SECURITIES AND EXCHANGE COMMISSION
                         Washington, D. C.  20549


                                FORM 10-Q


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


               For the quarterly period ended June 30, 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 July 30, 1999.

                   Louisville Gas and Electric Company
        21,294,223 shares, without par value, as of July 30, 1999,
                      all held by LG&E Energy Corp.

                        Kentucky Utilities Company
        37,817,878 shares, without par value, as of July 30, 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                         3
            Consolidated Statements of Cash Flows               5
            Consolidated Statements of Retained Earnings        7
            Consolidated Statements of Comprehensive Income     8

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

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

          Notes to Financial Statements                        20

Item 2 Management's Discussion and Analysis of Results of
          Operations and Financial Condition                   30

Item 3 Quantitative and Qualitative Disclosures About
          Market Risk                                          44

                             PART II

Item 1 Legal Proceedings                                       45

Item 4 Submission of Matters to a Vote of Security Holders     45

Item 6 Exhibits and Reports on Form 8-K                        47

       Signatures                                              49

<PAGE>

      Part I.  Financial Information - Item 1.  Financial Statements

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

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  1999       1998       1999        1998

REVENUES:
Electric utility               $ 406,258  $ 358,471 $  767,931  $ 682,266
Gas utility                       23,652     26,540     99,431    119,299
International and
 non-utility                     193,747     87,177    355,560    151,187
  Total revenues                 623,657    472,188  1,222,922    952,752

OPERATING EXPENSES:
Fuel and power purchased         250,994    136,175    456,082    251,940
Gas supply expenses               56,920     63,691    151,984    167,534
Utility operation and
 maintenance                     115,192    110,081    218,897    213,064
International and non-
 utility operation
 and maintenance                  47,434     22,985     92,398     39,904
Depreciation and
 amortization                     53,479     51,286    108,215    103,652
Merger costs to
 achieve                               -     65,318          -     65,318
  Total operating expenses       524,019    449,536  1,027,576    841,412

Equity in earnings
 of unconsolidated
 ventures (Notes 5 and 6)         12,051     50,882     33,707     56,863

OPERATING INCOME                 111,689     73,534    229,053    168,203

Other income and (deductions)      2,611     (4,971)     8,999     (2,268)
Interest charges and
 preferred dividends              32,243     26,061     62,763     52,294
Minority interest                  3,842      3,302      5,413      4,645

Income before income taxes        78,215     39,200    169,876    108,996

Income taxes                      28,250     26,197     63,132     49,775

Income from continuing
 operations                    $  49,965  $  13,003 $  106,744  $  59,221



                                   - 1 -
<PAGE>

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

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  1999       1998       1999        1998

Income from continuing
 operations                    $  49,965  $  13,003 $  106,744  $  59,221

Loss from discontinued
 operations, net of income tax
 expense benefit of $12,924
 and $15,008 (Notes 2 and 3)           -    (19,802)         -    (22,852)

Income (loss) on disposal of dis-
 continued operations, net of
 income tax benefit (expense)
 of $125,000, $(328) and
 $125,000 (Notes 2 and 3)              -   (225,000)       788   (225,000)

Income (loss) before cum-
 ulative effect of change
 in accounting principle          49,965   (231,799)   107,532   (188,631)

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

NET INCOME (LOSS)              $  49,965  $(231,799) $ 107,532  $(195,793)

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

Earnings (loss) per share -
 basic and diluted:
  Continuing operations        $     .39  $     .10  $      .82 $     .46
  Discontinued operations            .00       (.16)        .00      (.18)
  Income (loss) on dis-
   posal of discontinued
   operations                        .00      (1.73)        .01     (1.73)
  Cumulative effect of
   accounting change                 .00        .00         .00      (.06)

   Total                       $     .39  $   (1.79) $      .83 $   (1.51)

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


                                   - 2 -
<PAGE>

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

                                  ASSETS

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

CURRENT ASSETS:
Cash and temporary cash investments                 $  139,417 $  105,726
Marketable securities                                   13,620     20,862
Accounts receivable - less reserve                     315,366    293,219
Materials and supplies - primarily at average cost:
 Fuel (predominantly coal)                              96,839     78,855
 Gas stored underground                                 19,223     39,249
 Other                                                  69,177     72,457
Net assets of discontinued opera-
 tions (Notes 2 and 3)                                       -      3,219
Prepayments and other                                   48,885     38,287
 Total current assets                                  702,527    651,874

UTILITY PLANT:
At original cost                                     5,676,590  5,581,667
Less:  reserve for depreciation                      2,438,160  2,352,306
 Net utility plant                                   3,238,430  3,229,361

OTHER PROPERTY AND INVESTMENTS - LESS RESERVES:
Investment in unconsolidated
 ventures (Notes 5 and 6)                              229,173    167,877
Non-utility property and plant, net                    466,127    447,372
Other                                                  164,821    117,321
 Total other property and investments                  860,121    732,570

DEFERRED DEBITS AND OTHER ASSETS                       210,827    214,152

Total assets                                        $5,011,905 $4,827,957

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


                                   - 3 -
<PAGE>

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

                         CAPITAL AND LIABILITIES

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

CURRENT LIABILITIES:
Long-term debt due within one year                  $   61,500 $        -
Notes payable                                          311,034    365,135
Accounts payable                                       218,415    243,968
Net liabilities of discontinued oper-
 ations (Notes 2 and 3)                                 17,197          -
Other                                                  312,039    242,479
 Total current liabilities                             920,185    851,582

Long-term debt                                       1,599,348  1,510,775

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
 taxes                                                 567,691    570,698
Investment tax credit, in
 process of amortization                                89,860     93,844
Regulatory liability                                   104,875    109,411
Other                                                  210,761    206,064
 Total deferred credits and other liabilities          973,187    980,017

Minority interests                                     111,031    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                                                      494     (3,314)
Retained earnings                                      494,059    466,279
 Total common equity                                 1,272,826  1,241,238

Total liabilities and capital                       $5,011,905 $4,827,957

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


                                   - 4 -
<PAGE>

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

                                                            Six Months
                                                              Ended
                                                             June 30,
                                                        1999        1998

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                  $   107,532 $ (195,793)
Items not requiring cash currently:
 Depreciation and amortization                         108,215    103,652
 Deferred income taxes - net                            (4,752)    (5,614)
 Loss from discontinued operations
  (Notes 2 and 3)                                            -     22,852
 Loss (gain) on disposal of discon-
  tinued operations (Notes 2 and 3)                       (788)   225,000
 Cumulative effect of change
  in accounting principle                                    -      7,162
 Other                                                 (24,170)   (24,687)
Change in net current assets                            44,859     85,425
Other                                                   23,977    (28,372)
 Net cash flows from operating activities              254,873    189,625

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities                                   (652)    (4,451)
Proceeds from sales of securities                        7,871      1,820
Construction expenditures                             (199,770)   (93,620)
Investments in unconsolidated
 ventures (Note 5)                                     (74,498)    (1,294)
Proceeds from sale of investment
 in affiliate (Note 6)                                  33,821     16,000
  Net cash flows from investing activities            (233,228)   (81,545)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of medium-term notes                          150,000    150,000
Retirement of bonds                                          -    (20,021)
Short-term borrowings                                  756,132  2,074,643
Repayment of short-term borrowings                    (813,132)(2,262,624)
Redemption of preferred stock                           (1,202)    (1,823)
Payment of common dividends                            (79,752)   (62,275)
 Net cash flows from financing activities               12,046   (122,100)

CHANGE IN CASH AND TEMPORARY
 CASH INVESTMENTS                                       33,691    (14,020)

