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 September 30, 1999


                                    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 October 29, 1999.

                   Louisville Gas and Electric Company
      21,294,223 shares, without par value, as of October 29, 1999,
                      all held by LG&E Energy Corp.

                        Kentucky Utilities Company
      37,817,878 shares, without par value, as of October 29, 1999,
                      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                         4
            Consolidated Statements of Cash Flows               6
            Consolidated Statements of Retained Earnings        8
            Consolidated Statements of Comprehensive Income     9

          Louisville Gas and Electric Company
            Statements of Income                               10
            Balance Sheets                                     11
            Statements of Cash Flows                           13
            Statements of Retained Earnings                    14
            Statements of Comprehensive Income                 15

          Kentucky Utilities Company
            Statements of Income                               16
            Balance Sheets                                     17
            Statements of Cash Flows                           19
            Statements of Retained Earnings                    20

          Notes to Financial Statements                        21

Item 2 Management's Discussion and Analysis of Results of
          Operations and Financial Condition                   32

Item 3 Quantitative and Qualitative Disclosures About
          Market Risk                                          46

                             PART II

Item 1 Legal Proceedings                                       48

Item 6 Exhibits and Reports on Form 8-K                        49

       Signatures                                              50

<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           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

REVENUES:
Electric utility               $ 557,711  $ 447,796 $1,325,642 $1,130,062
Gas utility                       17,623     16,978    117,054    136,277
International and
 non-utility                     297,391    164,402    652,951    315,589
  Total revenues                 872,725    629,176  2,095,647  1,581,928
Provision for rate
 refunds (Note 12)                (7,335)         -     (7,335)         -
  Net revenues                   865,390    629,176  2,088,312  1,581,928

OPERATING EXPENSES:
Fuel and power purchased         413,713    206,044    869,795    457,984
Gas supply expenses               82,248     53,137    234,232    220,671
Utility operation and
 maintenance                     103,789    106,997    322,686    320,061
International and non-
 utility operation
 and maintenance                  48,905     57,003    141,303     96,907
Depreciation and
 amortization                     54,664     51,378    162,879    155,030
Merger costs to
 achieve                               -          -          -     65,318
  Total operating expenses       703,319    474,559  1,730,895  1,315,971

Equity in earnings
 of unconsolidated
 ventures (Notes 5 and 6)         10,092      2,744     43,799     59,607

OPERATING INCOME                 172,163    157,361    401,216    325,564

Other income                       5,863      2,840     14,862        572
Interest charges and
 preferred dividends              32,414     26,833     95,177     79,127
Minority interest                  4,735      4,459     10,148      9,104

Income before income taxes       140,877    128,909    310,753    237,905

Income taxes                      53,711     50,055    116,843     99,830

Income from continuing
 operations                    $  87,166  $  78,854 $  193,910 $  138,075



                                   - 1 -
<PAGE>

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

                                    Three Months           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

Income from continuing
 operations                    $  87,166  $  78,854 $  193,910 $  138,075

Loss from discontinued
 operations, net of income tax
 expense benefit of $15,008
 (Notes 2 and 3)                       -          -          -    (22,852)

Income (loss) on disposal of dis-
 continued operations, net of
 income tax (expense) benefit
 of $(243), $(328) and
 $124,757 (Notes 2 and 3)              -        658        788   (224,342)

Income (loss) before cum-
 ulative effect of change
 in accounting principle          87,166     79,512    194,698   (109,119)

Cumulative effect of change
 in accounting for start-up
 costs, net of income tax
 benefit of $5,061                     -          -          -     (7,162)

NET INCOME (LOSS)              $  87,166  $  79,512 $  194,698 $ (116,281)



                                   - 2 -
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                    LG&E Energy Corp. and Subsidiaries
                Consolidated Statements of Income (cont.)
            (Unaudited - Thousands of $ Except Per Share Data)

                                    Three Months           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

Average common shares
 outstanding                     129,677    129,683    129,677    129,683

Earnings (loss) per share -
 basic:
  Continuing operations        $     .67  $     .61  $     1.49 $     1.06
  Discontinued operations            .00        .00         .00       (.17)
  Income (loss) on dis-
   posal of discontinued
   operations                        .00        .00         .01      (1.73)
  Cumulative effect of
   accounting change                 .00        .00         .00       (.06)

   Total                       $     .67  $     .61  $     1.50 $     (.90)

Earnings (loss) per share -
 diluted:
  Continuing operations        $     .67  $     .61  $     1.49 $     1.06
  Discontinued operations            .00        .00         .00       (.16)
  Income (loss) on dis-
   posal of discontinued
   operations                        .00        .00         .01      (1.73)
  Cumulative effect of
   accounting change                 .00        .00         .00       (.06)

   Total                       $     .67  $     .61  $     1.50 $     (.89)

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


                                   - 3 -
<PAGE>

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

                                  ASSETS

                                                    (Unaudited)
                                                      Sep. 30,    Dec. 31,
                                                        1999        1998

CURRENT ASSETS:
Cash and temporary cash investments                 $   93,007 $  105,726
Marketable securities                                   11,458     20,862
Accounts receivable - less reserve                     377,693    293,219
Materials and supplies - primarily at average cost:
 Fuel (predominantly coal)                              82,614     78,855
 Gas stored underground                                 49,143     39,249
 Other                                                  93,797     72,457
Net assets of discontinued opera-
 tions (Notes 2 and 3)                                  36,380      3,219
Prepayments and other                                   41,810     38,287
 Total current assets                                  785,902    651,874

UTILITY PLANT:
At original cost                                     5,851,448  5,581,667
Less:  reserve for depreciation                      2,478,866  2,352,306
 Net utility plant                                   3,372,582  3,229,361

OTHER PROPERTY AND INVESTMENTS - LESS RESERVES:
Investment in unconsolidated
 ventures (Notes 5 and 6)                              231,690    167,877
Non-utility property and plant, net                    493,623    447,372
Other                                                   36,393    117,321
 Total other property and investments                  761,706    732,570

DEFERRED DEBITS AND OTHER ASSETS                       267,894    214,152

Total assets                                        $5,188,084 $4,827,957

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


                                   - 4 -
<PAGE>

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

                         CAPITAL AND LIABILITIES

                                                    (Unaudited)
                                                      Sep. 30,    Dec. 31,
                                                        1999        1998

CURRENT LIABILITIES:
Long-term debt due within one year                  $  111,590 $        -
Notes payable                                          393,202    365,135
Accounts payable                                       218,882    243,968
Other                                                  351,523    242,479
 Total current liabilities                           1,075,197    851,582

Long-term debt                                       1,599,603  1,510,775

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
 taxes                                                 558,609    570,698
Investment tax credit, in
 process of amortization                                87,844     93,844
Regulatory liability                                   102,844    109,411
Other                                                  201,013    206,064
 Total deferred credits and other liabilities          950,310    980,017

Minority interests                                     109,075    107,815

Cumulative preferred stock                             135,328    136,530

COMMON EQUITY:
Common stock, without par value -
 129,677,030 shares outstanding                        778,273    778,273
Other                                                      245     (3,314)
Retained earnings                                      540,053    466,279
 Total common equity                                 1,318,571  1,241,238

Total liabilities and capital                       $5,188,084 $4,827,957

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


                                   - 5 -
<PAGE>

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

                                                           Nine Months
                                                              Ended
                                                             Sep. 30,
                                                        1999        1998

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                  $   194,698 $ (116,281)
Items not requiring cash currently:
 Depreciation and amortization                         162,879    155,030
 Deferred income taxes - net                           (11,822)   (11,471)
 Loss from discontinued operations
  (Notes 2 and 3)                                            -     22,852
 (Gain) loss on disposal of discon-
  tinued operations (Notes 2 and 3)                       (788)   224,342
 Cumulative effect of change
  in accounting principle                                    -      7,162
 Other                                                 (17,480)    (9,276)
Change in net current assets                           (73,790)  (118,416)
Other                                                    4,933    (45,059)
 Net cash flows from operating activities              258,630    108,883

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities                                   (917)   (18,783)
Proceeds from sales of securities                       10,040     16,777
Construction expenditures                             (291,942)  (151,158)
Investments in unconsolidated
 ventures (Note 5)                                     (74,498)    (1,010)
Investment in subsidiary, net of cash
 and temporary cash investments
 acquired (Note 4)                                     (39,693)         -
Proceeds from sale of investment
 in affiliate and sale of
 leveraged leases (Note 6)                              53,384     16,000
  Net cash flows from investing activities            (343,626)  (138,174)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of medium-term notes                          200,000    150,000
Retirement of bonds                                    (35,268)   (20,021)
Short-term borrowings                                3,927,792  4,753,762
Repayment of short-term borrowings                  (3,899,417)(4,743,743)
Redemption of preferred stock                           (1,202)    (1,823)
Payment of common dividends                           (119,628)  (100,855)
 Net cash flows from financing activities               72,277     37,320

CHANGE IN CASH AND TEMPORARY
 CASH INVESTMENTS                                      (12,719)     8,029

BEGINNING CASH AND TEMPORARY
 CASH INVESTMENTS                                      105,726    111,512

ENDING CASH AND TEMPORARY
 CASH INVESTMENTS                                  $    93,007 $  119,541



                                   - 6 -
<PAGE>

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

                                                           Nine Months
                                                              Ended
                                                             Sep. 30,
                                                        1999        1998

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION:
 Cash paid during the period for:
  Income taxes                                     $    24,871 $   38,137
  Interest on borrowed money                            78,483     70,414

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.


                                   - 7 -
<PAGE>

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

                                    Three Months           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

Balance at beginning
 of period                     $ 494,059  $ 445,729  $ 466,279  $ 722,584
Net income (loss)                 87,166     79,512    194,698   (116,281)
Cash dividends declared on
 common stock ($.3175, $.3075,
 $.9325 and $.93259 per share)    41,172     39,877    120,924    120,939

Balance at end of period       $ 540,053  $ 485,364  $ 540,053  $ 485,364

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


                                   - 8 -
<PAGE>

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

                                    Three Months           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

Net income (loss)               $ 87,166    $79,512   $194,698  $(116,281)

Unrealized holding gains (losses)
 on available-for-sale securities
 arising during the period          (287)       (50)      (250)       (42)

Reclassification adjustment for
 realized gains and (losses) on
 available-for-sale securities
 included in net income              (89)        90       (247)       124

Other comprehensive income
 (loss), before tax                 (376)        40       (497)        82

Income tax benefit (expense) related
 to items of other comprehensive
 income                              142        (29)       188        (44)

Comprehensive income (loss)     $ 86,932    $79,523   $194,389  $(116,243)

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


                                   - 9 -
<PAGE>

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

                                    Three Months           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

OPERATING REVENUES:
Electric                        $279,907   $212,907   $621,693   $528,341
Gas                               17,623     16,978    117,054    136,277
Provision for rate
  refunds (Note 12)               (1,135)         -     (1,635)         -
  Total operating revenues       296,395    229,885    737,112    664,618

OPERATING EXPENSES:
Fuel for electric generation      45,361     41,205    117,199    118,488
Power purchased                   85,156     18,057    139,040     42,883
Gas supply expenses                8,763      8,950     72,650     89,308
Other operation expenses          39,452     41,976    119,101    122,850
Maintenance                       12,800     10,666     47,730     33,985
Depreciation and amortization     24,143     23,294     72,428     69,883
Federal and state
 income taxes                     25,683     27,403     47,317     53,485
Property and other taxes           4,001      4,914     12,999     14,361
 Total operating expenses        245,359    176,465    628,464    545,243

