8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):            April 18, 2007

Louisville Gas and Electric Company
(Exact name of registrant as specified in its charter)

Kentucky	1-2893	61-0264150
(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification No.)
incorporation)

220 West Main Street, P.O. Box 32010, Louisville, Kentucky	40232
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (502) 627-2000

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o        Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o        Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an off-balance sheet arrangement of a registrant.

(i)   On April 13, 2007, Louisville Gas and Electric Company (“LG&E” or the “Company”) completed financing transactions involving the issuance of $138 million in long-term indebtedness. The indebtedness is represented by (i) a $70 million, 30-year, unsecured loan from Fidelia Corporation (“Fidelia”), an indirect subsidiary of E.ON AG and an affiliate of KU, which will carry a 5.98% rate of interest and (ii) a $68 million, 24-year, unsecured loan from Fidelia, which will carry a 5.93% rate of interest.  The loan proceeds were used to fund the preferred stock redemption discussed below and to repay certain short-term loans which initially funded a pension contribution made by LG&E during the first quarter 2007.

As part of the transaction, LG&E entered into Loan Agreements with Fidelia, under which agreements the Company has agreed to repay the loans by making principal and semi-annual interest payments as and when due with respect to the indebtedness.

The Loan Agreements contain standard representations, covenants and events of default for arrangements of this type, including acceleration of indebtedness upon certain events of default. Events of default under the Loan Agreements or other transaction documents include a failure to punctually make payments associated with the loan when due; certain bankruptcy or insolvency-related conditions relating to the Company, and departure of the Company from the E.ON group.

(ii)  On April 16, 2007, LG&E and Fidelia amended the terms of two existing loan arrangements in place between the parties.  LG&E entered into an amended loan agreement and replacement notes with Fidelia relating to the following existing LG&E borrowings:  (i) $25 million loan due January 2012 and (ii) $100 million loan due April 2013.

The amended documents terminate a subordinated mortgage lien previously granted by LG&E to Fidelia as security for the existing loans.  The original maturity and interest rates and payment schedules of the loans were not changed.

Item 8.01.  Other Events.

On April 16, 2007, as previously announced, LG&E redeemed all outstanding shares of its three existing series of preferred stock for approximately $92 million.  LG&E paid redemption prices of $28 per share for the 5% Series Cumulative Preferred, $100 per share for the $5.875 Series Cumulative Preferred and $100 per share for the Auction Rate, Series A Cumulative Preferred.  The redemptions were pursuant to existing provisions applicable to each series.

Item 9.01  Financial Statements and Exhibits

Exhibits:

4.1.Loan Agreement and Promissory Note, each dated April 13, 2007, between LG&E and Fidelia.

2

4.2.Loan Agreement and Promissory Note, each dated April 13, 2007, between LG&E and Fidelia.

4.3Amendment, dated April 16, 2007, to Loan and Security Agreement, dated August 15, 2003 and two Amended and Restated Notes, each dated April 16, 2007, among LG&E and Fidelia.

3

SIGNATURES

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

	LOUISVILLE GAS AND ELECTRIC COMPANY
Dated:   April 18, 2007	BY:	/s/ S. Bradford Rives
		S. Bradford Rives
		Chief Financial Officer

4

EX-4.1

Exhibit 4.1

April 13, 2007

Louisville Gas and Electric Company
(as Borrower)

Fidelia Corporation
(as Lender)

LOAN AGREEMENT

Contents

Clause		Page
1.	DEFINITIONS	1
2.	TERM LOAN	2
3.	AVAILABILITY OF REQUESTS	2
4.	INTEREST	2
5.	REPAYMENT AND PREPAYMENT	3
6.	PAYMENTS	3
7.	TERMINATION EVENTS	4
8.	OPERATIONAL BREAKDOWN	4
9.	NOTICES	5
10.	ASSIGNMENT	5
11.	SEVERABILITY	5
12.	COUNTERPARTS	5
13.	LAW	6

THIS AGREEMENT made on April 13, 2007

Between

LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation, as borrower (the Borrower); and

FIDELIA CORPORATION, a Delaware corporation, as lender (the Lender).

Whereas

(A)          The Lender and the Borrower hereby enter into an agreement for the provision by the Lender to the Borrower of a loan in the amount of $68,000,000 (the Loan Amount).

Now it is hereby agreed as follows:

1.Definitions

1.1In this Agreement

Business Day means a day on which banks in New York are generally open

Default Interest Rate means: the rate, as determined by the Lender, applying to the principal element of an overdue amount under Clause 6.3, calculated as the sum of the interest rate in effect immediately before the due date of such amount, plus 1%;

Effective Date shall have the meaning given to it in Clause 2.1;

Final Repayment Date means April 13, 2031;

Interest Payment Date means April 13 and October 13 of each year during the term of this agreement, provided, that:

any Interest Payment Date which is not a Business Day shall be extended to the next succeeding Business Day;

Loan Amount means $68,000,000;

Maturity Date means the Final Repayment Date;

1

Request means a request for the Loan Amount from the Borrower to the Lender under the terms of clause 3.1;

Termination Event means an event specified as such in Clause 7;

Value Date means the date upon which cleared funds are made available to the Borrower by the Lender pursuant to a Request made in accordance with Clause 3.1. Such date shall be a Business Day as defined herein.

2.Term Loan

2.1This Agreement shall come into effect on April 13, 2007 (the “Effective Date”).

2.2The Lender grants to the Borrower upon the terms and conditions of this Agreement a term loan in an amount of $68,000,000.

2.3The new indebtedness shall be evidenced by a note in substantially the form of Exhibit “A” attached hereto.