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

ENDING CASH AND TEMPORARY
 CASH INVESTMENTS                                  $   139,417 $   97,492



                                   - 5 -
<PAGE>

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

                                                            Six Months
                                                              Ended
                                                             June 30,
                                                        1999        1998

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION:
 Cash paid during the period for:
  Income taxes                                     $     9,375 $   35,534
  Interest on borrowed money                            53,857     45,331

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

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


                                   - 6 -
<PAGE>

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

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  1999       1998       1999        1998

Balance at beginning
 of period                     $ 483,970  $ 721,780  $ 466,279  $ 722,584
Net income (loss)                 49,965   (231,799)   107,532   (195,793)
Cash dividends declared on
 common stock ($.30750, $.34123,
 $.61500 and $.62509 per share)   39,876     44,252     79,752     81,062

Balance at end of period       $ 494,059  $ 445,729  $ 494,059  $ 445,729

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


                                   - 7 -
<PAGE>

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

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  1999       1998       1999        1998

Net income (loss)                $49,965  $(231,799)  $107,532  $(195,793)

Unrealized holding gains (losses)
 on available-for-sale securities
 arising during the period          (155)        22         37          8

Reclassification adjustment for
 realized gains and losses on
 available-for-sale securities
 included in net income             (163)       (77)      (158)        34

Other comprehensive income
 (loss), before tax                 (318)       (55)      (121)        42

Income tax (expense) benefit related
 to items of other comprehensive
 income                              110         22         46        (15)

Comprehensive income (loss)      $49,757  $(231,832)  $107,457  $(195,766)

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


                                   - 8 -
<PAGE>

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

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  1999       1998       1999        1998

OPERATING REVENUES:
Electric                        $190,445   $174,849   $341,286   $315,435
Gas                               23,652     26,540     99,431    119,298
 Total operating revenues        214,097    201,389    440,717    434,733

OPERATING EXPENSES:
Fuel for electric generation      39,380     41,242     71,838     77,283
Power purchased                   30,858     15,227     53,884     24,826
Gas supply expenses               13,395     16,282     63,887     80,359
Other operation expenses          39,457     40,506     79,649     80,874
Maintenance                       20,227     13,054     34,930     23,319
Depreciation and amortization     24,143     23,294     48,285     46,589
Federal and state
 income taxes                     12,079     13,664     21,634     26,082
Property and other taxes           3,962      4,491      8,998      9,446
 Total operating expenses        183,501    167,760    383,105    368,778

NET OPERATING INCOME              30,596     33,629     57,612     65,955

Merger costs to
 achieve                               -     34,134          -     34,134
Other income                         234      9,998      1,312     10,309
Interest charges                   8,790      9,472     17,968     18,710

NET INCOME                        22,040         21     40,956     23,420

Preferred stock dividends          1,086      1,143      2,176      2,266

NET INCOME (LOSS) AVAILABLE
 FOR COMMON STOCK               $ 20,954   $ (1,122)  $ 38,780   $ 21,154

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


                                   - 9 -
<PAGE>

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

                                  ASSETS

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

UTILITY PLANT:
At original cost                                    $2,952,536 $2,896,139
Less:  reserve for depreciation                      1,188,585  1,144,123
 Net utility plant                                   1,763,951  1,752,016

OTHER PROPERTY AND INVESTMENTS -
 less reserve                                            1,239      1,154

CURRENT ASSETS:
Cash and temporary cash investments                     36,150     31,730
Marketable securities                                   10,394     17,851
Accounts receivable - less reserve                     158,278    142,580
Materials and supplies - at average cost:
 Fuel (predominantly coal)                              18,513     23,993
 Gas stored underground                                 13,203     33,485
 Other                                                  34,018     33,103
Prepayments and other                                    5,145      2,285
 Total current assets                                  275,701    285,027

DEFERRED DEBITS AND OTHER ASSETS:
Unamortized debt expense                                 5,763      5,919
Regulatory assets                                       35,292     37,643
Other                                                   17,665     22,878
 Total deferred debits and other assets                 58,720     66,440

Total assets                                        $2,099,611 $2,104,637

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


                                  - 10 -
<PAGE>

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

                      CAPITALIZATION AND LIABILITIES

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

CAPITALIZATION:
Common stock, without par value -
 Outstanding 21,294,223 shares                      $  425,170 $  425,170
Retained earnings                                      242,242    247,462
Other                                                     (842)      (786)
 Total common equity                                   666,570    671,846
Cumulative preferred stock                              95,328     95,328
Long-term debt                                         626,800    626,800
 Total capitalization                                1,388,698  1,393,974

CURRENT LIABILITIES:
Accounts payable                                       123,201    133,673
Provision for rate refunds                              11,169     13,261
Dividends declared                                      23,086     23,168
Accrued taxes                                           45,749     31,929
Accrued interest                                         8,013      8,038
Other                                                   17,772     15,242
 Total current liabilities                             228,990    225,311

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
 taxes                                                 252,256    254,589
Investment tax credit, in
 process of amortization                                69,397     71,542
Accumulated provision for pensions
 and related benefits                                   60,177     59,529
Regulatory liability                                    61,684     63,529
Other                                                   38,409     36,163
 Total deferred credits and other liabilities          481,923    485,352

Total capital and liabilities                       $2,099,611 $2,104,637

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


                                  - 11 -
<PAGE>

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

                                                            Six Months
                                                              Ended
                                                             June 30,
                                                        1999        1998

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                           $  40,956  $  23,420
Items not requiring cash currently:
 Depreciation and amortization                          48,285     46,589
 Deferred income taxes - net                            (3,982)     2,460
 Investment tax credit - net                            (2,145)    (2,156)
 Other                                                   3,585      2,008
Changes in current assets and liabilities:
 Accounts receivable                                   (15,698)    (4,704)
 Materials and supplies                                 24,847     19,205
 Provision for rate refunds                             (2,092)    (2,544)
 Accounts payable                                      (10,472)     6,850
 Accrued taxes                                          13,820       (861)
 Prepayments and other                                    (355)     3,759
Other                                                    6,319     17,647
 Net cash flows from operating activities              103,068    111,673

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities                                   (495)    (3,550)
Proceeds from sales of securities                        7,861        933
Construction expenditures                              (59,757)   (48,031)
 Net cash flows from investing activities              (52,391)   (50,648)

CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of first mortgage bonds                           -    (20,000)
Payment of dividends                                   (46,257)   (42,075)
 Net cash flows from financing activities              (46,257)   (62,075)

CHANGE IN CASH AND TEMPORARY
 CASH INVESTMENTS                                        4,420     (1,050)

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

CASH AND TEMPORARY CASH INVESTMENTS AT
 END OF PERIOD                                       $  36,150  $  49,422

SUPPLEMENTAL DISCLOSURES:
 Cash paid during the period for:
  Income taxes                                       $  16,065  $  23,121
  Interest on borrowed money                            16,657     17,357

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

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


                                  - 12 -
<PAGE>

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

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  1999       1998       1999        1998

Balance at beginning
 of period                      $243,288   $261,386   $247,462   $258,910
Net income                        22,040         21     40,956     23,420
 Subtotal                        265,328    261,407    288,418    282,330

Cash dividends declared on stock:
5% cumulative preferred              269        269        538        538
Auction rate cumulative
 preferred                           450        507        904        994
$5.875 cumulative preferred          367        367        734        734
Common                            22,000     21,200     44,000     41,000
 Subtotal                         23,086     22,343     46,176     43,266

Balance at end of period        $242,242   $239,064   $242,242   $239,064

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


                                  - 13 -
<PAGE>

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

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  1999       1998       1999        1998

Net income (loss) available
 for common stock                $20,954    $(1,122)   $38,780    $21,154

Unrealized holding gains (losses)
 on available-for-sale securities
 arising during the period          (178)        33        (94)         6