NET OPERATING INCOME              51,036     53,420    108,648    119,375

Merger costs to
 achieve                               -          -          -     34,134
Other income                         336        359      1,648     10,668
Interest charges                   9,668      8,918     27,636     27,629

NET INCOME                        41,704     44,861     82,660     68,280

Preferred stock dividends          1,090      1,135      3,266      3,400

NET INCOME AVAILABLE
 FOR COMMON STOCK               $ 40,614   $ 43,726   $ 79,394   $ 64,880

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


                                  - 10 -
<PAGE>

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

                                  ASSETS

                                                    (Unaudited)
                                                      Sep. 30,    Dec. 31,
                                                        1999        1998

UTILITY PLANT:
At original cost                                    $3,034,699 $2,896,139
Less:  reserve for depreciation                      1,211,971  1,144,123
 Net utility plant                                   1,822,728  1,752,016

OTHER PROPERTY AND INVESTMENTS -
 less reserve                                            1,348      1,154

CURRENT ASSETS:
Cash and temporary cash investments                     16,572     31,730
Marketable securities                                    8,274     17,851
Accounts receivable - less reserve                     191,017    142,580
Materials and supplies - at average cost:
 Fuel (predominantly coal)                              12,142     23,993
 Gas stored underground                                 41,778     33,485
 Other                                                  34,586     33,103
Prepayments and other                                    1,748      2,285
 Total current assets                                  306,117    285,027

DEFERRED DEBITS AND OTHER ASSETS:
Unamortized debt expense                                 5,685      5,919
Regulatory assets                                       34,117     37,643
Other                                                   15,217     22,878
 Total deferred debits and other assets                 55,019     66,440

Total assets                                        $2,185,212 $2,104,637

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


                                  - 11 -
<PAGE>

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

                      CAPITALIZATION AND LIABILITIES

                                                    (Unaudited)
                                                      Sep. 30,    Dec. 31,
                                                        1999        1998

CAPITALIZATION:
Common stock, without par value -
 Outstanding 21,294,223 shares                      $  425,170 $  425,170
Retained earnings                                      259,856    247,462
Other                                                     (960)      (786)
 Total common equity                                   684,066    671,846
Cumulative preferred stock                              95,328     95,328
Long-term debt                                         626,800    626,800
 Total capitalization                                1,406,194  1,393,974

CURRENT LIABILITIES:
Accounts payable                                       218,056    133,673
Provision for rate refunds                              11,126     13,261
Dividends declared                                      24,090     23,168
Accrued taxes                                           37,370     31,929
Accrued interest                                         7,786      8,038
Other                                                   15,978     15,242
 Total current liabilities                             314,406    225,311

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
 taxes                                                 252,021    254,589
Investment tax credit, in
 process of amortization                                68,325     71,542
Accumulated provision for pensions
 and related benefits                                   45,860     59,529
Regulatory liability                                    60,998     63,529
Other                                                   37,408     36,163
 Total deferred credits and other liabilities          464,612    485,352

Total capital and liabilities                       $2,185,212 $2,104,637

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


                                  - 12 -
<PAGE>

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

                                                           Nine Months
                                                              Ended
                                                             Sep. 30,
                                                        1999        1998

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                           $  82,660  $  68,280
Items not requiring cash currently:
 Depreciation and amortization                          72,428     69,883
 Deferred income taxes - net                            (4,981)       373
 Investment tax credit - net                            (3,217)    (3,180)
 Other                                                   5,255      2,862
Changes in current assets and liabilities               42,348    (22,279)
Other                                                   (7,663)    24,132
 Net cash flows from operating activities              186,830    140,071

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities                                   (668)   (17,784)
Proceeds from sales of securities                        9,955     15,623
Construction expenditures                             (141,932)   (72,950)
 Net cash flows from investing activities             (132,645)   (75,111)

CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of first mortgage bonds                           -    (20,000)
Payment of dividends                                   (69,343)   (64,417)
 Net cash flows from financing activities              (69,343)   (84,417)

CHANGE IN CASH AND TEMPORARY
 CASH INVESTMENTS                                      (15,158)   (19,457)

CASH AND TEMPORARY CASH INVESTMENTS AT
 BEGINNING OF PERIOD                                    31,730     50,472

CASH AND TEMPORARY CASH INVESTMENTS AT
 END OF PERIOD                                       $  16,572  $  31,015

SUPPLEMENTAL DISCLOSURES:
 Cash paid during the period for:
  Income taxes                                       $  53,326  $  37,396
  Interest on borrowed money                            25,497     26,195

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.


                                  - 13 -
<PAGE>

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

                                    Three Months           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

Balance at beginning
 of period                      $242,242   $239,064   $247,462   $258,910
Net income                        41,704     44,861     82,660     68,280
 Subtotal                        283,946    283,925    330,122    327,190

Cash dividends declared on stock:
Preferred                          1,090      1,135      3,266      3,400
Common                            23,000     22,000     67,000     63,000
 Subtotal                         24,090     23,135     70,266     66,400

Balance at end of period        $259,856   $260,790   $259,856   $260,790

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


                                  - 14 -
<PAGE>

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

                                    Three Months           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

Net income available
 for common stock                $40,614    $43,726    $79,394    $64,880

Unrealized holding (losses) gains
 on available-for-sale securities
 arising during the period          (199)        32       (293)        39

Income tax benefit (expense)
 related to unrealized holding
 gains and losses                     80        (14)       118        (16)

Comprehensive income             $40,495    $43,744    $79,219    $64,903

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


                                  - 15 -
<PAGE>

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

                                    Three Months           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

OPERATING REVENUES:
Electric                        $287,703   $246,117   $730,846   $622,415
Provision for rate refunds
 (Note 12)                        (6,200)         -     (6,200)         -
  Net operating revenues         281,503    246,117    724,646    622,415

OPERATING EXPENSES:
Fuel for electric generation      60,770     65,586    168,338    168,623
Power purchased                  104,213     40,134    195,136     82,725
Other operation expenses          30,403     31,100     89,359     92,531
Maintenance                       13,649     15,630     42,113     45,578
Depreciation and amortization     22,546     21,749     66,694     64,852
Federal and state
 income taxes                     13,910     23,325     47,130     50,024
Property and other taxes           3,483      3,916     11,384     12,225
 Total operating expenses        248,974    201,440    620,154    516,558

NET OPERATING INCOME              32,529     44,677    104,492    105,857

Merger costs to
 achieve                               -          -          -     21,830
Other income                       1,604      1,899      5,767      5,806
Interest charges                   9,707      9,596     28,448     28,923

NET INCOME                        24,426     36,980     81,811     60,910

Preferred stock dividends            564        564      1,692      1,692

NET INCOME AVAILABLE
 FOR COMMON STOCK               $ 23,862   $ 36,416   $ 80,119   $ 59,218

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


                                  - 16 -
<PAGE>

                        Kentucky Utilities Company
                              Balance Sheets
                             (Thousands of $)

                                  ASSETS

                                                    (Unaudited)
                                                      Sep. 30,    Dec. 31,
                                                        1999        1998

UTILITY PLANT:
At original cost                                    $2,816,749 $2,685,528
Less:  reserve for depreciation                      1,266,895  1,208,183
 Net utility plant                                   1,549,854  1,477,345

OTHER PROPERTY AND INVESTMENTS -
 less reserve                                           14,165     14,238

CURRENT ASSETS:
Cash and temporary cash investments                     37,129     59,071
Accounts receivable - less reserve                     135,287    106,003
Materials and supplies - at average cost:
 Fuel (predominantly coal)                              29,246     23,927
 Other                                                  25,461     24,877
Prepayments                                              2,595      2,427
 Total current assets                                  229,718    216,305

DEFERRED DEBITS AND OTHER ASSETS:
Unamortized debt expense                                 4,927      5,227
Regulatory assets                                       24,393     28,228
Other                                                   22,871     19,859
 Total deferred debits and other assets                 52,191     53,314

Total assets                                        $1,845,928 $1,761,202

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


                                  - 17 -
<PAGE>

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

                      CAPITALIZATION AND LIABILITIES

                                                    (Unaudited)
                                                      Sep. 30,    Dec. 31,
                                                        1999        1998

CAPITALIZATION:
Common stock, without par value -
 Outstanding 37,817,878 shares                      $  308,140 $  308,140
Retained earnings                                      324,286    299,168
Other                                                     (595)      (595)
 Total common equity                                   631,831    606,713
Cumulative preferred stock                              40,000     40,000
Long-term debt                                         484,830    546,330
 Total capitalization                                1,156,661  1,193,043

CURRENT LIABILITIES:
Long-term debt due within one year                      61,500          -
Accounts payable                                       148,093    100,012
Provision for rate refunds                              27,700     21,500
Dividends declared                                      19,282     18,188
Accrued taxes                                           25,107     16,733
Accrued interest                                         9,714      8,110
Other                                                   33,945     31,226
 Total current liabilities                             325,341    195,769

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
 taxes                                                 239,351    244,493
Investment tax credit, in
 process of amortization                                19,519     22,302
Accumulated provision for pensions
 and related benefits                                   55,165     50,044
Regulatory liability                                    41,846     45,882
Other                                                    8,045      9,669
 Total deferred credits and other liabilities          363,926    372,390

Total capital and liabilities                       $1,845,928 $1,761,202

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


                                  - 18 -
<PAGE>

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

                                                           Nine Months
                                                              Ended
                                                             Sep. 30,
                                                        1999        1998

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                           $  81,811  $  60,910
Items not requiring cash currently:
 Depreciation and amortization                          66,694     64,852
 Deferred income taxes - net                            (9,178)      (331)
 Investment tax credit - net                            (2,783)    (2,875)
Changes in current assets and liabilities               31,623     49,426
Other                                                   11,116      3,149
 Net cash flows from operating activities              179,283    175,131

CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures                             (145,628)   (53,498)
 Net cash flows from investing activities             (145,628)   (53,498)

CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings                                        -    381,500
Repayments of short-term borrowings                          -   (415,100)
Payment of dividends                                   (55,597)   (41,783)
 Net cash flows from financing activities              (55,597)   (75,383)

CHANGE IN CASH AND TEMPORARY
 CASH INVESTMENTS                                      (21,942)    46,250

CASH AND TEMPORARY CASH INVESTMENTS AT
 BEGINNING OF PERIOD                                    59,071      5,453

CASH AND TEMPORARY CASH INVESTMENTS AT
 END OF PERIOD                                       $  37,129  $  51,703

SUPPLEMENTAL DISCLOSURES:
 Cash paid during the period for:
  Income taxes                                       $  53,778  $  43,556
  Interest on borrowed money                            24,078     24,244

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.


