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 March 31, 2002


                                    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.


      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
                              (859) 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:

<page>

                   Louisville Gas and Electric Company
       21,294,223 shares, without par value, as of April 30, 2002,
                      all held by LG&E Energy Corp.
                        Kentucky Utilities Company
       37,817,878 shares, without par value, as of April 30, 2002,
                      all held by LG&E Energy Corp.

This combined Form 10-Q is separately filed by 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.
<page>

      	            TABLE OF CONTENTS

                             PART I

Item 1 Consolidated Financial Statements

          Louisville Gas and Electric Company and Subsidiary
            Statements of Income                                1
            Balance Sheets                                      2
            Statements of Cash Flows                            4
            Statements of Retained Earnings                     5
            Statements of Other Comprehensive Income            6

          Kentucky Utilities Company and Subsidiary
            Statements of Income                                7
            Balance Sheets                                      8
            Statements of Cash Flows                           10
            Statements of Retained Earnings                    11
            Statements of Other Comprehensive Income           12

          Notes to Consolidated Financial Statements           13

Item 2 Management's Discussion and Analysis of Financial Condition
          and Results of Operations                            20

Item 3 Quantitative and Qualitative Disclosures About
          Market Risk                                          25

                             PART II

Item 1 Legal Proceedings                                       26

Item 6 Exhibits and Reports on Form 8-K                        26

       Signatures                                              28

<page>

      Part I.  Financial Information - Item 1.  Financial Statements

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

                                                           Three Months
                                                              Ended
                                                            March 31,
                                                        2002        2001
OPERATING REVENUES:
Electric (Note 7)                                      $166,246   $155,374
Gas(Note 7)    						117,119    157,897
 Total operating revenues                               283,365    313,271

OPERATING EXPENSES:
Fuel for electric generation                             44,107     38,484
Power purchased                                          23,581     11,341
Gas supply expenses                                      83,467    125,237
Non-recurring charges (Note 4)                                -    144,385
Other operation expenses                                 48,410     35,283
Maintenance                                              12,001     10,555
Depreciation and amortization                            25,278     25,267
Federal and state
 income taxes                                            13,237    (38,011)
Property and other taxes                                  4,536      4,462
 Total operating expenses                               254,617    357,003

NET OPERATING INCOME (LOSS)                              28,748    (43,732)

Other income - net                                            1        996
Interest charges                                          7,806     11,379

NET INCOME (LOSS)                                        20,943    (54,115)

Preferred stock dividends                                 1,065      1,299
NET INCOME (LOSS) AVAILABLE
 FOR COMMON STOCK                                      $ 19,878   $(55,414)

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

<page>					-1-
            Louisville Gas and Electric Company and Subsidiary
                        Consolidated Balance Sheets
                                (Unaudited)
                             (Thousands of $)
                                  ASSETS


                                                      Mar. 31,    Dec. 31,
                                                        2002        2001

UTILITY PLANT:
At original cost                                    $3,444,952 $3,423,037
Less:  reserve for depreciation                      1,404,277  1,381,874
 Net utility plant                                   2,040,675  2,041,163

OTHER PROPERTY AND INVESTMENTS -
 less reserve                                            1,356      1,176

CURRENT ASSETS:
Cash                                                    16,082      2,112
Accounts receivable - less reserve (Note 6)            120,576     85,667
Materials and supplies - at average cost:
 Fuel (predominantly coal)                              28,715     22,024
 Gas stored underground                                 15,278     46,395
 Other                                                  28,176     29,050
Prepayments and other                                    4,071      4,688
 Total current assets                                  212,898    189,936

DEFERRED DEBITS AND OTHER ASSETS:
Unamortized debt expense                                 5,269      5,921
Regulatory assets (Note 8)                             169,544    197,142
Other                                                   13,686     13,016
 Total deferred debits and other assets                188,499    216,079

Total assets                                        $2,443,428 $2,448,354

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

<page>					-2-

            Louisville Gas and Electric Company and Subsidiary
                   Consolidated Balance Sheets (cont.)
                               (Unaudited)
                             (Thousands of $)
                      CAPITALIZATION AND LIABILITIES


                                                      Mar. 31,    Dec. 31,
                                                        2002        2001

CAPITALIZATION:
Common stock, without par value -
 Outstanding 21,294,223 shares                      $  425,170 $  425,170
Additional paid-in capital                              40,000     40,000
Retained earnings                                      413,514    393,636
Accumulated other comprehensive income                 (18,994)   (19,900)
Other                                                     (836)      (836)
 Total common equity                                   858,854    838,070
Cumulative preferred stock                              95,140     95,140
Long-term debt (Note 10)                               370,704    370,704
 Total capitalization                                1,324,698  1,303,914

CURRENT LIABILITIES:
Current portion of long-term debt                      246,200    246,200
Notes payable to parent                                122,553     94,197
Accounts payable                                        87,689    149,070
Dividends declared                                       1,065      1,111
Accrued taxes                                           38,451     20,257
Accrued interest                                         3,819      5,818
Other                                                   11,708     11,729
 Total current liabilities                             511,485    528,382

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
 taxes                                                 299,366    298,143
Investment tax credit, in
 process of amortization                                57,635     58,689
Accumulated provision for pensions
 and related benefits                                  168,043    167,526
Customer advances for construction                       9,758      9,745
Regulatory liabilities (Note 8)                         57,419     65,349
Other                                                   15,024     16,606
 Total deferred credits and other liabilities          607,245    616,058

Total capital and liabilities                       $2,443,428 $2,448,354

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

<page>					-3-

            Louisville Gas and Electric Company and Subsidiary
                  Consolidated Statements of Cash Flows
                               (Unaudited)
                             (Thousands of $)
                                                           Three Months
                                                              Ended
                                                             Mar. 31,
                                                        2002        2001

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                   $   20,943  $ (54,115)
Items not requiring cash currently:
  Depreciation and amortization                         25,278     25,267
  Deferred income taxes - net                              290    (50,358)
  Investment tax credit - net                           (1,054)    (1,067)
   Other                                                10,893      5,074
Changes in current assets and liabilities              (32,199)    12,199
Changes in accounts receivable securitization-net
 (Note 6)						22,000)    74,550
Other                                                    9,775     79,455
 Net cash flows from operating activities               11,926     91,005

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities                                   (180)         -
Proceeds from sales of securities                            -      4,225
Construction expenditures                              (24,947)   (66,227)
 Net cash flows from investing activities              (25,127)   (62,002)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of pollution control bonds                    119,926          -
Retirement of pollution control bonds                 (120,000)         -
Short-term borrowings                                   58,300          -
Repayment of short-term borrowings                     (29,944)   (23,136)
Payment of dividends                                    (1,111)    (1,367)
 Net cash flows from financing activities               27,171    (24,503)

CHANGE IN CASH                                          13,970      4,500

CASH AT BEGINNING OF PERIOD                              2,112      2,495

CASH AT END OF PERIOD                                $  16,082  $   6,995

SUPPLEMENTAL DISCLOSURES:
 Cash paid during the period for:
  Income taxes                                       $       -  $  (4,226)
Interest on borrowed money                               8,356      9,963

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 consolidated financial
statements.

