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.
On May 20, 1997, KU Energy, the parent company of the
Company, and LG&E Energy Corp. entered into an Agreement and Plan of
Merger as described in KU Energy's and the Company's Quarterly
Reports on Form 10-Q for the quarters ended June 30, 1997 and
September 30, 1997. LG&E Energy Corp. filed a Form U-1 (File
No. 70-09159) January 13, 1998.
The Company is a public utility engaged principally
in the producing, transmitting and selling electric energy. At
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December 31, 1997, the Company furnished electric service to about
441,200 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
municipality. The Company also supplied electric service to about
29,000 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, 1996,
and Form 10-Q's for the quarters ended March 31, 1997, June 30, 1997,
and September 30, 1997, 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
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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
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, 1997, EEI had outstanding long-term indebtedness of
$115,555,556.
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.
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(a) At December 31, 1997, 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:
<TABLE>
<CAPTION>
<C> <C> <C> <S> <S>
Nameplate Effective
Rating (KW) Capability (KW)
Steam: Ghent Ghent, Ky 2,226,060 1,997,000
Green River South Carrollton, Ky 263,636 239,000
E.W. Brown Burgin, Ky 739,534 717,000
Tyrone Tyrone, Ky 137,500 136,000
Pineville Four Mike, Ky 37,500 34,000
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 504,000 512,000
4,000,627 3,718,000
</TABLE>
At December 31, 1997, the Company also owned and operated
about 4,026 pole miles of transmission lines; 188 transmission
substations; 489 distribution substations; about 13,405 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,
1997, about 246 pole miles of electric transmission lines serving 15
transmission substations, 54 distribution substations and about 1,036
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
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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
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 44 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
Green River to Wilson 161 kv
Reference is made to the Company's Form 10-K for the
year ended December 31, 1996 and Form 10-Q's for the quarters ended
March 31, 1997, June 30, 1997, and September 30, 1997, 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
1997, the Company received dividends from EEI amounting to
$2,443,621.99.
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
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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 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, 1998.
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, 1997.
Exhibit A-2 Statement of Income of Kentucky Utilities Company
for the year 1997.
Exhibit A-3 Statement of Surplus of Kentucky Utilities
Company for the year 1997.
Exhibit A-4 Balance Sheet of Electric Energy, Inc., as of
December 31, 1997.
Exhibit A-5 Statement of Income and Surplus of Electric
Energy, Inc., for the year 1997.
Exhibit B Financial Data Schedule
Exhibit C Not applicable
Exhibit D Statement showing sales and purchases of electric
energy for the calendar year 1997 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, 1997
(in thousands of dollars)
ASSETS
UTILITY PLANT
Original Cost of Plant in Service $ 2,552,695
Construction Work in Progress 58,939
Total 2,611,634
Less: Reserves for Depreciation 1,128,282
Total 1,483,352
INVESTMENTS AND FUNDS (1)
Ohio Valley Electric Corporation 250
Property Not Used in Operations,
less Accumulated Depreciation 2,642
Investment in Associated Companies
Electric Energy, Inc. 2,157
Lexington Utilities Co. 1
Other Investments 551
Special Funds 7,207
12,808
CURRENT ASSETS
Cash and Cash Equivalents 5,453
Accounts Receivable Less Reserve of $520 44,652
Receivables from Associated Companies 204
Fuel, Principally Coal, at Average Cost 27,799
Materials and Supplies, at Average Cost 23,648
Prepaid Expense and Other 5,769
Accrued Utility Revenues 29,668
137,193
DEFERRED DEBITS 46,527
$ 1,679,880
(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, 1997
(in thousands of dollars)
LIABILITIES & EQUITY
CAPITALIZATION
Common Stock Equity
Common Stock $ 308,140
Retained Earnings 303,888
Unappropriated Undistributed
Subsidiary Earnings 862
Capital Stock Expense (595)
Total Common Stock Equity 612,295
Preferred Stock 40,000
Long-Term Debt 546,351
Total Capitalization 1,198,646
CURRENT LIABILITIES
Long-Term Debt Due Within One Year 21
Short-term Borrowings 33,600
Accounts Payable 33,386
Customers' Deposits 9,841
Accrued Taxes 7,473
Accrued Interest 8,283
Other 16,563
109,167
DEFERRED CREDITS AND OPERATING RESERVES
Investment Tax Credit, Being
Amortized Over Twenty-Five Years 26,131