                                  - 19 -
<PAGE>

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

                                    Three Months           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

Balance at beginning
 of period                      $319,424   $287,461   $299,167   $304,750
Net income                        24,426     36,980     81,811     60,910
Subtotal                         343,850    324,441    380,978    365,660

Cash dividends declared on stock:
Preferred                            564        564      1,692      1,692
Common                            19,000     18,000     55,000     58,091
 Subtotal                         19,564     18,564     56,692     59,783

Balance at end of period        $324,286   $305,877   $324,286   $305,877

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


                                  - 20 -
<PAGE>

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

                      Notes to Financial Statements
                               (Unaudited)

1. Effective May 4, 1998, following the receipt of all required state and
   federal regulatory approvals, LG&E Energy Corp. (LG&E Energy or the
   Company) and KU Energy Corporation (KU Energy) merged, with LG&E Energy
   as the surviving corporation (the Merger).  The accompanying unaudited
   consolidated financial statements reflect the accounting for the merger
   as a pooling of interests and are presented as if the companies were
   combined as of the earliest period presented.  However, the financial
   information is not necessarily indicative of the results of operations,
   financial position or cash flows that would have occurred had the
   merger been consummated for the periods for which it is given effect,
   nor is it necessarily indicative of future results of operations,
   financial position, or cash flows.  The financial statements reflect
   the conversion of each outstanding share of KU Energy common stock into
   1.67 shares of LG&E Energy common stock.  The outstanding preferred
   stock of Louisville Gas and Electric Company (LG&E), a subsidiary of
   LG&E Energy, and Kentucky Utilities Company (KU), a subsidiary of KU
   Energy, were not affected by the Merger.

   KU Capital Corporation, a subsidiary of KU Energy, was merged into LG&E
   Capital Corp. (Capital Corp.) on July 24, 1998, with the latter as the
   surviving corporation.  The consolidated financial statements include
   the accounts of LG&E Energy, LG&E, Capital Corp., and KU and their
   respective wholly-owned subsidiaries, collectively referred to herein
   as the "Company."  All significant intercompany items and transactions
   have been eliminated from the unaudited consolidated financial
   statements.

   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 included herein 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 1998 for
   information relevant to the accompanying financial statements,
   including information as to the significant accounting policies of the
   Company.

2. 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 enables the
   Company to focus on optimizing the value of physical assets it owns or
   controls, and to reduce the earnings impact on continuing operations of
   extreme market volatility in its portfolio of energy marketing
   contracts.  The Company is in the process of settling 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 under the contracts.  The Company,
   however, has maintained sufficient market knowledge, risk management
   skills, technical systems and experienced personnel to maximize the
   value of

                                  - 21 -
<PAGE>

   power sales from physical assets it owns or controls, including LG&E,
   KU and Western Kentucky Energy Corp. (WKE).

   At the time the Company decided to discontinue its merchant energy
   trading and sales business, it also decided to sell its natural gas
   gathering and processing business.  Subsequently, effective June 30,
   1999, the Company decided to retain this business.  The accompanying
   financial statements reflect the reclassification of the natural gas
   gathering and processing business as continuing operations for all
   periods presented.  See Note 3 below.

   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 Oglethorpe Power
   Corporation (OPC).  Other components of the write-off include costs
   relating to certain peaking options, goodwill associated with the
   Company's 1995 purchase of merchant energy trading and sales operations
   and exit costs, including labor and related benefits, severance and
   retention payments, and other general and administrative expenses.
   Although the Company used what it believed 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.

   Operating results for discontinued operations follow.  All amounts
   exclude the Company's natural gas gathering and processing business.
   The Company charged its loss from discontinued operations for the three-
   and nine-month periods ended September 30, 1999, to accrued loss on
   disposal of discontinued operations.

                                    Three Months           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

   Revenues                    $ 386,038 $1,870,301  $ 675,820 $3,466,093
   Loss before taxes            (148,464)   (76,367)  (175,187)  (114,227)
   Loss from discontinued
     operations, net of
     income taxes                (88,514)   (38,911)  (104,505)   (61,763)



                                  - 22 -
<PAGE>

   Net assets of discontinued operations at September 30, 1999, follow.
   All amounts exclude the Company's natural gas gathering and processing
   business.

   Accounts receivable                     $ 69,290
   Price risk management assets              33,384
   Accounts payable                         (83,390)
   Price risk management
     liabilities                            (10,499)
   Other assets and liab-
     ilities, net                            26,306

   Net assets before balance
     of reserve for discontinued
     operations                              35,091

   Reserve for discontinued
     operations                              (4,950)
   Income tax benefit                         6,239

   Net assets of discon-
     tinued operations                     $ 36,380

   Total charges against the accrued loss on disposal of discontinued
   operations through September 30, 1999, include $250.8 million for
   commitments prior to disposal, $69.6 million for transaction
   settlements, $11.1 million for goodwill, and $25.9 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, has successfully hedged certain of its future exposures, and
   has initiated arbitration proceedings with OPC over the terms of its
   contract.

   As discussed in Part II, Item 1, Legal Proceedings below, LG&E Energy
   Marketing Inc. initiated arbitration proceedings against OPC related to
   LEM's long-term contract to supply approximately one-half of OPC's
   systemwide power needs.  While the Company expects a favorable outcome
   in the OPC arbitration proceeding, no assurances can be given as to
   such an event.  Should OPC prevail, the Company may be required to
   increase its after-tax accrued loss on disposal of discontinued
   operations by approximately $150 million as a result of higher than
   anticipated future commodity prices, increased load demands, and other
   factors.  Any such increase in the loss reserve will be recorded in
   discontinued operations.  This amount is subject to continuing analysis
   and estimation.  Management does not expect this to have a material
   effect on income from continuing operations.  See Part II, Item 1,
   Legal Proceedings below.

   If the Company is unable to dispose of its remaining commitments, it
   will continue to meet its obligations through the terms of the
   contracts.  The net fair value of these commitments as of September 30,
   1999, are currently estimated to be approximately $7 million favorable
   for the remainder of 1999, offset by negative $5 million to $27 million
   each year in 2000 through 2004 and $9 million in the aggregate
   thereafter.

   As of September 30, 1999, the Company's discontinued operations were
   under various contracts to buy and sell power and gas with net notional
   amounts of 23.8 million MWh's of power and 38.5 million MMBTU's of
   natural gas with a volumetric weighted-average period of approximately
   39 and 50 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 immaterial
   amounts of coal and SO2 allowances in support of its power contracts.
   Notional amounts reflect the nominal volume of transactions included in
   the Company's price

                                  - 23 -
<PAGE>

   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 October 19, 1999, 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 $7.5 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 October 19,
   1999, the Company estimates that a 1% change in the forecasted load
   demand could change the value of the Company's remaining energy
   portfolio by $9.6 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 September 30, 1999, over 95% of
   the Company's price risk management commitments were with
   counterparties rated BBB equivalent or better.  As of September 30,
   1999, seven counterparties represented 80% of the Company's price risk
   management commitments.

3. Effective June 30, 1999, the Company reclassified its natural gas
   gathering and processing business to continuing operations from
   discontinued operations.  The Company chose to retain rather than
   dispose of this business at the end of the one-year period established
   by accounting standards because of management's expectation of more
   favorable future energy prices and the related impact on this business.
   The Company has reflected the operating results and net assets of the
   natural gas gathering and processing business as continuing operations
   in the accompanying financial statements for all periods presented.

   Operating results for the natural gas gathering and processing business
   follow.

                                             Year Ended December 31,
                                             1998       1997        1996

   Revenues                                $109,833   $107,691    $85,259
   (Loss) income before taxes                (2,593)     2,829      4,888
   Net (loss) income                         (1,599)     1,323      2,873

                                    Three Months           Nine Months
                                       Ended                  Ended
                                      Sep. 30,               Sep. 30,
                                  1999       1998       1999        1998

   Revenues                      $40,229    $25,321   $115,666    $86,212
   (Loss) income before taxes       (321)      (901)    (1,171)    (1,547)
   Net (loss) income                (312)      (658)    (1,060)    (1,405)



                                  - 24 -
<PAGE>

   Net assets of the natural gas gathering and processing business follow.

                                           Sep. 30,   Dec. 31,    Dec. 31,
                                             1999       1998        1997

   Cash and temporary cash
     investments                           $  6,440   $      -   $    509
   Accounts receivable                       20,303      7,425     13,948
   Non-utility property and
     plant, net                             157,539    161,473    171,114
   Accounts payable                         (20,819)    (6,148)   (13,449)
   Goodwill and other assets
     and liabilities, net                    (6,553)   (22,318)   (20,043)

   Net assets                              $156,910   $140,432   $152,079

   The Company recorded an after-tax loss on disposal of discontinued
   operations of $225 million in the second quarter of 1998.  No loss on
   disposal of the net assets of the natural gas gathering and processing
   business was included because the Company assumed it would sell these
   assets for an amount equal to or greater than book value.  It also
   included an after-tax reserve of approximately $1.6 million for
   estimated losses from operations of the natural gas gathering and
   processing business through the date of disposal.  Since this amount
   equaled the estimated losses from operations included in the original
   accrued loss on disposal of discontinued operations, no reversal of the
   accrued loss was included in income for the three- and nine-month
   periods ended September 30, 1999.  The Company has recorded no
   impairment losses related to the net assets of its natural gas
   gathering and processing business.

4.  In July 1999, the Company purchased 100% of the outstanding common
    stock of CRC-Evans Pipeline International, Inc. and affiliates (CRC)
    for initial consideration of $45.6 million and retirement of
    approximately $37.9 million in CRC debt.  CRC, based in Houston, Texas,
    is a provider of specialized equipment and services used in the
    construction and rehabilitation of gas and oil transmission pipelines.
    The purchase agreement provides for future annual earn-out payments to
    the previous owners based on CRC's meeting certain financial targets
    over the next three years.  The agreement caps the total of these
    payments at $31.0 million.

    The purchase consideration, including the potential earn-out payments,
    was paid 55% in cash and 45% in LG&E Energy common stock.  LG&E Energy
    will repurchase common stock from time to time in the open market or
    through privately negotiated transactions in amounts equal to the stock
    portions of the initial and subsequent earn-out payments.  During the
    third quarter 1999, the Company purchased approximately 935,000 shares
    in this regard and completed the initial purchase installment.

    The Company accounted for the acquisition using the purchase method.
    Management recorded goodwill of approximately $51.1 million from the
    initial transaction and may record additional goodwill contingent upon
    future earn-out payments.  Goodwill is being amortized over a period of
    twenty years.



                                  - 25 -
<PAGE>

    The fair values of the net assets acquired follow:

   Assets                                           $132,501
   Liabilities                                        87,956
   Cash paid, excluding transaction costs             44,545
   Cash and cash equivalents acquired                  5,943
   Net cash paid, excluding transaction costs         38,602
   Transaction costs                                   1,091
   Net cash paid                                    $ 39,693

5. On March 30, 1999, the Company acquired an indirect 19.6% ownership
   interest in Gas Natural BAN, S.A. (BAN), a natural gas distribution
   company that serves 1.1 million customers in the northern portion of
   the province of Buenos Aires, Argentina.  The purchase price totaled
   $73.5 million, which has been reflected in investments in
   unconsolidated ventures in the accompanying balance sheet.  The Company
   accounted for the acquisition using the purchase method, and it records
   its share of earnings using the equity method.  The purchase price
   exceeded the underlying equity in BAN by $13.0 million.  The Company
   allocated this difference to the assets and liabilities acquired based
   on their estimated fair values.