3.Availability of Requests

3.1On the Effective Date, the Borrower will submit a request (the “Request”) to the Lender for the Loan Amount, such Request specifying the Value Date, the Maturity Date and the bank account to which payment is to be made. The Request shall be submitted to the Lender by the Borrower and delivered in accordance with Clause 9.3.

4.Interest

4.1The rate of interest on the Loan Amount is 5.93%.

4.2Interest shall accrue on the basis of a 360-day year consisting of twelve 30 day months upon the Loan Amount.

4.3Interest shall be payable in arrears on each Interest Payment Date.

2

5.Repayment and Prepayment

5.1The Borrower shall repay the Loan Amount together with all interest accrued thereon and all other amounts due from the Borrower hereunder on the Final Repayment Date, whereupon this Agreement shall be terminated.

5.2On any Interest Payment Date, and with at least three business day’s prior written notice, the Borrower shall be entitled to prepay any amount of the loan outstanding, provided such payment is not less than $1,000,000 and, provided further, the Borrower shall pay a prepayment charge equal to the present value of the difference between (i) the interest payable provided in this loan agreement and (ii) the interest payable at the prevailing interest rate at the time of prepayment, for the period from the date of prepayment through the Maturity Date, which difference, if negative, shall be deemed to be zero. The present value will be determined using the prevailing interest rate at the time of the prepayment as the discount rate.

5.3A certificate from the Lender as to the amount due at any time from the Borrower to the Lender under this Agreement shall, in the absence of manifest error, be conclusive.

6.Payments

6.1All payments of principal to be made to the Lender by the Borrower shall be made on the Final Repayment Date, or on an Interest Payment Date under Clause (5.2) to such account as the Lender shall have specified.

6.2Interest shall be payable in arrears on each Interest Payment Date.

6.3If and to the extent that full payment of any amount due hereunder is not made by the Borrower on the due date then, interest shall be charged at the Default Interest Rate on such overdue amount from the date of such default to the date payment is received by the Lender.

3

7.Termination Events

7.1The Borrower shall notify the Lender of any Event of Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of it.

7.2The following shall constitute an Event of Default hereunder:

7.2.1Default is made by the Borrower in the payment of any sum due under this Agreement and such default continues for a period of 10 Business Days;

7.2.2Bankruptcy proceedings are initiated against the Borrower;

7.2.3The Borrower leaves the E.ON Group (i.e. the companies consolidated in EON AG’s balance sheet);

7.2.4Securities and Exchange Commission or Public Utility Holding Company Act (PUHCA) requirements prohibit the transactions hereunder.

If a Termination Event occurs under Clause (7.2.2) of this section, the Loan Amount outstanding together with interest will become due and payable immediately.

If a Termination Event occurs according to Clauses (7.2.1) or (7.2.3) or (7.2.4) of this Section, Lender shall at its discretion grant Borrower a reasonable grace period unless such grace period shall be detrimental to the Lender. If the Termination Event is uncured at the expiration of such period, the Loan Amount outstanding together with interest will become due and payable immediately.

8.Operational Breakdown

8.1The Borrower is not liable for any damages incurred by the Lender and the Lender is not liable for any damages incurred by the Borrower caused by Acts of God or other circumstances incurred by one party for which the other party cannot be held responsible (i.e. power outages, strikes, lock-outs, domestic and foreign acts of government and the like).

4

9.             Notices

9.1Each communication to be made in respect of this Agreement shall be made in writing but, unless otherwise stated, may be made by facsimile transmission or letter.

9.2Communications to the Borrower shall be addressed to: Louisville Gas and Electric Company., 220 W. Main St., Louisville, KY 40202, Attn: Treasurer fax# (502)627-4742 except for confirmations which should be sent to the attention of Mimi Kelly.

9.3Communications to the Lender shall be addressed to: Fidelia Corporation, 2751 Centerville Road, Suite 231, fax # (302) 006-9080, Attn: President

10.Assignment

10.1The Lender may at any time assign, novate or otherwise transfer all or any part of its rights and obligations under this Agreement to any affiliate of the Lender.

11.Severability

11.1If any of the provisions of this Agreement becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

12.Counterparts

12.1This Agreement may be executed in any number of counterparts that shall together constitute one Agreement. Any party may enter into an Agreement by signing any such counterpart.

5

13.Law

13.1This Agreement shall be governed by and construed for all purposes in accordance with the laws of Delaware.

IN WITNESS whereof the parties have executed this Agreement the day and year first above written.

SIGNED by		/s/ Daniel K. Arbough	)
for and on behalf of			)
Louisville Gas & Electric Co.			)
in the presence of:			)
SIGNED by	/s/ Udo Koch		)
Udo Koch, President			)
Fidelia Corporation			)
SIGNED by ________________			)

6

PROMISSORY NOTE

U.S. $68,000,000 Louisville, Kentucky, April 13, 2007

Louisville Gas & Electric Company, for value received, hereby promises to pay to the order of FIDELIA Corporation (“FIDELIA”), in lawful money of the United States of America (in freely transferable U.S. dollars and in same day funds), in accordance with the method of payment specified in that certain Louisville Gas & Electric Company loan Agreement dated as of April 13, 2007, between FIDELIA and Louisville Gas & Electric Company (“the Agreement”), the principal sum of $68,000,000, which amount shall be payable at such times as provided in the Agreement.