<page>					-4-

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

                                                           Three Months
                                                              Ended
                                                            March 31,

                                                        2002        2001
Balance at beginning
 of period                                            $393,636   $314,594
Net income (loss)                                       20,943    (54,115)
 Subtotal                                              414,579    260,479

Cash dividends declared on stock:
5% cumulative preferred                                    269        269
Auction rate cumulative
 preferred                                                 429        663
$5.875 cumulative preferred                                367        367
 Subtotal                                                1,065      1,299

Balance at end of period                              $413,514   $259,180

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

<page>					-5-

            Louisville Gas and Electric Company and Subsidiary
          Consolidated Statements of Other Comprehensive Income
                               (Unaudited)
                             (Thousands of $)

                                                           Three Months
                                                              Ended
                                                            March 31,
                                                        2002        2001

Net income (loss)                                      $20,943   $(54,115)

Cumulative effect of change in accounting principle -
 Accounting For Derivative Instruments and
 Hedging Activities (Note 5)                                 -     (5,998)

Gains (Losses) on derivative instruments
  and hedging activities (Note 5)                        1,509     (2,035)

Other comprehensive income (loss),
  before tax                                             1,509     (8,033)

Income tax benefit (expense)
 related to items of other
 comprehensive income (loss)                              (603)     3,213

Other comprehensive income (loss)                     $ 21,849  $ (58,935)

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

<page>					-6-

                Kentucky Utilities Company and Subsidiary
                    Consolidated Statements of Income
                               (Unaudited)
                             (Thousands of $)

                                                           Three Months
                                                              Ended
                                                            March 31,
                                                        2002        2001


OPERATING REVENUES (Note 7)                           $215,168   $211,793


OPERATING EXPENSES:
Fuel for electric generation                            58,271     55,928
Power purchased                                         41,060     32,885
Non-recurring charges (Note 4)                               -     63,788
Other operation expenses                                34,522     26,618
Maintenance                                             11,559     11,970
Depreciation and amortization                           23,059     23,828
Federal and state
 income taxes                                           14,383     (6,450)
Property and other taxes                                 4,114      4,155
 Total operating expenses                              186,968    212,722
NET OPERATING INCOME (LOSS)                             28,200       (929)
Other income - net                                       1,639      1,793
Interest charges (Note 5)                                5,482      8,117

NET INCOME (LOSS)before Cumulative Effect
 of Accounting Change                                   24,357     (7,253)

Cumulative Effect of Change in
 Accounting for Derivative Instruments
 and Hedging Activities, net of tax                          -        136

NET INCOME (LOSS)                                       24,357     (7,117)

Preferred stock dividends                                  564        564

NET INCOME (LOSS) AVAILABLE
 FOR COMMON STOCK                                     $ 23,793   $ (7,681)

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

<page>					-7-

                    Kentucky Utilities Company and Subsidiary
                       Consolidated Balance Sheets
                               (Unaudited)
                             (Thousands of $)
                                  ASSETS


                                                      Mar. 31,    Dec. 31,
                                                        2002        2001

UTILITY PLANT:
At original cost                                    $3,087,542 $3,064,220
Less:  reserve for depreciation                      1,481,695  1,457,754
 Net utility plant                                   1,605,847  1,606,466

OTHER PROPERTY AND INVESTMENTS -
 less reserve                                            9,859      9,629

CURRENT ASSETS:
Cash and temporary cash investments                      5,292      3,295
Accounts receivable - less reserve (Note 6)             79,070     45,291
Materials and supplies - at average cost:
 Fuel (predominantly coal)                              46,034     43,382
 Other                                                  26,729     26,188
Prepayments and other                                    6,057      4,942
 Total current assets                                  163,182    123,098

DEFERRED DEBITS AND OTHER ASSETS:
Unamortized debt expense                                 4,233      4,316
Regulatory assets (Note 8)                              61,511     66,467
Other                                                   15,701     16,926
 Total deferred debits and other assets                 81,445     87,709

Total assets                                        $1,860,333 $1,826,902

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

<page>					-8-

                Kentucky Utilities Company and Subsidiary
                   Consolidated Balance Sheets (cont.)
                               (Unaudited)
                             (Thousands of $)
                      CAPITALIZATION AND LIABILITIES



                                                     Mar. 31,     Dec. 31,
                                                        2002        2001

CAPITALIZATION:
Common stock, without par value -
 Outstanding 37,817,878 shares                      $  308,140 $  308,140
Additional paid-in capital                              15,000     15,000
Retained earnings                                      434,689    410,896
Accumulated other comprehensive income                   1,588      1,588
Other                                                     (595)      (595)
 Total common equity                                   758,822    735,029
Cumulative preferred stock                              40,000     40,000
Long-term debt (Note 5)                                432,892    434,506
 Total capitalization                                1,231,714  1,209,535

CURRENT LIABILITIES:
Current portion of long-term debt                       54,000     54,000
Notes payable to parent                                 64,190     47,790
Accounts payable                                        64,132     85,149
Accrued taxes                                           36,249     20,520
Accrued interest                                         4,947      5,668
Other                                                   16,458     16,482
 Total current liabilities                             239,976    229,609

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
 taxes                                                 237,723    239,204
Investment tax credit, in
 process of amortization                                10,716     11,455
Accumulated provision for pensions
 and related benefits                                   91,824     91,235
Customer advances for construction                       1,498      1,526
Regulatory liabilities (Note 8)                         32,972     33,889
Other                                                   13,910     10,449
 Total deferred credits and other liabilities          388,643    387,758

Total capital and liabilities                       $1,860,333 $1,826,902

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

<page>					-9-

                Kentucky Utilities Company and Subsidiary
                  Consolidated Statements of Cash Flows
                              (Unaudited)
                           (Thousands of $)

                                                           Three Months
                                                              Ended
                                                            March 31,
                                                        2002        2001