Reclassification adjustment for
 realized gains and losses on
 available-for-sale securities
 included in net income                -        (66)         -          -

Other comprehensive income
 (loss), before tax                 (178)       (33)       (94)         6

Income tax (expense) benefit related
 to items of other comprehensive
 income                               72         13         38         (3)

Comprehensive income (loss)      $20,848    $(1,142)   $38,724    $21,157

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


                                  - 14 -
<PAGE>

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

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  1999       1998       1999        1998

OPERATING REVENUES              $225,794   $193,079   $443,143   $376,298

OPERATING EXPENSES:
Fuel for electric generation      49,412     54,690    107,567    103,037
Power purchased                   51,606     24,602     90,923     42,591
Other operation expenses          31,812     31,458     58,955     61,431
Maintenance                       15,944     16,615     28,464     29,948
Depreciation                      22,158     21,617     44,149     43,103
Federal and state
 income taxes                     16,077     11,731     33,221     26,699
Property and other taxes           3,788      4,222      7,901      8,310
 Total operating expenses        190,797    164,935    371,180    315,119

NET OPERATING INCOME              34,997     28,144     71,963     61,179

Merger costs to
 achieve                               -     21,830          -     21,830
Other income and (deductions)      1,993      2,193      4,162      3,907
Interest charges                   9,233      9,626     18,740     19,326

NET INCOME (LOSS)                 27,757     (1,119)    57,385     23,930

Preferred stock dividends            564        564      1,128      1,128

NET INCOME (LOSS) AVAILABLE
 FOR COMMON STOCK               $ 27,193   $ (1,683)  $ 56,257   $ 22,802

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


                                  - 15 -
<PAGE>

                        Kentucky Utilities Company
                              Balance Sheets
                             (Thousands of $)

                                  ASSETS

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

UTILITY PLANT:
At original cost                                    $2,724,054 $2,685,528
Less:  reserve for depreciation                      1,249,575  1,208,183
 Net utility plant                                   1,474,479  1,477,345

OTHER PROPERTY AND INVESTMENTS -
 less reserve                                           14,641     14,238

CURRENT ASSETS:
Cash and temporary cash investments                     58,980     59,071
Accounts receivable - less reserve                     126,797    106,003
Materials and supplies - at average cost:
 Fuel (predominantly coal)                              33,731     23,927
 Other                                                  25,576     24,877
Prepayments                                              5,545      2,427
 Total current assets                                  250,629    216,305

DEFERRED DEBITS AND OTHER ASSETS:
Unamortized debt expense                                 5,027      5,227
Regulatory assets                                       25,716     28,228
Other                                                   22,887     19,859
 Total deferred debits and other assets                 53,630     53,314

Total assets                                        $1,793,379 $1,761,202

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


                                  - 16 -
<PAGE>

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

                      CAPITALIZATION AND LIABILITIES

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

CAPITALIZATION:
Common stock, without par value -
 Outstanding 37,817,878 shares                      $  308,140 $  308,140
Retained earnings                                      319,424    299,168
Other                                                     (595)      (595)
 Total common equity                                   626,969    606,713
Cumulative preferred stock                              40,000     40,000
Long-term debt                                         484,830    546,330
 Total capitalization                                1,151,799  1,193,043

CURRENT LIABILITIES:
Long-term debt due within one year                      61,500          -
Accounts payable                                       102,127    100,012
Provision for rate refunds                              21,500     21,500
Dividends declared                                      18,188     18,188
Accrued taxes                                           25,698     16,733
Accrued interest                                         7,625      8,110
Other                                                   33,394     31,226
 Total current liabilities                             270,032    195,769

DEFERRED CREDITS AND OTHER LIABILITIES:
Accumulated deferred income
 taxes                                                 244,970    244,493
Investment tax credit, in
 process of amortization                                20,463     22,302
Accumulated provision for pensions
 and related benefits                                   54,630     50,044
Regulatory liability                                    43,191     45,882
Other                                                    8,294      9,669
 Total deferred credits and other liabilities          371,548    372,390

Total capital and liabilities                       $1,793,379 $1,761,202

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


                                  - 17 -
<PAGE>

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

                                                            Six Months
                                                              Ended
                                                             June 30,
                                                        1999        1998

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                           $  57,385  $  23,930
Items not requiring cash currently:
 Depreciation and amortization                          44,149     43,103
 Deferred income taxes - net                            (2,214)      (188)
 Investment tax credit - net                            (1,839)    (1,922)
Changes in current assets and liabilities:
 Accounts receivable                                   (20,794)   (18,474)
 Materials and supplies                                (10,503)     2,025
 Accounts payable                                        2,115     33,275
 Accrued taxes                                           8,965     11,344
 Prepayments and other                                  (3,603)     1,829
Other                                                    7,658     (4,010)
 Net cash flows from operating activities               81,319     90,912

CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures                              (44,282)   (32,932)
 Net cash flows from investing activities              (44,282)   (32,932)

CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings                                        -    381,500
Repayments of short-term borrowings                          -   (415,100)
Payment of dividends                                   (37,128)   (23,819)
 Net cash flows from financing activities              (37,128)   (57,419)

CHANGE IN CASH AND TEMPORARY
 CASH INVESTMENTS                                          (91)       561

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

CASH AND TEMPORARY CASH INVESTMENTS AT
 END OF PERIOD                                       $  58,980  $   6,014

SUPPLEMENTAL DISCLOSURES:
 Cash paid during the period for:
  Income taxes                                       $  30,273  $  17,033
  Interest on borrowed money                            17,632     17,925

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

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


                                  - 18 -
<PAGE>

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

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  1999       1998       1999        1998

Balance at beginning
 of period                      $310,231   $312,216   $299,167   $304,750
Net income (loss)                 27,757     (1,119)    57,385     23,930
Subtotal                         337,988    311,097    356,552    328,680

Cash dividends declared on stock:
4 75% preferred                      237        237        475        475
6.53% preferred                      327        327        653        653
Common                            18,000     23,071     36,000     40,090
 Subtotal                         18,564     23,635     37,128     41,218

Balance at end of period        $319,424   $287,462   $319,424   $287,462

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


                                  - 19 -
<PAGE>

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

                      Notes to Financial Statements
                               (Unaudited)

1. 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

                                  - 20 -
<PAGE>

   power sales from physical assets it owns or controls, including LG&E,
   KU and Western Kentucky Energy (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 believes to be appropriate estimates
   for future energy prices, among other factors, to calculate the net
   realizable value of discontinued operations, it also recognizes that
   there are inherent limitations in models to accurately predict future
   events.  As a result, there is no guarantee that higher-than-
   anticipated future commodity prices or load demands, lower-than-
   estimated asset sales prices or other factors could not result in
   additional losses.  The Company has been successful in settling
   portions of its discontinued operations, but significant assets,
   operations and obligations remain.  As of July 28, 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 $8.8 million.  In addition to price risk, the value of
   the Company's remaining energy portfolio is subject to operational and
   event risks including, among others, increases in load demand,
   regulatory changes, and forced outages at units providing supply for
   the Company.  As of July 28, 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 $11.7 million.

   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 six-month periods ended June 30, 1999, to accrued loss on disposal
   of discontinued operations.

