Allegheny Energy, Inc. Chairman Outlines Growth Strategy, Challenges for the New Century at the Annual Meeting of Shareholders.

NEW YORK--(BUSINESS WIRE)--May 13, 1999--

Alan J. Noia, Chairman, President, and Chief Executive Officer of Allegheny Energy, Inc. (NYSE: AYE) today said that the Company will use its strengths - the generation and delivery of reliable, low-cost electricity - to power its continued growth in the next century.

"We have taken key steps in recent months to further capitalize on the advent of customer choice in our region and grow our Company to become America's best energy value," Noia told shareholders at the Company's Annual Meeting.

"We intend to deliver outstanding value to our shareholders by focusing on the things we know and do best," he added. "The generation business is a prime example. It is a complex business and we excel in it. We have the assets, skills, scale, and location to succeed. We currently have the largest unregulated, or merchant, fleet in the East Central Area Reliability Council region, and we are well on our way to enlarging that merchant fleet."

Allegheny Energy is forming its newest unregulated subsidiary, a generation company (Genco) which will sell power at market prices in competitive markets. All profits from these electricity sales will go directly to the bottom line without limits on earnings or return on equity, benefiting Allegheny Energy's shareholders. With customer choice now law in Pennsylvania, nearly 4,000 megawatts (MW) of unregulated generating capacity is being transferred into the Genco. Customer choice legislation passed in Maryland and Virginia should allow the transfer of another 1,700 MW. Noia stated that the Company recently announced the addition of 88 MW of new combustion turbine generating capacity at its Springdale Power Station site in Pennsylvania. These gas-/oil-fired turbines will be operational in the fourth quarter of this year.

On the regulated side of the business, Noia said Allegheny Energy is also poised to succeed in the delivery of electricity and intends to expand its "wires" business, which will provide stable cash flows and diversification of earnings. The Company is also expanding its business opportunities through less traditional, non-regulated ventures, such as telecommunications. Allegheny Energy is already involved in one very promising partnership and expects its unregulated telecommunications business to have a positive effect on earnings this year.

The core businesses, Supply and Delivery, however, will continue to be the keystone of Allegheny Energy. And while Noia recognized the importance of using a diversity of domestic fuels to generate power, he reiterated the Company's commitment to coal.

"Coal makes up nearly 90 percent of our generation mix," Noia said. "We are committed to its use. And we are equally committed to continuing to burn coal in an environmentally sound manner." In addition, coal is used to produce 57 percent of the nation's electricity.

Allegheny Energy stands firmly behind its environmental record, according to Noia. In the past 25 years, the Company has invested about $1.6 billion in environmental controls and programs. The Company also spends millions of dollars annually in operations and maintenance to comply with environmental standards and for research and development, Noia added. Allegheny Energy, which burns 16 million tons of coal per year, operates in complete compliance with the Clean Air Act Amendments of 1990.

"Electricity is the very heart of our past and we naturally see it as being central to our future," said Noia. "It is an absolutely essential service and the lifeblood of modern society. We have a great interest as environmental stewards in continuing to provide this invaluable service while preserving and protecting the world we share. It is our sincere aim to protect our natural resources through programs that advance public health and awareness, are scientifically sound and balanced, and which are achievable in a cost-effective manner.

"We must have balance in environmental regulation," he added. "Some new regulatory initiatives that are not scientifically proven to improve air quality could significantly harm the nation's economy. Our nation would be forced to begin shifting away from plentiful domestic resources to foreign sources, decreasing our country's competitiveness and increasing the cost of electricity for consumers. Our national economy is inexorably linked to electricity sales growth. Over the past 25 years, electricity sales and the gross domestic product have grown hand-in-hand."

Noia also updated shareholders on the Company's Year 2000 (Y2K) readiness program. At the end of March, nearly all of Allegheny Energy's mission-critical systems were Y2K ready. The remaining critical systems - those systems that directly affect safety and/or production and delivery of electricity - will be Y2K ready in June. The Company will have invested up to $20 million to become Y2K ready by January 2000 and will have up to 500 employees involved with the readiness program at its peak.

"We are well aware of the critical need to provide an uninterrupted flow of electricity at all times," Noia said. "We feel confident that we have done and are doing everything reasonable to prevent disruptions. Should a trouble spot arise, we have the expertise to manage it quickly and effectively. We plan on having extra personnel on hand just in case. Our goal is to have revelers greet the new year under bright lights wherever they might be."

AYE is a registered public 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 deliver 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 telecommunications projects, including energy production and energy marketing activities.