EXHIBIT B-2.1
UTILITY SERVICE AGREEMENT
This Service Agreement (this "Agreement") is entered into as of the ___ day
of _______, by and between Kentucky Utilities Company ("KU/ODP"), a public
service company organized under Virginia and Kentucky law and doing business in
Virginia as "Old Dominion Power Company", Louisville Gas and Electric Company
("LG&E"), a public utility organized under Kentucky law; and LG&E Energy
Services, Inc., a Kentucky corporation ("LG&E Energy Services").
WHEREAS, LG&E Energy Services is a direct or indirect wholly owned
subsidiary of LG&E Energy Corp.;
WHEREAS, LG&E Energy Services has been formed for the purpose of providing
administrative, management and other services to subsidiaries and affiliates of
LG&E Energy Corp.;
WHEREAS, KU/ODP believes that it is in the interest of KU/ODP to provide
for an arrangement whereby KU/ODP may, from time to time and at the option of
KU/ODP, agree to purchase such administrative, management and other services
from LG&E Energy Services; and
WHEREAS, it is in the public interest for KU/ODP and LG&E to establish an
arrangement whereby KU/ODP and LG&E may from time to time and at their option,
agree to provide or receive services, construction or goods on an emergency
basis or otherwise to or from each other at cost less depreciation;
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. SERVICES. LG&E Energy Services supplies, or will supply, certain
administrative, management or other services to KU/ODP similar to those
supplied to other subsidiaries or affiliates of LG&E Energy Corp. Such
services are and will be provided to KU/ODP only at the request of KU/ODP.
Exhibit A hereto lists and describes all of the services that are available
from LG&E Energy Services.
2. PERSONNEL. LG&E Energy Services provides and will provide such services by
utilizing the services of their executives, accountants, financial advisers,
technical advisers, attorneys and other persons with the necessary
qualifications.
If necessary, LG&E Energy Services, after consultation with KU/ODP, may
also arrange for the services of nonaffiliated experts, consultants and
attorneys in connection with the performance of any of the services supplied
under this Agreement.
3. BREAK DOWN OR OTHER EMERGENCY. KU/ODP and LG&E may, from time to time,
provide or receive such services, construction, or goods to or from each other,
at
cost, as are reasonably required to meet a break down or other emergency, when
KU/ODP and LG&E believe in good faith that, under the conditions then existing,
such transaction will be to the advantage of KU/ODP and/or LG&E.
4. GOODS. KU/ODP and LG&E may, from time to time, provide or receive, at
not more than cost less depreciation, goods purchased by either KU/ODP or LG&E
for their own use.
5. COMPENSATION AND ALLOCATION. As and to the extent required by law,
LG&E Energy Services provides and will provide such services at fully allocated
cost. Exhibit A hereof contains rules for determining and allocating such
costs.
6. COMPLIANCE. All contracts, agreements, or arrangements of any kind,
hereafter required to be filed with and/or approved by the Securities and
Exchange Commission ("SEC") pursuant to the Public Utility Holding Company Act
of 1935, as subsequently amended, between Louisville Gas and Electric Company or
Kentucky Utilities Company, and any affiliate, associate, holding, mutual
service or subsidiary company, within the same holding company system, as these
terms are defined in 15 U.S.C. (S)79b as it presently exists or as subsequently
amended, shall contain and be conditioned upon the following without
modification or alteration:
Louisville Gas and Electric Company ("LG&E") and Kentucky
Utilities Company ("KU") will not seek to overturn, reverse, set
aside, change or enjoin, whether through appeal or the initiation
or maintenance of any action in any forum, a decision or order of
the Kentucky Public Service Commission, or the Virginia State
Corporation Commission which pertain to recovery, disallowance,
allowance, deferral or ratemaking treatment of any expense,
charge, cost or allocation incurred or accrued by LG&E or KU in
or as a result of a contract, agreement, arrangement, or
transaction with any affiliate, associate, holding, mutual
service or subsidiary company on the basis that such expense,
charge, cost or allocation: (1) has itself been filed with or
approved by the SEC or (2) was incurred pursuant to a contract,
agreement, or allocation method which was filed with or approved
by the SEC.
