Allegheny Energy, Inc., West Penn Power Company, and AYP Energy, Inc. File Form U-1 with SEC for Approval of Formation of Unregulated Generating Subsidiary.

HAGERSTOWN, Md.--(BUSINESS WIRE)--April 19, 1999--

Allegheny Energy, Inc. (NYSE: AYE) and two of its subsidiaries -- West Penn Power Company and AYP Energy, Inc. -- filed on April 16 a Form U-1 application with the U.S. Securities and Exchange Commission (SEC) as the first step toward the formation of an unregulated generating subsidiary.

The action comes as a result of the final settlement in West Penn's Pennsylvania restructuring case, which granted permission to move West Penn's generating assets to an unregulated subsidiary at net book value. West Penn, which does business as Allegheny Power, is Allegheny Energy's Pennsylvania operating subsidiary.

If approved, West Penn will transfer approximately 3,700 megawatts of generating capacity to the new generating subsidiary or GENCO, while AYP Energy, an arm of the Company's nonutility subsidiary, will transfer the ownership of its 276-megawatt merchant generating asset.

The generating assets to be transferred are located in Pennsylvania, Virginia, and West Virginia.

"Allegheny Energy is committed to growing the generation portion of our business," said Alan J. Noia, Allegheny Energy's Chairman, President, and Chief Executive Officer. "Our strategic growth plans include the construction or acquisition of additional generation for a merchant fleet that is a flagship in the industry. The creation of this unregulated generating subsidiary will be a major step toward achieving our goal."

The Company plans to transfer the generation assets through a multi-step process. In the final phase of the process for the West Penn generation, the West Penn interest in the generating subsidiary will be transferred to Allegheny Energy, Inc. At that time, the GENCO will become a subsidiary of Allegheny Energy, Inc. The AYP Energy generation will be transferred to the new entity.

For the duration of the final phase-in of Customer Choice in Pennsylvania through Jan. 2, 2000, approximately one-third of West Penn's former generation will be leased back to the Pennsylvania operating subsidiary to cover its regulated obligations.

Allegheny Energy, Inc. is required to file the Form U-1 with the SEC because it is a registered holding company under the Public Utility Holding Company Act of 1935. Regulatory approval must also be obtained from the Federal Energy Regulatory Commission, and the plan must be reviewed by the Pennsylvania Public Utility Commission. These necessary approvals are expected to be received by the end of 1999.

Headquartered near Hagerstown, Md., Allegheny Energy, Inc., with public utility subsidiaries doing business as Allegheny Power, provides low-cost electric service to approximately three million people in parts of Maryland, Ohio, Pennsylvania, Virginia, and West Virginia. Its energy supply company, Allegheny Energy Supply, markets competitive retail and wholesale electric generation in Pennsylvania and the surrounding region. For more information about Allegheny Energy, Inc., check our web site at www.alleghenypower.com.