Allegheny Energy Proposes Plan to Expand Transmission System.

GREENSBURG, Pa. -- Allegheny Energy (NYSE:AYE) today announced a proposal by its electricity delivery business, Allegheny Power, to build the Trans-Allegheny Interstate Line - a new transmission line from West Virginia to central Maryland.

The project, as described in today's filing with the regional transmission organization, PJM Interconnection, is aimed at improving system reliability and reducing transmission congestion in the region.

"Maintaining an adequate transmission grid is key to our mission of delivering reliable electric service," said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. "Our investment in the transmission network must keep pace with the growing demand in PJM, and reducing congestion will bring cost-competitive power to more consumers."

The proposed 500-kilovolt transmission line would span about 330 miles, all within Allegheny's service territory, from the Weirton, West Virginia, area to near Kemptown, Maryland. Allegheny's proposal will make effective use of existing facilities, properties and rights-of-way.

Allegheny's plan requests that PJM incorporate the proposal into its next Regional Transmission Expansion Plan. PJM is expected to approve its plan in June 2006. If approved by PJM, Allegheny will seek state authorizations to build the line.

Allegheny also filed a request for the Federal Energy Regulatory Commission to authorize certain incentive rate treatments and plans to request that the U.S. Department of Energy designate the project as a National Interest Electric Transmission Corridor. Initial engineering and planning is expected to begin in 2007, with the first segment in place in 2013. The projected cost is approximately $1.4 billion.

Allegheny Energy

Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland and Virginia. For more information, visit our web site at www.alleghenyenergy.com.

Forward-Looking Statements 

In addition to historical information, this release contains a number of "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Words such as anticipate, expect, project, intend, plan, believe, and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. These include statements with respect to: rate regulation and the status of retail generation service supply competition in states served by Allegheny Energy's distribution business, Allegheny Power; financing plans; demand for energy and the cost and availability of raw materials, including coal; provider-of-last-resort and power supply contracts; results of litigation; results of operations; internal controls and procedures; capital expenditures; status and condition of plants and equipment; regulatory matters; and asset sales or transfers. Forward-looking statements involve estimates, expectations and projections and, as a result, are subject to risks and uncertainties. There can be no assurance that actual results will not materially differ from expectations. Actual results have varied materially and unpredictably from past expectations. Factors that could cause actual results to differ materially include, among others, the following: changes in the price of power and fuel for electric generation; general economic and business conditions; changes in access to capital markets; complications or other factors that render it difficult or impossible to obtain necessary lender consents or regulatory authorizations on a timely basis; environmental regulations; any failure to consummate, or delay in the consummation of, any contemplated asset sales or transfers; the results of regulatory proceedings, including proceedings related to rates; changes in industry capacity, development and other activities by Allegheny Energy's competitors; changes in the weather and other natural phenomena; changes in the underlying inputs and assumptions, including market conditions used to estimate the fair values of commodity contracts; changes in laws and regulations applicable to Allegheny Energy, its markets or its activities; the loss of any significant customers or suppliers; dependence on other electric transmission and gas transportation systems and their constraints or availability; changes in PJM, including changes to participant rules and tariffs; the effect of accounting policies issued periodically by accounting standard-setting bodies and accounting issues facing our company; and the continuing effects of global instability, terrorism and war. Additional risks and uncertainties are identified and discussed in Allegheny Energy's reports filed with the Securities and Exchange Commission.