7. TERMINATION AND MODIFICATION. Any party to this Agreement may
terminate this Agreement by providing 60 days written notice of such termination
to the remaining parties.
This Agreement is subject to termination or modification at any time to the
extent its performance may conflict with the provisions of the Public Utility
Holding Company Act of 1935, as amended, or with any rule, regulation or order
of the Securities and Exchange Commission adopted before or after the making of
this Agreement. This Agreement shall be subject to the approval of any state
commission or other state regulatory body whose approval is, by the laws of said
state, a legal prerequisite to the execution and delivery or the performance of
this Agreement.
8. SERVICE REQUESTS. KU/ODP and LG&E Energy Services will prepare a
Service Request on or before ________________ of each year listing services to
be provided to
KU/ODP by LG&E Energy Services and any special arrangements related to the
provision of such services for the coming year, based on services provided
during the past year. KU/ODP and LG&E Energy Services may supplement the Service
Request during the year to reflect any additional or special services that
KU/ODP wishes to obtain from LG&E Energy Services, and the arrangements relating
thereto.
9. BILLING AND PAYMENT. Unless otherwise set forth in a Service Request,
payment for services provided by LG&E Energy Services shall be by making
remittance of the amount billed or by making appropriate accounting entries on
the books of KU/ODP and LG&E Energy Services. Billing will be made on a monthly
basis, with the xxxx to be rendered by the 25th of the month, and remittance or
accounting entries completed within 30 days of billing. Any amount remaining
unpaid after 30 days following receipt of the xxxx shall bear interest thereon
from the date of the xxxx at annual rate of A1/P1 30-day Commercial Paper.
10. NOTICE. Where written notice is required by this Agreement, all
notices, consents, certificates, or other communications hereunder shall be in
writing and shall be deemed given when mailed by United States registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
1. To KU/ODP:
______________________________
______________________________
2. To LG&E:
______________________________
______________________________
3. To LG&E Energy Services, Inc.:
______________________________
______________________________
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Kentucky, without regard to their
conflict of laws provisions.
12. MODIFICATION. No amendment, change or modification of this Agreement
shall be valid, unless made in writing and signed by all parties hereto.
13. ENTIRE AGREEMENT. This Agreement, together with its exhibits,
constitutes the entire understanding and agreement of the parties with respect
to its subject matter, and
effective upon the execution of this Agreement by the respective parties hereof
and thereto, any and all prior agreements, understandings or representations
with respect to this subject matter are hereby terminated and canceled in their
entirety and are of no further force and effect.
14. WAIVER. No waiver by any party hereto of a breach of any provision of
this Agreement shall constitute a waiver of any preceding or succeeding breach
of the same or any other provision hereof.
15. ASSIGNMENT. This Agreement shall inure to the benefit and shall be
binding upon the parties and their respective successors and assigns. No
assignment of this Agreement or any party's rights, interests or obligations
hereunder may be made without the other party's consent, which shall not be
unreasonably withheld, delayed or conditioned.
16. SEVERABILITY. If any provision or provisions of this Agreement shall
be held by a court of competent jurisdiction to be invalid, illegal, or
unenforceable, the validity, legality, and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of this _____ day of _____, 2000.
LG&E Energy Services, Inc.
By:_________________________________
Name:
Title:
Kentucky Utilities Company
By:_________________________________
Name:
Title:
Louisville Gas and Electric Company
By:_________________________________
Name:
Title:
Exhibit A
Description of Services and Allocation Factors
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Cost Assignment
LG&E Services' costs accumulated for each activity, project, programs, or
work order will be directly assigned, distributed or allocated as follows:
(i) Costs accumulated in an activity, project, program or work order for
services specifically performed for a single Client Entity will be
directly assigned and charged to such entity.
(ii) Costs accumulated in an activity, project, program or work order for
services specifically performed for two or more Client Entities will
be distributed among and charged to such Client Entities using
methods determined on a case-by-case basis consistent with the nature
of the work performed and based on one of the allocation methods
described below.
