrative expenses
($6.8 million) and steam production costs ($2 million).

Maintenance expenses decreased $2.8 million (13.8%) in 2000 mainly due to
decreases in scheduled outages at the Mill Creek and Cane Run generating
stations ($2.8 million).

Other income and deductions increased $1.6 million (690%) due to gains on
the sale of non-utility property.



                                  - 28 -
<PAGE>

Variations in income tax expense are largely attributable to changes in pre-
tax income.

Interest charges increased $2.3 million (27%) due to increased borrowings
through the issuance of commercial paper.

KU Results:

KU's net income decreased $6.2 million (23%) for the quarter ended June 30,
2000, as compared to the quarter ended June 30, 1999.  The decrease was
mainly due to retail rate reductions ordered by the Kentucky Commission
early this year and lower wholesale sales.

A comparison of KU's revenues for the quarter ended June 30, 2000, with the
quarter ended June 30, 1999, reflects increases and (decreases) which have
been segregated by the following principal causes (in thousands of $):

Sales to ultimate consumers:
 Fuel supply adjustments                              $ (1,707)
 Environmental cost recovery surcharge                  (1,342)
 Performance based rate reduction                         (839)
 Merger surcredit                                         (299)
 Electric rate reduction                                (8,061)
 Variation in sales volume, etc.                         6,846

 Total retail sales                                     (5,402)

Wholesale sales                                        (18,060)
Other                                                    2,992
Total                                                 $(20,470)

The environmental cost recovery surcharges are costs recovered from retail
customers for investments KU made in facilities for compliance with clean
air regulations.  As shown above, KU recovered $1.3 million less as
compared with the same quarter 1999.

In January 2000, the Kentucky Commission ordered the termination of KU's
proposed PBR mechanism.  As a result, KU refunded certain amounts collected
from its customers during the nine months ended March 31, 2000.

The electric rate reduction resulted from the Kentucky Commission's January
2000 PBR order reducing KU's base electric rates.

On May 4, 1998, LG&E Energy and KU Energy merged.  As a result of merger,
the Kentucky Commission approved a surcredit for savings achieved from the
merger to be passed to the ultimate consumer over a five-year period.  The
reduction to retail sales for the merger surcredit is a reflection of that
rate reduction.

The variation in sales volumes for the quarter ended June 30, 2000,
compared with the quarter ended June 30, 1999, is attributable to higher
volumes resulting from cooler weather early in the quarter and warmer
weather at the end of the quarter.

The decrease in wholesale sales is due to fewer brokered sales marketing
opportunities and the reduced availability of power because of planned
outages at the electric generating plants.

Fuel for electric generation comprises a large segment of KU's total
operating expenses.  KU's electric rates contain an FAC, whereby increases
or decreases in the cost of fuel are reflected in retail rates, subject to
the approval of the Kentucky Commission, the Virginia Commission, and the
FERC.


                                  - 29 -
<PAGE>

Fuel for electric generation increased $2.1 million (4%) for the quarter
because of an increase in generation ($.5 million) and the cost of coal
burned ($1.5 million).

Power purchased decreased $8.1 million (16%) because there were fewer
opportunities in the brokered sales market as mentioned above.

Other operating expenses decreased by $7.6 million (24%).  The decrease was
mainly attributable to lower administrative and general expenses ($4.8
million) as well as decreased customer service and information expenses
($1.3 million), which were the result of further integration of customer
functions.

Maintenance expenses increased by $1.1 million (7%) due to increased
maintenance at the generating plants ($2.5 million) offset by decreases in
transmission maintenance ($1.0 million) and distribution maintenance ($.3
million).

Depreciation and amortization increased due to additional utility plant in
service.

Variations in income tax expense are largely attributable to changes in
pretax income.

LG&E Capital Corp. and Other Results:

Power Operations

Power Operations' equity in earnings of unconsolidated ventures decreased
from $8.6 million in 1999 to $6.5 million in 2000.  The decrease reflects
proceeds received from bankruptcy settlements related to the Company's
windpower partnerships in the second quarter of 1999.