Louisville Gas & Electric Company promises also to pay interest on the unpaid principal amount hereof in like money and in like manner at the rates which shall be determined in accordance with the provisions of the Agreement, said interest to be payable at the time provided for in the Agreement. This Note is referred to in the Agreement and is entitled to the benefits thereof and the security contemplated thereby. This Note evidences a loan made by FIDELIA, during such time as such loan is being maintained. This Note is subject to prepayment as specified in the Agreement. In case Louisville Gas & Electric Company defaults on the loan, the principal and accrued interest on this Note may be declared to be due and payable in the manner and with the effect provided in the Agreement.

Louisville Gas & Electric Company hereby waives presentment, demand, protest or notice of any kind in connection with this Note.

This Note shall be governed and construed and interpreted in accordance with the laws of the State of Delaware.

Louisville Gas & Electric Company
By:	/s/ Daniel K. Arbough
	Daniel K. Arbough
	Director of Corporate Finance & Treasurer

EX-4.2

Exhibit 4.2

April 13, 2007

Louisville Gas and Electric Company
(as Borrower)

Fidelia Corporation
(as Lender)

LOAN AGREEMENT

Contents

Clause		Page
1.	DEFINITIONS	1
2.	TERM LOAN	2
3.	AVAILABILITY OF REQUESTS	2
4.	INTEREST	2
5.	REPAYMENT AND PREPAYMENT	3
6.	PAYMENTS	3
7.	TERMINATION EVENTS	4
8.	OPERATIONAL BREAKDOWN	4
9.	NOTICES	5
10.	ASSIGNMENT	5
11.	SEVERABILITY	5
12.	COUNTERPARTS	5
13.	LAW	6

THIS AGREEMENT made on April 13, 2007

Between

LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation, as borrower (the Borrower); and

FIDELIA CORPORATION, a Delaware corporation, as lender (the Lender).

Whereas

(A)          The Lender and the Borrower hereby enter into an agreement for the provision by the Lender to the Borrower of a loan in the amount of $70,000,000 (the Loan Amount).

Now it is hereby agreed as follows:

1.Definitions

1.1In this Agreement

Business Day means a day on which banks in New York are generally open

Default Interest Rate means: the rate, as determined by the Lender, applying to the principal element of an overdue amount under Clause 6.3, calculated as the sum of the interest rate in effect immediately before the due date of such amount, plus 1%;

Effective Date shall have the meaning given to it in Clause 2.1;

Final Repayment Date means April 13, 2037;

Interest Payment Date means April 13 and October 13 of each year during the term of this agreement, provided, that:

any Interest Payment Date which is not a Business Day shall be extended to the next succeeding Business Day;

Loan Amount means $70,000,000;

Maturity Date means the Final Repayment Date;

1

Request means a request for the Loan Amount from the Borrower to the Lender under the terms of clause 3.1;

Termination Event means an event specified as such in Clause 7;

Value Date means the date upon which cleared funds are made available to the Borrower by the Lender pursuant to a Request made in accordance with Clause 3.1. Such date shall be a Business Day as defined herein.

2.Term Loan

2.1           This Agreement shall come into effect on April 13, 2007 (the “Effective Date”).

2.2The Lender grants to the Borrower upon the terms and conditions of this Agreement a term loan in an amount of $70,000,000.

2.3           The new indebtedness shall be evidenced by a note in substantially the form of Exhibit “A” attached hereto.

3.Availability of Requests

3.1On the Effective Date, the Borrower will submit a request (the “Request”) to the Lender for the Loan Amount, such Request specifying the Value Date, the Maturity Date and the bank account to which payment is to be made. The Request shall be submitted to the Lender by the Borrower and delivered in accordance with Clause 9.3.

4.Interest

4.1           The rate of interest on the Loan Amount is 5.98%.

4.2           Interest shall accrue on the basis of a 360-day year consisting of twelve 30 day months upon the Loan Amount.

4.3           Interest shall be payable in arrears on each Interest Payment Date.

2

5.Repayment and Prepayment

5.1The Borrower shall repay the Loan Amount together with all interest accrued thereon and all other amounts due from the Borrower hereunder on the Final Repayment Date, whereupon this Agreement shall be terminated.

5.2On any Interest Payment Date, and with at least three business day’s prior written notice, the Borrower shall be entitled to prepay any amount of the loan outstanding, provided such payment is not less than $1,000,000 and, provided further, the Borrower shall pay a prepayment charge equal to the present value of the difference between (i) the interest payable provided in this loan agreement and (ii) the interest payable at the prevailing interest rate at the time of prepayment, for the period from the date of prepayment through the Maturity Date, which difference, if negative, shall be deemed to be zero. The present value will be determined using the prevailing interest rate at the time of the prepayment as the discount rate.

5.3A certificate from the Lender as to the amount due at any time from the Borrower to the Lender under this Agreement shall, in the absence of manifest error, be conclusive.

6.Payments

6.1All payments of principal to be made to the Lender by the Borrower shall be made on the Final Repayment Date, or on an Interest Payment Date under Clause (5.2) to such account as the Lender shall have specified.

6.2Interest shall be payable in arrears on each Interest Payment Date.

6.3If and to the extent that full payment of any amount due hereunder is not made by the Borrower on the due date then, interest shall be charged at the Default Interest Rate on such overdue amount from the date of such default to the date payment is received by the Lender.

3

7.             Termination Events

7.1The Borrower shall notify the Lender of any Event of Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of it.

7.2           The following shall constitute an Event of Default hereunder:

7.2.1Default is made by the Borrower in the payment of any sum due under this Agreement and such default continues for a period of 10 Business Days;

7.2.2Bankruptcy proceedings are initiated against the Borrower;

7.2.3The Borrower leaves the E.ON Group (i.e. the companies consolidated in EON AG’s balance sheet);

7.2.4Securities and Exchange Commission or Public Utility Holding Company Act (PUHCA) requirements prohibit the transactions hereunder.

