Allegheny Energy, Inc. and subsidiaries form unregulated generating company.

HAGERSTOWN, Md.--(BUSINESS WIRE)--November 18, 1999--

Allegheny Energy, Inc. (NYSE: AYE) and two of its subsidiaries were granted approval on Nov. 12 by the U.S. Securities and Exchange Commission (SEC) to form an unregulated generating company. The new Company, which is now doing business as Allegheny Energy Supply Company, LLC, will have about 4,000 megawatts (MW) in merchant generating capacity by year's end and will be actively selling generation into unregulated markets, adding new customers and increasing shareholder value.

The SEC order follows approvals by the Federal Energy Regulatory Commission and the Pennsylvania Public Utility Commission and marks a milestone in the Company's long-term strategy to move its generating assets to an unregulated entity as the electric utility industry moves to competition.

"As we had envisioned earlier this year, the approval of our unregulated generating business has set into motion a dynamic strategy for growing our business," said Alan J. Noia, Chairman, President, and Chief Executive Officer of Allegheny Energy. "The formation of this generating company is not just a change in the way we do business, but represents the creation of an exciting new supply business that will take our years of expertise and translate them into a new era of growth. By transferring nearly half of our generating assets to this company, Allegheny Energy is positioned as one of the nation's leading electric generation suppliers."

Approximately 3,700 MW -- the amount of generation owned by Allegheny's Pennsylvania operating subsidiary -- is being transferred to the new company. Additionally, a 276-MW merchant generating asset, formerly owned by AYP Energy, is being placed in the fleet, and it is anticipated that the 88 MW of new capacity being constructed in Pennsylvania will also become part of the new company. Additional assets will be transferred as other states in Allegheny Energy's jurisdiction move to competition.

As previously announced, Peter J. Skrgic is President of the new company. The nonutility business will include both retail and wholesale sales operations and is licensed to sell competitive electric generation at retail in Pennsylvania, New York, New Jersey, and Delaware, with other licenses to follow as more states open their doors to choice.

Allegheny Energy, Inc., along with subsidiaries West Penn Power Company and AYP Energy, Inc., filed the application to create the unregulated subsidiary in April. The request was the 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.

Allegheny Energy, Inc. is a diversified energy company headquartered in Hagerstown, Md. The Allegheny Energy family includes Allegheny Power, which delivers electric energy to about three million people in parts of Maryland, Ohio, Pennsylvania, Virginia, and West Virginia; Allegheny Energy Supply Company, which operates and markets competitive retail and wholesale electric generation and operates regulated electric generation for its affiliates; and Allegheny Ventures, which actively invests in and develops energy-related and telecommunications projects. For more information, visit our web site at www.alleghenyenergy.com.