A three-member arbitration panel ruled that Oglethorpe PowerCorp.’s power marketing contract with LG&E Energy Corp. andLG&E Energy Marketing Inc. is valid and must be honored.LG&E began its challenge to the contract in 1998. The companysaid the decision will cause it to increase its fourth quarterafter-tax accrued loss on disposal of discontinued operations by$175 million. The loss stems from increased load demands, higherthan anticipated future commodity prices and other factors. Theincrease in the loss reserve will be recorded in discontinuedoperations.

The ruling resolves an arbitration claim filed by LG&E andits marketing subsidiary that sought to void their Oglethorpecontract. The contract, which was executed in November 1996 andwent into effect in early 1997, provides for LG&E to supplyabout one-half of Oglethorpe Power’s total system load for up to 15years, subject to early termination rights by Oglethorpe at fiveyears and by LG&E at 8 years. LG&E has continued to supplypower under the contract while the matter has been in arbitration.

Oglethorpe said the contract, the largest of its kind when itwent into effect in 1997, has yielded significant savings for thecooperative and its member systems since its inception. OglethorpePower is a power supply cooperative providing wholesale electricityto 39 of Georgia’s 42 customer-owned EMCs, which serve more than2.9 million customers.

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