If a Termination Event occurs under Clause (7.2.2) of this section, the Loan Amount outstanding together with interest will become due and payable immediately.

If a Termination Event occurs according to Clauses (7.2.1) or (7.2.3) or (7.2.4) of this Section, Lender shall at its discretion grant Borrower a reasonable grace period unless such grace period shall be detrimental to the Lender. If the Termination Event is uncured at the expiration of such period, the Loan Amount outstanding together with interest will become due and payable immediately.

8.             Operational Breakdown

8.1The Borrower is not liable for any damages incurred by the Lender and the Lender is not liable for any damages incurred by the Borrower caused by Acts of God or other circumstances incurred by one party for which the other party cannot be held responsible (i.e. power outages, strikes, lock-outs, domestic and foreign acts of government and the like).

4

9.             Notices

9.1Each communication to be made in respect of this Agreement shall be made in writing but, unless otherwise stated, may be made by facsimile transmission or letter.

9.2Communications to the Borrower shall be addressed to: Louisville Gas and Electric Company., 220 W. Main St., Louisville, KY 40202, Attn: Treasurer fax# (502)627-4742 except for confirmations which should be sent to the attention of Mimi Kelly.

9.3Communications to the Lender shall be addressed to: Fidelia Corporation, 2751 Centerville Road, Suite 231, fax # (302) 006-9080, Attn: President

10.          Assignment

10.1The Lender may at any time assign, novate or otherwise transfer all or any part of its rights and obligations under this Agreement to any affiliate of the Lender.

11.          Severability

11.1If any of the provisions of this Agreement becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

12.          Counterparts

12.1This Agreement may be executed in any number of counterparts that shall together constitute one Agreement. Any party may enter into an Agreement by signing any such counterpart.

5

13.          Law

13.1This Agreement shall be governed by and construed for all purposes in accordance with the laws of Delaware.

IN WITNESS whereof the parties have executed this Agreement the day and year first above written.

SIGNED by	/s/ Daniel K. Arbough		)
for and on behalf of			)
Louisville Gas & Electric Co.			)
in the presence of:			)
SIGNED by		/s/ Udo Koch	)
Udo Koch, President			)
Fidelia Corporation			)
SIGNED by _________________			)

6

PROMISSORY NOTE

U.S. $70,000,000 Louisville, Kentucky, April 13, 2007

Louisville Gas & Electric Company, for value received, hereby promises to pay to the order of FIDELIA Corporation (“FIDELIA”), in lawful money of the United States of America (in freely transferable U.S. dollars and in same day funds), in accordance with the method of payment specified in that certain Louisville Gas & Electric Company loan Agreement dated as of April 13, 2007, between FIDELIA and Louisville Gas & Electric Company (“the Agreement”), the principal sum of $70,000,000, which amount shall be payable at such times as provided in the Agreement.

Louisville Gas & Electric Company promises also to pay interest on the unpaid principal amount hereof in like money and in like manner at the rates which shall be determined in accordance with the provisions of the Agreement, said interest to be payable at the time provided for in the Agreement. This Note is referred to in the Agreement and is entitled to the benefits thereof and the security contemplated thereby. This Note evidences a loan made by FIDELIA, during such time as such loan is being maintained. This Note is subject to prepayment as specified in the Agreement. In case Louisville Gas & Electric Company defaults on the loan, the principal and accrued interest on this Note may be declared to be due and payable in the manner and with the effect provided in the Agreement.

Louisville Gas & Electric Company hereby waives presentment, demand, protest or notice of any kind in connection with this Note.

This Note shall be governed and construed and interpreted in accordance with the laws of the State of Delaware.

Louisville Gas & Electric Company
By:	/s/ Daniel K. Arbough
	Daniel K. Arbough
	Director of Corporate Finance & Treasurer

EX-4.3

Exhibit 4.3

Amendment
to
Loan and Security Agreement
between
Louisville Gas & Electric Company
and
Fidelia Corporation

This Amendment (the “Amendment”) to that certain Loan and Security Agreement dated as of August 15, 2003 between Louisville Gas & Electric Company (the “Borrower”) and Fidelia Corporation (the “Lender”) is entered into as of April 16, 2007.

WHEREAS, Borrower and Lender entered a Loan and Security Agreement dated as of August 15, 2003 (as modified and amended, the “Loan and Security Agreement”) pursuant to which Lender agreed to make term loans available to Borrower;

WHEREAS, in order to induce the Lender to make such term loans available, the Borrower agreed to secure its obligations to Lender by granting the Lender a security interest in, and lien upon, the Collateral (as defined in the Loan and Security Agreement);

WHEREAS, pursuant to such Loan and Security Agreement, Borrower has two Loans outstanding — one in the amount of $100,000,000 due August 15, 2013, and evidenced by a promissory note dated August 15, 2003 and one in the amount of $25,000,000 due January 16, 2012 and evidenced by a promissory note dated January 15, 2004 (collectively, the “Promissory Notes”);

WHEREAS, Lender and Borrower have determined that it is no longer necessary or advisable for the existing and future Loans under the Loan and Security Agreement to be secured by the Collateral; and

WHEREAS, the parties desire to amend the Loan and Security Agreement and the Promissory Notes to reflect that the Loans will be unsecured.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained in this Amendment, the Borrower and the Lender agree as follows:

1.             Definitions. All capitalized terms used herein shall have the same meaning given to them in the Loan and Security Agreement, unless otherwise defined herein.