6. In March 1999, LG&E-Westmoreland Rensselaer, a California general
   partnership in which the Company owns a 50% interest, sold
   substantially all the assets and major contracts of its 79 MW gas-fired
   cogeneration facility in Rensselaer, New York, with net proceeds to the
   Company of approximately $34 million.  The sale resulted in an after-
   tax gain to the Company of approximately $8.9 million.

7. The Company adopted Emerging Issues Task Force Issue No. 98-10,
   Accounting for Energy Trading and Risk Management Activities (EITF No.
   98-10) in the first quarter of 1999.  The task force concluded that
   energy trading contracts should be recorded using mark-to-market
   valuation on the balance sheet, with the gains and losses shown net in
   the income statement.  EITF No. 98-10 more broadly defines energy
   trading to include certain financial activities related to physical
   assets which were not previously marked to market by established
   industry practice.  Initial adoption of EITF No. 98-10 did not have a
   material impact on the Company's consolidated results of operations or
   financial position.  For the three- and nine- month periods ended
   September 30, 1999, the Company recorded approximately $6.2 million of
   expense and $.8 million of income, respectively, in consolidated pre-
   tax income as a result of valuing the Company's electric energy trading
   contracts using the mark-to-market method.

8. In April 1999, LG&E and KU filed a joint agreement among the companies
   and the Kentucky Attorney General to amend the companies' previously-
   filed performance-based ratemaking (PBR) plan.  The amendment requested
   Kentucky Public Service Commission (the Commission) approval of a five-
   year rate reduction plan, which would reduce electric rates by $20
   million in the first year (beginning July 1999), and by $8 million
   annually for each of the next four years (through June 2004), for a
   total five-year savings to customers of $52 million.  The reductions
   will be distributed between LG&E and KU customers based on the same
   methodology the Commission approved in its previous merger order for
   allocating the merger savings to the utilities' customers (53 percent
   to KU customers; 47 percent to LG&E customers).  The joint agreement
   includes adoption of the PBR plan as proposed by the companies.

   The amended filing also includes the establishment of a $6 million
   program over the five-year period to assist low-income customers in
   paying their energy bills.

   In addition to the rate reductions and energy assistance program, the
   amended filing calls for LG&E and KU to extend for an additional year
   (through June 2004) both the rate cap and the merger-savings surcredit
   the utilities established as part of their

                                  - 26 -
<PAGE>

   earlier merger plan.  Under the rate cap, the companies agreed, in the
   absence of extraordinary circumstances, not to increase base electric
   rates for five years following the merger.  They also agreed to a
   monthly surcredit to customers' bills reflecting the 50 percent share
   of the non-fuel merger savings allocated to the utilities' customers in
   the first five years following the merger.

   As part of the amended PBR filing, LG&E also agreed to refrain from
   filing for an increase in natural gas rates over the five-year period
   (through June 2004).

   In April 1999, the Commission issued initial orders implementing the
   amended PBR plan, effective July 1999, and subject to modification.
   The Commission also consolidated into the continuing PBR proceedings an
   earlier March 1999, rate complaint by a group of industrial
   intervenors, the Kentucky Industrial Utility Consumers, Inc. (KIUC) in
   which KIUC requested significant reductions in electric rates.
   Hearings were conducted before the Commission on LG&E's and KU's
   amended PBR plans and the KIUC rate reduction petitions in August and
   September 1999.  Legal briefs of the parties were filed with the
   Commission in October 1999.  KIUC's current position calls for annual
   revenue reductions for LG&E and KU of $69.6 million and $61.5 million,
   respectively.  A decision from the Commission is expected by the end of
   the fourth quarter of 1999 or in early 2000.

9. In September 1999, Capital Corp. issued $50 million of floating rate
   notes under its medium-term note program.  The notes mature in
   September 2000 and pay interest at a rate equal to the one-month LIBOR
   plus 0.10%.

   In May 1999, Capital Corp. issued $150.0 million of medium-term notes
   due May 2004, with a stated interest rate on the notes of 6.205%.
   After taking into account the forward-starting interest-rate swap
   entered into in April 1999, to hedge the entire issuance, the effective
   rate amounted to 6.13%.  The proceeds were used to repay a portion of
   Capital Corp.'s outstanding commercial paper, which had been used to
   fund the BAN acquisition and other working capital needs.

   In May 1999, KU entered into an interest-rate swap agreement to hedge a
   portion of its outstanding first mortgage bonds.  The swap has a
   notional amount of $53 million and expires in May 2004.  KU pays a
   variable rate based on the six-month London Interbank Offered Rate
   (LIBOR) plus 1.88% and receives a fixed rate of 7.92%.  The agreement
   provides for a collar on the variable rate paid by KU with a floor of
   4.65% and a cap of 6.78%.  The agreement suspends the collar during
   periods when the London Interbank Offered Rate moves outside a
   specified range.  As of September 30, 1999, the rate payable by KU
   equaled 5.18%.



                                  - 27 -
<PAGE>

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

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

   LG&E electric                $273,836   $  4,936   $ 39,771
   LG&E gas                       17,623          -        843
   KU electric                   276,540      4,963     23,862
   Independent Power
     Operations                    5,366          -      5,573
   Western Kentucky
     Energy                      144,434          -     12,377
   Argentine Gas
     Distribution                 48,479          -      6,632
   Other Capital Corp.            99,112          -      1,754
   All Other                           -     (9,899)    (3,646)

   Consolidated                 $865,390   $      -   $ 87,166

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

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

   LG&E electric              $  607,681   $ 12,377   $ 78,124
   LG&E gas                      117,054          -      1,270
   KU electric                   710,626     14,020     80,119
   Independent Power
     Operations                   18,467          -     26,850
   Western Kentucky
     Energy                      273,462          -     10,889
   Argentine Gas
     Distribution                123,422          -     11,785
   Other Capital Corp.           237,600          -     (3,842)
   All Other                           -    (26,397)   (11,285)

   Consolidated               $2,088,312   $      -   $193,910



                                  - 28 -
<PAGE>

   External and intersegment revenues and income from continuing
   operations by business segment for the three months ended September 30,
   1998, follow:

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

   LG&E electric                $209,431   $  3,475   $ 41,935
   LG&E gas                       16,978          -      1,790
   KU electric                   238,365      7,752     36,416
   Independent Power
     Operations                    5,108          -      1,812
   Western Kentucky
     Energy                       66,246          -      5,451
   Argentine Gas
     Distribution                 47,399          -      3,406
   Other Capital Corp.            45,649          -     (2,645)
   All Other                           -    (11,227)    (9,311)

   Consolidated                 $629,176   $      -   $ 78,854

   External and intersegment revenues and income from continuing
   operations by business segment for the nine months ended September 30,
   1998, follow:

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

   LG&E electric              $  520,539   $  7,801   $ 62,434
   LG&E gas                      136,277          -      2,446
   KU electric                   609,523     12,892     59,218
   Independent Power
     Operations                   15,001          -     30,962
   Western Kentucky
     Energy                       66,246          -      5,451
   Argentine Gas
     Distribution                118,051          -      6,115
   Other Capital Corp.           116,291          -     (5,257)
   All Other                           -    (20,693)   (23,294)

   Consolidated               $1,581,928   $      -   $138,075

   The assets of the Company's Argentine Gas Distribution segment
   increased from $346.3 million at December 31, 1998, to $441.9 million
   at September 30, 1999, due mainly to acquiring a 19.6% ownership
   interest in BAN (see Note 5 of Notes to Financial Statements) and to
   construction expenditures at Distribuidora de Gas del Centro.  The
   assets of the Other Capital Corp. segment increased from $121.0 million
   at December 31, 1998, to $439.8 million at June 30, 1999.  This
   increase resulted from reclassifying the assets of the natural gas
   gathering and processing business from discontinued to continuing
   operations (see Note 3 of Notes to Financial Statements) and acquiring
   CRC-Evans in July 1999 (see Note 4 of Notes to Financial Statements).
   A decrease resulting from transferring costs related to gas turbine
   peaking units to LG&E and KU

                                  - 29 -
<PAGE>

   partially offset these increases (see Management's Discussion and
   Analysis of Results of Operations and Financial Condition in Item 2).

11.In August 1999, a Capital Corp. subsidiary entered into an operating
   lease for three combustion turbines.  The lease has a five year term,
   but no rent is payable until the turbines have been completed and
   installed.  Certain related facilities are expected to be added to the
   same lease in the fourth quarter of 1999.  The turbines are expected to
   be used in a 450 Mw gas fired merchant combustion turbine power
   generation facility, located in Monroe, Georgia, which is expected to
   be completed in June 2001.  At the end of the lease term, the Company
   may purchase the leased assets or assist the lessor in selling them.
   If the assets are sold, the Company is obligated to make up any
   deficiency between the lease balance and the proceeds subject to a cap.
   The total value of the assets under the existing lease is expected to
   be approximately $125 million and is expected to increase to
   approximately $175 million in the fourth quarter of 1999.

12.Prior to implementation of the PBR, LG&E and KU employed a fuel
   adjustment clause (FAC) mechanism, which under Kentucky law allowed the
   companies to recover from customers, the actual fuel costs associated
   with retail electric sales.  In February 1999, LG&E received orders
   from the Kentucky Commission requiring a refund to retail electric
   customers of approximately $3.9 million resulting from reviews of the
   FAC from November 1994 through April 1998, of which $1.9 million was
   refunded in April 1999 for the period beginning November 1994 and
   ending October 1996.  The orders changed the Company's method of
   computing fuel costs associated with electric line losses on off-system
   sales appropriate for recovery through the FAC.  LG&E requested that
   the Commission grant rehearing on the February orders, and further
   requested that the Commission stay the refund requirement until it
   could rule on the rehearing request.  The Commission granted the
   request for a stay, and in March 1999 granted part of the request for
   rehearing.  The Commission also granted rehearing on the KIUC's request
   for rehearing on the Commission's determination that it lacked
   authority to require the Companies to pay interest on the refund
   amounts.  The Commission conducted a hearing on the rehearing issues in
   June 1999 and is expected to issue a final ruling on rehearing by the
   end of 1999.  LG&E and KIUC have each filed separate appeals from the
   Commission's February 1999 orders with the Franklin Circuit Court.  A
   decision on the appeals by the Court is not expected until next year.

   In July 1999, the Commission issued a series of orders requiring KU to
   refund approximately $10.1 million resulting from reviews of the FAC
   from November 1994 to October 1998.  The orders changed KU's method of
   computing fuel costs associated with electric line losses on off-system
   sales appropriate for recovery through the FAC, and KU's method for
   computing system line losses for the purpose of calculating the system
   sales component of the FAC charge.  At KU's request, on July 23, 1999,
   the Commission stayed the refund requirement pending the Commission's
   final determination of any rehearing request that KU may file.  In
   August 1999, KU filed its request for rehearing of the July orders.

   In August 1999, the Commission issued a Final Order in the KU
   proceedings, agreeing, in part, with the Company's arguments outlined
   in its Petition for Rehearing.  While the Commission confirmed that the
   Company should change its method of computing the fuel costs associated
   with electric line losses, it agreed with KU that the line loss
   percentage should be based on the Company's actual line losses incurred
   in making off-system sales rather than the percentage used in its Open
   Access Transmission Tariff.  The Commission also upheld its previous
   ruling concerning the computation of system line losses in the
   calculation of the FAC.  The net effect of the Commission's Final Order
   was to reduce the refund obligation to $5.8 million from the original
   Order amount of $10.1 million.  In August 1999, LG&E and KU each
   recorded its estimated share of anticipated FAC refunds of $8.7
   million.  KU began implementing the refund

                                  - 30 -
<PAGE>

   in October and will continue the refund through September 2000.  Both
   KU and the KIUC have appealed the Order to the Franklin Circuit Court.
   A decision is not expected on the appeal until next year.