Power Operations' other income increased from $.1 million expense in 1999
to $1.4 million income in 2000.  The increase resulted from recognizing a
gain on the sale of KUCC Cleburne in the second quarter of 2000.  Interest
income increased from $2.4 million in 1999 to $3.7 million in 2000 due to
an increase in cash resulting from asset sales.

Western Kentucky Energy

WKE's revenues decreased from $69.1 million in 1999 to $67.0 million in
2000 due mainly to lower off-system sales.  WKE's cost of revenues
decreased from $41.3 million in 1999 to $35.8 million in 2000 due to a
decrease in purchased power.

WKE's operation and maintenance expenses decreased from $26.6 million in
1999 to $24.3 million in 2000 due mainly to a decrease in payroll-related
benefits expenses.

Argentine Gas Distribution

The Argentine Gas Distribution companies' net income increased from $4.8
million in 1999 to $6.7 million in 2000 due mainly to an increase in net
revenues and higher equity in the earnings of Gas BAN.

Other

Other revenues increased from $73.4 million in 1999 to $77.8 million in
2000.  The increase resulted from acquiring CRC-Evans in July 1999 and from
increased sales in the Company's natural gas gathering and processing
business, partially offset by a decrease in Retail Access Services'
revenues and lower energy marketing revenues.

Other cost of revenues decreased from $64.8 million in 1999 to $62.3
million in 2000.  The decrease resulted from a decrease at Retail Access
Services and lower energy marketing

                                  - 30 -
<PAGE>

cost of revenues, partially offset by an increase resulting from acquiring
CRC-Evans in July 1999 and increased sales in the Company's natural gas
gathering and processing business.

The Company recorded asset-impairment and other non-recurring charges
totaling $59.7 million during the second quarter of 2000.  See Notes 2 and
4 of Notes to Financial Statements under Item 1 for more information.

Other income for Capital Corp. and Other increased from $1.3 million in
1999 to $2.7 million in 2000.  The increase resulted from recognizing the
gain on the sale of the Company's interest in KUCC Cleburne in the second
quarter of 2000.

Capital Corp. and Other interest expense increased from $13.0 million in
1999 to $14.6 million in 2000.  The increase resulted from funding
discontinued operations, corporate operating expenses, and the Gas BAN and
CRC acquisitions.  The Company's consolidated effective income tax rate
decreased from 36.1% in 1999 to 25.3% in 2000 due to an increase in
investment and wind tax credits as a percent of pretax income.

               Six Months Ended June 30, 2000, Compared to
                      Six Months Ended June 30, 1999

The Company's primary and diluted earnings per share from continuing
operations decreased to $.32 in 2000 from $.82 in 1999. The decrease
resulted from an asset impairment charge taken on the Company's natural gas
gathering and processing business ($.21), recognizing expenses associated
with the integration of the Company's two utilities ($.09), and from
recording expenses related to the Powergen acquisition ($.09).  Excluding
these nonrecurring items, earnings per share from continuing operations
decreased from $.82 in 1999 to $.71 in 2000.  This decrease resulted from
lower earnings at KU, decreases resulting from recognizing one-time items
in 1999, a decrease resulting from acquiring CRC-Evans in July 1999, and
higher interest expense at Capital Corp.  Higher earnings at LG&E and WKE
partially offset these decreases.  The one-time items recognized in 1999
consisted of a gain on the sale of the Company's interest in the Rensselaer
project, proceeds from bankruptcy settlements related to the Company's
windpower partnerships, and fees related to the development of an
independent power project in Gregory, Texas.

LG&E Results:

LG&E's net income increased $4.5 million (11%) for the first six months of
2000, as compared to the first six months of 1999, primarily because of
lower operations and maintenance expenses, a decrease in power purchased
and an increase in electric sales to other utilities.  These expenses are
partially offset by a decrease in electric rates, a decline in brokered
sales transactions, a nonrecurring net of tax charge of $4.9 million for
costs associated with further integration of KU and LG&E, and the reversal
of various rate refunds of $1.4 million net of tax.  Excluding the one-time
charges for the One-Utility Program and the reversal of provisions for
certain rate refunds, LG&E's net income would have increased $8.0 million.