(iii) Costs accumulated in an activity, project, program or work order for
services of a general nature which are applicable to all Client
Entities or to a class or classes of Client Entities will be
allocated among and charged to such Client Entities by application of
one or more of the allocation methods described below.
Allocation Methods
The following methods will be applied, as indicated in the Description of
Services section that follows, to allocate costs for services of a general
nature.
1. Information Systems Chargeback Rates - Rates for services, including
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but not limited to software, consulting, mainframe and personal computer
services, are based on the costs of labor, materials and information services
overheads related to the provision of each service. Such rates are applied based
on the specific equipment employed and the measured usage of services by Client
entities. These rates will be determined annually based on actual experience and
may be adjusted for any known and reasonably quantifiable events, or at such
time as may be required due to significant changes.
2. Number of Customers Ratio - A ratio based on the number of retail
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electric and/or gas customers. This ratio will be determined annually based on
the actual number of customers at the end of the previous calendar year and may
be adjusted for any known and reasonably quantifiable events, or at such time as
may be required due to significant changes. In some cases, the ratio may be
calculated based on the type of customer class being served (i.e. Residential,
Commercial or Industrial).
3. Payroll Ratio - Based on the sum of the payroll at the end of each
-------------
month for the immediately preceding twelve consecutive calendar months, the
numerator of which is for an operating company or an affected affiliate company
and the denominator of which is for all operating companies and affected
affiliate companies. This ratio will be determined annually, or at such time as
may be required due to significant changes.
4. Three Factor Formula - This formula will be determined annually
--------------------
based on the average of gross property (original cost of plant in service,
excluding depreciation), payroll charges (salaries and wages, including
overtime, shift premium and holiday pay, but not including pension, benefit and
company-paid payroll taxes) and gross revenues during the previous calendar year
and may be adjusted for any known and reasonably quantifiable events, or at such
time as may be required due to significant changes.
5. Telecommunications Chargeback Rates - Rates for use of
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telecommunications services other than those encompassed by Information Systems
Chargeback Rates are based on the costs of labor, materials, outside services
and telecommunications overheads. Such rates are applied based on the specific
equipment employment and the measured usage of services by Client entities.
These rates will be determined annually based on actual experience and may be
adjusted for any known and reasonably quantifiable events, or at such time as
may be required due to significant changes.
6. Gas Sales Ratio - A ratio based on the actual number of MCF of
---------------
natural gas sold by the applicable gas distribution or marketing operations.
This ratio will be determined annually based on actual results of operations for
the previous calendar year and may be adjusted for any known and reasonably
quantifiable events, or at such time, based on results of operations for a
subsequent twelve-month period, as may be required due to significant changes.
7. Transmission Construction Expenditures Ratio - A ratio based on
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transmission construction or capital expenditures, net of reimbursements, for
the immediately preceding twelve consecutive calendar months. The numerator is
equal to such expenditures for a specific Client entity and the denominator is
equal to such expenditures for all applicable client entities. This ratio will
be determined annually, or at such time as may be required due to significant
change.
8. Distribution Construction Expenditures Ratio - A ratio based on
--------------------------------------------
distribution construction or capital expenditures, net of reimbursements, for
the immediately preceding twelve consecutive calendar months. The numerator is
equal to such expenditures for a specific Client entity and the denominator is
equal to such expenditures for all applicable Client entities. This ratio will
be determined annually, or at such time as may be required due to a significant
change.
9. Substation Construction Expenditures Ratio - A ratio based on
------------------------------------------
substation construction or capital expenditures, net of reimbursements, for the
immediately preceding twelve consecutive calendar months. The numerator is
equal to such expenditures for a specific Client entity and the denominator is
equal to such expenditures for all applicable Client entities. This ratio will
be determined annually, or at such time as may be required due to a significant
change.
10. Electric MWh Generation Ratio - A ratio based on the sum of
-----------------------------
electric MWh generated during each month for the immediately preceding twelve
consecutive calendar months. The numerator is equal to the electric MWh
generated by a specific Client entity and the denominator is equal to all
electric MWh generated by all applicable Client entities. This ratio will be
determined annually, or at such time as may be required due to significant
changes.