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  1999       1998       1999        1998

   Revenues                     $156,345   $684,918   $289,782 $1,595,792
   Loss before taxes             (21,786)   (32,726)   (26,723)   (37,860)
   Loss from discontinued
     operations, net of
     income taxes                (13,070)   (19,802)   (15,991)   (22,852)



                                  - 21 -
<PAGE>

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

   Cash and temporary cash
     investments                           $  3,301
   Accounts receivable                      117,709
   Price risk management assets              78,237
   Accounts payable                        (132,937)
   Price risk management
     liabilities                            (25,925)
   Goodwill and other assets
     and liabilities, net                    41,320

   Net assets before accrued
     loss on disposal of dis-
     continued operations                    81,705

   Accrued loss on disposal
     of discontinued operations,
     net of income tax benefit
     of $57,233                             (98,902)

   Net liabilities of discon-
     tinued operations                     $(17,197)

   Total charges against the accrued loss on disposal of discontinued
   operations through June 30, 1999, include $105.7 million for
   commitments prior to disposal, $51.2 million for transaction
   settlements, $11.1 million for goodwill, and $23.2 million for other
   exit costs.  The reserve as of June 30, 1999, represents management's
   best estimate of the loss from remaining discontinued operations until
   disposal and the costs of disposing of these operations.

   As of June 30, 1999, the Company's discontinued operations were under
   various contracts to buy and sell power and gas with net notional
   amounts of 28.0 million MWh's of power and 24.8 million MMBTU's of
   natural gas with a volumetric weighted-average period of approximately
   38 and 53 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 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.



                                  - 22 -
<PAGE>

   The fair values of discontinued operations' price risk management
   assets and liabilities as of June 30, 1999, follow (in thousands of $):

                                           Liabil-
   Commodity                     Assets      ities

   Electricity                  $ 76,247   $ 25,522
   Natural gas                     1,990          -

   Totals                         78,237     25,522
   Reserves                            -        403

   Net values                   $ 78,237   $ 25,925

   The average fair values of discontinued operations' price risk
   management assets and liabilities for the three- and six-month periods
   ended June 30, 1999, follow (in thousands of $):

                                   Three Months            Six Months
                                           Liabil-               Liabil-
   Commodity                     Assets      ities     Assets      ities

   Electricity                  $ 80,036   $ 26,265   $ 80,601   $ 27,177
   Natural gas                     2,180          -      6,690          -

   Totals                       $ 82,216   $ 26,265   $ 87,291   $ 27,177

   The above tables above do not include the fair value of various
   transactions not previously recorded using mark-to-market accounting
   since these transactions commit the Company to the sale or purchase of
   electricity or natural gas without specified firm volumes.

   The fair values above are based on quotes from exchanges and over-the-
   counter markets, price volatility factors, the use of established
   pricing models and the time value of money.  They also reflect
   management estimates of counterparty credit risk, location
   differentials and the potential impact of liquidating the Company's
   position in an orderly manner over a reasonable period of time under
   present market conditions.

   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 June 30,
   1999, are currently estimated to be approximately $56.7 million in
   1999, $14.3 million to $38.5 million each year in 2000 through 2004,
   and $6.3 million for later years.

   The Company's discontinued operations maintain policies intended to
   minimize credit risk and revalue credit exposures daily to monitor
   compliance with those policies.  As of June 30, 1999, over 88% of the
   Company's price risk management commitments were with counterparties
   rated BBB equivalent or better.  As of June 30, 1999, seven
   counterparties represented 79% 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, as required by accounting standards.  The
   Company did not dispose of this business during the one-year period as
   required 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 gather

                                  - 23 -
<PAGE>

   ing 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
   Income (loss) before taxes                (2,593)     2,829      4,888
   Net income (loss)                         (1,599)     1,323      2,873

                                    Three Months            Six Months
                                       Ended                  Ended
                                      June 30,               June 30,
                                  1999       1998       1999        1998

   Revenues                      $42,135    $31,051    $75,437    $60,891
   Income (loss) before taxes        266       (289)      (850)      (646)
   Net income (loss)                  40       (291)      (748)      (747)

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

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

   Cash and temporary cash
     investments                           $    141   $      -   $    509
   Accounts receivable                       16,622      7,425     13,948
   Non-utility property and
     plant, net                             158,783    161,473    171,114
   Accounts payable                         (13,211)    (6,148)   (13,449)
   Goodwill and other assets
     and liabilities, net                   (20,617)   (22,318)   (20,043)

   Net assets                              $141,718   $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 is included in income for the three- and six-month periods
   ended June 30, 1999.  The Company has recorded no impairment losses
   related to the net assets of its natural gas gathering and processing
   business.

4.  On July 8, 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 capped the total of these
    payments at $31.0 million.  The Company accounted for the

                                  - 24 -
<PAGE>

    acquisition using the purchase method and management expects to record
    goodwill of approximately $47 million from the initial transaction with
    additional goodwill recorded contingent upon future earn-out payments.
    Goodwill will be amortized over a period of twenty years.

    The purchase consideration, including the potential earn-out payments,
    will be 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.

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, including transaction costs, 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. On March 15, 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 quarter ended June 30, 1999, the Company
   recorded approximately $6.9 million in consolidated pre-tax income as a
   result of valuing the Company's electric energy trading contracts using
   the mark-to-market method.

8. On April 5, 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 1,
   1999), and by $8 million annually for each of the next four years
   (through June 30, 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 30, 2004) both

                                  - 25 -
<PAGE>

   the rate cap and the merger-savings surcredit the utilities established
   as part of their 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 30, 2004).

   On April 13, 1999, the Commission issued initial orders implementing
   the amended PBR plan, effective July 2, 1999, and subject to
   modification.  The Commission has adopted a procedural schedule, which
   provides for discovery, hearings and public comment.  The Commission
   has also consolidated into the continuing PBR proceedings an earlier
   March 8, 1999, rate complaint by a group of industrial intervenors, the
   Kentucky Industrial Utility Consumers, Inc. (KIUC) in which  KIUC has
   requested significant reductions in the electric rates of LG&E and KU.
   The Commission has scheduled hearings on the Companies' PBR proposals
   and the rate complaint to begin on August 31.  The Commission is
   expected to issue a final ruling by the end of 1999.

9. On May 7, 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 on April 9, 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.

   On May 24, 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 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.


                                  - 26 -
<PAGE>

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

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

   LG&E electric                $185,519   $  4,927   $ 20,740
   LG&E gas                       23,652          -        213
   KU electric                   220,739      5,055     27,193
   Independent Power
     Operations                    6,197          -      7,202
   Western Kentucky
     Energy                       69,050          -       (464)
   Argentine Gas
     Distribution                 45,146          -      4,796
   Other Capital Corp.            73,354          -     (6,589)
   All Other                           -     (9,982)    (3,126)

   Consolidated                 $623,657   $      -   $ 49,965

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

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

   LG&E electric              $  333,845   $  7,441   $ 38,353
   LG&E gas                       99,431          -        427
   KU electric                   434,086      9,057     56,257
   Independent Power
     Operations                   13,101          -     21,382
   Western Kentucky
     Energy                      129,028          -     (1,488)
   Argentine Gas
     Distribution                 74,943          -      5,153
   Other Capital Corp.           138,488          -     (5,701)
   All Other                           -    (16,498)    (7,639)

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



                                  - 27 -
<PAGE>

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

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

   LG&E electric                $170,523   $  4,326   $   (922)
   LG&E gas                       26,540          -       (199)
   KU electric                   187,963      5,116     (1,683)
   Independent Power
     Operations                    4,666          -     25,166
   Argentine Gas
     Distribution                 43,241          -      2,513
   Other Capital Corp.            39,255          -     (1,441)
   All Other                           -     (9,442)   (10,431)

   Consolidated                 $472,188   $      -   $ 13,003

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

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

   LG&E electric                $311,108   $  4,326   $ 20,499
   LG&E gas                      119,299          -        656
   KU electric                   371,158      5,140     22,802
   Independent Power
     Operations                    9,893          -     29,150
   Argentine Gas
     Distribution                 70,652          -      2,709
   Other Capital Corp.            70,642          -     (2,612)
   All Other                           -     (9,466)   (13,983)

   Consolidated                 $952,752   $      -   $ 59,221

   The assets of the Company's Argentine Gas Distribution segment
   increased from $346.3 million at December 31, 1998, to $425.1 million
   at June 30, 1999, due mainly to acquiring a 19.6% ownership interest in
   BAN (see Note 5 of Notes to Financial Statements).  The assets of the
   Other Capital Corp. segment increased from $121.0 million at December
   31, 1998, to $383.3 million at June 30, 1999, due mainly to
   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 capitalizing construction costs
   related to gas turbine peaking units (see Management's Discussion and
   Analysis of Results of Operations and Financial Condition in Item 2).