13.In August 1999, the Company received a Final Order from the PSC
   relating to its Environmental Cost Recovery mechanism which resulted in
   the reversal of approximately $1.4 million of the provision for refunds
   by KU and LG&E in December 1998.

14.In October 1998, Capital Corp. purchased two natural gas combustion
   turbines and began to install them.  In July 1999, Capital Corp.
   completed installation of the turbines and sold them at cost to LG&E
   and KU for $45.7 million and $76.7 million, respectively, following
   approval from the Commission.  The turbines began commercial operation
   in early August 1999.

15.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 Note 18 of
   the Company's Notes to Financial Statements) Annual Reports on Form 10-
   K for the year ended December 31, 1998, and Part II, Item 1, Legal
   Proceedings, of the Form 10-Q for the quarters ended March 31, 1999,
   and June 30, 1999.


                                  - 31 -
<PAGE>

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

Recent Developments

In April 1999, the Kentucky Public Service Commission (the Commission)
issued initial orders in the performance-based ratemaking proceedings for
LG&E and KU.  The Commission orders implement, effective July 1999, and
subject to modification, the companies' pending performance-based
ratemaking proposals, including a five-year, $52 million rate reduction
plan jointly filed by LG&E, KU and the Kentucky Attorney General's Office
with the Commission in April 1999.  For more information, see Note 8 to the
Notes to Financial Statements under Item 1 and Commodity Price Risk under
Item 3.

In October 1999, a Capital Corp. subsidiary entered into an initial
agreement to purchase six natural gas combustion turbines and is
negotiating terms of a definitive agreement.  In connection therewith,
Capital Corp. is pursuing initial development of a possible 1,600 Mw
generation facility in Anderson County, Texas.  Should the plant be
developed as presently planned, the aggregate cost is estimated to be
approximately $760 million, portions of which may be independently financed
or shared with eventual outside partners.

In October 1999, a partnership in which Capital Corp. owns an interest sold
to an Ameren Energy Corporation affiliate the natural gas combustion
turbine previously leased by such partnership in Ferndale, Washington.  The
Company's indirect proceeds from such sale were approximately $4.5 million.

In August 1999, a Capital Corp. subsidiary entered into an operating lease
for three combustion turbines.  The lease has a five year term, but no rent
is payable until the turbines have been completed and installed.  Certain
related facilities are expected to be added to the same lease in the fourth
quarter of 1999.  The turbines are expected to be used in a 450 Mw gas
fired merchant combustion turbine power generation facility, located in
Monroe, Georgia, which is expected to be completed in June 2001.  At the
end of the lease term, the Company may purchase the leased assets or assist
the lessor in selling them.  If the assets are sold, the Company is
obligated to make up any deficiency between the lease balance and the
proceeds subject to a cap.  The total value of the assets under the
existing lease is expected to be approximately $125 million and is expected
to increase to approximately $175 million in the fourth quarter of 1999.
For more information, see Note 11 to the Notes to Financial Statements
under Item 1.

In July 1999, the Company purchased 100% of the outstanding common stock of
CRC-Evans Pipeline International, Inc. and affiliates (CRC) for initial
consideration of $45.6 million and retirement of approximately $37.9
million in CRC debt.  CRC, based in Houston, Texas, is a provider of
specialized equipment and services used in the construction and
rehabilitation of gas and oil transmission pipelines.  For more
information, see Note 4 of Notes to Financial Statements under Item 1.

In July 1999, Capital Corp. completed installation of two natural gas
turbines (purchased in October 1998) and sold them at cost to LG&E and KU
for $45.7 million and $76.7 million, respectively, following approval from
the Commission.  The turbines began commercial operation in early August
1999.

Effective June 30, 1999, the Company reclassified its natural gas gathering
and processing business to continuing operations from discontinued
operations.  For more information, see Note 3 to the Notes to Financial
Statements under Item 1.

In March 1999, the Company acquired an indirect 19.6% ownership interest in
Gas Natural BAN, S.A. (BAN), a natural gas distribution company that serves
1.1 million customers in

                                  - 32 -
<PAGE>

the northern portion of the province of Buenos Aires, Argentina.  For more
information, see Note 5 of Notes to Financial Statements under Item 1 for
more information.

In March 1999, the partnership that owns the Rensselaer cogeneration
facility sold substantially all the assets and major contracts of the
facility.  For more information, see "Results of Operations" below, Note 6
of Notes to Financial Statements under Item 1 and the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.

General

The Company's principal subsidiaries are LG&E, an electric and gas utility,
KU, an electric utility, and Capital Corp., the holding company for all non-
utility investments.  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.

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 or usage loads of power and natural gas;
unusual weather; regulatory decisions, including decisions relating to the
Company's performance-based ratemaking proceedings, legal proceedings,
including the arbitration matter relating to the OPC power contract, and
decisions resulting from the combination of LG&E Energy and KU Energy; the
Company's ability to resolve Year 2000 issues in a timely manner 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, 1998.

                          Results of Operations

The results of operations for LG&E, KU and Capital Corp.'s Argentine gas
distribution, CRC 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 September 30, 1999, Compared to
                  Three Months Ended September 30, 1998

The Company's primary and diluted earnings per share from continuing
operations increased to $.67 in 1999 from $.61 in 1998.  Results for 1999
included $.04 of after-tax charges for fuel adjustment refunds.  Excluding
this item, income from continuing operations increased to $.71 in 1999 from
$.61 in 1998.  This increase resulted from strong off-system sales at WKE,
increases resulting from acquiring CRC and BAN in 1999, and lower corporate
expenses.  Lower earnings at LG&E and KU partially offset these increases.

LG&E Results:

LG&E's net income decreased $3.2 million for the quarter ended September
30, 1999, compared to the quarter ended September 30, 1998, primarily due
to implementation of the Company's performance based ratemaking proposal
which resulted in a reduction of electric revenues of $ 3.2 million.



                                  - 33 -
<PAGE>

A comparison of LG&E's revenues for the quarter ended September 30, 1999,
with the quarter ended September 30, 1998, excluding the provision for rate
refunds of $1.1 million, reflects increases and decreases which have been
segregated by the following principal causes:

                                                           Increase or
                                                            (Decrease)
                                                          (Thousands of $)
                                                      Electric      Gas
Cause                                                 Revenues    Revenues

Sales to ultimate consumers:
 Fuel and gas supply adjustments                       $(2,190)   $(1,100)
 Merger surcredit                                         (900)         -
 Performance based rate bill reduction                  (3,159)         -
 Demand side management/revenue
  decoupling                                                20          -
 Environmental cost recovery                              (137)         -
 Variation in sales volume, etc.                        10,116      1,395

 Total retail sales                                      3,750        295

Sales for resale                                        63,789          8
Gas transportation - net                                     -       (144)
Other                                                     (539)       486

Total                                                  $67,000    $   645

Electric sales for resale increased $59.1 million due to brokered sales
activities.

Fuel for electric generation and gas supply expenses comprise a large
component of LG&E's total operating expenses.  LG&E had an electric fuel
adjustment clause (FAC) whereby increases or decreases would be reflected
in retail rates, subject to the approval of the Public Service Commission
of Kentucky (PSC).  Effective July 2, 1999 the FAC was discontinued and
replaced with an amended electric performance based rate mechanism (PBR).
The PBR is subject to PSC modification.  See Note 8 for a further
discussion of the PBR mechanism and Note 12 for a further discussion of the
FAC.  LG&E gas rates contain a gas supply clause whereby increases and
decreases in the cost of gas supply may be reflected in retail rates,
subject to PSC approval.  Fuel for electric generation increased $4.2
million (10%) for the quarter because of an increase in generation due to
warmer weather ($5.2 million), partially offset by a decrease in the cost
of coal burned ($1 million).  Gas supply expenses decreased $.2 million.

Power purchased increased $67 million primarily due to increased purchases
for sales for resale, including approximately $2 million of expenses
recorded as a result of valuing the Company's electric energy trading
contracts using the mark-to-market method.  See Note 7 of Notes to
Financial Statements.

Other operation expenses decreased $2.5 million (6%) primarily due to
decreased operation of steam power production ($2.1 million).

Maintenance expenses increased $2.1 million (20%) in 1999 mainly due to
increases in scheduled outages at the Mill Creek generating station units 3
and 4 ($1.4 million), and the Cane Run generating station units 4 and 6
($.7 million).



                                  - 34 -
<PAGE>

Depreciation and amortization increased $.8 million in 1999 because of
additional utility plant in service.

Property and other taxes decreased $.9 million due to a sales tax accrual
recorded as a result of a sales tax audit in the third quarter of last
year.

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

KU Results:

KU's net income decreased $12.6 million for the quarter ended September 30,
1999, as compared to the quarter ended September 30, 1998.  This decrease
is partially due to recording a net provision for the refund of certain
revenues under the fuel adjustment clause and environmental cost recovery
mechanism, as well as the implementation of the Commission ordered
performance-based ratemaking proposal.  The after-tax impact of these
regulatory actions is $6.4 million.  See Notes 8 and 12 of Notes to
Financial Statements.

A comparison of KU's revenues for the quarter ended September 30, 1999,
with the quarter ended September 30, 1998, excluding the provision for rate
refunds of $6.2 million, reflects increases and decreases which have been
segregated by the following principal causes:

Sales to ultimate consumers:
 Fuel clause adjustments                              $ (2,921)
 Environmental cost recovery                               396
 Merger surcredit                                         (603)
 Performance based rate bill reduction                  (2,914)
 Variation in sales volume, etc.                         2,066

 Total retail sales                                     (3,976)

Sales for resale                                        44,438
Other                                                    1,124

Total                                                  $41,586

The increase in sales for resale was primarily due to more aggressive
marketing efforts.

Fuel for electric generation comprises a large component of KU's total
operating expenses.  KU's Kentucky jurisdictional electric rates were
subject to an electric fuel adjustment clause (FAC) whereby increases or
decreases would be reflected in retail rates, subject to the approval of
the Public Service Commission of Kentucky (PSC).  Effective July 2, 1999
the FAC was discontinued and replaced with an amended electric performance
based rate mechanism (PBR).  The PBR is subject to PSC modification.  See
Note 8 for a further discussion of the PBR mechanism and Note 12 for a
further discussion of the FAC.  KU's wholesale and Virginia jurisdictional
electric rates contain a fuel adjustment clause whereby increases or
decreases in the cost of fuel are reflected in rates, subject to the
approval of the Virginia State Corporation Commission and the Federal
Energy Regulatory Commission.  Fuel for electric generation expenses
decreased by $4.8 million (7%) for the quarter primarily because of a
decrease in generation.

Power purchased increased $64 million.  The increase was primarily due to a
160% increase in megawatt-hour purchases which was used to support the
aforementioned sales for resale as well as an increase in reserve margin
purchases.