Deferred Income Taxes 245,150
Regulatory Tax Liability 50,904
Other 49,882
372,067
$ 1,679,880
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EXHIBIT A-2
Page 1 of 1
KENTUCKY UTILITIES COMPANY
STATEMENT OF INCOME
AS OF DECEMBER 31, 1997
(in thousands of dollars)
ELECTRIC OPERATING REVENUES $ 716,437
OPERATING EXPENSES AND TAXES
Electric Power Purchased 72,542
Fuel, Materials, Labor, etc.,
Used in Operations 309,390
Maintenance of Utility Plant 64,990
Provision for Depreciation 84,111
Federal and State Income Taxes 51,690
Property and Other Taxes 15,306
Total Operating Expenses and Taxes 598,029
NET OPERATING INCOME 118,408
OTHER INCOME AND DEDUCTIONS
Allow. for Funds Used Dur. Const. 49
Interest and Other (Net) 4,474
Equity in Earnings of Subsidiary
Companies 2,480
GROSS INCOME 125,411
INTEREST CHARGES
Interest on Long-Term Debt 37,405
Other Interest Charges 2,324
Allowance for Borrowed Funds Used
During Construction (31)
Total Interest Charges 39,698
NET INCOME $ 85,713
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EXHIBIT A-3
Page 1 of 1
KENTUCKY UTILITIES COMPANY
STATEMENT OF SURPLUS
AS OF DECEMBER 31, 1997
(in thousands of dollars)
EARNED SURPLUS
Balance December 31, 1996 $ 287,852
Add:
Net Income for 1997 85,713
Less:
Dividends:
Preferred Stock 4-3/4% 950
Preferred Stock 6.53% 1,306
Common Stock 66,559
68,815
Balance December 31, 1997 $ 304,750
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EXHIBIT A-4
Page 1 of 2
ELECTRIC ENERGY, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1997
(in thousands of dollars)
ASSETS
UTILITY PLANT Unaudited
Utility Plant in Service $ 348,116
Construction Work in Progress 901
Total 349,017
Less: Accumulated Depreciation of Utility Plant 259,061
Total Utility Plant, Net 89,956
CURRENT ASSETS
Cash 97
Working Funds 280
Temporary Cash Investments 8,333
Receivables:
Accounts Receivable 21,519
Receivables from Associated Companies 4,934
Total Receivables 26,453
Fuel Inventory 4,662
Plant Materials and Supplies Inventory 4,449
Prepayments 613
Total Current Assets 44,887
OTHER ASSETS
Unamortized Debt Expense 525
Other Deferred Debits 14,866
Total Other Assets 15,391
Total Assets $ 150,234
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EXHIBIT A-4
Page 2 of 2
ELECTRIC ENERGY, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1997
(in thousands of dollars)
STOCKHOLDERS' EQUITY AND LIABILITIES
STOCKHOLDERS' EQUITY Unaudited
Common Stock $ 6,200
Retained Earnings 2,634
Total Stockholders' Equity 8,834
LONG-TERM DEBT 115,556
CURRENT LIABILITIES
Notes Payable, Bank -
Accounts Payable 16,185
Accounts Payable to Sponsoring Companies 1,119
Accrued Interest 371
Dividends Payable 2,669
Accrued Taxes Other Than Income -
Accrued Income Taxes 1,061
Total Current Liabilities 21,405
OTHER LIABILITIES
Provision for Injuries and Damages 841
Postretirement Benefit Liability -
Pension Liability 3,465
Deferred Taxes 133
Total Other Liabilities 4,439
Total Stockholders' Equity and Liabilities $ 150,234
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EXHIBIT A-5
Page 1 of 1
ELECTRIC ENERGY, INC.
YEAR ENDED DECEMBER 31, 1997
(in thousands of dollars)
STATEMENT OF INCOME AND SURPLUS
OPERATING INCOME Unaudited
Operating Revenues
Sales to Department of Energy $ 167,556
Sales to Other Electric Utilities 64,140
Other Electric Revenues 333
Total Operating Revenues 232,029
OPERATING EXPENSES
Purchased Power 71,152
Fuel 78,900
Operation 18,764
Maintenance 17,166
Depreciation 14,698
Income Taxes 8,609
Taxes Other Than Income Taxes 1,659
Total Operating Expenses 210,948
Income From Operations 21,081
OTHER (INCOME) AND EXPENSE
Interest Income (1,066)
Interest Expense 9,836
Other, (Net) (119)
Total Other (Income) and Expense 8,651
Net Income $ 12,430
Retained Earnings Beginning of Year $ 2,634
Add: Net Income 12,430
Less: Dividends Declared 12,430
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, 1997
Amount
Item No. Description (in thousands)
1 Total Assets 1,679,880
2 Total Operating Revenues 716,437
3 Net Income 85,713
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EXHIBIT D
Page 1 of 1
SALES AND PURCHASES OF ELECTRIC ENERGY
CALENDAR YEAR 1997
Kentucky Electric
Utilities Co. Energy, Inc.
KWH Sold (at retail
or wholesale) 18,625,368,930 12,435,808,864
KWH Distributed at
retail outside of
state in which
organized 810,360,209 9,181,151,864 (a)
KWH Sold at wholesale
outside of state in
which organized or
at state line 1,615,716,000 (d) (b)
KWH Purchased outside
of state in which
organized or at
state line 60,764,000 (c)
(a) Represents energy sold to Paducah, Kentucky, Project of Energy
Research and Development Administration.
(b) In 1997 Electric Energy, Inc., sold to Kentucky Utilities Company
1,598,130,000 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 1,598,130,000 kilowatt-hours purchased from
Electric Energy, Inc., delivery of which was received in
Kentucky, as stated in footnote (b) above.
(d) Not including the 26,611,000 kilowatt-hours sold to Electric
Energy, Inc.
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