                                  - 31 -
<PAGE>

A comparison of LG&E's revenues for the six months ended June 30, 2000,
with the six months ended June 30, 1999, excluding the reversal of
provisions for certain rate refunds of $2.3 million, reflects increases and
decreases which have been segregated by the following principal causes (in
thousands of $):

                                                      Electric      Gas
Cause                                                 Revenues    Revenues

Retail sales:
 Fuel and gas supply adjustments                      $ (1,820)   $14,029
 Environmental cost recovery surcharge                    (724)         -
 Performance based rate reduction                       (2,275)         -
 Electric rate reduction                                (7,005)         -
 Merger surcredit                                         (931)         -
 Variation in sales volume, etc.                         1,687     (1,638)

 Total retail sales                                    (11,068)    12,391

Sales for resale                                         7,828      6,453
Gas transportation - net                                     -        163
Other                                                      689       (143)

Total                                                 $ (2,551)   $18,864

In January 2000, the Kentucky Commission ordered the termination of LG&E's
proposed PBR mechanism.  As a result, LG&E refunded certain amounts
collected from its customers during the nine months ended March 31, 2000.

The electric rate reduction resulted from the Kentucky Commission's January
2000 PBR order reducing LG&E's base electric rates.

Sales for resale increased due to increased sales to other utilities.

Fuel for electric generation increased $6.7 million (9%) for the six months
because of an increase in generation ($11 million) partially offset by
lower cost of coal burned ($4.3 million).

Gas supply expenses increased $18.2 million (28%) due to an increase in gas
prices ($19.2 million) partially offset by a decrease in the volume of gas
delivered to the distribution system ($1 million).

Power purchased decreased $7.8 million primarily because of a decrease in
brokered sales activities ($13.1 million), partially offset by increased
sales to other utilities ($5.3 million).

Other operation expenses decreased $4 million (5%) primarily as a result of
lower administrative expenses ($10.3 million) and steam production costs
($1.3 million) partially offset by a one-time expense of $8.1 million for
the Company's One-Utility Program.

Maintenance expenses for the first six months of 2000 decreased $3.6
million (10%) primarily due to decreases in scheduled outages at the Mill
Creek and the Cane Run generating stations ($4.3 million), and electric
distribution maintenance ($1.1 million), partially offset by increased
software maintenance costs ($1.9 million).

Other income and deductions increased $2.1 million (157%) due to gains on
the sale of non-utility property.



                                  - 32 -
<PAGE>

Variations in income tax expense are largely attributable to changes in pre-
tax income.

Interest charges increased $3.8 million (21%) due to the issuance of
commercial paper.

KU Results:

KU's net income decreased $15.7 million (28%) for the six months ended June
30, 2000 as compared to the six months ended June 30, 1999.  The decrease
was partially due to a non-recurring charge of $6.6 million, after tax,
made in the first quarter of 2000 for costs associated with further
integration of KU and LG&E.  Excluding this non-recurring charge, net
income decreased $9.2 million, mainly due to rate reductions ordered by the
Kentucky Commission early in 2000 and lower wholesale sales.

A comparison of KU's revenues for the six months ended June 30, 2000, with
the six months ended June 30, 1999, and reflects increases and (decreases)
which have been segregated by the following principal causes (in thousands
of $):

Sales to ultimate consumers:
 Fuel supply adjustments                              $   (840)
 Environmental cost recovery surcharge                  (2,614)
 Performance based rate reduction                       (1,732)
 Merger surcredit                                         (733)
 Electric rate reduction                               (12,140)
 Variation in sales volume, etc.                        12,119

 Total retail sales                                     (5,940)

Wholesale sales                                        (16,751)
Other                                                    2,651
Total                                                 $(20,040)

The environmental cost recovery surcharges are costs recovered from retail
customers for investments KU made in facilities for compliance with clean
air regulations.  As shown above, KU recovered $2.6 million less for the
six months ended June 30, 2000 as compared with the six months ended June
30, 1999.

