Allegheny Energy Applauds Ohio Commission Approval of Restructuring Settlement.

Business Editors

HAGERSTOWN, Md.--(BUSINESS WIRE)--October 6, 2000

Allegheny Energy, Inc.'s (NYSE: AYE) Ohio utility subsidiary, which does business as Allegheny Power, today applauded the Public Utilities Commission of Ohio (PUCO) for approving the Company's plan for deregulating the generation of electricity in Ohio.

"We are pleased that the PUCO has approved this settlement, which allows the Company to maintain and strengthen its position as a leader in the new, competitive marketplace and to promote shareholder value," said Michael P. Morrell, Allegheny Energy's Senior Vice President and Chief Financial Officer. "This fair and equitable plan will provide benefits for our shareholders and customers. For the first time ever, our Ohio customers will be able to choose the company that supplies their electricity, while also realizing a rate reduction."

The restructuring plan allows the Company to transfer its Ohio generating assets to Allegheny Energy Supply Company, LLC, its non-regulated affiliate, at book value on Jan. 1, 2001. Morrell said the addition of these assets to Allegheny Energy Supply Company's existing portfolio of non-regulated generation will ensure that the Company continues its growth strategy of becoming a premier energy supplier of choice throughout the region.

"Our ability to offer low-cost energy - a staple of ours for most of this century - combined with our invaluable experience in customer choice in Pennsylvania, Maryland, New Jersey, and other markets, will serve us well as we enter a new era in the industry," Morrell explained.

The settlement was filed with the PUCO in June following negotiations between the Company and other parties to its restructuring case. It will allow Allegheny Power's Ohio customers to choose their electricity supplier starting Jan. 1, 2001. Residential customers will also benefit from a five percent reduction in the generation portion of their rates, starting Jan.1, 2001 and remaining in effect for five years.

Approval of the plan allows the Company to seek new customers in new markets throughout Ohio while continuing to deliver safe, reliable electricity to its 29,000 customers, regardless of the company they choose to supply their energy.

"While times are changing, our commitment to serving our customers remains the same," said Morrell. "Allegheny Power will always be there to meet our customers' needs, 24 hours a day, 365 days a year."

The following are highlights of the agreement:

-- Allegheny will be permitted to transfer approximately 325 MW of Ohio
jurisdictional generating assets to a non-regulated affiliate at book value on
Jan. 1, 2001.

-- Residential customers will receive a five percent reduction in the
generation portion of their electric bills during a five-year market
development period beginning on Jan. 1, 2001. These rates will be frozen for
five years.

-- Allegheny Energy's existing, low generation rates will be frozen for a
maximum of three years for large industrial and commercial customers.

-- The Company will collect a regulatory asset transition charge through the
respective market development periods.

-- The Company's unregulated affiliate will be permitted to offer competitive
generation service throughout Ohio.

-- All additional taxes resulting from competition legislation will be deferred
for up to two years.

-- Allegheny Energy will participate with the PUCO, the Ohio Consumers'
Counsel, and other utilities in a statewide consumer education campaign
supplemented by a local education effort.

Other parties to the agreement include the Commission staff, the Ohio Consumers' Counsel, Industrial Users-Ohio, the Ohio Manufacturing Association, the Ohio Council of Retail Merchants, Ohio Partners for Affordable Energy, Strategic Energy L.L.C., Exelon Energy, PP&L Energy Plus, the Ohio Marketer's Coalition, Columbia Energy Services and Columbia Energy Power Marketing Corp., American Municipal Power-Ohio, Ohio Rural Electric Coops and Buckeye Power, the Ohio Department of Development, Kroger Company, the National Energy Marketers Association, the Corporation for Ohio Appalachian Development, and Mid-Atlantic Power Supply Association.

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