11.On March 15, 1999, Capital Corp. entered into a letter of intent to
   lease or acquire three 150-megawatt (Mw) combustion turbines and is
   currently negotiating the terms of a definitive agreement.  This 450 Mw
   gas fired merchant combustion turbine power generation facility will be
   located in Monroe, Georgia, and is expected to be completed

                                  - 28 -
<PAGE>

   by June 1, 2001.  The aggregate price, including construction of
   related facilities, is estimated to be approximately $185 million.

12.Prior to implementation of the PBR, LG&E and KU employed a fuel
   adjustment clause (FAC) mechanism, which under Kentucky law allows 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. On February 19, 1999
   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.  On February
   25, 1999 the Commission granted the request for a stay, and on March
   11, 1999 granted in part the request for rehearing.  The Commission
   also granted rehearing on the KIUC's request for rehearing on the
   Commission's determination that it lacks authority to require the
   Companies to pay interest on the refund amounts.  The Commission
   conducted a hearing on the rehearing issues on June 29, 1999.  The
   Commission 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, Ky. Circuit Court.
   A decision on the appeals by the Court is not expected until the middle
   of 2000.

   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.  On
   August 9, 1999, KU filed its request for rehearing of the July orders.

13.As of June 30, 1999, Capital Corp. had expended approximately $110.1
   million in connection with its October 1998 purchase of two natural gas
   combustion turbines.  The aggregate construction cost is not expected
   to exceed $125 million.  On July 23, 1999, the PSC approved LG&E's and
   KU's application for the purchase of the turbines from Capital Corp. at
   a price equal to the lower of their fair market value or cost.  Capital
   Corp. completed the installation of the turbines in July 1999.  These
   units were placed into commercial operation in early August 1999.

14.Reference is made to Part II, Legal Proceedings, below and Part I, Item
   3, Legal Proceedings, of the Company's, KU Energy'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 quarter ended March
   31, 1999.


                                  - 29 -
<PAGE>

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

Recent Developments

On July 8, 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.

As of June 30, 1999, Capital Corp. had expended approximately $110.1
million in connection with its October 1998 purchase of two natural gas
combustion turbines.  The aggregate construction cost is not expected to
exceed $125 million.  On July 23, 1999, the PSC approved LG&E's and KU's
application for the purchase of the turbines from Capital Corp. at a price
equal to the lower of their fair market value or cost.  Capital Corp.
completed the installation of the turbines in July 1999.  These units were
placed into commercial operation in early August 1999.

On April 13, 1999, the Kentucky Public Service Commission (PSC) issued
initial orders in the performance-based ratemaking proceedings for LG&E and
KU.  The PSC orders implement, effective July 2, 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 PSC
on April 5, 1999.  For more information, see Note 8 to the Notes to
Financial Statements of the Company, LG&E and KU under Item 1.

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.  For more information, see Note 5 of Notes to
Financial Statements under Item 1 for more information.

On March 15, 1999, Capital Corp. entered into a letter of intent to lease
or acquire three combustion turbines and is currently negotiating the terms
of a definitive agreement.  The aggregate price, including construction of
related facilities, is estimated to be approximately $185 million.

On March 15, 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 of power and natural gas; unusual weather;
regulatory decisions, in

                                  - 30 -
<PAGE>

cluding decisions relating to the Company's performance-based ratemaking
proceedings 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 and WKE operations are affected by seasonal fluctuations in
temperature and other weather-related factors.  Because of these and other
factors, the results of one interim period are not necessarily indicative
of results or trends to be expected for the full year.

              Three Months Ended June 30, 1999, Compared to
                     Three Months Ended June 30, 1998

The Company's primary and diluted earnings per share from continuing
operations increased to $.39 in 1999 from $.10 in 1998.  Continuing
operations 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).
Excluding these items, income from continuing operations increased to $.39
in 1999 from $.35 in 1998.  This increase resulted from higher earnings at
KU and Capital Corp., partially offset by lower earnings at LG&E.

LG&E Results:

LG&E's net income increased $22 million for the quarter ended June 30,
1999, compared to the quarter ended June 30, 1998, primarily because of a
$25 million one-time, after-tax charge incurred in 1998 for LG&E's costs to
merge LG&E Energy Corp. with KU Energy.  Excluding this charge, LG&E's net
income decreased $2.9 million compared to the second quarter of 1998,
primarily due to increased maintenance expenses at electric generating
plants, partially offset by increased electric sales.



                                  - 31 -
<PAGE>

A comparison of LG&E's revenues for the quarter ended June 30, 1999, with
the quarter ended June 30, 1998, 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                       $(2,193)   $(5,592)
 Merger surcredit                                       (1,466)          -
 Demand side management/revenue
  decoupling                                              (698)      (820)
 Variation in sales volume, etc.                         1,305      2,261

 Total retail sales                                     (3,052)    (4,151)

Sales for resale                                        18,627        823
Gas transportation - net                                     -         96
Other                                                       21        344

Total                                                  $15,596    $(2,888)

Electric sales for resale increased $18.6 million due to increases in
brokered sales activities.

Fuel for electric generation and gas supply expenses comprise a large
component of LG&E's total operating expenses.  LG&E's electric and gas
rates contain a fuel adjustment clause and a gas supply clause,
respectively, whereby increases or decreases in the cost of fuel and gas
supply may be reflected in retail rates, subject to the approval of the
Public Service Commission of Kentucky.  See Notes 8 and 12 for a further
discussion.  Fuel for electric generation decreased $1.9 million (5%) for
the quarter because of a decreased volume of generation.  Gas supply
expenses decreased $2.9 million (18%) due to a decrease in the volume of
gas delivered to the distribution system ($3.3 million).

Power purchased increased $16 million primarily due to increased purchases
for sales for resale, partially offset by approximately $3.5 million of
income 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.

Maintenance expenses increased $7.2 million (55%) in 1999 mainly due to
increases in scheduled outages at the Mill Creek generating station Unit 3
and the Cane Run generating station Unit 6 ($5.1 million), and maintenance
of other steam plant equipment ($2.9 million) partially offset by a
decrease in storm damage repairs ($1 million).

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

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
and (deductions)).

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



                                  - 32 -
<PAGE>

Interest charges decreased partly because of the retirement of the
Company's 6.75% Series First Mortgage Bonds ($20 million) at maturity on
June 1, 1998.

KU Results:

KU's net income increased $28.9 million for the quarter ended June 30,
1999, as compared to the quarter ended June 30, 1998, primarily because of
a $21.8 million one-time, after-tax charge incurred in 1998 for KU's costs
to merge LG&E Energy Corp. with KU Energy.  Excluding this charge, KU's net
income increased $7.2 million as compared to the second quarter of 1998 was
primarily due to increases in off-system sales and sales for resale.

A comparison of KU's revenues for the quarter ended June 30,1999, with the
quarter ended June 30,1998, reflects increases and decreases which have
been segregated by the following principal causes (in thousands of $):

Sales to ultimate consumers:
 Fuel clause adjustments                               $ 1,091
 Environmental cost recovery                              (443)
 Merger surcredit                                       (1,496)
 Variation in sales volume, etc.                         1,213

 Total retail sales                                        365

Sales for resale                                        32,356
Other                                                       (6)

Total                                                  $32,715

Operating revenues increased $32.7 million (17%).  The increase in sales
for resale (2,125,467 megawatt-hours versus 1,147,199 megawatt-hours) was
primarily due to more aggressive marketing efforts.