In January 2000, the Kentucky Commission ordered the termination of KU's
proposed PBR mechanism.  As a result, KU refunded certain amounts collected
from its customers during the nine months ended March 31, 2000.

The electric rate reduction resulted from the Kentucky Commission's January
2000 PBR order reducing KU's base electric rates.

On May 4, 1998, LG&E Energy and KU Energy merged.  As a result of merger,
the Kentucky Commission approved a surcredit for savings achieved from the
merger to be passed to the ultimate consumer over a five-year period.  The
reduction to retail sales for the merger surcredit is a reflection of that
rate reduction.

Variation in sales volumes is mainly due to higher volumes this year as
compared to the same period last year.  The higher volumes (288,137 Mwh)
are attributable to an increase in the number of customers served as well
as warmer weather this period as compared to the same period last year.

The decrease in wholesale sales is due to fewer brokered sales marketing
opportunities and the reduced availability of power because of planned
outages at the electric generating plants.



                                  - 33 -
<PAGE>

Fuel for electric generation decreased $0.5 million (.5%) because of a
decrease in generation ($1.0 million) which was partially offset by the
increased cost of coal burned ($.5 million).

Power purchased decreased $8.6 million (9.5%) because there were fewer
opportunities in the brokered sales market as mentioned above.

Non-recurring charges of $6.6 million, after tax, include the costs
associated with the Company's One-Utility Program.

Other operating expenses decreased by $5.9 million (10%).  The decrease was
mainly attributable to a decrease in administration and general expenses
($4.2 million) and  customer service and information expenses ($1.1
million).

Maintenance expenses increased by $2.7 million (10%) due to increased
maintenance at the steam generating plants ($3.4 million) which was offset
by decreases in transmission ($1.1 million) and distribution ($.5 million)
maintenance.

Depreciation and amortization increased due to additional utility plant in
service.

Variations in income tax expense are largely attributable to changes in
pretax income.

LG&E Capital Corp. and Other Results:

Power Operations

Power Operations' revenues decreased from $13.1 million in 1999 to $10.6
million in 2000.  The decrease resulted mainly from recognizing revenues in
1999 related to the Rensselaer project, which the Company sold in March
1999.

Power Operations' operation and maintenance expense decreased from $5.5
million in 1999 to $3.4 million in 2000.  The decrease resulted primarily
from writing off assets related to the Rensselaer project in 1999.

Power Operations' equity in earnings of unconsolidated ventures decreased
from $30.0 million in 1999 to $12.2 million in 2000, due to recognizing a
pretax gain of $15.4 million on the sale of the Rensselaer project in 1999
and to receiving proceeds from bankruptcy settlements related to the
Company's windpower partnerships in the second quarter of 1999.

Western Kentucky Energy

WKE's revenues decreased from $129.0 million in 1999 to $127.7 million in
2000 due mainly to lower off-system sales, partially offset by higher sales
to industrial customers.  WKE's cost of revenues decreased from $77.0
million in 1999 to $71.0 million in 2000 due to a decrease in purchased
power.

WKE's operation and maintenance expenses decreased from $50.6 million in
1999 to $48.8 million in 2000 due mainly to a decrease in payroll-related
benefits expenses.  WKE's depreciation and amortization expense increased
from $1.5 million in 1999 to $2.9 million in 2000 due to increased
expenditures for information systems conversions.

WKE's interest income increased from $.4 million in 1999 to $1.4 million in
2000 due to an increase in the note receivable from Big Rivers.



                                  - 34 -
<PAGE>

Argentine Gas Distribution

The Argentine Gas Distribution companies' net income increased from $5.2
million in 1999 to $6.0 million in 2000 due mainly to an increase in net
revenues and higher equity in the earnings of Gas BAN.

Other

Other revenues increased from $138.5 million in 1999 to $152.8 million in
2000.  The increase resulted from acquiring CRC-Evans in July 1999 and from
increased sales in the Company's natural gas gathering and processing
business, partially offset by a decrease in Retail Access Services'
revenues and lower energy marketing revenues.  Fees received in 1999
related to the development of an independent power project in Gregory,
Texas, partially offset the increases also.

