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POTOMAC EDISON $165 MILLION SHELF DEBT RATED 'AA-' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Jan. 7 /PRNewswire/ -- Potomac Edison Co.'s $165 million first mortgage bond shelf registration is rated 'AA-' by Fitch. The credit trend is stable.
 The rating reflects sound credit fundamentals, the operating and financial strengths of its parent, Allegheny Power System, Inc., and supportive regulatory treatment for Clean Air Act (CAA) related expenditures in each of Potomac Edison's three jurisdictions. Rating maintenance also assumes constructive treatment for attrition-related rate increases.
 Potomac Edison's revenues are regulated by Maryland (70.1 percent), West Virginia (15.3 percent), and Virginia (14.6 percent). Regulators in all jurisdictions determined that the Allegheny system's acid rain compliance plan is prudent. Treatment by Maryland and West Virginia regulators was particularly constructive. The Maryland Public Service Commission (PSC) authorized the recovery of capital costs associated with CAA investments through a surcharge. West Virginia permitted similar treatment of capital costs with recovery through the energy clause. The Virginia State Corporation Commission granted the rate base recognition of construction work in progress following an annual information filing. Potomac Edison filed a request for a $23 million rate increase unrelated to acid rain expense recovery in Maryland in July. A decision is expected in February.
 Allegheny Power plans to comply with 1990 CAA Phase 1 requirements by building three scrubbers at its mine-mouth Harrison plant for $726.6 million, including allowance for funds used during construction (AFUDC). Potomac Edison's share of these costs is $233.6 million.
 Total debt as a percent of capitalization was 45.1 percent at Sept. 30. The company received an $80 million equity infusion in September partly from the proceeds of a parent company common stock offering that raised approximately $87 million. Pretax coverage of interest expense excluding AFUDC and including subsidiary Allegheny Generating Co. interest expense was 2.92 times for the 12 months ended Sept. 30. Internal cash generation funded 47.5 percent of construction expenditures for the same period. Based on favorable CAA rate treatment, internal generation and pretax interest coverage should approach levels more appropriate for the rating category by 1995 when scrubber construction expenditures decline.
 -0- 1/7/93
 /CONTACT: Josephine Zeppieri CFA of Fitch, 212-908-0575/
 (AYP)


CO: Potomac Edison Co.; Allegheny Power System ST: New York IN: UTI SU: RTG

SH -- NY085 -- 5589 01/07/93 15:06 EST
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Date:Jan 7, 1993
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