Allegheny Power Modifies Maryland Rate Plan.

Low-Income Customer Group Comments on Proposal

GREENSBURG, Pa. -- Allegheny Power, the electric delivery subsidiary of Allegheny Energy, Inc. (NYSE:AYE), has offered to modify its proposed rate stabilization and transition plan for Maryland residential customers. The Maryland State Department of Human Resources Office of Home Energy Programs has commented favorably on the plan.

The key changes to the original plan include:

* the opportunity for customers to choose not to participate (opt-out) in the transition plan,

* refunds will be available to customers who move outside of Allegheny's service territory or the heirs of deceased customers, and

* an increase in the company's contribution to the Community Energy Fund over the four years of the plan.

"Our goal is to help customers manage their bills when rate caps expire. We listened to customers throughout the commission's public hearing process and have modified our plan in response to their concerns," said David E. Flitman, President of Allegheny Power. "We believe these changes address the key issues: choice, protection from dramatic rate changes and assistance for those who need it the most - our fixed-income and low-income customers."

The Maryland Office of Home Energy Programs director, Mary Lou Kueffer, supports Allegheny Power's revised rate stabilization plan and considers it an opportunity for low-income customers to gradually adapt to the significant cost increase predicted for 2009. "Higher energy prices hit the most vulnerable populations the hardest," states Ms. Kueffer, "But with the gradual annual increases in the plan and Allegheny Power's commitment to increase contributions to the utility's energy fund, coupled with the State's energy benefits, OHEP believes that the impact on the low-income community will be greatly reduced."

Allegheny Power filed its original proposal with the Maryland Public Service Commission in December 2006. The plan called for 15 percent rate increases in 2007 and 2008 with the money going into a dedicated fund. With the expiration of the residential generation rate caps and the move to market-based generation pricing on January 1, 2009, the surcharge would convert to a credit on customers' bills. Funds collected through the surcharge during 2007 and 2008, plus interest, would be returned to customers as a credit on their electric bills, thereby reducing the effect of purchasing electricity at market prices. The credit would continue, with adjustments, to maintain rate stability until December 31, 2010.

Allegheny Power's proposed transition plan is subject to final approval by the Public Service Commission. Allegheny has requested that the commission approve the plan to be effective beginning March 31, 2007.

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; capacity purchase commitments; regulatory matters; and accounting issues. 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; 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; changes in PJM, including changes to participant rules and tariffs; the effect of accounting policies issued periodically by accounting standard-setting bodies; 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.