SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM U-3A-2
STATEMENT BY HOLDING COMPANY CLAIMING EXEMPTION UNDER RULE U-3A-2
FROM THE PROVISIONS OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
To Be Filed Annually Prior to March 1
KENTUCKY UTILITIES COMPANY
hereby files with the Securities and Exchange Commission, pursuant to
Rule 2, its statement claiming exemption as a holding company from
the provisions of the Public Utility Holding Company Act of 1935, and
submits the following information:
1. Name, State of organization, location and nature of
business of claimant and every subsidiary thereof, other than any
exempt wholesale generator (EWG) or foreign utility company in which
claimant directly or indirectly holds an interest.
(a) The Claimant. Kentucky Utilities Company (hereinafter
called "Company") is a Kentucky and Virginia corporation, and has its
principal executive office at One Quality Street, Lexington, Kentucky
40507. The Company is a public utility engaged principally in the
production and sale of electric energy. At December 31, 1994, the
Company furnished electric service to about 418,100 retail customers
in over 600 communities and adjacent suburban and rural areas,
located in 77 counties in central, southeastern and western Kentucky
and one adjoining county in Tennessee; and also sold electric energy
at wholesale in 11 municipalities, interchanged power with two
generating and transmission cooperatives and supplied at retail the
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major portion of the requirements of one other municipality. The
Company also supplied electric service to about 28,300 customers in
about 40 communities and adjacent rural areas, located in five
counties in southwestern Virginia. The territory served by the
Company has an estimated population of about 1,000,000 and includes
most of the "Bluegrass Region" of central Kentucky and parts of the
coal mining areas in southeastern and western Kentucky and
southwestern Virginia. Bituminous coal mining, automotive and
related industries, the manufacture of paper and paper products and
of electrical and other machinery and primary metals processing are
among the principal industries in the territory served. Reference is
made to the Company's Form 10-K for the year ended December 31, 1993,
and Form 10-Q's for the quarters ended March 31, 1994, June 30, 1994,
and September 30, 1994, for further information regarding the
business of the Company.
(b) Electric Energy, Inc. The Company owns 12,400 shares of
the common stock, par value $100 per share, of Electric Energy, Inc.
(hereinafter called "EEI"), an Illinois corporation, constituting 20%
of the outstanding voting securities of EEI. The principal executive
office of EEI is located at Joppa, Illinois. EEI owns and operates a
steam electric generating station having a capacity of about
1,000,000 kilowatts, located near Joppa, Illinois, and related
transmission facilities, for the purpose of supplying power to a
gaseous diffusion project of the Department of Energy (hereinafter
called "DOE") located near Paducah, Kentucky, under a power contract
with DOE expiring in 2005. The delivery commitment of EEI under its
power contract with DOE is 75% of the station's annual output through
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December 31, 2005, subject to reduction in certain circumstances.
Under a power supply agreement between EEI and the four sponsoring
companies which own its common stock (including the Company), the
Company had agreed to purchase, through 2005, a portion of the
capacity of the station not sold to DOE and others. However, the
Company's share of the available capacity was increased to 20%
effective January 1, 1994. The Company's obligation to provide a
portion of EEI's operating expenses, taxes, and certain debt service
is based upon the amount of the Company's annual percentage of the
EEI station capacity. At December 31, 1994 EEI had outstanding long-
term indebtedness of $130,000,000.
For a description of the organization, business, financing,
and properties of EEI, reference is made to the applications and
declarations (and the amendments and exhibits thereto) relating to
EEI heretofore filed with the Securities and Exchange Commission,
under the Public Utility Holding Company Act of 1935, by EEI, the
Company, and others in File Nos. 70-2540, 70-2647, 70-2973, 70-3095,
70-3120, 70-3595, and 70-3596, and to the findings, opinions, and
orders of the Commission with respect thereto.
2. A brief description of the properties of claimant and each
of its subsidiary public utility companies used for the generation,
transmission, and distribution of electric energy for sale, or for
the production, transmission, and distribution of natural or
manufactured gas, indicating the location of principal generating
plants, transmission lines, producing fields, gas manufacturing
plants, and electric and gas distribution facilities, including all
such properties which are outside the State in which claimant and its
subsidiaries are organized and all transmission or pipelines which
deliver or receive electric energy or gas at the borders of such
State.