Other cost of revenues increased from $112.7 million in 1999 to $123.0
million in 2000.  The increase resulted from acquiring CRC-Evans in July
1999 and from increased sales in the Company's natural gas gathering and
processing business, partially offset by a decrease at Retail Access
Services and lower energy marketing cost of revenues.

The Company recorded asset-impairment and other non-recurring charges
totaling $80.4 million during the six months ended June 30, 2000.  See
Notes 2, 3 and 4 of Notes to Financial Statements under Item 1 for more
information.

Other income for Capital Corp. and Other increased from $4.6 million in
1999 to $6.9 million in 2000. The increase resulted from recognizing the
gain on the sale of the Company's interest in KUCC Cleburne in the second
quarter of 2000 and the gain on the sale of the Company's interest in CEC-
APL L.P. in the first quarter of 2000.  Higher interest income also
contributed to the increase.  Decreases resulting from payments received in
1999 related to the Rensselaer sale and the initial settlement of a claim
on an undeveloped independent power project in California partially offset
the increases.

Capital Corp. and Other interest expense increased from $23.2 million in
1999 to $27.8 million in 2000.  The increase resulted from funding
discontinued operations, corporate operating expenses, and the Gas BAN and
CRC acquisitions.  The Company's consolidated effective income tax rate
decreased from 37.2% in 1999 to 32.6% in 2000 due to an increase in
investment and wind tax credits as a percent of pretax income.

                     Liquidity and Capital Resources

The Company's need for capital funds is largely related to the construction
of plant and equipment necessary to meet the needs of electric and gas
utility customers and equity investments in connection with independent
power production projects and other energy-related growth or acquisition
opportunities among the non-utility businesses.  Capital funds are also
needed for the Company's capital obligations under the Big Rivers lease
arrangements, losses incurred in connection with the discontinuance of the
merchant energy trading and sales business, information system
enhancements, and other business development opportunities.  Fluctuations
in the Company's discontinued energy marketing and trading activities also
affected liquidity throughout the quarter.  Lines of credit and commercial
paper programs are maintained to fund these temporary capital requirements.

Construction expenditures for the six months ended June 30, 2000, of $157.3
million were financed with internally generated funds and commercial paper.

The Company's combined cash and marketable securities balance decreased
$35.7 million during the six months ended June 30, 2000. The decrease
reflects construction expenditures

                                  - 35 -
<PAGE>

and dividends paid, partially offset by cash flows from operations,
proceeds received from sales of investments in affiliates, and a net
increase in debt.

Variations in accounts receivable, accounts payable and materials and
supplies are generally not significant indicators of the Company's
liquidity.  Such variations are primarily attributable to fluctuations in
weather, which have a direct effect on sales of electricity and natural
gas.  The decrease in accounts receivable during the six months ended June
30, 2000, resulted mainly from seasonal fluctuations at LG&E and WKE, and a
decrease in the balance at Retail Access Services, partially offset by
seasonal fluctuations at the Company's natural gas gathering and processing
business and an increase in Centro's balance.  The decrease in accounts
payable resulted mainly from seasonal fluctuations at LG&E, KU and WKE, and
a decrease in the balance at Retail Access Services, partially offset by
seasonal fluctuations at the Company's natural gas gathering and processing
business and an increase in Centro's balance.  The decrease in gas stored
underground resulted from seasonal fluctuations at LG&E.

The decrease in non-utility property and plant resulted from recording an
impairment charge in the second quarter of 2000.  See Note 4 of Notes to
Financial Statements under Item 1 for more information.  The increase in
other property and investments resulted from expenditures related to the
purchase of combustion turbines by Capital Corp.

The increase in net liabilities of discontinued operations resulted from an
increase in the Company's accrued loss on disposal of discontinued
operations.

Long-term debt (including current portion) increased by $68.7 million due
to Capital Corp.'s issuing $150 million of medium-term notes in June 2000,
partially offset by LG&E's redeeming its first mortgage bonds 7.5% series
due July 1, 2002, in January 2000, and by KU's redeeming its Series Q 5.95%
bonds due June 15, 2000, in June 2000.

