ALLEGHENY POWER REPORTS INCREASED 1996 EARNINGS.

HAGERSTOWN, Md.--(BUSINESS WIRE)--Jan. 22, 1997--Allegheny Power System, Inc. (NYSE:AYP) today reported an increase in 1996 earnings of about $19 million ($0.13 per share) compared to 1995, excluding restructuring charges and asset write-offs. Earnings before restructuring charges and asset write-offs were $272.6 million ($2.25 per share) in 1996 compared to $253.8 million ($2.12 per share) in 1995, an increase of about 6%.

The increased earnings reflect increased sales and the beneficial effects of the reorganization begun in 1995, according to Alan J. Noia, President and Chief Executive Officer.

"These results show that the cost controls resulting from Allegheny Power's reorganization are beginning to have an effect," said Noia. "We are pleased that the restructuring process, for the most part, has been completed, all restructuring charges have now been recorded, and current earnings and future earning prospects are improved as a result."

Consolidated 1996 net income was $210.0 million, or $1.73 per share, after reflecting restructuring charges and asset write-offs of $62.6 million, net of taxes ($0.52 per share). Consolidated net income for the year 1995 was $239.7 million ($2.00 per share), after reflecting restructuring charges and asset write-offs of $14.1 million, net of taxes ($0.12 per share).

Residential, commercial, and industrial kilowatt-hour (kWh) sales reflect increases of 3%, 2%, and 1%, respectively, over those of 1995, due to an increase in the number of customers for all classes and an increase in residential and commercial usage.

For the fourth quarter 1996, consolidated net income was $48.6 million, or $0.40 per share, after reflecting restructuring charges of $19.1 million, net of taxes ($0.16 per share). Fourth quarter 1995 earnings were $62.6 million, or $0.52 per share, after reflecting restructuring charges and asset write-offs of $5.9 million, net of taxes ($0.05 per share).

The decrease in fourth quarter earnings, excluding restructuring charges and asset write-offs, was primarily due to a decrease in kWh sales to residential customers because of relatively warm weather in December of 1996. Residential kWh sales, which are more weather sensitive than the commercial and industrial classes, showed a decrease of 2.7% in the fourth quarter due to decreased usage related to temperatures that were more than 25% above the corresponding 1995 period. Industrial sales were down 1% in the fourth quarter.

Allegheny Power is a registered utility holding company with three operating utility subsidiaries: Monongahela Power Company, The Potomac Edison Company, and West Penn Power Company doing business as Allegheny Power in five states. Allegheny Power's utility subsidiaries annually provide approximately 42 billion kWh of electricity to approximately 1.4 million customers in Maryland, Ohio, Pennsylvania, Virginia, and West Virginia. Allegheny Power also owns AYP Capital, which invests in non-utility projects, and conducts power marketing activities. -0-

                  1996 ALLEGHENY POWER EARNINGS


Three months ended Dec. 31, 1996                     1996     1995

Sales to regular customers, gigawatt hours (Note 1)  10,360   10,439

Total Revenues ($000)
 Revenues Other Than Those Related To Energy       $390,012 $390,374
 Energy Related Revenue (Note 2)                   $184,684 $196,024
Net Income ($000)(a)                                $48,616  $62,634
Earnings per average share(a)                         $0.40    $0.52
Average common shares outstanding (000)             121,567  120,407

(a) Includes restructuring charges of $19.1 million ($0.16 per
share) in 1996 and restructuring charges and asset write-offs of $5.9
million ($0.05 per share) in 1995.



Year ended Dec. 31, 1996                              1996    1995

Sales to regular customers, gigawatt hours (Note 1)  41,484   40,727

Total Revenues ($000)
 Revenues Other Than Those Related To Energy   $1,552,313 $1,515,047
 Energy Related Revenue (Note 2)                 $775,336   $800,164
Net Income ($000)(a)                             $210,047   $239,692
Earnings per average share(a)                       $1.73      $2.00
Average common shares outstanding (000)           121,141    119,864

(a) Includes restructuring charges and asset write-offs of $62.6 million ($0.52 per share) in 1996 and $14.1 million ($0.12 per share) in 1995.

Note 1: Excludes bulk power transaction sales Note 2: Primarily revenues passed on to retail customers in the fuel and energy cost recovery procedures, which have little effect on consolidated net income.

CONTACT: Donald L. Whipp

Director, Corporate Communications

412/838-6272

E-mail: [e-mail]