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                    $  24,357  $  (7,117)
Items not requiring cash currently:
 Depreciation and amortization                          23,059     23,828
 Deferred income taxes - net                            (2,406)   (28,166)
 Investment tax credit - net                              (739)      (862)
 Other                                                   1,233      1,654
Changes in current assets and liabilities              (19,020)    (1,502)
Changes in accounts receivable securitization-net
 (Note 6)				               (25,100)    50,000
Other                                                    8,388     41,947
 Net cash flows from operating activities                9,772     79,782

CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures                              (23,611)   (60,302)
 Net cash flows from investing activities              (23,611)   (60,302)

CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings                                  174,869     99,325
Repayment of short-term borrowings                    (158,469)  (114,375)
Payment of dividends                                      (564)      (564)
  Net cash flows from financing activities              15,836    (15,614)

CHANGE IN CASH AND TEMPORARY
 CASH INVESTMENTS                                        1,997      3,866

CASH AND TEMPORARY CASH INVESTMENTS AT
 BEGINNING OF PERIOD                                     3,295        314

CASH AND TEMPORARY CASH INVESTMENTS AT
 END OF PERIOD                                       $   5,292  $   4,180

SUPPLEMENTAL DISCLOSURES:
 Cash paid during the period for:
  Income taxes                                       $       -  $   3,894
  Interest on borrowed money                             6,101      7,116

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 consolidated financial
statements.
<page>					-10-

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

                                                           Three Months
Ended March 31,

                                                        2002        2001

Balance at beginning
 of period                                            $410,896   $347,238
Net income (loss)                                       24,357     (7,117)
 Subtotal                                              435,253    340,121

Cash dividends declared on stock:
4.75% preferred                                            237        237
6.53% preferred                                            327        327
 Subtotal                                                  564        564

Balance at end of period                              $434,689   $339,557

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

<page>					-11-

                 Kentucky Utilities Company and Subsidiary
           Consolidated Statements of Other Comprehensive Income
                               (Unaudited)
                             (Thousands of $)

                                                           Three Months
                                                              Ended
                                                            March 31,
                                                        2002        2001


Net income (loss)                                      $24,357    $(7,117)

Cumulative effect of change in
  accounting principle-Accounting
  for Derivative Instruments and
  Hedging activities (Note 5)                                -      2,647

Other comprehensive income, before tax                       -      2,647

Income tax (expense) related to items
  of other comprehensive income                              -     (1,059)

Other comprehensive income (loss)                      $24,357    $(5,529)

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

<page>					-12-

            Louisville Gas and Electric Company and Subsidiary
                Kentucky Utilities Company and Subsidiary

                Notes to Consolidated Financial Statements
                               (Unaudited)

1. The unaudited consolidated financial statements include the accounts of
   Louisville Gas and Electric Company and Subsidiary and Kentucky
   Utilities Company and Subsidiary ("LG&E" and "KU" or the "Companies").
   The common stock of each of LG&E and KU is wholly owned by LG&E Energy
   Corp. ("LG&E Energy").  In the opinion of management, the unaudited
   interim data includes all adjustments, consisting only of normal
   recurring adjustments, necessary for a fair statement of consolidated
   financial position, results of operations, comprehensive income 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 Companies believe that the disclosures are adequate to make the
   information presented not misleading.

   See LG&E's and KU's Reports on Form 10-K for 2001 for information
   relevant to the accompanying financial statements, including
   information as to the significant accounting policies of the Companies.

2. On December 11, 2000, LG&E Energy Corp. was acquired by Powergen plc
   for cash of approximately $3.2 billion or $24.85 per share and the
   assumption of all of LG&E Energy's debt.  As a result of the acquisition,
   among other things, LG&E Energy became a wholly-owned indirect subsidiary
   of Powergen and, as a result, LG&E and KU became indirect subsidiaries of
   Powergen.  The utility operations (LG&E and KU) of LG&E Energy have
   continued their separate identities and continue to serve customers in
   Kentucky and Virginia under their existing names.  The preferred stock and
   debt securities of the utility operations were not affected by this
   transaction resulting in the utility operations' obligations to continue to
   file SEC reports.  Following the acquisition, Powergen became a registered
   holding company under the Public Utility Holding Company Act (PUHCA), and
   LG&E and KU, as subsidiaries of a registered holding company, became
   subject to additional regulation under PUHCA.

   As a result of the Powergen acquisition and in order to comply with
   PUHCA, LG&E Energy Services Inc. ("LG&E Services") was formed and
   became operational on January 1, 2001.  LG&E Services provides certain
   services to affiliated entities, including LG&E and KU, at cost, as
   required under PUHCA.  On January 1, 2001, approximately 1,000
   employees, primarily from LG&E Energy, LG&E and KU, were moved to LG&E
   Services.

3. On April 9, 2001, a German power company, E.ON AG ("E.ON"), announced
   a pre-conditional cash offer of 5.1 billion pounds sterling ($7.3 billion)
   for Powergen. The offer is subject to a number of conditions, including the
   receipt of certain European and United States regulatory approvals. The
   Kentucky Public Service Commission ("Kentucky Commission"), the Federal
   Regulatory Energy Commission ("FERC"), the Virginia State Corporation
   Commission, and the Tennessee Regulatory Authority have all approved the
   acquisition of Powergen and LG&E Energy by E.ON. The parties expect to
   obtain the remaining regulatory approvals during the first half of 2002
   and they expect to complete the transaction during this time frame.

   On April 19, 2002, Powergen plc shareholders voted in favor of the
   acquisition of Powergen by E.ON.  The vote in favor of such resolutions
   enables the deal to proceed by way of a scheme of arrangement.  Such
   procedure is anticipated to allow E.ON to obtain full equity in
   Powergen upon completion.
<page>					-13-

4. During the first quarter 2001, LG&E recorded a $144 million charge and
   KU recorded a $64 million charge for a workforce reduction program.
   Primary components of the charge were separation benefits, enhanced
   early retirement benefits, and health care benefits.  The result of
   this workforce reduction was the elimination of over 1,100 positions,
   accomplished primarily through a voluntary enhanced severance program.

   On June 1, 2001, LG&E and KU filed an application (VDT case) with the
   Kentucky Commission to create a regulatory asset relating to these
   first quarter 2001 charges.  The application requested permission to
   amortize these costs over a four-year period.  The Kentucky Commission
   also opened a case to review the new depreciation study and resulting
   depreciation rates implemented in 2001.

   LG&E and KU reached a settlement in the VDT case as well as the other
   cases involving depreciation rates and the Earnings Sharing Mechanism
   with all intervening parties.  The settlement agreement was approved by
   the Kentucky Commission on December 3, 2001.

