AMENDMENT NO. 1 to COAL SUPPLY AGREEMENT

EXHIBIT 10.61

KU Contract #KUF-02849
Amendment #1

AMENDMENT NO. 1 to

COAL SUPPLY AGREEMENT

THIS AMENDMENT NO. 1 to COAL SUPPLY AGREEMENT (“Amendment No. 1”) is entered into effective July 1, 2003, by and between KENTUCKY UTILITIES COMPANY, a Kentucky corporation, 220 West Main Street, Louisville, Kentucky 40202 (“KU”), and ARCH COAL SALES COMPANY, INC., a Delaware corporation, agent for the independent operating subsidiaries of ARCH COAL, INC., a Delaware corporation (collectively “Seller”), whose address is CityPlace One, Suite 300, St. Louis, Missouri 63141.

In consideration of the agreements herein contained, the parties hereto agree as follows:

1.0                                                                                MODIFICATIONS TO AGREEMENT

The Agreement heretofore entered into by the parties, dated effective January 1, 2002 and identified by the Contract Number set forth above (hereinafter together referred to as “Agreement”), is hereby amended as follows:

1.1                                  Section 3.1 Base Quantity :

The quantity schedule set forth in Section 3.1 is deleted in its entirety and is replaced with the following:

1.2                                  Section 4.1. Source:

Section 4.1 is deleted in its entirety and is replaced with the following provision:

“The coal sold hereunder shall be supplied by Seller primarily from the following coal mines owned or controlled by Arch Coal, Inc., its subsidiaries or affiliates: Ruffner, Wylo, Campbell’s Creek, Ragland, Mingo-Logan, Samples and Guyan Mines located in Logan, Mingo and Kanawha Counties, West Virginia. Seller shall determine, in its discretion, which mine or mines shall produce the coal to be supplied to Buyer for each shipment, provided that Buyer receives a continuous supply of the quantity and the quality of coal to be provided hereunder. Arch Coal, Inc. benefits from this Agreement as supplier of the coal to be sold hereunder and as the parent corporation of Arch Coal Sales Co., Inc., and Arch Coal, Inc. is therefore the guarantor of Seller’s obligations hereunder pursuant to a Guaranty Agreement of even date herewith.”

1.3                                  Section 4.5. Substitute Coal:

Section 4.5 is deleted in its entirety and is replaced with the following provision:

“Notwithstanding the above representations and warranties, in the event that Seller is unable to produce or obtain coal from the Coal Property in the quantity and of the quality required by this Agreement, and such inability is not caused by a force majeure event as defined in § 10, then Buyer will have the option of requiring that Seller supply coal from Seller’s other facilities and mines. Seller shall also have the right to supply substitute coal from sources not owned or controlled by Seller after having received Buyer’s prior written consent (which shall not be unreasonably withheld) for up to 20% of the annual volume commitments. Such substitute coal shall be provided under all the terms and conditions of this Agreement including, but not limited to, the price provisions of §8, the quality specifications of § 6.1, and the provisions of § 5 concerning reimbursement to Buyer for increased transportation costs. Seller’s delivery of coal not produced from the Coal Property without having received the express written consent of Buyer shall constitute a material breach of this Agreement.”

1.4                                  Section 5.1. Barge Delivery:

The first literary paragraph of Section 5.1 is deleted in its entirety and is replaced by the following paragraph. All other portions of Section 5.1 shall remain unchanged.

“The coal shall be delivered to Buyer F.O.B. barge at the following points (the “Delivery Point”), for coal delivered from the Ruffner Mine, the Wylo Mines, the Samples Mine, the Ragland Mine, the Mingo-Logan Mine and the Guyan Mine: Huntington Coal Terminal (HCT), KRT-Ceredo, Ohio River Terminal (ORT) and Arch Coal Terminal (ACT) located at mile points 309.1, 314.5, 306.0 and 318.0 respectively on the Ohio River. For coal delivered from the Campbell’s Creek Mine: Port Amherst Dock located at mile point 63.9 on the Kanawha River. Seller may deliver the coal at a location different from the Delivery Points, provided, however, that Seller shall reimburse Buyer for any resulting increases in the cost of transporting the coal to Buyer’s generating stations. Buyer shall retain any resulting savings in such transportation costs.

1.5                                  Section 6.1. Specifications:

Section 6.1 is deleted in its entirety and is replaced with the following:

“6.1          Specifications.

(a) The first 1,600,000 tons of coal delivered hereunder shall conf