Fitch Rates Allegheny Energy Supply's $400MM Notes `BBB+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 5, 2001

Allegheny Energy Supply Company, LLC's (AE Supply) issuance of $400 million senior unsecured notes is rated `BBB+' by Fitch. In addition, AE Supply's commercial paper rating is affirmed at 'F2'. The Rating Outlook is Stable. The notes are scheduled to price the week of March 12th, with Salomon Smith Barney as lead underwriter. Proceeds will be used as part of the $490 million needed to purchase Global Energy Marketing (GEM) -- a Merrill Lynch energy trading business.

The acquisition of GEM, one of the largest energy trading operations in the U.S., should enhance AE Supply's existing wholesale marketing and risk management activities, and support the company's strategy to become a national energy supplier. AE Supply's generating fleet currently consists of 6,472 MW of primarily coal-fueled, base load capacity in the PJM and ECAR regions. By 2005, AE Supply plans to more than double its existing generating portfolio and expand its presence into the mid and southwestern US power markets. The additional generating capacity will consist of: a transfer of assets from affiliate Monongahela Power Company, generating plant acquisitions and new plant construction. The incremental capacity will add load, fuel and geographic diversity to AE Supply's asset base.

AE Supply derives its credit strength from its low-cost generating assets, long-term contracts with its affiliated distribution companies (West Penn Power Co. and Potomac Edison Co.) that account for over 85% of AE Supply's revenues, and a solid balance sheet with 37% debt capitalization as of Dec. 31, 2000 (unaudited). The company also benefits from operating in varied and generally liquid power markets. Financial protection measures are strong for a `BBB+' rated entity, with EBIT and cashflow interest coverage of 4.29 times (x) and 5.78x, for fiscal year-end 2000 (unaudited). AE Supply's management of the volume and price risk associated with the contracted retail loads is substantially hedged via the ownership of the low-cost generating facilities.

Credit concerns center on the company's aggressive growth strategy, rising pure merchant risk in the generation portfolio (up to 40% of operating revenues by 2005), plant construction risk, and integration of the new energy trading business. AE Supply anticipates aggregate debt issuance of $1.5 billion through 2003 to finance the company's growth to +14,000 MW generating capacity. Debt capitalization will rise to 47% by 2002, then gradually decline thereafter. While the incremental debt burden weakens credit quality, Fitch's initial `BBB+' rating factored in the company's rapid growth plans. EBIT and cashflow interest coverages are projected to exceed 6.0x and 5.0x, respectively, through 2005. The projections incorporate the company's consideration of an initial public offering (IPO) of a portion of the merchant generating company (approximately 20% of projected 2001 gross plant asset value) by June 2001. Without the IPO, AE Supply's leverage will rise to 57% in 2002 and interest coverage ratios will moderately tighten -- although remaining adequate for the rating category.

Allegheny Energy Supply Company, LLC is a wholly owned subsidiary of Allegheny Energy, Inc. AE Supply operates and markets retail and wholesale electric generation, and operates regulated electric generation for its affiliates.