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KENTUCKY ADVANTAGE:

EXTREMELY COMPETITIVE UTILITY COSTS

The Lowest Industrial Electrical Costs in the U.S. for six consecutive years

A major area of concern for new or expanding businesses are the potentially high overhead costs involved. Utility costs such as electricity, gas, water and sewage and other utility expenses can substantially effect your overall business costs, and your bottom line. An increasingly competitive business environment compels companies to examine the long-term costs of production and distribution, and to focus on regional differences in the net cost of doing business. Kentucky enjoys a tremendous competitive advantage in the provision of energy, natural gas, and water supply. The state's large coal reserves and their resulting proximity to coal-burning utility plants, its direct location on the interstate natural gas pipeline corridor, and an abundant natural water supply derived from an extensive network of rivers, streams, and lakes, keep Kentucky's utility costs among the very lowest in the nation. In turn, a large number of utility providers, and oversight by the Kentucky Public Service Commission (PSC) continue to ensure competitive rates for the consumer. Average annual utility costs and tariff rates for individual providers are available at the PSC.

Those who only think of Kentucky as home to the Kentucky Derby, bourbon and bluegrass may be in for a surprise: For six consecutive years, Kentucky has enjoyed the lowest industrial electric costs in the entire United States, according to the U.S. Energy Information Administration.

Kentucky’s industrial power costs are more than 37% lower than the U.S. average. Electric power in Kentucky is distributed by five investor owned electric utilities, approximately thirty municipal electric systems, twenty-one rural electric cooperatives and the Tennessee Valley Authority.

There are many reasons for Kentucky’s low electric rates, but the major factor is the state’s large coal resources. As a result, about 96 percent of Kentucky’s electric power is produced by coal-fired plants. Those plants also are primarily located near fuel-rich mines, cutting transportation costs.

In addition to low cost, Kentucky’s plentiful coal reserves also assure a reliable supply of electricity for customers. Such is not the case today in parts of the U.S., a situation that is becoming critical for many companies. In fact, energy availability and costs were the fourth most important site selection factor – up from tenth a year ago – in Area Development magazine’s annual Corporate Survey.

In advertising, direct mail and at trade shows, Kentucky is aggressively touting its low energy costs to business prospects worldwide. The Kentucky Cabinet for Economic Development (KCED) works closely with utility companies and local economic development agencies throughout the state in responding to the energy needs and questions of businesses. “Utility costs are near the top of every prospects list,” said Jim Navolio, Commissioner of Business Development with KCED. “We’ll usually ask them to show us their existing utility bill – which we’re almost always able to beat.”

Kentucky's Electric Power Cost, In The

Industrial Sector, Ranks the Lowest In The Nation

2

Source: U.S. Energy Information Administration

Electric Sales and Revenue, 2005 Released Summer 2007

2006 Results Due Spring/Summer 2008

NATURAL GAS

INTERSTATE NATURAL GAS PIPELINE

Kentucky's Natural Gas Costs, Industrial Sector

Comparison vs. Other States

2003 Industrial Average Prices, Dollars Per Thousand Feet

* Indiana average price is for the months of January thru September and November.

October and December costs were not available to the E.I.A. at this time

Source: U.S. Energy Information Administration

Natural Gas Industrial Costs, 2003, Last Updated by the EIA January 2005

2004 costs will be posted January 2006 or when available from the EIA

WATER AND SEWAGE