Allegheny Energy, Inc. Announces 25% Increase in First Quarter Earnings.

HAGERSTOWN, Md.--(BUSINESS WIRE)--April 23, 1999--

Allegheny Energy, Inc. (NYSE: AYE) today reported 1999 first quarter earnings of $97.8 million ($.80 per share), a 25 percent increase over 1998 first quarter earnings of $78.2 million ($.64 per share).

The $19.6-million ($.16 per share) increase was due primarily to colder weather that led to increased kilowatt-hour (kWh) sales to regular utility customers, and, to a lesser extent, to new sales in Pennsylvania's competitive markets and to reduced interest expenses. The winter of 1999 was 22 percent cooler than the relatively warm winter of 1998 - as measured by heating degree days - but was still more than 3 percent warmer than normal. Residential kWh sales to regular customers, which are very weather sensitive, increased 8 percent in the first quarter of 1999.

"The return of more typical weather helped us to achieve solid first-quarter earnings and has provided the Company with a good foundation on which to continue our strong financial performance in 1999," said Michael P. Morrell, Senior Vice President and Chief Financial Officer.

"And, while it is still too early to tell conclusively, we seem to be faring well in the new environment of customer choice in Pennsylvania. In addition, our current earnings are supported by the beneficial effects of transition cost recovery as authorized in our Pennsylvania restructuring settlement," Morrell said.

For the twelve months ended March 31, 1999, consolidated net income before Pennsylvania restructuring and settlement costs was $306.3 million ($2.50 per share), compared with $281.9 million ($2.30 per share) for the same period in 1998. The increase in earnings over the twelve-month period, which excludes restructuring costs, was primarily attributable to an increase in kWh sales to regular customers.

The twelve months ended March 31, 1999, included an extraordinary charge of $275.4 million ($2.25 per share), net of taxes, and additional costs of $23.7 million ($.19 per share), net of taxes, related to the 1998 Pennsylvania restructuring order and subsequent settlement. As a result, earnings were $7.1 million ($.06 per share) for the twelve months ended March 31, 1999. The extraordinary charges reflect a write-off by the Company's Pennsylvania subsidiary, West Penn Power Company, primarily in the second quarter of 1998, in connection with deregulation proceedings in Pennsylvania. The write-off reflects adverse purchase commitments and costs previously deferred for future recovery in accordance with the former regulatory environment. -0-

     Per-share earnings for the comparable 1999 and 1998 periods are:

                          First Quarter         12 Months Ended March
                          1999     1998           1999         1998
                         ---------------------------------------------
Earnings before
 restructuring
 and settlement costs    $ .80     $ .64         $2.50         $2.30
Pennsylvania
 extraordinary charges                           (2.25)          --
Pennsylvania
 settlement costs                                 (.19)          --
                         ---------------------------------------------
Reported earnings         $ .80    $ .64        $  .06         $2.30
                          =====    =====        ======         =====

     Allegheny Energy was very active in the first few months of 1999
on a variety of fronts aimed at increasing revenue and improving
shareholder value. The following are some of our recent milestones:

--   Formation of Genco
     Allegheny Energy has filed a U-1 application with the Securities
and Exchange Commission for approval to establish a new generating
subsidiary or Genco. When all regulatory approval is obtained, the
Genco, which will not be subject to state utility regulatory
oversight, will sell power at market prices in the competitive market.
All profits from these unregulated electricity sales will go directly
to the bottom line without limits on earnings or return on equity.

--   Stock Repurchase Plan
     Allegheny Energy is in the midst of a program to repurchase up to
$500 million worth of common stock using a portion of the proceeds
from the issuance of $670 million in transition bonds. Allegheny
Energy's regulated Pennsylvania subsidiary, West Penn Power Company,
will issue the bonds in July in accordance with its 1998 restructuring
settlement approved by the Pennsylvania Public Utility Commission.
Allegheny Energy has repurchased about 2.8 million shares through
April 22, but the purchases had no meaningful effect on first quarter
earnings.

--   Shareholder Rights Plan
     Allegheny Energy is awaiting word from the Securities and
Exchange Commission on its request for approval of a Shareholders
Rights Plan. The plan is intended to discourage coercive or inadequate
takeover bids and other tactics that may be used by hostile bidders to
acquire control of the Company without paying a full and fair price to
all shareholders for their stock. The Company does not believe that it
is a target for a takeover at this time, but would enact the plan as a
safeguard given the current climate for mergers in the industry.