Fuel for electric generation comprises a large component of KU's total
operating expenses.  KU's electric rates contain a fuel adjustment clause
(FAC), whereby increases or decreases in the cost of fuel are reflected in
retail rates, subject to the approval of the Public Service Commission of
Kentucky, The Virginia State Corporation Commission, and the Federal Energy
Regulatory Commission.  See Note 12 for a further discussion.  Fuel for
electric generation expenses decreased by $5.3 million (11%) for the
quarter because of decrease in the cost of coal burned ($3.4 million) and
reduced levels of generation ($1.8 million).

Power purchased increased $27 million.  The increase was primarily due to a
86% increase in megawatt-hour purchases which was used to support the
aforementioned sales for resale, partially offset by approximately $3.1
million of income 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.

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 (the corresponding tax
benefit of $.1 million is recorded in other income and (deductions)).

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

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

                                  - 33 -
<PAGE>

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.  The Company engages in other energy-
related businesses which are not individual distinct segments of the
business.  These include CRC-Evans, based in Houston, Texas, a provider of
specialized equipment and services used in the construction and
rehabilitation of gas and oil transmission pipelines.  Capital Corp. is
also engaged in commercial and retail initiatives designed to assess the
energy and utility needs of large commercial and industrial entities, to
provide maintenance and repair services for customers' major household
appliances and to provide third party metering and billing services.

Independent Power Operations

Independent Power Operations' revenues increased from $4.7 million in 1998
to $6.2 million in 1999 due to an increase in fees related to development
power projects, partially offset by lower income resulting from selling the
Rensselaer joint venture in March 1999.

Independent Power Operations' depreciation and amortization decreased from
$1.5 million in 1998 to $.3 million in 1999 due to asset write-offs in June
1998 related to the Rensselaer project's Master Restructuring Agreement
(MRA) with Niagara Mohawk Power Corporation (NIMO).

Independent Power Operations' equity in earnings of unconsolidated ventures
decreased from $50.0 million in 1998 to $8.6 million in 1999.  The decrease
resulted mainly from recognizing the June 1998 gain related to the
Rensselaer project's NIMO MRA.

Western Kentucky Energy

Western Kentucky Energy (WKE) began operations July 15, 1998, after closing
its lease transaction with Big Rivers.  During the quarter, WKE's revenues
totaled $69.1 million and cost of revenues, primarily composed of fuel and
purchased power expenses, amounted to $41.3 million.  Operation and
maintenance expenses of $27.3 million include $7.0 million of rent expense
associated with the lease of Big Rivers' operating facilities.  WKE
incurred interest expense of approximately $1.5 million associated with
borrowings to fund the initial purchase of certain materials and supplies
from Big Rivers and to prepay the first two years' lease payments of $55.9
million.

Argentine Gas Distribution

The Argentine Gas Distribution companies' revenues increased 4% or $1.9
million in 1999 to $45.1 million due to higher consumption per customer and
an increase in the customer base.  Operation and maintenance expenses
increased by 2.7% or $.2 million over the same period due to higher
consumption.

The Argentine Gas Distribution companies' equity in earnings of
unconsolidated ventures increased from $.9 million in 1998 to $3.4 million
in 1999 due to acquiring a 19.6% interest in Gas Natural BAN, S.A. (BAN) in
March 1999.  See Recent Developments and Note 5 of Notes to Financial
Statements in Item 1.



                                  - 34 -
<PAGE>

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.
Additionally, the Company conducts various commercial and retail
initiatives, primarily energy-related new businesses and services designed
to leverage the 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.

This segment's revenues increased from $39.3 million in 1998 to $73.4
million in 1999, and its cost of revenues increased from $31.2 million in
1998 to $64.8 million in 1999.  These increases reflect increases at Retail
Access Services and higher natural gas liquids prices.  Retail Access
Services provides consulting, technical, software and operational support
and services to independent retail energy service providers in certain
markets.  See Note 3 for a discussion of the Company's decision to retain
its natural gas gathering and processing business.

Interest expense increased by $7.7 million in 1999 mainly due to funding
discontinued operations and corporate expenses, including the cost to fund
the WKE transaction and the Gas BAN acquisition.  The Company's
consolidated effective income tax rate decreased from 66.8% in 1998 to
36.1% in 1999 due to non-deductible merger-related expenses recorded in
1998.

               Six Months Ended June 30, 1999, Compared to
                      Six Months Ended June 30, 1998

The Company's primary and diluted earnings per share from continuing
operations increased to $.82 in 1999 from $.46 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).  Excluding these items,
income from continuing operations increased to $.82 in 1999 from $.71 in
1998.  This increase resulted from higher earnings at KU and Capital Corp.

LG&E Results:

LG&E's net income increased $17.5 million for the first six months of 1999,
as compared to the first six months of 1998, primarily because of the
charge incurred in 1998 for LG&E's costs to merge LG&E Energy Corp. with KU
Energy of $25 million.  Excluding this charge, LG&E's net income decreased
$7.4 million for the same period.  This is primarily due to increased
maintenance expenses at electric generating plants.



                                  - 35 -
<PAGE>

A comparison of LG&E's revenues for the six months ended June 30, 1999,
with the six months ended June 30, 1998, 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                      $    790   $(25,612)
 Merger surcredit                                       (2,856)         -
 Demand side management/revenue
  decoupling                                            (3,094)    (5,398)
 Variation in sales volume, etc.                         6,400     10,693

 Total retail sales                                      1,240    (20,317)

Sales for resale                                        24,552        412
Other                                                       59         38

Total                                                  $25,851   $(19,867)

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.

Fuel for electric generation decreased $5.4 million (7%) for the six months
because of a decrease in generation ($5.9 million).

Gas supply expenses decreased $16.5 million (21%) due to a decrease in net
gas supply costs ($22.4 million) partially offset by an increase in the
volume of gas delivered to the distribution system ($3.7 million).

Power purchased increased $29.1 million (117%) primarily due to increased
purchases for sales for resale.

Maintenance expenses for the first six months of 1999 increased $11.6
million (50%) primarily due to increases in scheduled outages at the Mill
Creek generating station Unit 3 and the Cane Run generating station Unit 6
($5.4 million), forced outages at Mill Creek Units 1 and 4 ($3.9 million),
and general repairs at the electric generating plants ($2.4 million).

Depreciation and amortization increased $1.7 million in 1999 because of
additional utility plant in service.

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
and (deductions)).

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

Interest charges decreased partly because $20 million of the Company's
First Mortgage Bonds, 6.75% Series were retired at maturity on June 1,
1998.


                                  - 36 -
<PAGE>

KU Results:

KU's net income increased $33.5 million for the first six months of 1999,
as compared to the first six months of 1998, primarily because of the
charge incurred in 1998 for KU's costs to merge LG&E Energy Corp. with KU
Energy of $21.7 million.  Excluding this charge, KU's net income increased
$11.8 million for the same period.  The increase was primarily due to
increases in residential sales, commercial sales and sales for resale.

A comparison of KU's revenues for the six months ended June 30, 1999, with
the six months ended June 30,1998, reflects increases and decreases which
have been segregated by the following principal causes (in thousands of $):

Sales to ultimate consumers:
 Fuel clause adjustments                               $   241
 Environmental cost recovery                            (1,081)
 Merger surcredit                                       (3,165)
 Variation in sales volume, etc.                        10,490

 Total retail sales                                      6,485

Sales for resale                                        59,627
Other                                                      733

Total                                                  $66,845

Retail sales increased due to a 2% increase in sales volumes year to date.
The increase in sales for resale (4,020,756 megawatt-hours versus 1,676,671
megawatt-hours) 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.

Expenses

Fuel for electric generation expenses increased by $4.5 million (4%)
primarily due to an increase in generation ($8.5 million) offset by a
decrease in the lower cost of coal burned ($4.2 million).

Power purchased increased $48.3 million.  The increase was primarily due to
a 90% increase in megawatt-hour purchases which was primarily used to
support the aforementioned sales for resale.

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 (the corresponding tax
benefit of $.1 million is recorded in other income and (deductions)).

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 $9.9 million in 1998
to $13.1 million in 1999 due to recognizing fees related to an independent
power project in Gregory, Texas and recognizing previously deferred income
related to the sale of the Rensselaer project in March 1999.  See Note 6 of
Notes to Financial Statements under Item 1.



                                  - 37 -
<PAGE>

Independent Power Operations' depreciation and amortization decreased from
$4.1 million in 1998 to $2.3 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 $55.6 million in 1998 to $30.0 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.

Independent Power Operations' other income and expense changed from $8.7
million expense in 1998 to $.9 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 July 15, 1998, after closing its lease transaction
with Big Rivers.  During 1999, revenues totaled $129.0 million and cost of
revenues, primarily composed of fuel and purchased power expenses, amounted
to $77.0 million.  Operation and maintenance expenses of $52.1 million
include $14.0 million of rent expense associated with the lease of Big
Rivers' operating facilities.  WKE incurred interest expense of
approximately $2.8 million associated with borrowings to fund the initial
purchase of certain materials and supplies from Big Rivers and to prepay
the first two years' lease payments of $55.9 million.

Argentine Gas Distribution

The Argentine Gas Distribution companies' revenues increased 6% or $4.3
million in 1999 to $74.9 million due to higher consumption per customer and
an increase in the customer base.  Operation and maintenance expenses
increased by 5.3% or $.8 million over the same period due to higher
consumption.

The Argentine Gas Distribution companies' equity in earnings of
unconsolidated ventures increased from $1.2 million in 1998 to $3.7 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

This segment's revenues increased from $70.6 million in 1998 to $138.5
million in 1999, and its cost of revenues increased from $55.6 million in
1998 to $113.6 million in 1999.  These increases reflect increases at
Retail Access Services and higher natural gas liquids prices.

Capital Corp.'s other income increased $3.2 million in 1999 due mainly to
receiving the initial settlement of a claim related to its independent
power project in California.

Interest expense increased by $12.3 million in 1999 mainly due to funding
discontinued operations and corporate expenses, including the cost to fund
the WKE transaction and the Gas BAN acquisition.  The Company's
consolidated effective income tax rate decreased from 45.7% in 1998 to
37.2% in 1999 mainly due to non-deductible merger-related expenses recorded
in 1998.



                                  - 38 -
<PAGE>

                     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 six months ended June 30, 1999, of $199.8
million were financed with internally generated funds and commercial paper.

The Company's combined cash and marketable securities balance increased
$26.4 million during the six months ended June 30, 1999.  The increase
reflects cash flows from operations, a net increase in debt, and the
Company's portion of the proceeds received by the Rensselaer project from
the sale of its assets and major contracts, partially offset by
construction expenditures, the investment in BAN, and dividends paid.

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 and KU's businesses and higher natural gas gathering
and processing revenues.  The decrease in accounts payable resulted from
fluctuations in LG&E's and KU's businesses.  The increase in fuel
inventories resulted from seasonal fluctuations in KU's and WKE's
businesses, and the decrease in gas stored underground resulted from
seasonal fluctuations in LG&E's business.

The decrease in net assets of discontinued operations resulted from a
seasonal increase in accounts payable and a decrease in price risk
management assets, partially offset by a seasonal increase in accounts
receivable and a reduction in the accrued loss on disposal.

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

The increase in non-utility property and plant resulted mainly from
additions at Centro.  The increase in other property and investments
resulted from expenditures related to the purchase of two natural gas
turbines by Capital Corp.

The Company issues commercial paper that has maturity dates ranging between
one and 270 days.  Because of the rollover of these maturity dates, total
short-term borrowings during the first six months of 1999 were $756.1
million and total repayments of short-term borrowings were $813.1 million.
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.

As of June 30, 1999, Capital Corp. had expended approximately $110.1
million in connection with its October 1998 purchase of two natural gas
combustion turbines.  The aggregate construction cost is not expected to
exceed $125 million.  On July 23, 1999, the PSC approved LG&E's and KU's
application for the purchase of the turbines from Capital Corp. at a price
equal to the lower of their fair market value or cost.  Capital Corp.
completed the installation of the turbines in July 1999.  These units were
placed into commercial operation in early August 1999.

On March 15, 1999, Capital Corp. entered into a letter of intent to lease
or acquire three 150-megawatt (Mw) combustion turbines and is currently
negotiating the terms of a defini

                                  - 39 -
<PAGE>

tive agreement.  This 450 Mw gas fired merchant combustion turbine power
generation facility will be located in Monroe, Georgia, and is expected to
be completed by June 1, 2000.  The aggregate price, including construction
of related facilities, is estimated to be approximately $185 million.

At June 30, 1999, unused capacity under the Company's lines of credit
totaled $592.0 million after considering commercial paper support and
approximately $56.7 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 increase in unused capacity
resulted from paying down commercial paper during the six months ended June
30, 1999.

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

                                              June 30,  Dec. 31,
                                                1999      1998

Long-term debt (including current portion)      49.1%     46.5%
Notes payable                                    9.2      11.2
Preferred stock                                  4.0       4.2
Common equity                                   37.7      38.1
Total                                          100.0%    100.0%

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

                                              June 30,  Dec. 31,
                                                1999      1998

Long-term debt (including current portion)      45.1%     45.0%
Preferred stock                                  6.9       6.8
Common equity                                   48.0      48.2
Total                                          100.0%    100.0%

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

                                              June 30,  Dec. 31,
                                                1999      1998

Long-term debt (including current portion)      45.0%     45.7%
Preferred stock                                  3.3       3.4
Common equity                                   51.7      50.9
Total                                          100.0%    100.0%

On May 7, 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 on
April 9, 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.

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.



                                  - 40 -
<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 June 1999, the Company and its subsidiaries have completed the
internal inventory, vendor survey and compliance assessment portions
(Phases I and II) of their Year 2000 plan for critical equipment and
systems, including IT, non-IT and embedded components.   Remediation
efforts (Phase III) in these areas are complete with minor exceptions,
which exceptions do not effect the reliability of the electric generation,
transmission or distribution or gas distribution systems.  Testing has been
conducted in parallel with remediation and is also largely complete for
critical systems.  Contingency planning has been initiated for all IT and
non-IT 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 is currently evaluating and, in
certain cases, initiating follow-up actions regarding the responses from
these

                                  - 41 -
<PAGE>

parties.  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 June 1999, the
Company incurred approximately $24.4 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 $7.7 million to
complete its Year 2000 efforts.

Through June 1999, LG&E incurred approximately $17.8 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 $2.8 million
to complete its Year 2000 efforts.

Through June 1999, KU incurred approximately $4.1 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 $2.8 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 made significant progress in the
implementation of its Year 2000 plan.  Based upon the information currently
known regarding its internal operations and assuming successful and timely
completion of its remediation plan, 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 is under way for material areas of Year 2000 risk.
This effort is addressing certain areas, including the most reasonably
likely worst-case scenarios and delays in completion in the Company's
remediation plans, failure or incomplete remediation results and failure of
key third parties to be Year 2000 compliant.  Contingency plans will
include provisions for extra staffing, back-up communications, review of
unit dispatch and load shedding procedures, carrying of additional energy
reserves and manual en-

                                  - 42 -
<PAGE>

ergy accounting procedures.  Contingency plan formulation was substantially
completed in June 1999 and implementation and resourcing 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.



                                  - 43 -
<PAGE>

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 six months ended June 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 six months ended June 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 six months ended June 30, 1999.  However,
as a result of the Commission's approval of the PBR effective July 2, 1999,
LG&E's and KU's fuel adjustment clause mechanism will be 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.  See Item 7 of
the Company's report on Form 10-K for the year ended December 31, 1998.

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


                                  - 44 -
<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 Report on Form 10-Q for the quarter ended
March 31, 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

In July 1999, the Kentucky Public Service Commission (PSC) issued orders to
KU requiring refunds of approximately $4.2 million and $5.8 million,
respectively, in costs previously recovered from customers under the fuel
adjustment clause mechanism for line losses associated with off-system
sales.  KU has filed a motion to stay the refund pending a rehearing on
certain issues.  Subject to those rehearings, the refunds are currently
ordered for the third quarter 1999.  See Note 12 of Notes to Financial
Statements, above, Item 3, 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.

Environmental Matters

On May 25, 1999, the U.S. Court of Appeals for the D.C. Circuit entered an
order in the appeal concerning the Environmental Protection Agency's (EPA)
September 1998 rulemaking mandating significant reductions in NOx
emissions.  The court issued an indefinite stay of the September 1999
deadline for each state to incorporate additional NOx deadlines in their
state implementation plans of the NOx reductions pending further appellate
proceedings which are scheduled to occur during 1999.  In a separate
proceeding, the court also remanded certain related ozone standards to the
EPA for further rule-making action.  See Environmental Matters, under Item
7 of the Company's, LG&E's and KU's Annual Report for the year ended
December 31, 1998 for a further discussion of these matters.

Oglethorpe Power Contract

Discovery proceedings have continued 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.  A
hearing on the merits is currently scheduled for November 1999 with a final
decision anticipated in December 1999.  See Item 3, Legal Proceedings, and
Item 8, Note 18 to Notes to Financial Statements, in LG&E Energy's Annual
Report on Form 10-K for the year ended December 31, 1998 for more
information on this matter.

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

a) LG&E Energy's, LG&E's and KU's Annual Meetings of Shareholders were
   held on April 21, 1999.



                                  - 45 -
<PAGE>

b) Not applicable.

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

1. LG&E Energy:

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

   William L. Rouse, Jr. - 101,006,828 common shares cast in favor of
   election and 1,349,817 shares withheld.

   Charles L. Shearer - 101,071,033 common shares cast in favor of
   election and 1,285,612 shares withheld.

   Carol M. Gatton - 101,004,430 common shares cast in favor of election
   and 1,352,215 shares withheld.

   Lee T. Todd, Jr. - 101,086,957 common shares cast in favor of election
   and 1,269,688 shares withheld.

   Mira S. Ball - 100,987,324 common shares cast in favor of election and
   1,369,445 shares withheld.

   Roger W. Hale - 100,750,551 common shares cast in favor of election and
   1,606,700 shares withheld.

   David B Lewis - 100,971,581 common shares cast in favor of election and
   1,385,192 shares withheld.

   Anne H. McNamara - 101,026,444 common shares cast in favor of election
   and 1,330,201 shares withheld.

   Frank V. Ramsey, Jr. - 100,596,229 common shares cast in favor of
   election and 1,400,416 shares withheld.

   Holders of 514,576 common shares abstained from voting on this matter.

ii)  The shareholders voted 101,269,233 common shares in favor of and
     622,022 shares against the approval of Arthur Andersen LLP as
     independent auditors for 1999.  Holders of 996,985 common shares
     abstained from voting on this matter.

iii) The shareholders voted 73,254,869 common shares in favor of and
     25,774,121 shares against the approval of an amendment to the Omnibus
     Long-Term Incentive Plan, including the issuance of additional shares
     thereunder.  Holders of 3,846,557 common shares abstained from voting
     on this matter.

2. LG&E:

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

   William L. Rouse, Jr. - 21,294,223 common shares and 282,068
   preferred shares cast in favor of election and 13,169 preferred shares
   withheld.



                                  - 46 -
<PAGE>

   Charles L. Shearer - 21,294,223 common shares and 282,193 preferred
   shares cast in favor of election and 13,044 preferred shares withheld.

   Carol M. Gatton - 21,294,223 common shares and 282,174 preferred shares
   cast in favor of election and 13,063 preferred shares withheld.

   Lee T. Todd, Jr. - 21,294,223 common shares and 282,218 preferred
   shares cast in favor of election and 13,019 preferred shares withheld.

   Mira S. Ball - 21,294,223 common shares and 282,218 preferred shares
   cast in favor of election and 13,019 preferred shares withheld.

   Roger W. Hale - 21,294,223 common shares and 281,877 preferred shares
   cast in favor of election and 13,360 preferred shares withheld.

   David B. Lewis - 21,294,223 common shares and 281,458 preferred shares
   cast in favor of election and 13,779 preferred shares withheld.

   Anne H. McNamara - 21,294,223 common shares and 282,218 preferred
   shares cast in favor of election and 13,019 preferred shares withheld.

   Frank V. Ramsey, Jr. - 21,294,223 common shares and 282,218 preferred
   shares cast in favor of election and 13,019 preferred shares withheld.

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

ii)The shareholders voted 21,294,223 common shares and 285,910 preferred
   shares in favor of and 667 preferred shares against the approval of
   Arthur Andersen LLP as independent auditors for 1999.  Holders of 8,660
   preferred shares abstained from voting on this matter.

3. KU:

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

   37,817,878 common shares cast in favor of election and no shares
   withheld for each of William L. Rouse, Jr., Charles L. Shearer, Carol
   M. Gatton, Lee T. Todd, Jr., Mira S. Ball, Roger W. Hale, David B.
   Lewis, Anne H. McNamara and Frank V. Ramsey, Jr., respectively.

ii)The sole shareholder voted 37,817,878 common shares in favor of and no
   shares against the approval of Arthur Andersen LLP as independent
   auditors for 1999.

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

d) Not applicable.

Item 6(a).  Exhibits.

Exhibit
Number              Description

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



                                  - 47 -
<PAGE>

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

On April 7, 1999, the Company, LG&E and KU filed reports on Form 8-K
announcing that on April 5, 1999, LG&E and KU had reached an agreement with
the Kentucky Attorney General's Office regarding LG&E's and KU's pending
performance-based ratemaking (PBR) proposal.  In a filing with the PSC, the
parties amended the companies' PBR proposal to request approval of an
agreed-upon five-year rate reduction plan.  In the same filing, the Company
announced that on March 30, 1999, it had acquired an indirect ownership
interest of approximately 20 percent in Gas Natural BAN, S.A.

On April 20, 1999, the Company, LG&E and KU filed reports on Form 8-K
announcing orders of the PSC dated April 13, 1999, regarding LG&E and KU.
The PSC orders implement, effective July 2, 1999, the companies' pending
performance-based ratemaking proposal, including a five-year rate reduction
plan agreed upon earlier by the companies and the Kentucky Attorney
General's Office.

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.


                                  - 48 -
<PAGE>

                                SIGNATURES


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


LG&E Energy Corp.
Registrant


Date:  August 13, 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:  August 13,1999           /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:  August 13, 1999          /s/ Michael D. Robinson
                                Michael D. Robinson
                                Vice President and Controller
                                (On behalf of the registrant in his
                                capacity as Principal Accounting Officer)



                                  - 49 -