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 producing, transmitting and selling electric energy. At
December 31, 1996, the Company furnished electric service to about
432,900 retail customers in over 600 communities and adjacent
suburban and rural areas in 77 counties in central, southeastern and
western Kentucky and one adjoining county in Tennessee; and also sold
electric energy at wholesale in 12 municipalities, interchanged power
with two generating and transmission cooperatives and supplied at
retail the major portion of the requirements of one other
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municipality. The Company also supplied electric service to about
28,800 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. Automotive and related industries, coal
mining, the manufacture of paper and paper products, electrical and
other machinery and rubber and miscellaneous plastic products 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, 1995,
and Form 10-Q's for the quarters ended March 31, 1996, June 30, 1996,
and September 30, 1996, 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
December 31, 2005, subject to reduction in certain circumstances.
Under a power supply agreement between EEI and the four sponsoring
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companies which own its common stock (including the Company), the
Company's entitlement of the available capacity is 20%. 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, 1996,
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, 1996, the Company owned and regularly
operated five steam electric generating stations, two hydroelectric
generating stations and two gas/oil turbine peaking stations.
The name plate ratings, effective capability and location of each of
these electric generating stations is as follows:
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<TABLE>
<CAPTION>
Nameplate Effective
Rating (KW) Capability (KW)
<C> <C> <C> <C> <C>
Steam: Ghent Ghent, Ky 2,226,060 2,000,000
Green River South Carrollton, Ky 263,636 242,000
E.W. Brown Burgin, Ky 739,534 661,000
Tyrone Tyrone, Ky 137,500 136,000
Pineville Four Mike, Ky 37,500 33,000
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 504,000 484,000
4,000,627 3,639,000
</TABLE>
At December 31, 1996, the Company also owned and operated about 4,019
pole miles of transmission lines; 184 transmission substations; 486
distribution substations; about 13,219 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, 1996, about 246
pole miles of electric transmission lines serving 15 transmission
substations, 54 distribution substations and about 1,019 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 Cloverport 138 kv
Hardinsburg to Cloverport 138 kv
Finchville to Middletown 69 kv
Eastwood to Shelbyville 69 kv
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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 45 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
CINergy 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, 1995 and Form 10-Q's for the quarters ended
March 31, 1996, June 30, 1996, and September 30, 1996, 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.
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(c) Number of KWH of electric energy and MCF of natural or
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
1996, the Company received dividends from EEI amounting to
$2,460,419.84.
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
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system company, other than the EWG or foreign utility company.
(d) Capitalization and earnings of the EWG or foreign utility
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 28th
day of February, 1997.
KENTUCKY UTILITIES COMPANY
By /s/ Michael R. Whitley
Michael R. Whitley
Chairman and President
(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:
Michael R. Whitley
Chairman and President
Kentucky Utilities Company
One Quality Street
Lexington, Kentucky 40507
Robert A. Yolles
Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, Illinois 60601-1692
Exhibit A-1 Balance Sheet of Kentucky Utilities Company
as of December 31, 1996.
Exhibit A-2 Statement of Income of Kentucky Utilities Company
for the year 1996.
Exhibit A-3 Statement of Surplus of Kentucky Utilities
Company for the year 1996.
Exhibit A-4 Balance Sheet of Electric Energy, Inc., as of
December 31, 1996.
Exhibit A-5 Statement of Income and Surplus of Electric
Energy, Inc., for the year 1996.
Exhibit B Financial Data Schedule of Kentucky Utilities
Company for the year 1996.
Exhibit C Not applicable
Exhibit D Statement showing sales and purchases of electric
energy for the calendar year 1996 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, 1996
(in thousands of dollars)
ASSETS
UTILITY PLANT
Original Cost of Plant in Service $ 2,482,812
Construction Work in Progress 63,435
Total 2,546,247
Less: Reserves for Depreciation 1,067,911
Total 1,478,336
INVESTMENTS AND FUNDS (1)
Ohio Valley Electric Corporation 250
Property Not Used in Operations,
less Accumulated Depreciation 2,813
Investment in Associated Companies
Electric Energy, Inc. 2,121
Lexington Utilities Co. 1
Other Investments 394
Special Funds 6,971
12,550
CURRENT ASSETS
Cash and Cash Equivalents 5,719
Accounts Receivable Less Reserve of $520 50,481
Receivables from Associated Companies 101
Fuel, Principally Coal, at Average Cost 30,895
Materials and Supplies, at Average Cost 21,656
Prepaid Expense and Other 7,486
Accrued Utility Revenues 24,239
140,577
DEFERRED DEBITS 41,592
$ 1,673,055
(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, 1996
