AEC Completes Final Testing of its Demonstration Hydrogen Production Unit.

LAS VEGAS -- Mr. Blaine Froats, Chairman of Alternate Energy Corporation (OTCBB:ARGY) today announced the completion of the second phase of its backup power initiative with the final testing of its beta version demonstration HPU (Hydrogen Production Unit). Last week, the HPU successfully powered the Company's recently converted internal combustion engine (ICE) with its low-cost, on-demand hydrogen.

Over the past several months, AEC has been focused on the building of ICE and fuel cell generator sets to demonstrate to investors and potential customers AEC's hydrogen fuel production capability. AEC's Chairman, Blaine Froats, stated, "AEC's demo unit will prove that an ICE generator can produce electricity using safe, portable and most of all - affordable hydrogen. The ICE generator will use our hydrogen as fuel throughout the demonstration, produced on the spot by AEC's HPU."

Mr. Froats further stated, "Now that the testing of the beta version HPU is complete, our next task is to shrink its components into a transportable size to ensure ease of demonstration. We expect this to be completed by mid-March."

AEC anticipates the unveiling of a final demonstration unit prior to the end of March of this year and at such time will commence demonstrations in strategic locations in both the United States and Canada. "We are in the process of scheduling demonstrations with existing prominent players in the ICE generator business. This is one of the last steps in bringing AEC closer to revenue generation," stated Mr. Froats.

These developments parallel AEC's recent work on its hydrogen production unit for use with the Astris E8 alkaline fuel cell. The fuel cell and ICE platforms are expected to provide AEC with multiple market opportunities and greater revenue potential.

About Alternate Energy Corporation (AEC; www.cleanwatts.com):

Alternate Energy Corporation (AEC) intends to provide a hydrogen fuel system that has mass-deployment economics and provides small-scale, on-demand distributed generation of electricity. The Company is scheduling product demonstrations with key strategic partners in the first quarter of 2005, then shipping initial hydrogen production and electricity generation systems later in 2005. AEC's proprietary discovery in metallurgy permits a small-scale unit to generate hydrogen from an aqueous solution through a "green" system at a price competitive with the current fossil fuel kWh cost of energy.

Statements herein express management's beliefs and expectations regarding future performance and are forward-looking and involve risks and uncertainties, including, but not limited to, the ability to negotiate outstanding prior debts of acquired companies; properly identify acquisition partners; adequately perform due diligence; manage and integrate acquired businesses; react to quarterly fluctuations in results; raise working capital and secure other financing; respond to competition and rapidly changing technology; deal with market and stock price fluctuations; and other risks. These risks are and will be detailed, from time to time, in ARGY's Securities and Exchange Commission filings, including Form 10-KSB for the year ended Dec. 31, 2002, and subsequent Forms 10-QSB and 8-K. Actual results may differ materially from management's expectations.