At June 30, 2000, unused capacity under the Company's lines of credit
totaled $469.3 million after considering commercial paper support and
approximately $47.0 million in letters of credit securing on- and off-
balance sheet commitments.  KU maintains an uncommitted borrowing facility
of $100 million.

Standard and Poor's downgraded LG&E's, KU's and Capital Corp.'s debt
ratings on February 28, 2000.  The downgrades reflect S&P's opinion of the
credit quality of the Companies following the impact of the Kentucky
Commission rate reduction and the OPC decision.  S&P, Moody's and Fitch
continue to have the debt of the Companies on credit watch pending review
of the financial condition following consummation of the merger of the
Company with Powergen.

In July 2000, Fitch (formerly Duff and Phelps) downgraded the long-term
debt of Capital Corp. to BBB+ following the announcement of the increase in
the discontinued operations reserve.  Also during the second quarter of
2000, Capital Corp.'s commercial paper rating changed from D-1- to F-2 as a
result of the merger of Fitch and Duff and Phelps.

Also in July 2000, the Company announced plans to build up to ten natural
gas fired combustion turbines.  The Company will build the turbines in
Kentucky and Georgia to meet the native load commitments of its two
utilities and to mitigate its exposure related to the OPC contract.  The
Company has not arranged, but has under consideration, several possible
methods of financing the construction of the turbines, including the use of
new short- or long-term credit facilities or the use of project or lease
financing.

Certain of Capital Corp.'s long-term debt agreements require the Company to
maintain a debt-to-capitalization ratio not greater than 65%.  The
Company's debt-to-capitalization ratio at June 30, 2000, as defined in
those agreements, equaled an amount just under 65%.  Capital Corp. is
pursuing a variety of actions to avoid any event of default under the

                                  - 36 -
<PAGE>

agreements, including selling the gas facilities business and certain asset
securitization programs to reduce working capital requirements and debt,
and is working with the financial institutions to obtain standstill
agreements or waivers of the 65% debt-to-capitalization limit.

The Company's capitalization ratios follow:

                                              June 30,  Dec. 31,
                                                2000      1999

Long-term debt (including current portion)      54.3%     49.8%
Notes payable                                   12.6      13.1
Preferred stock                                  4.3       3.9
Common equity                                   28.8      33.2
Total                                          100.0%    100.0%

LG&E's capitalization ratios follow:

                                              June 30,  Dec. 31,
                                                2000      1999

Long-term debt (including current portion)      39.7%     41.1%
Notes payable                                    8.6       7.9
Preferred stock                                  6.2       6.2
Common equity                                   45.5      44.8
Total                                          100.0%    100.0%

KU's capitalization ratios follow:

                                              June 30,  Dec. 31,
                                                2000      1999

Long-term debt (including current portion)      41.0%     44.7%
Notes payable                                    2.5       0.0
Preferred stock                                  3.4       3.3
Common equity                                   53.1      52.0
Total                                          100.0%    100.0%

For a description of certain contingencies that may affect the Company,
LG&E and KU, reference is made to Part II herein - Item 1, Legal
Proceedings.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

LG&E Energy is exposed to market risks in both its regulated and non-
utility operations.  Both operations are exposed to market risks from
changes in interest rates and commodity prices, while the non-utility
operations are also exposed to changes in foreign exchange rates.  To
mitigate changes in cash flows attributable to these exposures, the Company
has entered into various derivative instruments.  Derivative positions are
monitored using techniques that include market value and sensitivity
analysis.

The potential change in interest expense resulting from changes in base
interest rates of the Company's unswapped debt did not change materially
during the three- and six-month periods ended June 30, 2000.  The potential
changes in the fair values of the Company's interest-rate swaps resulting
from changes in interest rates and the yield curve also did not change
materially three- and six-month periods ended June 30, 2000.  The Company's
exposure to market risks from changes in commodity prices and foreign
exchange rates remained immaterial three- and six-month periods ended June
30, 2000.


                                  - 37 -
<PAGE>

                       Part II.  Other Information

Item 1.  Legal Proceedings.