(in thousands of dollars)
LIABILITIES & EQUITY
CAPITALIZATION
Common Stock Equity
Common Stock $ 308,140
Retained Earnings 287,027
Unappropriated Undistributed
Subsidiary Earnings 825
Capital Stock Expense (595)
Total Common Stock Equity 595,397
Preferred Stock 40,000
Long-Term Debt 546,373
Total Capitalization 1,181,770
CURRENT LIABILITIES
Long-Term Debt Due Within One Year 21
Short-term Borrowings 54,200
Accounts Payable 28,960
Customers' Deposits 8,746
Accrued Taxes 5,383
Accrued Interest 8,048
Other 15,590
120,948
DEFERRED CREDITS AND OPERATING RESERVES
Investment Tax Credit, Being
Amortized Over Twenty-Five Years 30,167
Deferred Income Taxes 238,542
Regulatory Tax Liability 54,388
Other 47,240
370,337
$ 1,673,055
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EXHIBIT A-2
Page 1 of 1
KENTUCKY UTILITIES COMPANY
STATEMENT OF INCOME
AS OF DECEMBER 31, 1996
(in thousands of dollars)
ELECTRIC OPERATING REVENUES $ 711,711
OPERATING EXPENSES AND TAXES
Electric Power Purchased 62,490
Fuel, Materials, Labor, etc.,
Used in Operations 321,070
Maintenance of Utility Plant 64,161
Provision for Depreciation 80,424
Federal and State Income Taxes 51,452
Property and Other Taxes 14,777
Total Operating Expenses and Taxes 594,374
NET OPERATING INCOME 117,337
OTHER INCOME AND DEDUCTIONS
Allow. for Funds Used Dur. Const. 66
Interest and Other (Net) 5,941
Equity in Earnings of Subsidiary
Companies 2,436
GROSS INCOME 125,780
INTEREST CHARGES
Interest on Long-Term Debt 37,584
Other Interest Charges 2,104
Allowance for Borrowed Funds Used
During Construction (71)
Total Interest Charges 39,617
NET INCOME $ 86,163
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EXHIBIT A-3
Page 1 of 1
KENTUCKY UTILITIES COMPANY
STATEMENT OF SURPLUS
AS OF DECEMBER 31, 1996
(in thousands of dollars)
EARNED SURPLUS
Balance December 31, 1995 $ 268,992
Add:
Net Income for 1996 86,163
Less:
Dividends:
Preferred Stock 4 3/4% 950
Preferred Stock 6.53% 1,306
Common Stock 65,047
67,303
Balance December 31, 1996 $ 287,852
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EXHIBIT A-4
Page 1 of 2
ELECTRIC ENERGY, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1996
(in thousands of dollars)
ASSETS
UTILITY PLANT Unaudited
Utility Plant in Service $ 342,906
Construction Work in Progress 1,311
Total 344,217
Less: Accumulated Depreciation of Utility Plant 244,906
Total Utility Plant, Net 99,311
CURRENT ASSETS
Cash 79
Working Funds 293
Temporary Cash Investments 4,300
Receivables:
Accounts Receivable 13,551
Receivables from Associated Companies 12,345
Total Receivables 25,896
Fuel Inventory 7,531
Plant Materials and Supplies Inventory 4,630
Prepayments 221
Total Current Assets 42,950
OTHER ASSETS
Unamortized Debt Expense 591
Other Deferred Debits 17,494
Total Other Assets 18,085
Total Assets $ 160,346
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EXHIBIT A-4
Page 2 of 2
ELECTRIC ENERGY, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1996
(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 -
Accounts Payable 11,656
Accounts Payable to Sponsoring Companies 1,900
Accrued Interest 417
Dividends Payable 2,458
Accrued Taxes Other Than Income 8
Accrued Income Taxes -
Total Current Liabilities 16,439
OTHER LIABILITIES
Provision for Injuries and Damages 555
Postretirement Benefit Liability 1,057
Pension Liability 3,121
Deferred Taxes 340
Total Other Liabilities 5,073
Total Stockholders' Equity and Liabilities $ 160,346
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EXHIBIT A-5
Page 1 of 1
ELECTRIC ENERGY, INC.
YEAR ENDED DECEMBER 31, 1996
(in thousands of dollars)
STATEMENT OF INCOME AND SURPLUS
OPERATING INCOME Unaudited
Operating Revenues
Sales to Department of Energy $ 159,130
Sales to Other Electric Utilities 64,391
Other Electric Revenues 666
Total Operating Revenues 224,187
OPERATING EXPENSES
Purchased Power 61,387
Fuel 79,276
Operation 18,211
Maintenance 17,110
Depreciation 15,412
Income Taxes 7,690
Taxes Other Than Income Taxes 1,951
Total Operating Expenses 201,037
Income From Operations 23,150
OTHER (INCOME) AND EXPENSE
Interest Income (316)
Interest Expense 10,007
Other, (Net) 1,271
Total Other (Income) and Expense 10,962
Net Income $ 12,188
Retained Earnings Beginning of Year $ 2,634
Add: Net Income 12,188
Less: Dividends Declared 12,188
Retained Earnings End of Year $ 2,634
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EXHIBIT B
Page 1 of 1
KENTUCKY UTILITIES COMPANY
FINANCIAL DATA SCHEDULE
FOR THE YEAR ENDED DECEMBER 31, 1996
Item No. Description Amount
(in thousands)
1 Total Assets $1,673,055
2 Total Operating Revenues $ 711,711
3 Net Income $ 86,163
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EXHIBIT D
Page 1 of 1
SALES AND PURCHASES OF ELECTRIC ENERGY
CALENDAR YEAR 1996
Kentucky Electric
Utilities Co. Energy, Inc.
KWH Sold (at retail
or wholesale) 18,630,577,896 11,755,513,991
KWH Distributed at
retail outside of
state in which
organized 138,196 8,634,588,991 (a)
KWH Sold at wholesale
outside of state in
which organized or
at state line 1,537,312,000 (d) (b)
KWH Purchased outside
of state in which
organized or at
state line 69,105,000 (c)
(a) Represents energy sold to Paducah, Kentucky, Project of Energy
Research and Development Administration.
(b) In 1996 Electric Energy, Inc., sold to Kentucky Utilities Company
1,570,074,000 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 1,570,074,000 kilowatt-hours purchased from
Electric Energy, Inc., delivery of which was received in
Kentucky, as stated in footnote (b) above.
(d) Not including the 421,486,000 kilowatt-hours sold to Electric
Energy, Inc.
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