2.             Issuance of Amended and Restated Notes; Cancellation of Prior Notes; Release of Security Interest. In connection with this Amendment, the Borrower shall issue to the Lender Amended and Restated Notes duly executed by the Borrower in the form attached hereto as Exhibit B for each of the existing Promissory Notes. Concurrent with receipt thereof, the Lender shall deliver such existing Promissory Notes to Borrower marked “Cancelled. Replaced with “Amended and Restated Note.” The Lender’s security interest and other liens in, on and to the Collateral shall be, and hereby is, terminated and released and Lender shall, and hereby does, reassign and redeliver (or cause to be reassigned and redelivered) to the Borrower, or to such Person as the Borrower designates such of the Collateral (if any) assigned by the Borrower to the

Lender (or otherwise held by the Lender) as has not been sold or otherwise applied by the Lender under the terms of the Loan and Security Agreement and still held by it thereunder, together with appropriate instruments of reassignment and release, including UCC termination statements. For avoidance of doubt, the use of the term “Loan and Security Agreement” shall not be construed so as to evidence any continuing or future security interest or lien in the Collateral.

3.             Amendment of Section 1.1. (a) Section 1.1 of the Loan and Security Agreement is hereby amended by deleting the following definitions:

“Bond Trustee”

“Code”

“Collateral”

“Equipment”

“First Mortgage Indenture”

“Lien”

“Permitted Lien”

(b) Section 1.1 of the Loan and Security Agreement is hereby amended by deleting the definition of “Agreement” in its entirety and replacing it with the following:

“Agreement” means that certain Loan and Security Agreement dated as of August 15, 2003 between Louisville Gas & Electric Company and Fidelia Corporation, as the same may be amended, modified or restated from time to time.

4.             Amendment of Section 1.3. Section 1.3 of the Loan and Security Agreement is hereby deleted in its entirety and shall be replaced with the following:

1.3           Intentionally omitted.

5.             Amendment of Section 2.7. Section 2.7 of the Loan and Security Agreement is hereby amended by deleting the phrase, “and the Lender is entitled to retain its security interest in and to all existing and future Collateral” in the second sentence thereof.

6.             Amendment of Section 3.1. Section 3.1 of the Loan and Security Agreement is hereby deleted in its entirety and shall be replaced with the following:

“3.1         Documents. The Lender has received all of the following (or the delivery of such has been waived), each duly executed, in form and substance satisfactory to the Lender, and delivered on or prior to the applicable Borrowing Date:

(i)This Agreement, duly executed by the Borrower.

(ii)The Note, evidencing such Loan, duly executed by the Borrower.

2

(iii)Certified copies of all documents evidencing any necessary corporate action, consents and governmental approvals, if any, with respect to this Agreement and the Notes.

(iv)A signature authorization certificate for the Borrower.

(v)Such other documents as the Lender may reasonably request.”

7.             Amendment of Article 4. Article 4 “Collateral” of the Loan and Security Agreement is hereby deleted in its entirety and shall be replaced with the following:

“4.           Intentionally omitted.”

8.             Amendment of Section 5.2. Section 5.2 of the Loan and Security Agreement is hereby deleted in its entirety and shall be replaced with the following:

“5.2         Authority. The execution and delivery by the Borrower of this Agreement and the Notes and the performance of the Borrower’s obligations under this Agreement and the Notes: (i) are within the Borrower’s corporate powers; (ii) are duly authorized by the Borrower’s board of directors or other governing body; (iii) are not in contravention of the terms of the Borrower’s certificate of incorporation or bylaws or of any material indenture, agreement or undertaking to which the Borrower is a party or by which the Borrower or any of its property is bound; (iv) does not require any consent, registration or approval of any Governmental Authority, which has not been obtained; (v) does not contravene any material contractual or governmental restriction binding upon the Borrower; and (vi) will not result in the imposition of any lien, claim or encumbrance upon any property of the Borrower under any existing material indenture, mortgage, deed of trust, loan or credit agreement or other material agreement or instrument to which the Borrower is a party or by which it or its property may be bound or affected.”

9.             Amendment of Section 5.5. Section 5.5 of the Loan and Security Agreement is hereby deleted in its entirety and shall be replaced with the following:

“5.5         Intentionally omitted.”

10.           Amendment of Section 6.1. Section 6.1 of the Loan and Security Agreement is hereby amended by deleting clause (A) in its entirety and replacing clause (A) with the following:

“(A)        Intentionally omitted.”

11.           Amendment of Section 6.2. Section 6.2 of the Loan and Security Agreement is hereby deleted in its entirety and shall be replaced with the following:

“6.2         Intentionally omitted.”

12.           Amendment of Article 7. Article 7 of the Loan and Security Agreement is hereby amended by deleting Sections 7.1, 7.2, 7.3 and 7.4 in their entirety and replacing them with the following:

3

“7.           EVENTS OF DEFAULT

7.1           Events of Default. The following events shall constitute events of default (“Events of Default”):

(A)          Default is made by the Borrower in the payment of any sum due under this Agreement and such default continues for a period of 10 Business Days;

(B)           Bankruptcy proceedings are initiated against the Borrower; or

(C)           The Borrower leaves the E.ON Group (i.e., the companies consolidated in E.ON AG’s balance sheet);

If an Event of Default occurs under clause (B) of this Section 7.1, the Loans will become immediately due and payable.

If an Event of Default occurs under clause (A) or (C) of this Section 7.1, Lender shall at its discretion grant Borrower a reasonable grace period unless such grace period shall be detrimental to the Lender. If the Event of Default is uncured at the expiration of such period, the Loans outstanding together with interest will become due and payable immediately.

7.2          Rights and Remedies Generally. Upon the occurrence and continuance of an Event of Default, the Lender has all rights and remedies contained in this Agreement and under applicable laws, all of which rights and remedies are cumulative, and none exclusive, to the extent permitted by law. Any single or partial exercise by the Lender of any right or remedy for a default or breach of any term covenant, condition or agreement in this Agreement does not affect its rights and does not waive, alter, affect or prejudice any other right or remedy to which the Lender may be lawfully entitled for the same default or breach.

7.3          Waiver of Demand. Demand, presentment, protest and notice of nonpayment are waived by the Borrower.

7.4          Payments Set Aside. To the extent that the Borrower makes a payment or payments to the Lender and such payment or payments or any part thereof are substantially invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under the bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied will be revived and continue in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.”

13.           Amendment of Article 8. Article 8 “Subordination” of the Loan and Security Agreement is hereby deleted in its entirety and shall be replaced with the following:

“8.           Intentionally omitted.”

14.           Amendment to Form of Note. Exhibit A, Form of Note, is hereby deleted in its entirety and replaced with the new Exhibit A attached hereto.

4

15.           Conditions to Effectiveness. The amendments to the Loan and Security Agreement set forth above shall become effective upon (i) the execution of this Amendment by the Borrower and the Lender and (ii) delivery of Amended and Restated Notes duly executed by the Borrower in the form attached hereto as Exhibit B for each of the existing Promissory Notes.

16.           Continuing Force and Effect of Loan and Security Agreement. Except as specifically modified or amended by the terms of this Amendment, all other terms and provisions of the Loan and Security Agreement are incorporated by reference herein, and in all respects, shall continue in full force and effect. The Borrower, by execution of this Amendment, hereby reaffirms, assumes and binds itself to all of the obligations, duties, rights, covenants, terms and conditions that are contained in the Loan and Security Agreement.

17.           Miscellaneous.

(a)           Choice of Law.      THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH THE INTERNAL LAWS OF THE SATE OF DELAWARE.

(b)           Successors and Assigns. This Amendment shall be binding upon the Borrower and the Lender and their respective successors and assigns, and shall inure to the benefit of the Borrower and the Lender and their respective successors and assigns.

(c)           Counterparts. This Amendment may be executed in any number of counterparts, all of which shall constitute one and the same agreement.

(d)           Further Assurances. From time to time, the parties hereto agree to execute and deliver all such documents and instruments and take or cause to be taken, all such further actions, as may reasonably be necessary or desirable to consummate the transactions contemplated by this Amendment.

[Signature Page to Follow].

5

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

LOUISVILLE GAS & ELECTRIC COMPANY
Address:			220 West Main St.
			Louisville, Kentucky 40507
			Attn: Treasurer
Facsimile:			502-627-4742
By:	/s/ Daniel K. Arbough
Name:	Daniel K. Arbough
Title:	Treasurer
FIDELIA CORPORATION
Address:		300 Delaware Avenue
		Wilmington, Delaware 19801
		Attn: Executive Vice President
Facsimile:		302-417-5913
By:	/s/ Udo Koch
Name:	Udo Koch
Title:	President

6

EXHIBIT A

FORM OF NOTE

NOTE

$ Date

FOR VALUE RECEIVED, on (“Maturity Date”) the undersigned, LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation (the “Borrower”), unconditionally promises to pay to FIDELIA CORPORATION (the “Lender”), at the Lender’s office at 300 Delaware Avenue, Wilmington, Delaware 19801, or at such other place as the holder of this Note may from time to time designate in writing, in lawful money of the United States of America and immediately available funds, the principal sum of $. This Note is referred to in and was executed and delivered under the Loan and Security Agreement dated as of August 15, 2003, as amended by the Amendment to Loan and Security Agreement dated as of April , 2007 (as amended, modified or restated from time to time, the “Loan Agreement”) between the Borrower and the Lender, to which reference is made for a more complete statement of the terms and conditions under which the loan evidenced by this Note was made and is to be repaid. Capitalized terms used in this Note and not otherwise defined have the meanings assigned to such terms in the Loan Agreement.

Unless otherwise paid sooner under the provisions of Section 2.6(c) or 7.1 of the Loan Agreement, the principal indebtedness represented by this Note is payable on the Maturity Date. The Borrower further promises to pay interest on the outstanding principal amount of the indebtedness represented by this Note from the date of this Note until payment in full at the applicable rates determined in accordance with Section 2.3(A) of the Loan Agreement. Except as otherwise provided in the Loan Agreement, interest is payable quarterly in arrears not later than the last Business Day of each calendar quarter and is computed on the basis of a 360-day year consisting of twelve 30-day months.

If payment under this Note becomes due and payable on a day that is not a Business Day, the due date of such payment is extended to the next succeeding Business Day. In no contingency or event whatsoever will interest charged under this Note, however such interest may be characterized or computed, exceed the highest rate permissible under any law which a court of competent jurisdiction, in a final determination, deems applicable to this Note. In the event that such a court determines that the Lender has received interest under this Note in excess of the highest rate applicable to this Note, any such excess interest collected by the Lender is deemed to have been a repayment of principal and be so applied.

This Note is subject to prepayment at the option of the Borrower as provided in the Loan Agreement.

DEMAND, PRESENTMENT, PROTEST AND NOTICE OF NONPAYMENT AND PROTEST ARE WAIVED BY THE BORROWER.

This Note has been delivered and is deemed to have been made, at Wilmington, Delaware and will be interpreted in accordance with the internal law as (as opposed to conflicts of law provisions) and decisions of the State of Delaware. Whenever possible each provision of this Note will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note is prohibited by or invalid under applicable law, such provision will be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. Whenever in this Note reference is made to the Lender or the Borrower, such reference is deemed to include, as applicable, a reference to their respective successors and assigns. The provisions of this Note are binding upon and inure to the benefit of said successors and assigns. The Borrower’s successors and assigns include, without limitation, a receiver, trustee or debtor-in-possession of or for the Borrower.

LOUISVILLE GAS AND ELECTRIC COMPANY

By:

Title:

8

EXHIBIT B

FORM OF AMENDED AND RESTATED NOTE

AMENDED AND RESTATED NOTE

$ Date

FOR VALUE RECEIVED, on (“Maturity Date”) the undersigned, LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation (the “Borrower”), unconditionally promises to pay to FIDELIA CORPORATION (the “Lender”), at the Lender’s office at 300 Delaware Avenue, Wilmington, Delaware 19801, or at such other place as the holder of this Note may from time to time designate in writing, in lawful money of the United States of America and immediately available funds, the principal sum of $. This Note is referred to in and was executed and delivered under the Loan and Security Agreement dated as of August 15, 2003, as amended by the Amendment to Loan and Security Agreement dated as of April , 2007 (as amended, modified or restated from time to time, the “Loan Agreement”) between the Borrower and the Lender, to which reference is made for a more complete statement of the terms and conditions under which the loan evidenced by this Note was made and is to be repaid. Capitalized terms used in this Note and not otherwise defined have the meanings assigned to such terms in the Loan Agreement.

Unless otherwise paid sooner under the provisions of Section 2.6(c) or 7.1 of the Loan Agreement, the principal indebtedness represented by this Note is payable on the Maturity Date. The Borrower further promises to pay interest on the outstanding principal amount of the indebtedness represented by this Note from the date of this Note until payment in full at the applicable rates determined in accordance with Section 2.3(A) of the Loan Agreement. Except as otherwise provided in the Loan Agreement, interest is payable quarterly in arrears not later than the last Business Day of each calendar quarter and is computed on the basis of a 360-day year consisting of twelve 30-day months.

If payment under this Note becomes due and payable on a day that is not a Business Day, the due date of such payment is extended to the next succeeding Business Day. In no contingency or event whatsoever will interest charged under this Note, however such interest may be characterized or computed, exceed the highest rate permissible under any law which a court of competent jurisdiction, in a final determination, deems applicable to this Note. In the event that such a court determines that the Lender has received interest under this Note in excess of the highest rate applicable to this Note, any such excess interest collected by the Lender is deemed to have been a repayment of principal and be so applied.

This Note is subject to prepayment at the option of the Borrower as provided in the Loan Agreement.

DEMAND, PRESENTMENT, PROTEST AND NOTICE OF NONPAYMENT AND PROTEST ARE WAIVED BY THE BORROWER.

This Note amends and restates the Note dated as of [] (the “Existing Note”) made by the Borrower in favor of the Lender in the original principal amount of $[]. Execution and delivery of this Note and any document executed pursuant hereto are not intended and should not be construed (i) to deem to have repaid or otherwise discharged any amount of principal of or interest on the Existing Note, or (ii) to effect a novation or otherwise to release the obligation of the undersigned under or extinguish the debt evidenced by the Existing Note.

This Note has been delivered and is deemed to have been made, at Wilmington, Delaware and will be interpreted in accordance with the internal law as (as opposed to conflicts of law provisions) and decisions of the State of Delaware. Whenever possible each provision of this Note will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note is prohibited by or invalid under applicable law, such provision will be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. Whenever in this Note reference is made to the Lender or the Borrower, such reference is deemed to include, as applicable, a reference to their respective successors and assigns. The provisions of this Note are binding upon and inure to the benefit of said successors and assigns. The Borrower’s successors and assigns include, without limitation, a receiver, trustee or debtor-in-possession of or for the Borrower.

	LOUISVILLE GAS AND ELECTRIC COMPANY
'	By:
	Title:

10

AMENDED AND RESTATED NOTE

$25,000,000                                                                                                                                                         & #160;                  April 16, 2007

FOR VALUE RECEIVED, on January 16, 2012 (“Maturity Date”) the undersigned, LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation (the “Borrower”), unconditionally promises to pay to FIDELIA CORPORATION (the “Lender”), at the Lender’s office at 300 Delaware Avenue, Wilmington, Delaware 19801, or at such other place as the holder of this Note may from time to time designate in writing, in lawful money of the United States of America and immediately available funds, the principal sum of $25,000,000. This Note is referred to in and was executed and delivered under the Loan and Security Agreement dated as of August 15, 2003, as amended by the Amendment to Loan and Security Agreement dated as of April 16, 2007 (as amended, modified or restated from time to time, the “Loan Agreement”) between the Borrower and the Lender, to which reference is made for a more complete statement of the terms and conditions under which the loan evidenced by this Note was made and is to be repaid. Capitalized terms used in this Note and not otherwise defined have the meanings assigned to such terms in the Loan Agreement.

Unless otherwise paid sooner under the provisions of Section 2.6(c) or 7.1 of the Loan Agreement, the principal indebtedness represented by this Note is payable on the Maturity Date. The Borrower further promises to pay interest on the outstanding principal amount of the indebtedness represented by this Note from the date of this Note until payment in full at the applicable rates determined in accordance with Section 2.3(A) of the Loan Agreement. Except as otherwise provided in the Loan Agreement, interest is payable quarterly in arrears not later than the last Business Day of each calendar quarter and is computed on the basis of a 360-day year consisting of twelve 30-day months.

If payment under this Note becomes due and payable on a day that is not a Business Day, the due date of such payment is extended to the next succeeding Business Day. In no contingency or event whatsoever will interest charged under this Note, however such interest may be characterized or computed, exceed the highest rate permissible under any law which a court of competent jurisdiction, in a final determination, deems applicable to this Note. In the event that such a court determines that the Lender has received interest under this Note in excess of the highest rate applicable to this Note, any such excess interest collected by the Lender is deemed to have been a repayment of principal and be so applied.

This Note is subject to prepayment at the option of the Borrower as provided in the Loan Agreement.

DEMAND, PRESENTMENT, PROTEST AND NOTICE OF NONPAYMENT AND PROTEST ARE WAIVED BY THE BORROWER.

This Note amends and restates the Note dated as of January 15, 2004 (the “Existing Note”) made by the Borrower in favor of the Lender in the original principal amount of $25,000,000. Execution and delivery of this Note and any document executed pursuant hereto

are not intended and should not be construed (i) to deem to have repaid or otherwise discharged any amount of principal of or interest on the Existing Note, or (ii) to effect a novation or otherwise to release the obligation of the undersigned under or extinguish the debt evidenced by the Existing Note.

This Note has been delivered and is deemed to have been made, at Wilmington, Delaware and will be interpreted in accordance with the internal law as (as opposed to conflicts of law provisions) and decisions of the State of Delaware. Whenever possible each provision of this Note will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note is prohibited by or invalid under applicable law, such provision will be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. Whenever in this Note reference is made to the Lender or the Borrower, such reference is deemed to include, as applicable, a reference to their respective successors and assigns. The provisions of this Note are binding upon and inure to the benefit of said successors and assigns. The Borrower’s successors and assigns include, without limitation, a receiver, trustee or debtor-in-possession of or for the Borrower.

LOUISVILLE GAS AND ELECTRIC COMPANY
/s/ Daniel K. Arbough
By:	Daniel K. Arbough
Title:	Treasurer

AMENDED AND RESTATED NOTE

$100,000,000                                                                                                                                                        & #160;                 April 16, 2007

FOR VALUE RECEIVED, on August 15, 2013 (“Maturity Date”) the undersigned, LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation (the “Borrower”), unconditionally promises to pay to FIDELIA CORPORATION (the “Lender”), at the Lender’s office at 300 Delaware Avenue, Wilmington, Delaware 19801, or at such other place as the holder of this Note may from time to time designate in writing, in lawful money of the United States of America and immediately available funds, the principal sum of $100,000,000. This Note is referred to in and was executed and delivered under the Loan and Security Agreement dated as of August 15, 2003, as amended by the Amendment to Loan and Security Agreement dated as of April 16, 2007 (as amended, modified or restated from time to time, the “Loan Agreement”) between the Borrower and the Lender, to which reference is made for a more complete statement of the terms and conditions under which the loan evidenced by this Note was made and is to be repaid. Capitalized terms used in this Note and not otherwise defined have the meanings assigned to such terms in the Loan Agreement.

Unless otherwise paid sooner under the provisions of Section 2.6(c) or 7.1 of the Loan Agreement, the principal indebtedness represented by this Note is payable on the Maturity Date. The Borrower further promises to pay interest on the outstanding principal amount of the indebtedness represented by this Note from the date of this Note until payment in full at the applicable rates determined in accordance with Section 2.3(A) of the Loan Agreement. Except as otherwise provided in the Loan Agreement, interest is payable quarterly in arrears not later than the last Business Day of each calendar quarter and is computed on the basis of a 360-day year consisting of twelve 30-day months.

If payment under this Note becomes due and payable on a day that is not a Business Day, the due date of such payment is extended to the next succeeding Business Day. In no contingency or event whatsoever will interest charged under this Note, however such interest may be characterized or computed, exceed the highest rate permissible under any law which a court of competent jurisdiction, in a final determination, deems applicable to this Note. In the event that such a court determines that the Lender has received interest under this Note in excess of the highest rate applicable to this Note, any such excess interest collected by the Lender is deemed to have been a repayment of principal and be so applied.

This Note is subject to prepayment at the option of the Borrower as provided in the Loan Agreement.

DEMAND, PRESENTMENT, PROTEST AND NOTICE OF NONPAYMENT AND PROTEST ARE WAIVED BY THE BORROWER.

This Note amends and restates the Note dated as of August 15, 2003 (the “Existing Note”) made by the Borrower in favor of the Lender in the original principal amount of $100,000,000. Execution and delivery of this Note and any document executed pursuant hereto are not intended

and should not be construed (i) to deem to have repaid or otherwise discharged any amount of principal of or interest on the Existing Note, or (ii) to effect a novation or otherwise to release the obligation of the undersigned under or extinguish the debt evidenced by the Existing Note.

This Note has been delivered and is deemed to have been made, at Wilmington, Delaware and will be interpreted in accordance with the internal law as (as opposed to conflicts of law provisions) and decisions of the State of Delaware. Whenever possible each provision of this Note will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note is prohibited by or invalid under applicable law, such provision will be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. Whenever in this Note reference is made to the Lender or the Borrower, such reference is deemed to include, as applicable, a reference to their respective successors and assigns. The provisions of this Note are binding upon and inure to the benefit of said successors and assigns. The Borrower’s successors and assigns include, without limitation, a receiver, trustee or debtor-in-possession of or for the Borrower.

LOUISVILLE GAS AND ELECTRIC COMPANY
/s/ Daniel K. Arbough
By:	Daniel K. Arbough
Title:	Treasurer