For a description of the significant legal proceedings involving the
Company, LG&E and KU, reference is made to the information under the
following items and captions of (a) the Company's, LG&E's and KU's
respective combined Annual Report on Form 10-K for the year ended December
31, 1999:  Item 1, Business; Item 3, Legal Proceedings; Item 7,
Management's Discussion and Analysis of Results of Operations and Financial
Condition; Notes 2, 6, 18 and 22 of the Company's Notes to Financial
Statements under Item 8; Notes 3, 12 and 16 of LG&E's Notes to Financial
Statements under Item 8 and Notes 3, 11 and 14 of KU's Notes to Financial
Statements under Item 8 and (b) the Company's, LG&E's and KU's respective
combined Quarterly Report on Form 10-Q for the quarter ended March 31,
2000:  Part III, Item 1, Legal Proceedings.  Except as described herein, to
date, the proceedings reported in the Company's, LG&E's and KU's respective
combined Annual Report on Form 10-K have not changed materially.

Powergen Merger Regulatory Filings

On February 28, 2000, the Company announced the signing of a definitive
merger agreement with Powergen plc of the United Kingdom, wherein, upon
closing, the Company will become a wholly-owned subsidiary of Powergen and
shareholders of the Company will receive $24.85 per share of Company common
stock.  The transaction is expected to be completed 9 to 12 months from
announcement, subject to receipt of required regulatory approvals and other
conditions to consummation.  It is possible that the remaining regulatory
approvals may be received in time to permit a closing during the fourth
quarter of 2000  Applications for approval were filed with the Kentucky
Commission, the Virginia Commission and the FERC (under the Federal Power
Act) in March 2000, and with the SEC (under the Public Utility Holding
Company Act of 1935) in April 2000.  Notice filings were made to the
Tennessee Regulatory Authority in the second quarter of 2000, to the
Department of Justice and the Federal Trade Commission (under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act)) in July 2000
and as required under the "Exon-Florio" US Omnibus Trade and
Competitiveness Act of 1988 (the E-F Act) in August 2000.  Powergen has
made standard filings with the United Kingdom Office of Fair Trading under
the Fair Trading Act of 1973, which implements a voluntary regulatory
regime.

Through mid-August 2000, a number of approval steps have been completed by
the Company and Powergen.  Shareholders of the Company and of Powergen
approved the merger transaction in separate meetings held in June 2000.
Further, approvals were received from the Kentucky Commission in May 2000,
the FERC in June 2000 and the Virginia Commission in July 2000.  The
parties submitted the requisite filings under the HSR Act and the E-F Act
in late July and early August 2000, respectively, which trigger 30 day
waiting periods due to expire in late August and early September,
respectively, absent any further inquiry or investigation by the applicable
regulatory authority.  The parties joint application for approval to the
SEC under PUHCA was submitted in April 2000.  While the Company and
Powergen believe that they will receive the requisite regulatory approvals
for the merger in sufficient time to complete the transaction on the
schedule mentioned above, there can be no assurance as to the timing of
such approvals or the ability to obtain such approvals on satisfactory
terms or otherwise.  See Item 1, Powergen Merger and Note 22 to the
Company's Notes to Financial Statements under Item 8 of its Annual Report
on Form 10-K for the year ended December 31, 1999 for further discussion of
this matter.

Gas Rate Increase Proceeding

In August 2000, hearings were held before the Kentucky Commission regarding
LG&E's March 2000 application for an general adjustment in gas rates.  The
requested increase of approximately $26.4 million, the first major non-fuel-
related adjustment requested by LG&E

                                  - 38 -
<PAGE>

to gas rates in 10 years, is designed to reflect higher service and
distribution costs to natural gas customers.  A final decision in the
matter is expected in late September 2000 from the Kentucky Commission,
whose decision may include possible changes to the amount of any approved
increases.  An October 2000 effective date for the new rates has been
suspended.