(a) At December 31, 1994, the Company owned and regularly
operated five steam electric generating stations, two hydroelectric
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generating stations and four gas/oil turbine peaking units.
The name plate ratings, effective capability and location of each of
these electric generating stations is as follows:
<TABLE>
<CAPTION>
Nameplate Effective
Rating (KW) Capability (KW)
<S> <C> <C> <C> <C>
Steam: Ghent Ghent, Ky 2,226,060 2,000,000
Green River South Carrollton, Ky 263,636 241,000
E.W. Brown Burgin, Ky 739,534 661,000
Tyrone Tyrone, Ky 137,500 135,000
Pineville Four Mike, Ky 37,500 35,000
Hydro: Dix Dam &
Lock #7 Burgin, Ky 30,297 24,000
Gas/Oil Peaking: Haefling Lexington, Ky 62,100 59,000
E.W. Brown Burgin, Ky 119,000 110,000
3,615,627 3,265,000
</TABLE>
At December 31, 1994, the Company also owned and operated about 4,007
pole miles of transmission lines; 177 transmission substations; 472
distribution substations; about 13,183 pole miles of distribution
lines located in or adjacent to the communities served by the
Company, in the State of Kentucky and in a small rural area in one
county in Tennessee. The Company also owned at December 31, 1994,
about 245 miles of electric transmission lines serving 15
transmission substations, 54 distribution substations and about 1,013
pole miles of distribution lines located in or adjacent to the 40
communities served by it, all located in the State of Virginia.
Kentucky Utilities has major interconnection ties with the following
companies:
UTILITY LOCATION TIE VOLTAGE
Ohio Power Company Kenton to Hillsboro 138 kv
Kentucky Power Company Rodburn to Morehead 69 kv
Louisville Gas & Electric Green River Steel to Cloverport138 kv
Hardinsburg to Cloverport 138 kv
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Finchville to Middletown 69 kv
Eastwood to Shelbyville 69 kv
Tennessee Valley Authority Pocket to Phipps Bend 500 kv
Livingston to Calvert 161 kv
Livingston to Ky. Dam 161 kv
Pineville to Pineville 161 kv
KU Park to Pineville 161-69 kv
Paducah to Ky. Dam 69 kv
Paducah/Princeton to Ky. Dam 69 kv
East Kentucky RECC 41 ties in Kentucky 161-138-69 kv
Owensboro Municipal Utilities Hardin County to Smith 345 kv
Green River Steel to Smith 138 kv
Green River Steel to Smith 69 kv
Ohio Valley Electric Carrollton to Clifty 138 kv
Electric Energy Inc Grahamville to C-33A 161 kv
Public Service of Indiana Ghent to Speed 345 kv
Ghent to Batesville 345 kv
Ghent to Fairview 138 kv
Big Rivers Rural Elect. Coop. Hardinsburg to Hardinsburg 138 kv
Reference is made to the Company's Form 10-K for the year
ended December 31, 1993 and Form 10-Q's for the quarters ended March
31, 1994, June 30, 1994, and September 30, 1994, for additional
information with respect to the properties owned by the Company.
(b) See paragraph (b) under Item 1 above and filings with the
Securities and Exchange Commission referred to therein for a
description of the properties of EEI.
3. The following information for the last calendar year with
respect to claimant and each of its subsidiary public utility
companies:
(a) Number of KWH of electric energy sold (at retail or
wholesale) and MCF of natural or manufactured gas distributed at
retail.
(b) Number of KWH of electric energy and MCF of natural or
manufactured gas distributed at retail outside of the State in which
each such company is organized.
(c) Number of KWH of electric energy and MCF of natural or
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manufactured gas sold at wholesale outside of the State in which each
such company is organized, or at the State line.
(d) Number of KWH of electric energy and MCF of natural or
manufactured gas purchased outside the State in which each such
company is organized or at the State line.
The information required by this item, so far as applicable,
is included as Exhibit D. Neither the Company, nor EEI engages in
the business of selling or distributing gas.