11. Electric Sales Ratio - Based on firm kilowatt-hour electric
--------------------
sales, excluding inter-system sales, for the immediate preceding twelve
consecutive calendar months, the numerator of which is for an operating company
or and affiliate and the denominator of which is for all operating companies and
affected affiliate companies. This ratio will be determined annually, or at
such time as may be required due to a significant change.
12. Transportation Ratio - Based on the actual usage of vehicles in
--------------------
the fleet for the immediately preceding twelve consecutive calendar months, the
numerator of which is for an operating company or an affiliate and the
denominator of which is for all operating companies and affected affiliate
companies. This ratio will be determined annually, or at such time as may be
required due to a significant change.
13. Number of Employees Ratio - A ratio based on the number of
-------------------------
employees benefiting from the performance of a service. This ratio will be
determined annually based on actual counts of applicable employees at the end of
the previous calendar year and may be adjusted for any known and reasonably
quantifiable events, or at such time as may be required due to significant
changes. In some cases, a two-step assignment methodology is utilized to
properly allocate SERVCO employee costs to the proper legal entity.
14. Departmental Charge Ratio - A specific SERVCO department ratio
-------------------------
based upon various factors such as labor hours, labor dollars, departmental or
Client entity headcount, etc. The departmental charge ratio typically applies to
indirectly attributable costs (defined in Section V, Cost Apportionment
Methodology) such as departmental administrative, support, and/or material and
supply costs that benefit more than one affiliate and that require allocation
using general measures of cost causation. Methods for assignment are department-
specific depending on the type of product or service being performed and are
documented and monitored by the PUHCA Compliance Manager on a monthly basis to
ensure consistent and proper application and periodic true-up, where necessary,
for SERVCO billing purposes.
15. Electric Peak Load Ratio - Based on the sum of the monthly
------------------------
electric maximum system demands for the immediately preceding twelve consecutive
calendar months, the numerator of which is for an operating company and the
denominator of which is for all operating companies. This ratio will be
determined annually, or at such time as may be required due to a significant
change.
16. Revenue Ratio - Based on the sum of the revenue at the end of
-------------
each month for the immediately preceding twelve consecutive calendar months, the
numerator of which is for an operating company or an affected affiliate company
and the denominator of which is for all
operating companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to significant
changes.
17. Total Assets Ratio - Based on the total assets at year end for
------------------
the preceding year, the numerator of which is for an operating company or
affected affiliate company and the denominator of which is for all operating
companies and affected affiliate companies. This ratio will be determined
annually, or at such time as may be required due to significant changes. In the
event of joint ownership of a specific asset, asset ownership percentages will
be utilized to assign costs.
18. Contract Ratio - Based on the sum of the physical amount (i.e.
--------------
tons of coal, cubic feet of natural gas) of the contract for both coal and
natural gas at the end of each month for the immediately preceding twelve
consecutive calendar months, the numerator of which is for an operating company
or an affected affiliate company and the denominator of which is for all
operating companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to significant
changes.
19. Shareholder Ratio - Based on the average number of preferred
-----------------
shareholders at the end of each month for the immediately preceding twelve
consecutive calendar months, the numerator of which is for an operating company
or an affected affiliate company and the denominator of which is for all
operating companies and affected affiliate companies. This ratio will be
determined on an annual basis, or at such time as may be required due to
significant changes.
20. Supplier Spend Ratio - Based on the sum of dollars spent with
--------------------
suppliers for the immediately preceding twelve consecutive calendar months, the
numerator of which is for an operating company or an affected affiliate company
and the denominator of which is for all operating companies and affected
affiliate companies. This ratio will be determined on a monthly basis, or at
such time as may be required due to significant changes.
