Allegheny Power Embarks on Advanced Utility Infrastructure Projects.

Deploying New Technology for the Next Generation of Utility Systems

GREENSBURG, Pa. -- Allegheny Power, the electric delivery subsidiary of Allegheny Energy, Inc. (NYSE:AYE), is deploying Advanced Utility Infrastructure (AUI) projects that will help identify new technologies for the nation's electricity grid.

Such projects hold the potential to move beyond technologies such as smart meters to an advanced communications and control network that links utility infrastructure with customers' equipment and appliances. The ideal outcome will be a system that reduces peak power consumption, enables real-time pricing options, improves system efficiency and enhances service reliability.

"These projects will aid us in evaluating the mutual benefits advanced infrastructure holds for the utility and its customers," said Paul J. Evanson, Chairman, President, and Chief Executive Officer of Allegheny Power. "Potentially, customers could benefit through improved service and enhanced systems to manage their energy use and reduce costs, and the utility could benefit from better system performance."

Allegheny's AUI projects are:

Research Ridge Project will demonstrate how a network can link the customer's equipment to the utility's distribution system to optimize energy consumption at a six-building office park in Morgantown, W.Va.

West Virginia Super Circuit is one of nine new U.S. Department of Energy demonstration projects. The project will evaluate the integration of advanced system monitoring and control as well as distributed generation resources to improve the performance and reliability for approximately 2,300 customers in the Morgantown area.

Modern Grid is a Department of Energy-sponsored field test for isolating system faults and restoring electricity service without manual intervention.

These efforts complement Allegheny's demand side management programs offered to large commercial and industrial customers, which are currently integrated into PJM Interconnection's regional wholesale electricity market. The Economic Load Response Program offers financial incentives to customers who reduce their power consumption during periods of high electrical demand or prices. The Interruptible Load Resource Program pays customers if they are called to reduce electrical usage during system emergencies.

Allegheny and its technology partner, Augusta Systems, Inc, of Morgantown, W.Va., are working on engineering and design for the AUI projects, and will collaborate on evaluating the results.

Allegheny Energy

Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned electric utility with total annual revenues of over $3 billion and more than 4,000 employees. The company owns and operates generating facilities and delivers low-cost, reliable electric service to 1.6 million 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 may contain 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; capacity purchase commitments; and regulatory matters. 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: plant performance and unplanned outages; changes in the price of power and fuel for electric generation; general economic and business conditions; changes in access to capital markets and actions of rating agencies; complications or other factors that render it difficult or impossible to obtain necessary lender consents or regulatory authorizations on a timely basis; environmental regulations; 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 customer switching behavior and their resulting effects on existing and future load requirements; 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; inflationary and interest rate trends changes in market rules, including changes to PJM participant rules and tariffs; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies and accounting issues facing our organization; 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.