   The Kentucky Commission December 3, 2001 order allowed LG&E to set up
   a regulatory asset of $141 million for the workforce reduction costs
   and begin amortizing these costs over a five year period starting in
   April 2001.  The first quarter charge of $144 million represented all
   employees who had accepted a voluntary enhanced severance program.
   Between the time of the original filing and the December 3, 2001 order,
   some employees rescinded their participation in the voluntary enhanced
   severance program, thereby decreasing the original charge from $144
   million to $141 million.  The settlement will also reduce revenues by
   approximately $26 million through a surcredit on future bills to
   customers over the same five year period.  The surcredit represents
   stipulated net savings LG&E is expected to realize from implementation
   of best practices through the value delivery process.  The agreement
   also established LG&E's new depreciation rates in effect retroactive to
   January 1, 2001.  The new depreciation rates decreased depreciation
   expense by $5.6 million in 2001.

   The Kentucky Commission December 3, 2001, order allowed KU to set up a
   regulatory asset of $54 million for the workforce reduction costs and begin
   amortizing these costs over a five year period starting in April 2001. The
   first quarter charge of $64 million represented all employees who had
   accepted a voluntary enhanced severance program.  Some employees rescinded
   their participation in the voluntary enhanced severance program and, along
   with the non-recurring charge of $6.9 million for FERC and Virginia
   jurisdictions, thereby decreasing the original charge from $64 million to
   $54 million. The settlement will also reduce revenues by approximately $11
   million through a surcredit on future bills to customers over the same five
   year period.  The surcredit represents stipulated net savings KU is
   expected to realize from implementation of best practices through the value
   delivery process. The agreement also established KU's new depreciation
   rates in effect December 2001, retroactive to January 1, 2001.  The new
   depreciation rates decreased depreciation expense by $6.0 million in 2001.

5. Statement of Financial Accounting Standards No. 133, Accounting for
   Derivative Instruments and Hedging Activities, establishes accounting and
   reporting standards requiring that every derivative instrument (including
   certain derivative instruments embedded in other contracts) be recorded on
   the balance sheet as either an asset or a liability measured at its fair
   value.  SFAS No. 133 requires that changes in the derivative's fair value
   be recognized currently in earnings unless specific hedge accounting
   criteria are met.  Special accounting for qualifying hedges allows a
   derivative's gains and losses to offset related results on the hedged item
   in the income statement, and requires that LG&E and KU must formally
   document, designate, and assess the effectiveness of transactions that
   receive hedge accounting. SFAS No. 133 could increase the volatility in
   earnings and other comprehensive income. LG&E and KU adopted SFAS No. 133
<page>					-14-

   on January 1, 2001.  The effect of adopting this statement in 2001 resulted
   in a $3.6 million (net of tax of $2.4 million) decrease in other
   comprehensive income from a cumulative effect of change in accounting
   principle for LG&E and a $1.6 million (net of tax of $1.1 million) increase
   in other comprehensive income from a cumulative effect of change in
   accounting principle for KU.

   The Companies use interest rate swaps to hedge exposure to market
   fluctuations in certain of their debt instruments.  Pursuant to Company
   policy, use of these financial instruments is intended to mitigate risk
   and earnings volatility and is not speculative in nature.  Management
   has designated all of the Companies' interest rate swaps as hedge
   instruments.  Financial instruments designated as cash flow hedges have
   resulting gains and losses recorded within other comprehensive income
   and stockholders' equity.  To the extent a financial instrument or the
   underlying item being hedged is prematurely terminated or the hedge
   becomes ineffective, the resulting gains or losses are reclassified
   from other comprehensive income to net income.  Financial instruments
   designated as fair value hedges are periodically marked to market with
   the resulting gains and losses recorded directly into net income to
   correspond with income or expense recognized from changes in market
   value of the items being hedged.

   As of March 31, 2002, LG&E had fixed rate swaps covering $117,335,000
   in notional amounts of variable rate debt and with fixed rates ranging
   from 4.184% to 5.495%.  The average variable rate on the debt during
   the quarter was 1.41%. The swaps have been designated as cash flow
   hedges and expire on various dates from September 2003 through November
   2020. The hedges were deemed to be fully effective resulting in pretax
   gain for the quarter ended March 31, 2002 of $1.5 million, recorded in
   Other Comprehensive Income. Upon expiration of these hedges, the amount
   recorded in Other Comprehensive Income will be reclassified into
   earnings.  The amount expected to be reclassified from Other
   Comprehensive Income to earnings in the next twelve months is
   immaterial.

   As of March 31, 2002, KU had variable rate swaps covering
   $153,000,000 in notional amounts of fixed rate debt.  The average
   variable rate on these swaps during the quarter was 2.42%. The
   underlying debt has fixed rates ranging from 5.75% to 7.92%.  The swaps
   have been designated as fair value hedges and expire on various dates
   from May 2007 through June 2025.  During the quarter ended March 31,
   2002, the effect of marking these financial instruments and the
   underlying debt to market resulted in pretax gains of $1.8 million,
   recorded as a reduction in interest expense.

6. SFAS No. 140, Accounting for Transfers and Servicing of Financial
   Assets and Extinguishments of Liabilities, revises the standards for
   accounting for securitizations and other transfers of financial assets
   and collateral and requires certain disclosures, and provides
   accounting and reporting standards for transfers and servicing of
   financial assets and extinguishments of liabilities.  The Companies
   adopted SFAS No. 140 in the first quarter of 2001, when LG&E and KU
   entered into an accounts receivable securitization transaction.

   On February 6, 2001, LG&E and KU implemented an accounts receivable
   securitization program.  The purpose of this program is to enable the
   utilities to accelerate the receipt of cash from the collection of
   retail accounts receivable, thereby reducing dependence upon more
   costly sources of working capital.  The securitization program allows
   for a percentage of eligible receivables to be sold.  Eligible
   receivables are generally all receivables associated with retail sales
   that have standard terms and are not past due.  LG&E and KU are able to
   terminate these programs at any time without penalty.  If there is a
   significant deterioration in the payment record of the receivables by
   retail customers or if the Companies fail to meet certain covenants of
   the program, the program may terminate at the election of the financial
   institutions.  In this case, payments from retail customers would first
<page>					-15-

   be used to repay the financial institutions participating in the
   program, and would then be available for use by the Companies.

   As part of the program, LG&E and KU sold retail accounts receivables to
   wholly owned subsidiaries, LG&E Receivables LLC ("LG&E R") and KU
   Receivables LLC ("KU R").  Simultaneously, LG&E R and KU R entered into
   two separate three-year accounts receivable securitization facilities
   with two financial institutions and their affiliates whereby LG&E R and
   KU R can sell, on a revolving basis, an undivided interest in certain
   of their receivables and receive up to $75 million and $50 million,
   respectively, from an unrelated third party purchaser.  The effective
   cost of the receivables programs is comparable to LG&E and KU's lowest
   cost source of capital, and is based on prime rated commercial paper.
   LG&E and KU retain servicing rights of the sold receivables through
   separate servicing agreements with the third party purchasers.  LG&E
   and KU have obtained opinions from independent legal counsel indicating
   these transactions qualify as true sales of receivables.  As of March
   31, 2002 and December 31, 2001, LG&E's outstanding program balance was
   $20.0 million and $42.0 million, respectively, and KU's balance at
   March 31, 2002 and December 31, 2001 was $20.0 million and $45.1
   million, respectively.

   Management expects to renew these facilities when they expire.

   The allowance for doubtful accounts associated with the eligible
   securitized receivables was $1.6 million and $1.3 million for LG&E and $0.5
   million and $0.5 million for KU at March 31, 2002 and December 31, 2001,
   respectively.  Charge offs were immaterial for LG&E and KU.  The risk of
   uncollectibility associated with the sold receivables is minimal.
   Moreover, each securitization facility contains a fully funded reserve for
   uncollectible receivables.

7. External and intersegment revenues (related parties transactions
   between LG&E and KU) and income by business segment for the three
   months ended March 31, 2002, follow (in thousands of $):

<page>					-16-
                                                        Net
                                                      Income/
                                                       (Loss)
                                            Inter-     Avail.
                               External    segment       For-
                               Revenues   Revenues     Common

   LG&E electric              $  153,193  $  13,053   $ 10,178
   LG&E gas                      117,119          -      9,700
    Total                     $  270,312  $  13,053   $ 19,878


   KU electric                $  200,387  $  14,781   $ 23,793



   External and intersegment revenues (related parties transactions
   between LG&E and KU) and income by business segment for the three
   months ended March 31, 2001, follow (in thousands of $):
                                                        Net
                                                      Income/
                                                       (Loss)
                                            Inter-     Avail.
                               External    segment        For
                               Revenues   Revenues     Common

   LG&E electric               $ 148,361   $  7,013 $  (44,443)
   LG&E gas                      157,897          -    (10,971)
    Total                      $ 306,258   $  7,013 $  (55,414)


   KU electric                 $ 206,111   $  5,682  $  (7,681)


8.   The following regulatory assets and liabilities were included in the
  balance sheet of LG&E and KU as of March 31, 2002 and  December 31, 2001
  (in thousands of $):

                        Louisville Gas and Electric
                                                           (Unaudited)
                                                      Mar. 31,    Dec. 31,
                                                        2002        2001

REGULATORY ASSETS:
VDT costs                                            $ 120,029  $ 127,529
Unamortized loss on bonds                               18,262     17,902
Gas supply adjustments due from customers               13,772     30,135
LG&E/KU merger costs                                     4,537      5,444
One utility costs                                        2,971      3,643
Manufactured gas sites                                   1,987      2,062
Other                                                    7,986     10,427
 Total                                                 169,544    197,142

REGULATORY LIABILITIES:
Deferred income taxes - net                             47,770     48,703
Gas supply adjustments due to customers                  8,879     15,702
Other                                                      770        944
 Total                                               $  57,419  $  65,349

<page>					-17-

                            Kentucky Utilities
                                                           (Unaudited)
                                                      Mar. 31,    Dec. 31,
                                                        2002        2001

REGULATORY ASSETS:
VDT costs                                            $  45,936  $  48,811
Unamortized loss on bonds                                5,925      6,142
LG&E/KU merger costs                                     5,116      6,139
One utility costs                                        3,492      4,365
Other                                                    1,042      1,010
 Total                                                  61,511     66,467

REGULATORY LIABILITIES:
Deferred income taxes - net                             31,947     32,872
Other                                                    1,025      1,017
 Total                                               $  32,972  $  33,889

9. Statements of Financial Accounting Standards ("SFAS") No. 141, Business
   Combinations and No. 142, Goodwill and Other Intangible Assets were
   issued in the second quarter of 2001. SFAS No. 141 requires all
   business combinations initiated after June 30, 2001, to be accounted
   for using the purchase method. SFAS No. 142 requires goodwill to be
   recorded, but not amortized. Further, goodwill will now be subject to a
   periodic assessment for impairment. LG&E and KU have no recorded
   goodwill and have no merger or acquisitions in progress. Accordingly,
   the provisions of these new pronouncements were effective July 1, 2001,
   for LG&E and KU.  The Companies experienced no impact on financial
   position or results of operations as a result of adopting these
   standards.

   SFAS No. 143, Accounting for Asset Retirement Obligations and SFAS No.
   144, Accounting for the Impairment or Disposal of Long-Lived Assets,
   were also issued during 2001.  SFAS No. 143 establishes accounting and
   reporting standards for obligations associated with the retirement of
   tangible long-lived assets and the associated asset retirement costs.
   SFAS No. 144 supersedes SFAS No. 121, Accounting for the Impairment of
   Long-Lived Assets and for Long-Lived Assets to Be Disposed Of and the
   accounting and reporting provisions of APB Opinion No. 30, Reporting
   the Results of Operations - Reporting the Effects of Disposal of a
   Segment of a Business, and Extraordinary, Unusual and Infrequently
   Occurring Events and Transactions.  SFAS No. 144, among other
   provisions, eliminates the requirement of SFAS No. 121 to allocate
   goodwill to long-lived assets to be tested for impairment.  The
   effective implementation date as it relates to the Companies for SFAS
   No. 144 is January 1, 2002 and SFAS No. 143 is January 1, 2003. SFAS
   No. 144 had no current impact on the financial position or results of
   operations of LG&E or KU.  Management has not determined what impact
   SFAS No. 143 will have on the financial position or results of
   operations of the Companies.

   The Financial Accounting Standards Board created the Derivatives
   Implementation Group ("DIG") to provide guidance for implementation of
   SFAS No. 133.  DIG Issue C15, Normal Purchases and Normal Sales
   Exception for Option Type Contracts and Forward Contracts in
   Electricity was adopted in 2001 and had no impact on results of
   operations and financial position.  DIG Issue C16, Applying the Normal
   Purchase and Normal Sales Exception to Contracts that Combine a Forward
   Contract and a Purchased Option Contract, was cleared in the third
   quarter 2001 and stated that option contracts do not meet the normal
   purchases and normal sales exception and should follow SFAS No. 133.

<page>					-18-

   DIG Issue C16 will be effective in the second quarter of 2002.  The
   Companies have reviewed their contracts for options and determined that
   DIG Issue C16 does apply, but the adoption of DIG Issue C16 will not
   have a material impact on the financial position or results of
   operations of the Companies pursuant to regulatory treatment prescribed
   by SFAS No. 71, Accounting for the Effects of Certain Types of
   Regulation.

10.On March 22, 2002, LG&E refinanced two $35 million unsecured pollution
   control bonds due November 1, 2027.  The replacement variable rate
   bonds are secured by first mortgage bonds and will mature November 1,
   2027.  The variable rate will be established by the remarketing agent
   taking into account market conditions in the commercial paper market.

   On March 6, 2002, LG&E refinanced $22.5 million and $27.5 million in
   unsecured pollution control bonds, both due September 1, 2026.  The
   replacement bonds, due September 1, 2026, are variable rate bonds and
   are secured by first mortgage bonds.  The variable rate will be
   established by the remarketing agent taking into account market
   conditions in the commercial paper market.

11.In the normal course of business, lawsuits, claims, environmental
   actions, and various non-ratemaking governmental proceedings arise
   against LG&E and KU.  To the extent that damages are assessed in any of
   these lawsuits, LG&E and KU believe that their insurance coverage is
   adequate.  Management, after consultation with legal counsel, does not
   anticipate that liabilities arising out of other currently pending or
   threatened lawsuits and claims of the type referenced above will have a
   material adverse effect on LG&E's or KU's consolidated financial
   position or results of operations, respectively.

<page>					-19-

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

General

The following discussion and analysis by management focuses on those
factors that had a material effect on LG&E's and KU's financial results of
operations and financial condition during the three month period ended
March 31, 2002 and should be read in connection with the financial
statements and notes thereto.

Some of the following discussion may contain forward-looking statements
that are subject to certain risks, uncertainties and assumptions.  Such
forward-looking statements are intended to be identified in this document
by the words "anticipate," "expect," "estimate," "objective," "possible,"
"potential" and similar expressions.  Actual results may vary materially.
Factors that could cause actual results to differ materially include:
general economic conditions; business and competitive conditions in the
energy industry; changes in federal or state legislation; unusual weather;
actions by state or federal regulatory agencies; and other factors
described from time to time in LG&E's and KU's reports to the Securities
and Exchange Commission, including Exhibit No. 99.01 to the report on Form
10-K for year ended December 31, 2001.

                          Results of Operations

The results of operations for LG&E and KU 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 March 31, 2002, Compared to
                    Three Months Ended March 31, 2001


LG&E Results:


LG&E's net income increased $75.1 million for the quarter ended March 31,
2002, as compared to the quarter ended March 31, 2001, primarily because of
a non-recurring charge of $86.1 million, net of tax, for LG&E's workforce
reduction program incurred in 2001. Excluding this one-time charge, LG&E's
net income would have decreased $11.0 million primarily due to amortization
expenses associated with LG&E's workforce reduction program and higher
pension and fuel costs.

A comparison of LG&E's revenues for the quarter ended March 31, 2002, with
the quarter ended March 31, 2001, 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                      $   (698)$  (40,932)
 Environmental cost recovery surcharge                   1,646          -
 Demand side management cost recovery                       52        422
 LG&E/KU merger surcredit                                 (204)         -
 Value delivery surcredit                                 (237)      (122)
 Variation in sales volume, etc.                        (2,341)   (10,296)

 Total retail sales                                     (1,782)   (50,928)

Wholesale sales                                         13,101     10,022
Gas transportation - net                                     -        189
Other                                                     (447)       (61)

  Total                                              $  10,872 $  (40,778)

<page>					-20-

Electric revenues increased primarily because of an increase in wholesale
sales volumes ($27.6 million) partially offset by a decrease in wholesale
sales prices ($14.5 million). Gas revenues decreased primarily as a result
of lower gas supply costs billed to customers through the gas supply clause
and decreased volumes sold in the first quarter of 2002 due to an 18%
decrease in heating-degree days.

Fuel for electric generation and gas supply expenses comprise a large
portion 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 increased $5.6 million (15%) for
the quarter because of an increase in volume of generation ($3.2 million)
and an increase in the cost of coal burned ($2.4 million).  Gas supply
expenses decreased $41.8 million (33%) due to a decrease in net gas supply
cost ($36.4 million), and a decrease in the volume of retail gas delivered
to the distribution system ($13.6 million), partially offset by increased
wholesale gas expenses ($8.2 million).

Power purchased increased $12.2 million (108%) primarily because of an
increase in volume of purchases to support increased wholesale sales ($14
million) partially offset by a decrease in cost of power purchased ($1.8
million).

The decrease in non-recurring charges of $144.4 million, $86.1 million
after tax is due to the costs associated with LG&E's workforce reduction
initiative.  (See Note 4).

Other operations expenses increased $13.1 million (37%) in 2002, as
compared to 2001, primarily due to amortization expenses associated with
LG&E's workforce reduction program ($7.5 million), higher pension expenses
($2.7 million), and higher costs for electric transmission ($1.7 million).

Maintenance expenses increased $1.4 million (14%) in 2002 primarily due to
increased repairs to steam production ($0.9 million) and maintenance to
electric distribution plant ($0.3 million).

Other income-net decreased $1 million (100%) in 2002 primarily due to
increases in repairs to non-utility property($0.5 million), and a decrease
in gains recorded on the sale of non-utility property ($0.4 million).

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

Interest charges decreased $3.6 million (31%) due to lower interest rates
on variable rate long term debt ($2.0 million), a decrease in interest on
debt to parent company ($0.6 million) and a decrease in interest associated
with LG&E's accounts receivable securitization program ($1.1 million).

<page>					-21-

KU Results:

KU's net income increased $31.5 million for the quarter ended March 31,
2002, as compared to the quarter ended March 31, 2001. The increase was
primarily due to a non-recurring charge of $38.0 million, net of tax, made
in the first quarter of 2001 for costs associated with KU's workforce
reduction program. Excluding this one-time charge, net income decreased
$6.5 million, due largely to increased operations and purchased power
expense, partially offset by decreased interest expense.

A comparison of KU's revenues for the quarter ended March 31, 2002, with
the quarter ended March 31, 2001, reflects increases and (decreases) which
have been segregated by the following principal causes (in thousands of $):

Retail sales:
 Fuel supply adjustments                              $  5,133
 Environmental cost recovery surcharge                   1,510
 Demand side management cost recovery                      784
 LG&E/KU merger surcredit                               (1,025)
 Value delivery surcredit                                 (189)
 Variation in sales volume, etc.                        (3,814)

 Total retail sales                                      2,399

Wholesale sales                                           (305)
Other                                                    1,281

Total                                                 $  3,375

Electric revenues increased primarily due to increased price of sales to
retail customers.

Fuel for electric generation comprises a large portion of KU's total
operating expenses.  KU's electric rates contain a Fuel Adjustment Clause,
whereby increases or decreases in the cost of fuel are reflected in retail
rates, subject to the approval of the Kentucky Public Service Commission,
the Virginia State Corporation Commission, and the Federal Energy
Regulatory Commission. Fuel for electric generation increased $2.3 million
(4%) for the quarter due to a $5.3 million increase in the cost of coal
burned partially offset by a decrease of $3.0 million in volume burned.

Power purchased increased $8.2 million (25%) in 2002 primarily because of
an increase in volumes purchased ($11.6 million) partially offset by a
decrease in price ($3.4 million).

Non-recurring charges decreased $63.8 million, $38.0 million after tax.
These costs were due to KU's workforce reduction program. (See Note 4).

Other operations expenses increased $7.9 million (30%) as compared to 2001,
primarily due to amortization expenses associated with KU's workforce
reduction program ($2.9 million), higher pension expenses ($1.2 million),
higher costs for electric transmission ($1.4 million) and increases in
uncollectible accounts and customer assistance programs ($1.9 million).

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

Interest charges decreased $2.6 million (32%) for the first quarter 2002 as
compared to the first quarter 2001 due to lower rates on variable rate debt
($2.2 million) and a decrease in interest associated with KU's accounts
receivable securitization program ($0.6 million).


<page>					-22-

                     Liquidity and Capital Resources

LG&E's and KU's need for capital funds are largely related to the
construction of plant and equipment necessary to meet the needs of electric
and gas utility customers. Lines of credit, the accounts receivable
securitization programs, and commercial paper programs are maintained to
fund short-term capital requirements.

Construction expenditures for the three months ended March 31, 2002 for
LG&E and KU amounted to $24.9 million and $23.6 million, respectively.
Such expenditures related primarily to construction to meet nitrogen oxide
(NOx) emission standards, and were financed with internally generated funds
and accounts receivable securitization program funds.  Also, no common
dividends have been paid by LG&E or KU for the three months ended March 31,
2002. See Note 6 of Notes to Financial Statements concerning accounts
receivable securitization.

LG&E's and KU's combined cash and temporary cash investment balance
increased $16.0 million (LG&E $14.0 million, KU $2.0 million) during the
three months ended March 31, 2002.  The increase reflects cash flows from
operations and short term borrowings, partially offset by construction
expenditures.

Variations in accounts receivable, accounts payable and materials and
supplies are generally not significant indicators of LG&E's and KU's
liquidity.  Such variations are primarily attributable to fluctuations in
weather, which have a direct effect on sales of electricity and natural
gas.  The increases in accounts receivable resulted primarily from seasonal
fluctuations and the reduced sales of accounts receivable through LG&E and
KU's accounts receivable securitization program. See Note 6 of Notes to
Financial Statements. The increase in fuel inventory resulted from seasonal
fluctuations at LG&E and KU, and the decrease in LG&E's gas stored
underground resulted from seasonal fluctuations.

LG&E and KU participate in a money pool whereby LG&E Energy can make funds
available to LG&E and KU at market-based rates up to $200 million each.
LG&E Energy maintains a facility of $200 million with a Powergen subsidiary
to ensure funding availability for the money pool.  There is no balance
outstanding under the Powergen line of credit as of March 31, 2002 and no
outstanding commercial paper program balance.  LG&E Energy has provided
loans to LG&E and KU through the money pool that total $122.6 million and
$64.2 million, respectively, as of March 31, 2002.  These borrowings
carried a commercial paper grade interest rate of 1.80% at March 31, 2002.

On March 6, 2002, LG&E refinanced its $22.5 million and $27.5 million
unsecured pollution control bonds, both due September 1, 2026.  The
replacement bonds, due September 1, 2026, are variable rate bonds and are
secured by first mortgage bonds.

On March 22, 2002, LG&E refinanced its two $35 million unsecured pollution
control bonds due November 1, 2027.  The replacement variable rate bonds
are secured by first mortgage bonds and will mature November 1, 2027.


LG&E's security ratings as of March 31, 2002, were:

                                              Moody's       S&P  Fitch

     First mortgage bonds                A1        A-        A+
     Preferred stock                     a2        BBB-      A-
     Commercial paper                    P-1       A-2       F-1

KU's security ratings as of March 31, 2002, were:

                                              Moody's       S&P  Fitch

     First mortgage bonds                A1        A-        A+
     Preferred stock                     a2        BBB-      A-
     Commercial paper                    P-1       A-2       F-1

<page>					-23-

The S&P ratings of LG&E's and KU's debt securities are on Credit Watch for
upgrade as the result of the E.ON bid.  Fitch has placed LG&E and KU on
credit watch evolving following the E.ON bid. These ratings reflect the
views of Moody's, S&P and Fitch.  A security rating is not a recommendation
to buy, sell or hold securities and is subject to revision or withdrawal at
any time by the rating agency.

LG&E's capitalization ratios at March 31, 2002, and December 31, 2001,
follow:

                                              Mar. 31,  Dec. 31,
                                                2002      2001

Long-term debt (including current portion)      36.5%     37.5%
Notes payable                                    7.2       5.7
Preferred stock                                  5.6       5.8
Common equity                                   50.7      51.0
Total                                          100.0%    100.0%


KU's capitalization ratios at March 31, 2002, and December 31, 2001,
follow:

                                              Mar. 31,  Dec. 31,
                                                2001      2001

Long-term debt (including current portion)      36.0%     37.2%
Notes payable                                    4.8       3.6
Preferred stock                                  3.0       3.1
Common equity                                   56.2      56.1
Total                                          100.0%    100.0%

Statements of Financial Accounting Standards ("SFAS") No. 141, Business
Combinations and No. 142, Goodwill and Other Intangible Assets were issued
in the second quarter of 2001. Therefore, the provisions of these new
pronouncements were effective July 1, 2001, for LG&E and KU.  SFAS No. 141
requires all business combinations initiated after June 30, 2001, to be
accounted for using the purchase method. SFAS No. 142 requires goodwill to
be recorded, but not amortized. Furthermore, goodwill will now be subject
to a periodic assessment for impairment. LG&E and KU have no recorded
goodwill and have no merger or acquisitions in progress.  Accordingly,
these pronouncements have no effect on the financial condition and results
of operations for LG&E or KU.  The Companies experienced no impact on the
financial position or results of operation as a result of adopting these
standards.

<page>					-24-

SFAS No. 143, Accounting for Asset Retirement Obligations and SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, were issued
during 2001.  SFAS No. 143 establishes accounting and reporting standards
for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs.  SFAS No. 144 supersedes
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of and the accounting and reporting
provisions of APB Opinion No. 30, Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions.
SFAS No. 144, among other provisions, eliminates the requirement of SFAS
No. 121 to allocate goodwill to long-lived assets to be tested for
impairment.  The effective implementation date for SFAS No. 144 is January
1, 2002 and SFAS No. 143 is January 1, 2003.  SFAS No. 144 had no current
impact on the financial position or results of operations of LG&E or KU.
Management has not determined what impact SFAS No. 143 will have on the
financial position or results of operations of the Companies.

The Financial Accounting Standards Board created the Derivatives
Implementation Group (DIG) to provide guidance for implementation of SFAS
No. 133.  DIG Issue C15, Normal Purchases and Normal Sales Exception for
Option Type Contracts and Forward Contracts in Electricity was adopted in
2001 and had no impact on results of operations or financial condition.
DIG Issue C16, Applying the Normal Purchase and Normal Sales Exception to
Contracts that Combine a Forward Contract and a Purchased Option Contract,
was cleared in the third quarter 2001 and stated that option contracts do
not meet the normal purchases and normal sales exception and should follow
SFAS No. 133.  DIG Issue C16 will become effective in the second quarter of
2002.  The Companies have reviewed their contracts for options and
determined that DIG Issue C16 does apply, but the adoption of DIG Issue C16
will not have a material impact on the financial position or results of
operations of the Companies pursuant to regulatory treatment prescribed by
SFAS No. 71, Accounting for the Effects of Certain Types of Regulation.

For a description of significant contingencies that may affect LG&E and KU,
reference is made to Part I, Item 3, Legal Proceedings, and Notes 12 (LG&E)
and 11 (KU) to the financial statements of LG&E's and KU's Annual Reports
on form 10-K.  For the year ended December 31, 2001 and to Part II herein -
Item 1, Legal Proceedings.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

<page>					-25-

LG&E and KU are exposed to market risks.  Both operations are exposed to
market risks from changes in interest rates and commodity prices. To
mitigate changes in cash flows attributable to these exposures, the
Companies have entered into various derivative instruments.  Derivative
positions are monitored using techniques that include market value and
sensitivity analysis.

The Companies use interest rate swaps to hedge exposure to market
fluctuations in certain of their debt instruments.  Pursuant to Company
policy, use of these financial instruments is intended to mitigate risk and
earnings volatility and is not speculative in nature.  Management has
designated all of the Companies' interest rate swaps as hedge instruments.
Financial instruments designated as cash flow hedges have resulting gains
and losses recorded within other comprehensive income and stockholders'
equity.  To the extent a financial instrument or the underlying item being
hedged is prematurely terminated or the hedge becomes ineffective, the
resulting gains or losses are reclassified from other comprehensive income
to net income.  Financial instruments designated as fair value hedges are
periodically marked to market with the resulting gains and losses recorded
directly into net income to correspond with income or expense recognized
from changes in market value of the items being hedged.

The potential change in interest expense resulting from changes in base
interest rates of the Companies' unswapped debt did not change materially
in 2002.  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 in 2002.  The Company's exposure to
market risks from changes in commodity prices remained immaterial in 2002.

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                       Part II.  Other Information

Item 1.  Legal Proceedings.

For a description of the significant legal proceedings involving LG&E and
KU, reference is made to the information under the following items and
captions of LG&E's and KU's respective combined Annual Report on Form 10-K
for the year ended December 31, 2001:  Item 1, Business; Item 3, Legal
Proceedings; Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations; Notes 3, 11 and 14 of LG&E's Notes to
Financial Statements under Item 8 and Notes 3, 12 and 16 of KU's Notes to
Financial Statements under Item 8.  Except as described herein, to date,
the proceedings reported in LG&E's and KU's respective combined Annual
Report on Form 10-K have not changed materially.

E.ON-Powergen Transaction

On April 9, 2001, E.ON AG announced a conditional offer to purchase all the
common shares of Powergen plc, the indirect corporate parent of LG&E and
KU. The transaction is subject to a number of conditions precedent,
including the receipt of regulatory approvals from European and United
States governmental bodies, in form satisfactory to the parties. Among the
primary United States regulatory approvals are: the Kentucky Public Service
Commission, the Virginia State Corporation Commission, the Securities and
Exchange Commission, and the Federal Energy Regulatory Commission. The
parties anticipate that the remaining approvals may be received by mid-2002
to permit completion of the transaction in 2002.  However, there can be no
assurance that such approvals will be obtained in form or timing sufficient
for such dates.

Regulatory orders approving the E.ON transaction were received from the
Kentucky Commission on August 6, 2001, from the Virginia State Corporation
Commission on October 5, 2001, the Federal Energy Regulatory Commission on
October 11, 2001, and the Tennessee Regulatory Authority on October 23,
voted in an open hearing to approve the transaction with an affirmative
order issued shortly thereafter.  On November 15, 2001, the Commission of
the European Communities granted E.ON AG and Powergen plc transaction
approval.

On April 19, 2002, Powergen plc shareholders voted in favor of certain
resolutions to approve the acquisition of Powergen plc by E.ON AG by means
of a scheme of arrangement under United Kingdom law.

Other

On April 16, 2002, the LG&E 5% Cumulative Preferred class of stock was
delisted from the NASDAQ Small Capitalization Market.  Delisting will
enable the Companies to realize certain administrative and corporate
governance efficiencies.

In May 2002, KU filed a request with the Philadelphia Stock Exchange
seeking delisting of its 4.75% Cumulative Preferred class of stock, which
delisting may become effective shortly.  Delisting will enable the
Companies to realize certain administrative and corporate governance
efficiencies.


Item 6(a).  Exhibits.

None.

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

None.
<page>					-27-

                                SIGNATURES


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


Louisville Gas and Electric Company
Registrant


Date:  May 14, 2002             /s/ S. Bradford Rives
                                S. Bradford Rives
                                Senior Vice President - Finance and
                                Controller
                                (On behalf of the registrant in his
                                capacity as Principal Accounting Officer)

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


Kentucky Utilities Company
Registrant


Date:  May 14, 2002             /s/ S. Bradford Rives
                                S. Bradford Rives
                                Senior Vice President - Finance and
                                Controller
                                (On behalf of the registrant in his
                                capacity as Principal Accounting Officer)


<page>					-28-