The Company is predominantly a public utility company whose
operations as such do not extend beyond the States in which it is
organized (Kentucky and Virginia) and States contiguous thereto
(Tennessee) and, on the basis of the foregoing, is entitled to
exemption as a holding company pursuant to paragraph (2) of Section
3(a) of the Public Utility Holding Company Act of 1935 and paragraph
(a) (2) of Rule 2 of the Commission promulgated under said Act. EEI,
an Illinois corporation, owns property and operates in the State of
Illinois and supplies power to the DOE project located in Kentucky.
Reference is made to the exhibits filed herewith. In 1994, the
Company received dividends from EEI amounting to $2,720,830.31.
4. The following information for the reporting period with
respect to claimant and each interest it holds directly or indirectly
in an EWG or a foreign utility company, stating monetary amounts in
United States dollars:
(a) Name, location, business address and description of the
facilities used by the EWG or foreign utility company for the
generation, transmission and distribution of electric energy for sale
or for the distribution at retail of natural or manufactured gas.
(b) Name of each system company that holds an interest in such
EWG or foreign utility company; and description of the interest held.
(c) Type and amount of capital invested, directly or
indirectly, by the holding company claiming exemption; any direct or
indirect guarantee of the security of the EWG or foreign utility
company by the holding company claiming exemption; and any debt or
other financial obligation for which there is recourse, directly or
indirectly, to the holding company claiming exemption or another
system company, other than the EWG or foreign utility company.
(d) Capitalization and earnings of the EWG or foreign utility
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company during the reporting period.
(e) Identify any service, sales or construction contract(s)
between the EWG or foreign utility company and a system company, and
describe the services to be rendered or goods sold and fees or
revenues under such agreement(s).
The Company did not hold directly or indirectly any interest
in an EWG or a foreign utility company during the reporting period
and therefore, has no information to report under this item.
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* * * * * * *
In making and filing this statement, Kentucky Utilities
Company specifically reserves the right to apply at any time in the
future to the Securities and Exchange Commission (a) pursuant to
Section 2 (a)(7) of the Public Utility Holding Company Act of 1935,
for an order declaring it is not a holding company under clause (a)
of said section by reason of its investment in EEI, and/or (b) for an
order exempting it from the provisions of the Public Utility Holding
Company Act of 1935 pursuant to Section 3(a) or any other provision
of said Act or any rule or regulation of the Commission thereunder.
Neither the making and filing of this statement nor anything
contained herein shall constitute or be construed to be an admission
that Kentucky Utilities Company is not entitled to any such order.
The above-named claimant has caused this statement to be
duly executed on its behalf by its authorized officer on this 24th
day of February, 1995.
KENTUCKY UTILITIES COMPANY
By /s/ John Newton
John Newton
Chairman and Chief Executive Officer
(Corporate Seal)
Attest:
/s/ George S. Brooks II
George S. Brooks II, Corporate Secretary
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Names and addresses of persons to whom notices and correspondence
concerning this statement should be addressed:
John T. Newton
Chairman of the Board and Chief Executive Officer
Kentucky Utilities Company
One Quality Street
Lexington, Kentucky 40507
Robert A. Yolles
Jones, Day, Reavis & Pogue
77 West Wacker
Chicago, Illinois 60601-1692
Exhibit A-1 Balance Sheet of Kentucky Utilities Company
as of December 31, 1994.
Exhibit A-2 Statement of Income of Kentucky Utilities Company
for the year 1994.
Exhibit A-3 Statement of Surplus of Kentucky Utilities
Company for the year 1994.
Exhibit A-4 Balance Sheet of Electric Energy, Inc., as of
December 31, 1994.
Exhibit A-5 Statement of Income and Surplus of Electric
Energy, Inc., for the year 1994.
Exhibit B Not required at this time
Exhibit C Not applicable
Exhibit D Statement showing sales and purchases of electric
energy for the calendar year 1994 by Kentucky
Utilities Company and Electric Energy, Inc.