--   New Contracts
     The Allegheny Energy Supply Division of West Penn Power Company,
an unregulated division, has won several new contracts since the
advent of customer choice in Pennsylvania. Allegheny Energy Supply and
Columbia Energy Services, in a joint effort, won contracts to supply
electricity and natural gas to 20 Pennsylvania State University
campuses. Beginning Jan. 1 of this year, the Company is providing more
than 300 million kWh to the campuses. The combined contracts are
expected to save Penn State more than $1.5 million on its energy
purchases. Similarly, Allegheny Energy Supply is offering the Township
of Hampton in Allegheny County, Pa., the opportunity to provide its
residents with electricity through an incentive-based aggregation
program.

--   Customer Choice in Maryland and Virginia
     Allegheny Energy is encouraged by the passage of customer choice
legislation in Maryland and Virginia in recent weeks and looks forward
to gaining new customers as these markets open. In Maryland, where
Allegheny Energy serves more than 200,000 customers, the Company has
achieved a tentative settlement with a majority of parties to our
Public Service Commission (PSC) restructuring proceeding. The Company
is hopeful that the PSC's final order in this proceeding will provide
benefits for consumers and shareholders alike. The legislation allows
one-third of Maryland's residential customers to begin to choose their
electric supplier beginning July 1, 2000, with the rest to be phased
in over two years. All businesses can choose their supplier beginning
Jan. 1, 2001.
     In Virginia, where the Company serves more than 80,000 customers,
regulators plan to phase in full customer choice by 2004.

--   Y2K Preparations
     Allegheny Energy has made progress in its plan to be Y2K ready by
June 30, 1999. As of March 31, more than 90 percent of the Company's
mission-critical systems - those systems necessary for safety and the
production and distribution of electricity - were Y2K ready. The
Company has committed more than 500 employees to Y2K preparations, and
expects to spend up to $20 million on its efforts. The Company also
participated in an industry-wide Y2K drill in April to further
evaluate its readiness. The drill was a test of the ability of
utilities to function and communicate effectively under
less-than-normal conditions if normal telephone lines would fail on
Jan. 1, 2000. The Company's back-up voice and data communications
systems functioned successfully.

     AYE is a registered public utility holding company which includes
three regulated electric utility subsidiaries doing business as
Allegheny Power: Monongahela Power Company, The Potomac Edison
Company, and West Penn Power Company. AYE subsidiaries annually
provide approximately 43 billion kWh of electricity to approximately
three million people in Maryland, Ohio, Pennsylvania, Virginia, and
West Virginia. AYE also owns unregulated subsidiaries and divisions,
which invest in energy-related and telecommunication projects,
including energy production and energy marketing activities.

                       ALLEGHENY ENERGY EARNINGS
                          FIRST QUARTER 1999

Three months ended         March 31         1999              1998
----------------------------------------------------------------------

Sales to regular utility
 customers, gigawatt-hours (Note 1)        11,044            10,892

Revenues ($000)
   Regular Utility Customer              $580,349          $572,630
   Other Utility Revenues                  12,243            23,748
   Nonutility Revenues                     97,395            49,094
                                      --------------------------------
      Total                              $689,987          $645,472
                                      ================================

Consolidated net income ($000)            $97,775           $78,237
Basic and diluted earnings
 per average share (Note 2)                 $0.80             $0.64
Average common shares outstanding (000)   122,396           122,436


Twelve months ended        March 31         1999              1998
----------------------------------------------------------------------

Sales to regular utility
 customers, gigawatt-hours (Note 1)        42,801            41,512

Revenues ($000)
   Regular Utility Customers (Note 3)  $2,214,942        $2,187,230
   Other Utility Revenues                 110,724            90,153
   Nonutility Revenues                    295,287           122,600
                                      --------------------------------
      Total                            $2,620,953        $2,399,983
                                      ================================

Consolidated income
 before restructuring
 and settlement costs ($000)             $306,293          $281,942
Pennsylvania extraordinary
 charges ($000) (Note 4)                 (275,426)              --
Pennsylvania settlement costs ($000)      (23,748)              --
                                      --------------------------------
Consolidated net income ($000)             $7,119          $281,942
                                      ================================
Basic and diluted earnings
 per average share (Note 2)
 Before restructuring
 and settlement costs                       $2.50             $2.30
   Pennsylvania extraordinary charges       (2.25)              --
   Pennsylvania settlement costs            (0.19)              --
                                      --------------------------------
   Consolidated net income                  $0.06             $2.30
                                      ================================
Average common shares
 outstanding (000)                        122,426           122,355

Note 1: Excludes bulk power transaction sales.
Note 2: Basic and diluted earnings per share are the same.
Note 3: 1998 retail revenues are reduced by a 2.5% rate refund ($25.1
     million) for Pennsylvania customers as a result of the 1998
     settlement agreement.
Note 4: Costs after taxes, determined to be unrecoverable as a result
     of deregulation proceedings in Pennsylvania.