E.ON U.S. Receives $125 Million Federal Tax Credit For State-of-the-Art Environmental Controls at New Plant
11.30.2006


(LOUISVILLE, Ky.) — As a result of its plan to construct one of the nation's most efficient and environmentally-friendly generating stations in Trimble County, E.ON U.S. today announced on behalf of its subsidiaries, LG&E and KU, that the utilities have received a $125 million tax credit from the U.S. Internal Revenue Service, made available through the 2005 Energy Policy Act.

The award, announced today by U.S. Energy Secretary Samuel W. Bodman, is the culmination of an award process which began in June 2006 with E.ON's application to the Department of Energy. DOE certification is a prerequisite for award eligibility.

LG&E's plans for TC2 met and exceeded the U.S. IRS's qualifying criteria for the section 48A tax credit, which included achieving a 99 percent sulfur dioxide and 90 percent mercury emissions removal rate.

"This is wonderful news for our customers and the Commonwealth," said Victor A. Staffieri, Chairman, CEO and President of E.ON U.S. "The impact of the credit will effectively lower the plant's costs by $125 million. We intend to pass through to our customers the benefit of these credits."

The following requirements are among the stipulations that a "qualifying advanced coal project" must meet in order to be eligible for the U.S. IRS Section 48A tax credit: have a design net heat rate of 8,530 Btu/kWh (40 percent efficiency), and utilize certain thermal design efficiency improvements. The project must also meet certain emission performance requirements, have a total nameplate generating capacity of at least 400 megawatts, and, in addition, utilize fuel input of at least 75 percent coal.

As designed, TC2 meets the required criteria. The 750-megawatt generating station will be powered by an advanced super-critical pulverized coal boiler that includes more than $300 million in the latest technological advances in efficiency and environmental controls.

E.ON U.S.'s successful tax credit application is part of its continual effort to provide clean, reliable, low-cost energy using the best available technology.

"Our efforts to identify best available, environmentally friendly technology led us to develop a clean coal research partnership with the University of Kentucky and join the FutureGen Alliance for the development of an emissions-free electric generating plant," said Staffieri. "This $125 million tax credit award allows us to maintain our focus on reducing energy cost as we strive to make new, environmentally friendly technology available to our customers."



E.ON U.S. LLC, headquartered in Louisville, Ky., is a subsidiary of E.ON A.G., the world's largest investor-owned energy services provider. E.ON U.S. is a diversified energy services company that owns and operates Louisville Gas and Electric Company, a regulated utility that serves 321,000 natural gas and 394,000 electric customers in Louisville and 16 surrounding counties, and Kentucky Utilities Company, a regulated electric utility in Lexington, Ky., that serves 525,000 customers in 77 Kentucky counties and five counties in Virginia.