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EXHIBIT A-1
Page 1 of 2
KENTUCKY UTILITIES COMPANY
BALANCE SHEET
AS OF DECEMBER 31, 1994
(in thousands of dollars)
ASSETS
UTILITY PLANT
Original Cost of Plant in Service $ 2,238,926
Construction Work in Progress 104,385
Total 2,343,311
Less: Reserves for Depreciation 933,394
Total 1,409,917
INVESTMENTS AND FUNDS (1)
Ohio Valley Electric Corporation 250
Property Not Used in Operations,
less Accumulated Depreciation 4,485
Investment in Associated Companies
Electric Energy, Inc. 2,244
Lexington Utilities Co. 1
Other Investments 483
Special Funds 5,882
13,345
CURRENT ASSETS
Cash and Cash Equivalents 28,575
Accounts Receivable Less Reserve of $457 41,502
Receivables from Associated Companies 158
Fuel, Principally Coal, at Average Cost 35,652
Materials and Supplies, at Average Cost 20,081
Prepaid Expense and Other 10,616
Accrued Utility Revenues 24,227
160,811
DEFERRED DEBITS 34,027
$ 1,618,100
(1) Investments and funds are stated at cost except for Electric
Energy, Inc., which is stated at equity in underlying book value.
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EXHIBIT A-1
Page 2 of 2
KENTUCKY UTILITIES COMPANY
BALANCE SHEET
AS OF DECEMBER 31, 1994
(in thousands of dollars)
LIABILITIES & EQUITY
CAPITALIZATION
Common Stock Equity
Common Stock $ 308,140
Retained Earnings 256,708
Unappropriated Undistributed
Subsidiary Earnings 948
Capital Stock Expense (595)
Total Common Stock Equity 565,201
Preferred Stock 40,000
Long-Term Debt 496,012
Total Capitalization 1,101,213
CURRENT LIABILITIES
Long-Term Debt Due Within One Year 21
Short-term Borrowings 76,300
Accounts Payable 49,517
Customers' Deposits 6,423
Accrued Taxes 9,422
Accrued Interest 7,328
Other 21,391
170,402
DEFERRED CREDITS AND OPERATING RESERVES
Investment Tax Credit, Being
Amortized Over Twenty-Five Years 38,275
Deferred Income Taxes 214,892
Regulatory Tax Liability 60,788
Other 32,530
346,485
$ 1,618,100
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EXHIBIT A-2
Page 1 of 1
KENTUCKY UTILITIES COMPANY
STATEMENT OF INCOME
AS OF DECEMBER 31, 1994
(in thousands of dollars)
ELECTRIC OPERATING REVENUES $ 636,652
OPERATING EXPENSES AND TAXES
Electric Power Purchased 61,442
Fuel, Materials, Labor, etc.,
Used in Operations 283,366
Maintenance of Utility Plant 66,134
Provision for Depreciation 65,259
Federal and State Income Taxes 44,683
Property and Other Taxes 14,582
Total Operating Expenses and Taxes 535,466
NET OPERATING INCOME 101,186
OTHER INCOME AND DEDUCTIONS
Allow. for Funds Used Dur. Const. 1,094
Interest and Other (Net) 6,539
Equity in Earnings of Subsidiary
Companies 2,760
GROSS INCOME 111,579
INTEREST CHARGES
Interest on Long-Term Debt 32,147
Other Interest Charges 2,411
Allowance for Borrowed Funds Used
During Construction (491)
Total Interest Charges 34,067
NET INCOME $ 77,512
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EXHIBIT A-3
Page 1 of 1
KENTUCKY UTILITIES COMPANY
STATEMENT OF SURPLUS
AS OF DECEMBER 31, 1994
(in thousands of dollars)
EARNED SURPLUS
Balance December 31, 1993 $ 244,429
Add:
Net Income for 1994 77,512
Less:
Dividends:
Preferred Stock 4 3/4% 950
Preferred Stock 7.84% 131
Preferred Stock 6.53% 1,303
Common Stock 61,644
Preferred Stock Redemption Expense 257
64,285
Balance December 31, 1994 $ 257,656
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EXHIBIT A-4
Page 1 of 2
ELECTRIC ENERGY, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1994
(in thousands of dollars)
ASSETS
UTILITY PLANT Unaudited
Utility Plant in Service $ 321,408
Construction Work in Progress 7,795
Total 329,203
Less: Accumulated Depreciation of Utility Plant 218,578
Total Utility Plant, Net 110,625
CURRENT ASSETS
Cash 91
Working Funds 38
Receivables:
Accounts Receivable 23,210
Receivables from Associated Companies 17,183
Total Receivables 40,393
Fuel Inventory 5,173
Plant Materials and Supplies Inventory 5,656
Prepayments 533
Total Current Assets 51,884
OTHER ASSETS
Unamortized Debt Expense 723
Other Deferred Debits 27,854
Total Other Assets 28,577
Total Assets $ 191,086
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EXHIBIT A-4
Page 2 of 2
ELECTRIC ENERGY, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1994
(in thousands of dollars)
STOCKHOLDERS' EQUITY AND LIABILITIES
STOCKHOLDERS' EQUITY
Common Stock $ 6,200
Retained Earnings 2,634
Total Stockholders' Equity 8,834
LONG-TERM DEBT 130,000
CURRENT LIABILITIES
Notes Payable, Bank 16,100
Accounts Payable 12,130
Accounts Payable to Sponsoring Companies 10,209
Accrued Interest 457
Dividends Payable 3,280
Accrued Taxes Other Than Income 103
Accrued Income Taxes 2,380
Total Current Liabilities 44,659
OTHER LIABILITIES
Provision for Injuries and Damages 678
Postretirement Benefit Liability 3,151
Pension Liability 3,350
Deferred Taxes 414
Total Other Liabilities 7,593
Total Stockholders' Equity and Liabilities $ 191,086
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EXHIBIT A-5
Page 1 of 1
ELECTRIC ENERGY, INC.
YEAR ENDED DECEMBER 31, 1994
(in thousands of dollars)
STATEMENT OF INCOME AND SURPLUS
OPERATING INCOME Unaudited
Operating Revenues
Sales to Department of Energy $ 238,689
Sales to Other Electric Utilities 62,923
Other Electric Revenues 61
Total Operating Revenues 301,673
OPERATING EXPENSES
Purchased Power 133,883
Fuel 78,895
Operation 19,940
Maintenance 19,076
Depreciation 13,559
Income Taxes 11,087
Taxes Other Than Income Taxes 1,929
Total Operating Expenses 278,369
Income From Operations 23,304
OTHER (INCOME) AND EXPENSE
Interest Income (301)
Interest Expense 9,429
Other, (Net) 285
Total Other (Income) and Expense 9,413
Net Income $ 13,891
Retained Earnings Beginning of Year $ 2,634
Add: Net Income 13,891
Less: Dividends Declared 13,891
Retained Earnings End of Year $ 2,634
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EXHIBIT D
Page 1 of 1
SALES AND PURCHASES OF ELECTRIC ENERGY
CALENDAR YEAR 1994
Kentucky Electric
Utilities Co. Energy, Inc.
KWH Sold (at retail
or wholesale) 17,596,389,441 15,636,124,339
KWH Distributed at
retail outside of
state in which
organized 127,727 12,879,400,339 (a)
KWH Sold at wholesale
outside of state in
which organized or
at state line 668,652,000 (d) (b)
KWH Purchased outside
of state in which
organized or at
state line 204,490,000 (c)
(a) Represents energy sold to Paducah, Kentucky, Project of Energy
Research and Development Administration.
(b) In 1994 Electric Energy, Inc., sold to Kentucky Utilities Company
1,407,415,000 kilowatt-hours of energy, which was metered at the
Joppa, Illinois, Generating Station of Electric Energy, Inc., and
delivered to Kentucky Utilities Company at the Paducah, Kentucky,
project of the Energy Research and Development Administration.
(c) Not including the 1,407,415,000 kilowatt-hours purchased from
Electric Energy, Inc., delivery of which was received in
Kentucky, as stated in footnote (b) above.
(d) Not including the 1,509,479,000 kilowatt-hours sold to Electric
Energy, Inc.
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<TABLE> <S> <C>
<ARTICLE> OPUR3
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet as of December 31, 1994 and the Income Statement for the period ended
December 31, 1994 and is qualified in its entirety by reference to such Form
U-3A-2 Annual Report.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 1,618,100
<TOTAL-OPERATING-REVENUES> 636,652
<NET-INCOME> 77,512
</TABLE>