                                  - 35 -
<PAGE>

Maintenance expense decreased $2 million (13%) due to a decrease in
maintenance activities at the steam generating plants.

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

Capital Corp. Results:

Capital Corp., the holding company for all non-utility investments,
conducts its operations through three principal segments:  Independent
Power Operations, WKE and Argentine Gas Distribution.  Involvement in these
and other non-utility businesses represents the Company's commitment to
understand, respond to, and capitalize on the opportunities presented by an
emerging competitive energy services industry.  Independent Power
Operations develops, operates, maintains and owns interests in domestic and
international power generation facilities that sell electric and steam
energy to utility and industrial customers, and owns equity interests in
combustion turbines which are leased to others.  WKE leases and operates
the generating facilities of Big Rivers.  Argentine Gas Distribution owns
interests in three natural gas distribution companies in Argentina.
Capital Corp. also engages in other energy-related businesses (Other Energy-
Related Businesses) which are not individual distinct segments of the
business.  These include CRC, a provider of specialized equipment and
services used in the construction and rehabilitation of gas and oil
transmission pipelines, Enertech, a commercial and retail initiative
designed to assess the energy and utility needs of large commercial and
industrial entities, and LG&E Home Services, a maintenance and repair
service for customers' major household appliances, and third party metering
and billing services.  These also include the gas gathering and processing
business, which consists of certain natural gas transportation, storage,
gathering and processing operations and facilities.

Independent Power Operations

Independent Power Operations' equity in earnings of unconsolidated ventures
increased from $1.8 million in 1998 to $5.4 million in 1999.  The increase
resulted mainly from writing off the $3.8 million investment in Windpower
Partners 1994 in the third quarter of 1998, offset by lower equity in
earnings at the Rensselaer project in 1999 resulting from the sale of this
project in the first quarter, and lower ROVA I capacity payments from
Virginia Electric and Power during the third quarter of 1999.

Western Kentucky Energy

Western Kentucky Energy (WKE) began operations in July 1998, upon
commencement of its lease transaction with Big Rivers.

WKE's revenues and cost of revenues increased from $66.2 million and $29.3
million, respectively, in 1998 to $144.4 million and $100.8 million,
respectively, in 1999.  These increases resulted mainly from higher off-
system sales in 1999.

WKE's operation and maintenance expenses decreased from $25.8 million in
1998 to $21.5 million in 1999 due to reclassifying reagent and disposal
expenses from operation and maintenance expenses in 1998 to cost of
revenues in 1999.  One-time expenses paid in 1998 to Big Rivers Electric
Corporation for storage and unloading of fuel acquired at closing also
contributed to the decrease.



                                  - 36 -
<PAGE>

Argentine Gas Distribution

The Argentine Gas Distribution companies' revenues increased 2% or $1.1
million in 1999 to $48.5 million due to higher consumption per customer and
an increase in the customer base.  Operation and maintenance expenses
decreased by 21.4% or $1.4 million over the same period.

The Argentine Gas Distribution companies' equity in earnings of
unconsolidated ventures increased from $1.0 million in 1998 to $4.7 million
in 1999 due to acquiring a 19.6% interest in BAN in March 1999.  See Recent
Developments and Note 5 of Notes to Financial Statements in Item 1.

Other

As a result of the reclassification of the gas gathering and processing
business from discontinued operations to continuing operations effective
June 30, 1999, the Company's activities include certain natural gas
transportation, storage, gathering and processing operations and
facilities, which businesses are conducted through Capital Corp.  Its
activities also include those of CRC, a provider of specialized equipment
and services used in the construction and rehabilitation of gas and oil
transmission pipelines, which the Company acquired in July 1999.
Additionally, the Company conducts various commercial and retail
initiatives, primarily energy-related new businesses and services designed
to leverage its existing assets, operations and market presence, which
commercial and retail initiatives have not had a significant impact on the
Company's financial position or required significant capital investment.

Other Energy-Related Businesses' revenues increased from $45.6 million in
1998 to $99.1 million in 1999, and its cost of revenues increased from
$38.4 million in 1998 to $73.1 million in 1999.  These increases reflect
the CRC acquisition in July 1999 and higher natural gas sales.  See Note 4
for a discussion of the CRC acquisition and see Note 3 for a discussion of
the Company's decision to retain its natural gas gathering and processing
business.

Other Energy-Related Businesses' operation and maintenance expense
increased from $9.0 million in 1998 to $14.9 million in 1999 due mainly to
acquiring CRC.

Capital Corp.'s interest expense increased from $6.6 million in 1998 to
$12.0 million in 1999 mainly due to funding the BAN and CRC acquisitions,
the WKE transaction, discontinued operations and corporate expenses.

            Nine Months Ended September 30, 1999, Compared to
                   Nine Months Ended September 30, 1998

The Company's primary and diluted earnings per share from continuing
operations increased to $1.49 in 1999 from $1.06 in 1998.  Results for 1998
included $.41 of after-tax charges for merger-related costs ($.19 for LG&E,
$.17 for KU, and $.05 for Corporate), and an after-tax gain of $.16
resulting from the Rensselaer project's Master Restructuring Agreement
(MRA) with Niagara Mohawk Power Corporation (NIMO).  Results for 1999
included $.05 of after-tax charges for fuel adjustment refunds ($.04 for KU
and $.01 for LG&E).  Excluding these items, income from continuing
operations increased to $1.54 in 1999 from $1.31 in 1998.  This increase
resulted from higher earnings at Capital Corp, partially offset by lower
earnings at LG&E (excluding merger-related costs).

LG&E Results:

LG&E's net income increased $14.4 million for the first nine months of
1999, as compared to the first nine months of 1998, primarily because of
the charge incurred in 1998 for

                                  - 37 -
<PAGE>

LG&E's cost to merge LG&E Energy Corp. with KU Energy of $25 million.
Excluding this charge, LG&E's net income decreased $10.6 million for the
same period.  This is primarily due to increased maintenance expenses at
electric generating plants.

A comparison of LG&E's revenues for the nine months ended September 30,
1999, with the nine months ended September 30, 1998, excluding the
provision for rate refunds of $1.6 million, reflects increases and
decreases which have been segregated by the following principal causes:

                                                           Increase or
                                                            (Decrease)
                                                          (Thousands of $)
                                                      Electric      Gas
Cause                                                 Revenues    Revenues

Sales to ultimate consumers:
 Fuel and gas supply adjustments                       $(2,102)  $(26,851)
 Merger surcredit                                       (3,756)         -
 Performance based rate bill reduction                  (3,159)         -
 Demand side management/revenue
  decoupling                                            (3,075)    (6,220)
 Environmental cost recovery                              (169)         -
 Variation in sales volume, etc.                        17,750     13,049

 Total retail sales                                      5,489    (20,022)

Sales for resale                                        88,341        420
Gas transportation - net                                     -       (412)
Other                                                     (478)       791

Total                                                  $93,352   $(19,223)

Sales for resale increased due to increased brokered sales.

Gas retail sales decreased from 1998 due to a decline in gas prices in the
first quarter of 1999.

Gas supply expenses decreased $16.7 million (19%) due to a decrease in net
gas supply costs ($20.7 million) partially offset by an increase in the
volume of gas delivered to the distribution system ($4.0 million).

Power purchased increased $96.2 million (224%) primarily due to increased
purchases for sales for resale.

Other operation expenses decreased $3.7 million (3%) for the nine months
ended September 1999 as compared to same period ended September 1998
primarily due to lower steam power production expenses.

Maintenance expenses for the first nine months of 1999 increased $13.7
million (40%) primarily due to increases in scheduled outages at the Mill
Creek generating station units 3 and 4, and the Cane Run generating station
units 4 and 6 ($7.5 million), increased forced outages at Mill Creek units
1 and 4 and Cane Run unit 5 ($3.9 million), and general repairs at the
electric generating plants ($2.4 million).

Depreciation and amortization increased $2.5 million in 1999 because of
additional utility plant in service.



                                  - 38 -
<PAGE>

A $34.1 million one-time charge was recorded in the second quarter of 1998
for costs associated with the merger of LG&E Energy Corp. and KU Energy
(the corresponding tax benefit of $9.1 million is recorded in Other
income).

Variations in income tax expense are largely attributable to changes in pre-
tax income as well as non-deductible merger expenses.

KU Results:

KU's net income increased $20.9 million for the nine months ended September
30, 1999, as compared to the nine months ended September 30, 1998,
primarily because of a $21.7 million one-time, after tax charge incurred in
1998 for KU's costs to merge LG&E Energy Corp. with KU Energy.

A comparison of KU's revenues for the nine months ended September 30, 1999,
with the nine months ended September 30, 1998, excluding the provision for
rate refunds of $6.2 million, reflects increases and decreases which have
been segregated by the following principal causes:

Sales to ultimate consumers:
 Fuel clause adjustments                              $ (2,626)
 Environmental cost recovery                              (684)
 Merger surcredit                                       (3,767)
 Performance based rate bill reduction                  (2,914)
 Variation in sales volume, etc.                        12,499

 Total retail sales                                      2,508

Sales for resale                                       104,065
Other                                                    1,858

Total                                                 $108,431

The increase in sales for resale was primarily due to more aggressive
marketing efforts and efficiencies achieved from coordinated dispatch of a
larger available pool of generation following completion of the merger in
May 1998 of LG&E Energy and KU Energy.

Power purchased increased $112 million.  The increase was primarily due to
a 53% increase in megawatt-hour purchases which was primarily used to
support the aforementioned sales for resale as well as an increase in
reserve margin purchases.

Maintenance expense decreased $3.5 million (8%) due to decreases in
maintenance at the steam generating plants and the transmission and
distribution systems.

A $21.8 million one-time charge was recorded in the second quarter of 1998
for the merger of LG&E Energy Corp. and KU Energy.

Variations in income tax expense are largely attributable to changes in pre-
tax income as well as non-deductible merger expenses.

Capital Corp. Results:

Independent Power Operations

Independent Power Operations' revenues increased from $15.0 million in 1998
to $18.5 million in 1999 due to recognizing previously deferred income
related to the sale of the

                                  - 39 -
<PAGE>

Rensselaer project in March 1999.  See Note 6 of Notes to Financial
Statements under Item 1.

Independent Power Operations' depreciation and amortization decreased from
$4.3 million in 1998 to $2.6 million in 1999 due to writing off certain
capitalized interest and development costs related to the San Miguel
facility in the first quarter of 1998 and to write-offs related to the
Rensselaer project's MRA with NIMO in the second quarter of 1998.

Independent Power Operations' equity in earnings of unconsolidated ventures
decreased from $57.4 million in 1998 to $35.4 million in 1999.  The
decrease resulted mainly from recognizing a gain in June 1998 related to
the Rensselaer project's NIMO MRA, partially offset by the Rensselaer
project's sale of substantially all of its assets and major contracts in
March 1999.  An increase resulting from writing off the investment in
Windpower Partners 1994 in the third quarter of 1998 also offset the
overall decrease.

Independent Power Operations' other income and expense changed from $8.9
million expense in 1998 to $1.7 million income in 1999 due primarily to
reacquiring in 1998 half of the Company's interest in the partnership that
owned the Rensselaer project, and to recording related expenses.

Western Kentucky Energy

WKE began operations in July 1998, after closing its lease transaction with
Big Rivers.  WKE's revenues and cost of revenues increased from $66.2
million and $29.3 million, respectively, in 1998 to $273.5 million and
$177.9 million, respectively, in 1999.  These increases resulted from WKE's
operating for nine months in 1999, compared to only two and one-half months
in 1998.  Increases in off-system sales in the third quarter of 1999 also
contributed to the increase.

WKE's operation and maintenance increased from $25.8 million in 1998 to
$72.1 million in 1999.  This increase resulted from WKE's operating for
nine months in 1999, compared to only two and one-half months in 1998.

Argentine Gas Distribution

The Argentine Gas Distribution companies' revenues increased 4.5% or $5.4
million in 1999 to $123.4 million due to higher consumption per customer
and an increase in the customer base.  Operation and maintenance expenses
decreased by 6.7% or $1.2 million over the same period.

The Argentine Gas Distribution companies' equity in earnings of
unconsolidated ventures increased from $2.2 million in 1998 to $8.4 million
in 1999 due to acquiring a 19.6% interest in BAN in March 1999.  See Note 5
of Notes to Financial Statements in Item 1.

Other

Other Energy-Related Businesses' revenues increased from $116.3 million in
1998 to $237.6 million in 1999, and its cost of revenues increased from
$94.0 million in 1998 to $185.9 million in 1999.  These increases reflect
increases at Retail Access Services, higher natural gas sales, and the CRC
acquisition.

Other Energy-Related Businesses' operation and maintenance expense
increased from $21.6 million in 1998 to $31.6 million in 1999 due mainly to
acquiring CRC.



                                  - 40 -
<PAGE>

Other Energy-Related Businesses' other income increased from $3.0 million
in 1998 to $7.6 million in 1999 due mainly to receiving a claim related to
an undeveloped independent power project in California.

Capital Corp.'s interest expense increased from $17.5 million in 1998 to
$35.1 million in 1999 due mainly to funding the BAN and CRC acquisitions,
the WKE transaction, discontinued operations and corporate expenses.

                     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 and information system
enhancements.  Lines of credit and commercial paper programs are maintained
to fund these temporary capital requirements.

Construction expenditures for the nine months ended September 30, 1999, of
$291.9 million were financed with internally generated funds and commercial
paper.

The Company's combined cash and marketable securities balance decreased
$22.1 million during the nine months ended September 30, 1999.  The
decrease reflects construction expenditures, the investment in BAN, the
acquisition of CRC and dividends paid, partially offset by cash flows from
operations, a net increase in debt, the Company's portion of the proceeds
received by the Rensselaer project from the sale of its assets and major
contracts, and proceeds received from the sale of four combustion turbines
held under a leveraged lease.

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 increase in accounts receivable resulted primarily from seasonal
fluctuations in LG&E's, KU's, and WKE's businesses, the CRC acquisition,
and higher natural gas gathering and processing revenues.  The decrease in
accounts payable resulted from fluctuations in LG&E's and KU's businesses,
partially offset by seasonal fluctuations in Distribuidora de Gas del
Centro's (Centro's) business and an increase resulting from acquiring CRC.
The increase in other materials and supplies resulted from acquiring CRC.

The increase in net assets of discontinued operations resulted from a
decrease in the reserve, partially offset by a decrease in net price risk
management assets, a seasonal increase in accounts payable and a decrease
in cash.  The decrease in cash resulted from seasonal fluctuations and from
a large transaction settlement near the end of the period.

The increase in investments in unconsolidated ventures resulted from the
investment in BAN and equity in earnings, partially offset by selling the
investment in the Rensselaer venture and distributions received.

The increase in non-utility property and plant resulted mainly from
acquiring CRC and from additions at Centro and WKE.  The decrease in other
property and investments resulted from reclassifying the two combustion
turbines purchased by Capital Corp. to LG&E's and KU's utility property
accounts.  In July 1999, Capital Corp. completed installation of the
turbines and sold them at cost to LG&E and KU for $45.7 million and $76.7
million, respectively.  The turbines began commercial operation in early
August 1999.



                                  - 41 -
<PAGE>

The increase in deferred debits and other assets resulted from recording
goodwill related to the CRC acquisition, and to capitalizing costs related
to the combustion turbine power generation facility in Monroe, Georgia.

Long-term debt due within one year increased due to issuing new debt and
reclassifying amounts from noncurrent to current.

The Company issues commercial paper that has maturity dates ranging between
one and 270 days.  The Company had outstanding commercial paper of $393.2
million at September 30, 1999, at a weighted-average interest rate of
5.65%.  Because of the rollover of these maturity dates, total short-term
borrowings and repayments during the first nine months of 1999 totaled $3.9
billion.  See Note 16 of the Company's Notes to Financial Statements
contained in its Annual Report on Form 10-K for the year ended December 31,
1998.

The increase in other current liabilities resulted from acquiring CRC and
from differences in the timing of estimated income tax payments.  The
increase in long-term debt resulted from additional borrowings, partially
offset by reclassifications to current.

In October 1999, a Capital Corp. subsidiary entered into an initial
agreement to purchase six natural gas combustion turbines and is
negotiating terms of a definitive agreement.  In connection therewith,
Capital Corp. is pursuing initial development of a possible 1,600 Mw
generation facility in Anderson County, Texas.  Should the plant be
developed as presently planned, the aggregate cost is estimated to be
approximately $760 million, portions of which may be independently financed
or shared with eventual outside partners.

In August 1999, a Capital Corp. subsidiary entered into an operating lease
for three combustion turbines.  The lease has a five year term, but no rent
is payable until the turbines have been completed and installed.  Certain
related facilities are expected to be added to the same lease in the fourth
quarter of 1999.  The turbines are expected to be used in a 450 Mw gas
fired merchant combustion turbine power generation facility, located in
Monroe, Georgia, which is expected to be completed in June 2001.  At the
end of the lease term, the Company may purchase the leased assets or assist
the lessor in selling them.  If the assets are sold, the Company is
obligated to make up any deficiency between the lease balance and the
proceeds subject to a cap.  The total value of the assets under the
existing lease is expected to be approximately $125 million and is expected
to increase to approximately $175 million in the fourth quarter of 1999.

At September 30, 1999, unused capacity under the Company's lines of credit
totaled $504.8 million after considering commercial paper support and
approximately $62.0 million in letters of credit securing on- and off-
balance sheet commitments.  At December 31, 1998, unused capacity under the
lines of credit totaled $536.8 million.  The decrease in unused capacity
resulted from additional borrowing during the nine months ended September
30, 1999.

Capital Corp. has provided letters of credit issued to third parties to
secure certain off-balance sheet obligations (including contingent
obligations) of its subsidiaries.  The letters of credit securing such
obligations totaled approximately $23.0 million at September 30, 1999.  For
more information, see Notes 17 and 18 of the Company's Notes to Financial
Statements in its Annual Report on Form 10-K for the year ended December
31, 1998.



                                  - 42 -
<PAGE>

The Company's capitalization ratios at September 30, 1999, and December 31,
1998, follow:

                                              Sep. 30,  Dec. 31,
                                                1999      1998

Long-term debt (including current portion)      48.0%     46.5%
Notes payable                                   11.1      11.2
Preferred stock                                  3.8       4.2
Common equity                                   37.1      38.1
Total                                          100.0%    100.0%

LG&E's capitalization ratios at September 30, 1999, and December 31, 1998,
follow:

                                              Sep. 30,  Dec. 31,
                                                1999      1998

Long-term debt (including current portion)      44.6%     45.0%
Preferred stock                                  6.8       6.8
Common equity                                   48.6      48.2
Total                                          100.0%    100.0%

KU's capitalization ratios at September 30, 1999, and December 31, 1998,
follow:

                                              Sep. 30,  Dec. 31,
                                                1999      1998

Long-term debt (including current portion)      44.8%     45.7%
Preferred stock                                  3.3       3.4
Common equity                                   51.9      50.9
Total                                          100.0%    100.0%

In May 1999, Capital Corp. issued $150.0 million of medium-term notes due
May 2004, with a stated interest rate on the notes of 6.205%.  After taking
into account the forward-starting interest-rate swap entered into in April
1999, to hedge the entire issuance, the effective rate amounted to 6.13%.
The proceeds were used to repay a portion of Capital Corp.'s outstanding
commercial paper, which had been used to fund the BAN acquisition and other
working capital needs.

In September 1999, Capital Corp. issued $50 million of floating rate notes
under its medium-term note program.  The notes mature in September 2000 and
pay interest at a rate equal to the one-month LIBOR plus 0.10%.

LG&E implemented a new $200 million commercial paper program in November
1999.  An initial issuance of notes totaling $120.1 million took place on
November 8.  A majority of the proceeds were used in connection with
capital requirements relating to the joint acquisition by LG&E and KU of
combustion turbines from LG&E Capital Corp., which occurred in July 1999.

See Recent Developments for common stock repurchase activities in
connection with the CRC acquisition.

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



                                  - 43 -
<PAGE>

Year 2000 Computer Issue

The Company and its subsidiaries, including LG&E and KU, use various
software, systems and technology that may be affected by the "Year 2000
Issue."  This concerns the ability of electronic processing equipment
(including microprocessors embedded in other equipment) to properly process
the millennium change to the year 2000 and related issues.  A failure to
timely correct any such processing problems could result in material
operational and financial risks if significant systems either cease to
function or produce erroneous data.  Such risks are more fully detailed in
the sections that follow, but could include an inability to operate its
generating plants, disruptions in the operation of transmission and
distribution systems and an inability to access interconnections with the
systems of neighboring utilities.

The Company began its project regarding the Year 2000 issue in 1996.  The
Board of Directors has approved the general Year 2000 plan and receives
regular updates.  In addition, monthly reporting procedures have been
established at senior management levels.  Since 1996, a single-purpose Year
2000 team has been established in the Information Technology (IT)
Department.  This team, which is headed by an officer of the Company, is
responsible for planning, implementing and documenting the Company's Year
2000 process.  The team also provides direct and detailed assistance to the
Company's operational divisions and smaller units, where identified
personnel are responsible for Year 2000 work and remediation in their
specific areas.  In many cases, the Company also uses the services of third
parties, including technical consultants, vendor representatives and
auditors.

The Company's Year 2000 effort generally follows a three phase process:

  Phase I - inventory and identify potential Year 2000 issues, determine
  solutions;

  Phase II - survey vendors regarding their Year 2000 readiness, determine
  solutions to deal with possible vendor non-compliance, develop work
  plans regarding Company and vendors non-compliance issues; and

  Phase III - implementation, testing, certification, contingency
  planning.

The Company has long recognized the complexity of the Year 2000 issue.
Work has progressed concurrently on (a) replacing or modifying IT systems,
including mainframes, client-server, PCs and software applications, (b)
replacing or modifying non-IT systems, including embedded systems such as
mechanical control units and (c) evaluating the readiness of key third
parties, including customers, suppliers, business partners and neighboring
utilities.

State of Readiness

As of October 1999, the Company and its subsidiaries have completed the
internal inventory, vendor survey, compliance assessment, remediation and
testing and contingency planning portions (Phases I, II and III) of their
Year 2000 plan for critical equipment and systems, including IT, non-IT and
embedded components.  A substantially similar readiness state exists for
all non-critical systems.  Training and drill scenarios on contingency plan
actions have been initiated for appropriate critical systems and will
continue throughout 1999.

