We are currently in the development phase of the project. During this phase, we will seek an Air Permit from the Department for Air Quality to build a generation plant in Trimble County. We will also seek Certificates of Public Convenience and Necessity (CCN) from the Kentucky Public Service Commission (KPSC) for both the generation plant and the associated transmission lines. If we obtain these required approvals, we will begin obtaining right of way for the transmission lines later this year. We plan on beginning construction of the generation plant and transmission lines in the second quarter of 2006 if all approvals are granted.

In early April, KU notified the KPSC that it intends to seek a CCN in order to build the needed transmission lines. At this point, KU and LG&E have contacted property owners via mail and are hosting three public information sessions in order to provide more detailed information to property owners and members of the public. After these meetings are complete, KU and LG&E anticipate making the formal CCN application in May.

If approvals are obtained, construction of the plant and the transmission lines should be complete by fall 2009.

Electricity Power Flow analysis performed by the Midwest Independent System Operator (MISO) in conjunction with LG&E and KU determined that the proposed transmission upgrades are necessary to support and deliver the additional electricity that will be generated at Trimble County, as well as existing electricity capacity on the system.

Transmission corridors were identified and alternate routes were identified within these corridors. The routes were then compared looking at the impact on property (homes, churches, schools, businesses, cemeteries, etc.), natural environments, and cost and engineering factors. The route selected scored best when all those criteria were combined.

LG&E and KU have gone through an exhaustive process to determine the preferred route locations. The criteria for determining the route are briefly described in answer to the last question. The resulting routes are being submitted to the KPSC for approval in their current form.

The entire project will cost approximately $51.2 million. The project is planned to include one line from Franklin County to Woodford County, which we estimate will cost $4.5 million; a line from Jefferson County to Hardin County, which we estimate will cost $39.5 million; and a line from Trimble County across the Ohio River into Indiana, which we estimate will cost $7.2 million.

The construction of these facilities does not automatically or immediately affect the rates customers pay for electricity. Any rate increase would need to be approved by the Kentucky Public Service Commission.

Putting these lines underground would be extremely expensive in comparison to building the planned overhead lines and could compromise reliability. Underground construction would cost approximately six to ten times the average cost of overhead line construction.