21. Number of Transactions Ratio - Based on the sum of transactions
----------------------------
occurring in the immediately preceding twelve consecutive calendar months, the
numerator of which is for an operating company or an affected affiliate company
and the denominator of which is for all operating companies and affected
affiliate companies. This ratio will be determined on a monthly basis, or at
such time as may be required due to significant changes. For example, services
with regard to Procurement and Major Contracts would define a transaction as the
number of contracts negotiated. Services pertaining to Materials Logistics would
define the transaction as the number of items ordered, picked and disbursed out
of the warehouse. Services pertaining to Accounts Payable would define the
transaction as the number of invoices processed. Similar to the Departmental
Charge Ratio, defined previously, the PUHCA Compliance Manager is responsible
for maintaining and monitoring specific product/service methodology
documentation and periodic true-up requirements for actual transactions related
to SERVCO xxxxxxxx.
22. Retail Revenue Ratio - Based on utility revenues, excluding
--------------------
energy marketing revenues, for the immediate preceding twelve consecutive
calendar months, the numerator of
which is for an operating company or an affiliate and the denominator of which
is for all operating companies and affected affiliate companies. This ratio will
be determined annually, or at such time as may be required due to a significant
change.
23. Energy Marketing Ratio - Based on the absolute value of
----------------------
equivalent megawatt hours purchased or sold for the immediate preceding twelve
consecutive calendar months, the numerator of which is for an operating company
or an affiliate and the denominator of which is for all operating companies and
affected affiliate companies. This ratio will be determined annually, or at
such time as may be required due to a significant change.
24. Regulatory Mandate Ratios - Based on Federal or state mandated
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percentage allocations based on regulatory proceedings and requirements. These
ratios are typically developed in concert with regulatory authorities
representing the results of merger or joint asset ownership negotiations and are
supported by specific contracts regarding legal entity allocation requirements.
Contract terms and periodic updates, if necessary, are maintained and monitored
by the PUHCA Compliance Manager and SERVCO departmental management.
25. Project Ratio - Based on the total costs for any departmental or
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affiliate project at the end of each month for the immediately preceding twelve
consecutive calendar months, the numerator of which is for an operating company
or an affected affiliate company and the denominator of which is for all
operating companies and affected affiliate companies. This ratio will be
determined on a monthly basis, or at such time as may be required due to
significant changes.
26. Transportation Resource Management System Chargeback Rate - Rates
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for use of transportation equipment are based on the costs associated with
providing and operating transportation fleet for all affiliated companies
including developing fleet policy, administering regulatory compliance programs,
managing repair and maintenance of vehicles and procuring vehicles. Such rates
are applied based on the specific equipment employment and the measured usage of
services by Client entities. These rates will be determined annually based on
actual experience and may be adjusted for any known and reasonably quantifiable
events, or at such time as may be required due to significant changes.
27. Non-Fuel Material and Services Expenditures - A ratio based on
-------------------------------------------
non-fuel material and services expenditures, net of reimbursements, for the
immediately preceding twelve consecutive calendar months. The numerator is
equal to such expenditures for a specific Client entity and/or line-of-business
as appropriate and the denominator is equal to such expenditures for all
applicable Client entities. This ratio will be determined annually, or at such
time as may be required due to a significant change.
28. Number of Meters Ratio - Ratio based on the number or types of
----------------------
meters being utilized by all levels of customer classes within the system for
the immediately preceding twelve consecutive calendar months. The numerator is
equal to the number of meters for a specific Client entity and the denominator
is equal to such expenditures for all applicable client entities. This ratio
will be determined annually, or at such time as may be required due to
significant change.
29. Residential Sales Ratio - Based on firm kilowatt-hour electric
-----------------------
sales to residential customers for the immediate preceding twelve consecutive
calendar months, the numerator of which is for an operating company or an
affiliate and the denominator or which is for all operating companies and
affected affiliate companies. This ratio will be determined annually, or at
such time as may be required due to a significant change.
30. Business Sales Ratio - Based on firm kilowatt-hour electric sales
--------------------
to business customers that purchase less than 250 kilowatts for the immediate
preceding twelve consecutive calendar months, the numerator of which is for an
operating company or an affiliate and the denominator of which is for all
operating companies and affected affiliate companies. This ratio will be
determined annually, or at such as may be required due to a significant change.
