We recognise the benefits of employing a diverse workforce reflecting the communities where we operate, the customers we serve and the partners with whom we work. We are also committed to providing equal opportunities for our staff, regardless of any criteria not relevant to job performance such as race, colour, ethnic or national origin, religion, gender, marital status, disability, sexual orientation or age.

Powergen's Equal Opportunity Policy is well established and is at the heart of recruitment, selection, training and development throughout the Company. Employees told us in our 2001 staff survey that they were treated fairly at work and were not discriminated against. In 2002 we intend to build on this positive feedback with a number of initiatives which will help us and our employees to benefit further from embracing diversity.

Aiming for greater diversity

We are pleased that during the year the percentage of women employed in the Company increased - up from 29% to 37% in the UK and up from 19.2% to 22.5% in the US.

In the UK

Our UK Retail business faces a particular challenge of managing turnover and retention in a competitive employment market. The business already employs a large number of people from a range of ethnic backgrounds, age groups and skill profiles. However, managers have been keen to explore how even greater diversity could enhance business performance. Employees have been canvassed for their views on diversity issues and managers and supervisors will undergo a development programme during 2002 to equip them with the skills to make the most of managing diverse teams.

Powergen is committed to providing a workplace for employees that is free from harassment and where individuals are treated with dignity and respect. We have produced guidance for employees and managers which explains what harassment and bullying are and provides advice on dealing with any alleged instances. In the 2001 Employee Opinion Survey, UK employees said Powergen supports a working environment free from harassment and bullying.

We have also installed a new self-service HR information system to help us gain an even clearer picture of the demographic profile of the workforce. Employees will have greater ownership of their personal data, as they will be able to update details such as their religion and skills.

We take an active role in diversity matters beyond Powergen. We are a regional member of Race for Opportunity (RfO), a Business in the Community campaign which strives to promote racial diversity in business. A representative from Powergen is Chair of the East Midlands branch of RfO and Powergen has led a sub-committee on employment.

Powergen is also a member of the Employers’ Forum on Age and the Employers’ Forum on Disability. Membership of these fora helps us to keep abreast of changes and developments in these areas of diversity.

In the US

At LG&E, the Company works hard to maintain a discrimination-free environment for all employees and regularly offers training and counselling to employees and managers. Since 1965, LG&E has been an affirmative action employer and annually sets goals to encourage women and minorities to join the organisation.

LG&E is committed to the hiring, advancement and fair treatment of individuals without regard to race, colour, religion, age, national origin, ethnicity, disability or veteran status, or any other protected status designated by federal, state or local laws. LG&E also provides equal opportunity for disabled workers, special disabled veterans and other protected veterans. Harassment of any individual because of a disability is not tolerated.

LG&E has a firm commitment to provide a work environment free from all forms of discrimination and harassment. Any substantiated incident of harassment by a management or supervisory employee or co-worker will result in immediate disciplinary action.

In pursuit of these aims, LG&E has set itself four key goals. To:

• increase the hiring percentages of women and minorities
• focus on retention of employees
• develop high potential women and minorities
• reinforce / build reputation as a diversity-friendly Company.

LG&E is a member or sponsor of many organisations supporting diversity in the workplace and the community including the Louisville Urban League, Black Achievers organisation and the Minority Expo.