The Company has communicated with its key suppliers, customers and business
partners regarding their Year 2000 progress, particularly in the IT
software and embedded component areas, to determine the areas in which the
Company's operations are vulnerable to those parties' failure to complete
their remediation efforts.  The Company has evaluated and, in certain
cases, initiated follow-up actions regarding the responses from these
parties.

                                  - 44 -
<PAGE>

The Company regularly attends and participates in trade group efforts
focusing on Year 2000 issues in the energy industry.

Costs of Year 2000 Issues

The Company's, LG&E's and KU's system modification costs related to the
Year 2000 issue are being expensed as incurred.  Through September 1999,
the Company incurred approximately $26.1 million in capital and operating
costs in connection with the Year 2000 issue.  Based upon studies and
projections to date, the Company expects to spend an additional $6.0
million to complete its Year 2000 efforts.

Through September 1999, LG&E incurred approximately $18.4 million in
capital and operating costs in connection with the Year 2000 issue.  Based
upon studies and projections to date, LG&E expects to spend an additional
$2.2 million to complete its Year 2000 efforts.

Through September 1999, KU incurred approximately $4.8 million in capital
and operating costs in connection with the Year 2000 issue.  Based upon
studies and projections to date, KU expects to spend an additional $2.1
million to complete its Year 2000 efforts.

It should be noted that these figures include total hardware, software,
embedded systems and consulting costs.  In many cases, these costs include
system replacements which were already contemplated or which provided
additional benefits or efficiencies beyond the Year 2000 aspect.
Additionally, many costs are not incremental costs but constitute
redeployment of existing IT and other resources.  These costs represent
management's current estimates; however, there can be no assurance that
actual costs associated with the Company's Year 2000 issues will not be
higher.

Risks of Year 2000 Issues

As described above, the Company has significantly completed the
implementation of its Year 2000 plan.  Based upon the information currently
known regarding its internal operations and assuming successful and timely
completion of remaining remediation and contingency plan actions, the
Company does not anticipate material business disruptions from its internal
systems due to the Year 2000 issue.  However, the Company may possibly
experience limited interruptions to some aspects of its activities, whether
IT, generation, transmission or distribution, operational, administrative
functions or otherwise, and the Company is considering such potential
occurrences in planning for the most reasonably likely worst-case
scenarios.

Additionally, risk exists regarding the non-compliance of third parties
with key business or operational importance to the Company.  Year 2000
problems affecting key customers, interconnected utilities, fuel suppliers
and transporters, telecommunications providers or financial institutions
could result in lost power or gas sales, reduced power production or
transmission capabilities or internal operational or administrative
difficulties on the part of the Company.  The Company is not presently
aware of any such situations; however, severe occurrences of this type
could have material adverse impacts upon the business, operating results or
financial condition of the Company.  There can be no assurance that the
Company will be able to identify and correct all aspects of the Year 2000
problem among these third parties that affect it in sufficient time, that
it will develop adequate contingency plans or that the costs of achieving
Year 2000 readiness will not be material.

Contingency planning has been completed for material areas of Year 2000
risk.  This effort has addressed certain areas, including the most
reasonably likely worst-case scenarios, delays in completion of any
remaining remediation plans, failure or incomplete remediation results and
failure of key third parties to be Year 2000 compliant.  Contingency plans
include provisions for extra staffing, back-up communications, review of
unit dispatch and load shedding procedures, carrying of additional energy
reserves and manual energy ac

                                  - 45 -
<PAGE>

counting procedures.  Contingency plan formulation has been completed and
final implementation, resourcing and drilling of such plans is underway.

Forward Looking Statements

The foregoing discussion regarding the timing, effectiveness,
implementation, and cost of the Company's Year 2000 efforts, contains
forward-looking statements, which are based on management's best estimates
derived using assumptions.  These forward-looking statements involve
inherent risks and uncertainties, and actual results could differ
materially from those contemplated by such statements.  Factors that might
cause material differences include, but are not limited to, the
availability of key Year 2000 personnel, the Company's ability to locate
and correct all relevant computer codes, the readiness of third parties,
and the Company's ability to respond to unforeseen Year 2000 complications
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, 1998.  Such material differences could
result in, among other things, business disruption, operational problems,
financial loss, legal liability and similar risks.

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 financial instruments.  Derivative
positions are monitored using techniques that include market value and
sensitivity analysis.

Interest Rate Risk

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 nine months ended September 30, 1999.  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 during
the nine months ended September 30, 1999.  See Item 7 of the Company's
report on Form 10-K for the year ended December 31, 1998.

Commodity Price Risk

The Company's exposure to market risks from changes in commodity prices did
not change materially during the nine months ended September 30, 1999.
However, as a result of the Commission's approval of the PBR effective July
1999, (subject to future change) LG&E's and KU's fuel adjustment clause
mechanism was withdrawn and replaced with a cap that limits recovery of
actual changes in fuel cost to changes in a fuel price index for a five-
state region.  If the utilities outperform the index, benefits will be
shared equally between shareholders and customers.  If the utilities' fuel
costs exceed the index, the difference will be absorbed by the Company's
shareholders.

Capital Corp. through its subsidiaries operates and controls the generating
capacity of Big Rivers and the City of Henderson.  Some of the excess
capacity generated by Big Rivers and the City is currently being marketed
by WKE.  To mitigate residual risks relative to the movements in
electricity prices, WKE has entered into primarily fixed-priced contracts
for the sale of electricity through the wholesale electricity market. At
September 30, 1999, exposure from these activities was not material to the
consolidated financial statements of the Company.

See Item 7 of the Company's report on Form 10-K for the year ended December
31, 1998.



                                  - 46 -
<PAGE>

Foreign Exchange Risk

The Company has foreign exchange exposure to both the Spanish Peseta and
the Argentine Peso.  During the second quarter of 1999, the Company's
exposure to the Argentine Peso increased due to the acquisition of BAN.
However, management believes the Company's foreign exchange exposure to a
10% change in the Spanish Peseta and Argentine Peso would not have a
material effect on the financial position or results of operations.

As a result of acquiring CRC, the Company also has foreign exchange
exposure to the Canadian dollar and the British pound.  Management believes
the Company's foreign exchange exposure to a 10% change in the either of
these currencies would not have a material effect on the financial position
or results of operations.

See Item 7 of the Company's report on Form 10-K for the year ended December
31, 1998.


                                  - 47 -
<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, 1998:  Item 1, Business; Item 3, Legal Proceedings; Item 7,
Management's Discussion and Analysis of Results of Operations and Financial
Condition; Notes 2, 5, 18 and 22 of the Company's Notes to Financial
Statements under Item 8; Notes 3, 12, 16 and 18 of LG&E's Notes to
Financial Statements under Item 8 and Notes 3, 11 and 13 of KU's Notes to
Financial Statements under Item 8 and (b) the Company's, LG&E's and KU's
respective combined Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999 and June 30, 1999:  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 Form 10-K's and Form 10-Q's
have not changed materially.

Certain Fuel Adjustment Clause Proceedings

On August 30, 1999, the Kentucky Public Service Commission (PSC) issued a
final order in these proceedings, agreeing with in part, and denying in
part, the arguments outlined by KU in its rehearing petition.  A net effect
of the PSC's final order is to reduce the refund obligation from $10.1
million, the original order amount, to $5.8 million.  The refund will be
implemented by KU from October 1999 to September 2000.  Both KU and an
intervenor in the case have appealed the PSC final order to the Franklin
Circuit Court where a decision is anticipated in mid to late 2000.  See
Note 12 of Notes to Financial Statements, in Item 3 above; Legal
Proceedings, and Notes 5 and 22 to the Company's and Note 3 of KU's
respective Notes to Financial Statements under Item 8 of the Company's and
KU's combined Annual Report on Form 10-K for the year ended December 31,
1998, for further discussion of this matter.

Performance-Based Ratemaking

During August and September 1999, hearings were conducted before the PSC on
LG&E's and KU's amended PBR plans.  Initial briefs of the parties were
filed with the PSC on October 7, 1999 and reply briefs were filed October
21, 1999.  A decision from the PSC is expected by the end of the fourth
quarter of 1999 or in early 2000.  See Note 8 of Notes to Financial
Statements of the Company, LG&E and KU contained in Item 1 of this Form 10-
Q and Item 3, Legal Proceedings, to the Company's, LG&E's and KU's combined
Annual Report on Form 10-K for further discussion of this matter.

Oglethorpe Power Contract

Written submissions were filed by both parties during the third quarter in
the arbitration proceeding brought by LG&E Energy Marketing Inc. (LEM)
against Oglethorpe Power Corporation (OPC) regarding LEM's November 1996
power sales agreement with OPC and disputed load forecasts provided in
connection therewith.  A hearing on the merits began on November 2, 1999,
and will end on November 19, 1999, with a final decision anticipated in mid
to late December 1999.  While the Company anticipates a favorable outcome
in the proceeding, no assurances can be given as to such event.  Should OPC
prevail, and as a result of higher than anticipated future commodity
prices, increased load demands, particularly at OPC, and other factors, the
Company may be required to increase its after-tax loss reserve by
approximately $150 million.  Any such increase in the loss reserve will be
recorded in discontinued operations.  This amount is subject to continuing
analysis and estimation.  Management does not expect this to have a
material effect on income from continuing operations.  See Note 2 in Notes
to Financial Statements under Item 1 above for a discussion of the
Company's discontinued operations and the reserve associated therewith.


                                  - 48 -
<PAGE>


Springfield Municipal Contract

Trial is currently scheduled for January 2000 in the action filed by LEM
against the City of Springfield, Illinois City Water, Light and Power
Company concerning the parties' 1997 Interchange Agreement.  LEM has
estimated damages in this matter of approximately $21 million.  See Item 3,
Legal Proceedings and Note 18 to the Company's Notes to Financial
Statements under Item 8, respectively, of the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 for further discussion of
this matter.

Environmental Matters

On October 2, 1999, approximately 38,000 gallons of diesel fuel leaked from
an underground pipeline at the E.W. Brown Station.  Under the oversight of
EPA and state officials, KU commenced immediate spill containment and
recovery measures which prevented the spill from reaching the Kentucky
River.  KU ultimately recovered approximately 34,000 gallons of diesel
fuel.  On November 4, 1999, the Kentucky Division of Water issued a notice
of violation for the incident.  KU has committed to undertake additional
mitigation measures and is currently negotiating a resolution of the state
regulatory aspects of this matter.  To date, KU has incurred an estimated
$800,000 in remediation costs.  KU is also investigating its possible
remedies against the manufacturer of a cracked valve at issue in the spill.

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 July 14, 1999, the Company filed a report on Form 8-K announcing that it
had acquired, effective July 8, 1999, CRC Holdings Corp., the parent
company of CRC-Evans Pipeline International, Inc. and related companies, a
provider of specialized equipment and services used in the construction and
rehabilitation of gas and oil transmission pipelines.


                                  - 49 -
<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:  November 15, 1999        /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: November 15, 1999         /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: November 15, 1999         /s/ Michael D. Robinson
                                Michael D. Robinson
                                Vice President and Controller
                                (On behalf of the registrant in his
                                capacity as Principal Accounting Officer)



                                  - 50 -