31. Large Commercial & Industrial Sales Ratio - Based on firm
-----------------------------------------
kilowatt-hour electric sales to large commercial and industrial customers that
purchase greater than 250 kilowatts for the immediate preceding twelve
consecutive calendar months, the numerator of which is for an operating company
or an affiliate and the denominator of which is for all operating companies and
affected affiliate companies. This ratio will be determined annually, or at
such time as may be required due to a significant change.
32. Construction Expenditures Ratio - Based on construction or
-------------------------------
capital expenditures, net of reimbursements, for the immediately preceding
twelve consecutive calendar months, the numerator of which is for an operating
company or an affected affiliate company and the denominator of which is for all
operating companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to a significant
change.
33. Total Common Equity Ratio - Based on the sum of the common equity
-------------------------
at the end of each month for the immediately preceding twelve calendar months,
the numerator of which is for an operating company or an affected affiliate
company and the denominator of which is for all operating companies and affected
affiliate companies. This ratio will be determined annually, or at such time as
may be required due to significant changes.
34. Wholesale Revenue Ratio - Based on the sum of the electric
-----------------------
wholesale revenue at the end of each month for the immediately preceding twelve
consecutive calendar months, the numerator of which is for an operating company
or an affected affiliate company and the denominator of which is for all
operating companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to significant
changes.
35. Industrial Revenue Ratio - Based on the sum of the electric
------------------------
industrial revenue at the end of each month for the immediately preceding twelve
consecutive calendar months, the numerator of which is for an operating company
or an affected affiliate company and the denominator or which is for all
operating companies and affected affiliate companies. This ratio will be
determined annually, or at such time as may be required due to significant
changes.
36. Electric kWh Purchased Power Ratio - Based on the sum of electric
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kWh purchased power during each month for the immediately preceding twelve
consecutive calendar months,
the numerator of which is for an operating company and the denominator of which
is for all operating companies. This ratio will be determined annually, or at
such time as may be required due to significant changes.
Description of Services
A description of each of the services performed by LG&E Energy Services,
Inc., which may be modified from time to time, is presented below. As discussed
above, where identifiable, costs will be directly assigned or distributed to
Client Entities. For costs accumulated in an activity, project, program or work
order which are for services of a general nature that can not be directly
assigned or distributed, the method or methods of allocation are also set forth.
Substitution or changes may be made in the methods of allocation hereinafter
specified, as may be appropriate, and will be provided to state regulatory
agencies and to each affected Client Entity.
1. Information Systems Services - Provides electronic data processing
services. Costs of a general nature are allocated using the following method(s):
Information Systems Chargeback Rates
2. Customer Services - Provides billing, mailing, remittance processing, call
center and customer communication services for customers. Costs of a general
nature are allocated using the following method(s): Number of Customer Ratio,
Revenue Ratio
3. Marketing and Sales - Establishes strategies, provides oversight for
marketing, sales and branding of utility and related services, conducts
marketing and sales programs, and economic development. Costs of a general
nature are allocated using the following method(s): Departmental Charge Ratio
4. Employee Services - Includes Human Resources which establishes and
administers policies and oversees compliance with regulations in the areas of
employment, compensation and benefits, processes payroll and administers
corporate training. Also includes employee communications, facilities
management and mail services. Costs of a general nature are allocated using the
following method(s): Number of Employees Ratio, Departmental Charge Ratio
5. Corporate Compliance - Oversees compliance with all laws, regulations and
policies applicable to all of LG&E Energy Corp.'s businesses and directs
compliance training.