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

a) LG&E Energy's, LG&E's and KU's Annual Meetings of Shareholders were
   held on June 7, 2000.

b) Not applicable.

c) The matters voted upon and the results of the voting at the Annual
   Meetings are set forth below:

1. LG&E Energy:

i) The shareholders voted 85,066,839 common shares in favor of and
   8,118,348 shares against the Merger Agreement and related transactions
   with Powergen.  Holders of 2,154,339 common shares abstained from
   voting on this matter.

ii) The shareholders voted to elect LG&E Energy's nominees for election to
    the Board of Directors as follows:

    William C. Ballard, Jr. - 106,760,854 common shares cast in favor of
    election and 4,442,532 shares withheld.

    T. Ballard Morton, Jr. - 106,719,738 common shares cast in favor of
    election and 4,483,648 shares withheld.

    William L. Rouse, Jr. - 106,617,016 common shares cast in favor of
    election and 4,586,370 shares withheld.

    Charles L. Shearer - 106,735,367 common shares cast in favor of
    election and 4,468,019 shares withheld.

    Holders of 3,725,775 common shares abstained from voting on this
    matter.

iii) The shareholders voted 108,358,737 common shares in favor of and
     1,440,846 shares against the approval of Arthur Andersen LLP as
     independent auditors for 2000.  Holders of 1,403,803 common shares
     abstained from voting on this matter.

2. LG&E:

i) The shareholders voted to elect LG&E's nominees for election to the
   Board of Directors as follows:

   William C. Ballard, Jr. - 21,294,223 common shares and 582,318
   preferred shares cast in favor of election and 17,408 preferred shares
   withheld.

   T. Ballard Morton, Jr. - 21,294,223 common shares and 586,296 preferred
   shares cast in favor of election and 13,430 preferred shares withheld.

   William L. Rouse, Jr. - 21,294,223 common shares and 586,105 preferred
   shares cast in favor of election and 13,621 preferred shares withheld.



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<PAGE>

   Charles L. Shearer - 21,294,223 common shares and 586,832 preferred
   shares cast in favor of election and 12,894 preferred shares withheld.

   Holders of no common or preferred shares abstained from voting on this
   matter.

ii) The shareholders voted 21,294,223 common shares and 587,072 preferred
    shares in favor of and 2,373 preferred shares against the approval of
    Arthur Andersen LLP as independent auditors for 2000.  Holders of
    10,281 preferred shares abstained from voting on this matter.

3. KU:

i) The sole shareholder voted to elect KU's nominees for election to the
   Board of Directors as follows:

   37,817,878 common shares cast in favor of election and no shares
   withheld for each of William C. Ballard, Jr., T. Ballard Morton, Jr.,
   William L. Rouse, Jr., and Charles L. Shearer, respectively.

ii) The sole shareholder voted 37,817,878 common shares in favor of and no
    shares against the approval of Arthur Andersen LLP as independent
    auditors for 2000.

    Holders of no common shares abstained from voting on these matters.

d)  Not applicable.

Item 6(a).  Exhibits.

Exhibit
Number              Description

27                  Financial Data Schedules for LG&E Energy Corp.,
                    Louisville Gas and Electric Company, and Kentucky
                    Utilities Company.

Item 6(b).  Reports on Form 8-K.

On August 14, 2000, the Company filed a report on Form 8-K stating that on
July 28, 2000, it announced that it had increased its after-tax loss on
disposal of discontinued operations by an additional $155 million.


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<PAGE>

                                SIGNATURES


Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.


LG&E Energy Corp.
Registrant


Date:  August 14, 2000          /s/ Michael D. Robinson
                                Michael D. Robinson
                                Vice President and Controller
                                (On behalf of the registrant in his
                                capacity as Principal Accounting Officer)


Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.


Louisville Gas and Electric Company
Registrant


Date:  August 14, 2000          /s/ Michael D. Robinson
                                Michael D. Robinson
                                Vice President and Controller
                                (On behalf of the registrant in his
                                capacity as Principal Accounting Officer)

Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.


Kentucky Utilities Company
Registrant


Date:  August 14, 2000          /s/ Michael D. Robinson
                                Michael D. Robinson
                                Vice President and Controller
                                (On behalf of the registrant in his
                                capacity as Principal Accounting Officer)



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