6. Purchasing - Provides procurement services. Costs of a general nature are
allocated using the following method(s): Non-Fuel Materials and Services
Expenditures Ratio, Number of Transactions Ratio
7. Financial Services - Provides treasury, accounting, tax, financial
planning, regulatory and auditing services. Costs of a general nature are
allocated using the following method(s):
Revenue, Total Assets and Payroll Ratios, Departmental Charge Ratio, Number of
Transactions Ratio, Number of Employees Ratio, Project Ratio, Retail Revenue
Ratio
8. Risk Management - Provides insurance, claims, security, and safety
services. Costs of a general nature are allocated using the following method(s):
Outsourced - Direct charges only
9. Public Affairs and Regulatory - Maintains relationships with government
policy makers, provides regulatory analysis and compliance filings, conducts
lobbying activities and provides community relations functions. Costs of a
general nature are allocated using the following method(s): Revenue Ratio
10. Legal Services - Provides various legal services and general legal
oversight; handles claims. Costs of a general nature are allocated using the
following method(s): Departmental Charge Ratio
11. Investor Relations - Maintains relationships with the financial community
and provides shareholder services. Costs of a general nature are allocated using
the following method(s): Shareholder Ratio
12. Telecommunications - Provides telecommunications services, primarily the
use of telephone equipment. Costs of a general nature are allocated using the
following method(s): Information Systems Chargeback Rates
13. Gas Supply and Capacity Management - Provides gas supply and capacity
management services.
14. Transmission, Substation Construction, Maintenance & Operations - Provides
management services for transmission and substation construction, maintenance
and operations areas. Costs of a general nature are allocated using the
following method(s): Departmental Charge Ratio
15. Meter Reading, Repair and Maintenance - Provides services related to meter
reading and the repair and maintenance of meters. Costs of a general nature are
allocated using the following method(s): Departmental Charge Ratio, Number of
Meters Ratio
16. Design Engineering - Designs and monitors construction of electric
generation assets and transmission and distribution lines and substations. Costs
of a general nature are allocated using the following method(s): Total Assets
Ratio, Departmental Charge Ratio, Electric Peak Load Ratio
17. Substation Engineering and Support - Provides management support services
to the Substation Engineering and Support organizations of the Operating
Companies. Costs of a general nature are allocated using the following
method(s): Departmental Charge Ratio
18. Resource Acquisition and Analysis - Procures coal, natural gas and oil for
the generation facilities of Client Entities. Also ensures compliance with
price and quality provisions of fuel contracts and arranges for transportation
of fuel to the desired location, and completes analyses
as required on all fuel used for generation. Costs of a general nature are
allocated using the following method(s): Contract Ratio, Departmental Charge
Ratio
19. Purchased Power and Electric Trading - Purchases power and provides
electric trading services to the Operating Companies' electric generation
systems and all other trading functions. Costs of a general nature are allocated
using the following method(s): Energy Marketing Ratio, Regulatory Mandate Ratio
20. Strategic Planning - Develops corporate strategies and business plans.
Costs of a general nature are allocated using the following method(s): Direct
Charge Only
21. Executive - Provides executive and general administration services. Costs
of a general nature are allocated using the following method(s): Departmental
Charge Ratio
22. Environmental Affairs - Performs analyses and advocacy of regulatory and
legislative issues in the areas of environment. Communicates final regulatory
requirements to Operating Groups. Provides assistance, support and compliance
review in meeting those requirements. Oversees hazardous substance site
investigations and remediation activities. Costs of a general nature are
allocated using the following method(s): Departmental Charge Ratio
23. Energy Supply - Coordinates the use of the generating, transmission and
interconnection facilities to provide economical and reliable energy. Costs of a
general nature are allocated using the following method(s): Regulatory Mandate
Ratio
24. Transportation - Operates transportation fleet for the Operating Companies
and affiliates. Provides engineering, support, mechanical servicing of
vehicles, and procurement of vehicles. Costs of a general nature are allocated
using the following method(s): Transportation Resource Management System
Chargeback Rates
25. Media Relations - Performs all media relations with local and national
media organizations according to established policies and procedures. Costs of a
general nature are allocated using the following method(s): Departmental Charge
Ratio
26. Office Furniture and Equipment - Provides office furniture and equipment
for the Operating Companies and affiliates. Costs of a general nature are
allocated using the following method(s): Departmental Charge Ratio
FORM OF INITIAL SERVICE REQUEST
The undersigned request all of the services listed in Exhibit A from LG&E
Energy Services, Inc., except for ____________________________________________.
The services requested hereunder shall commence on _________________________ and
be provided through ______________________.
Kentucky Utilities Company
By:___________________________________
Name:
Title:
