Forward-Looking Statements

In addition to historical information, this presentation 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: regulation and the status of retail generation service supply
competition in states served by Allegheny Energy's delivery business, Allegheny Power; the closing of
various agreements; 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 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: changes in the price of power and fuel for electric
generation; general economic and business conditions; changes in access to capital; 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'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, its markets or its
activities; the loss of any significant customers and suppliers; dependence on other electric
transmission and gas transportation systems and their constraints on availability; changes in PJM,
including changes to participants 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 and
registration statements filed with the Securities and Exchange Commission. These forward-looking
statements speak only as of the date of this document. Allegheny Energy undertakes no obligation to
update its forward-looking statements to reflect events or circumstances after
the date of this document.

Non-GAAP Financial Measures

This presentation includes non-GAAP financial measures as defined in the
Securities and Exchange Commission’s Regulation G. Where noted, the
presentation shows certain financial information on an “as adjusted” basis, to
exclude the effect of certain items as described herein. By presenting “as adjusted”
results, management intends to provide investors with a better understanding of
the core results and underlying trends from which to consider past performance
and prospects for the future.

Users of this financial information should consider the types of events and
transactions for which adjustments have been made. “As adjusted” information
should not be considered in isolation or viewed as a substitute for, or superior to,
net income or other data prepared in accordance with GAAP as measures of our
operating performance or liquidity. In addition, the “as adjusted” information is not
necessarily comparable to similarly titled measures provided by other companies.

Pursuant to the requirements of Regulation G, we have attached a table that
reconciles the non-GAAP financial measures in this presentation to the most
directly comparable GAAP measures. The table is also available at
www.alleghenyenergy.com.

Allegheny Energy

Allegheny
Energy

Generation

Coal-fired, PJM

48.1 million MWH*

Delivery

1.6 million customers,

PA-MD-WV-VA

* 12 months ended December 31, 2005

Growth Driver:
Increase Generation Rates

July January

2007 2009

State Virginia Maryland

MWH transitioning 1.0 - 3.2 million* 3.5 million

to market-based rates

Increase in pre-tax income $20-60 million* $60 million

* annualized

2008

Goal

Supercritical Coal Units

Each 1% improvement provides benefit >$10 million

2006

Est.

Growth Driver:
Improve Plant Availability

2007

Goal

Achieve 91% Availability

Outage Factor

(supercritical units)

22%

24%

17%

16%

15%

Reduce planned
outages

Reduce unplanned
outages

18%

2005

Ft. Martin 2

COMPLETED

PLANNED

Harrison 1

Harrison 3

Hatfield 1

Hatfield 3

Pleasants 2

Ft. Martin 1

Hatfield 2

Harrison 2

Pleasants 1

2006

2007

Improving Availability:
Conducting Extended Planned Outages

Requested $100 million net increase

Fuel, purchased power: $126 million increase

Base rates: $26 million decrease

10% net increase (residential)

Requested reinstatement of fuel cost adjustment

Proposed ROE: 11.75%

Probable effective date: late May 2007

Growth Driver:
West Virginia Rate Case

Growth Driver:
Expand Transmission System

2007: enhance near-term reliability

Cost: $70 million

By 2011: construct ~210-mile line

Cost: over $850 million (preliminary estimate)

FERC approved incentive rate treatment,
including return during construction

Separate legal entity to own, construct

85% of costs recovered from other PJM
utilities

Other Growth Catalysts

Projected PJM

Reserve Margin

Increasing marginal heat rate

Gas will more frequently impact PJM energy prices

Improving capacity values

16% PJM Target

Improve
Environmental Performance

By 2010:

One of the cleanest coal fleets in the U.S.

2009

$500 – 550

Ft. Martin Scrubbers

2009

~$650

Hatfield Scrubbers

2008

$110

Pleasants Bypass

IN
SERVICE

ESTIMATED
COST
($ Millions)

Improving Financial Results

Earnings per Share

2003

2005

2004

2006

9 mos.

($2.80)

($0.37)

($1.83)

$0.47

$0.40

$0.94

$1.51

$1.46

As Reported

As Adjusted

Cash Flow
($ millions)

Cash from Operations

as reported

Free Cash Flow

(adjusted cash from operations

net of capital expenditures)

2006

9 mos.

2006

9 mos.

Capital Expenditures
($ millions)

$307

~$1,000

~$500

Environmental –

other

Environmental –

securitized

All other

Transmission

2007 Earnings Growth:
Key Drivers

*2007 vs. 2006 as adjusted

positive/negative

Other factors

Interest expense

(30)

Higher SO₂ allowance costs

(45)

Higher coal prices

O&M expense

Plant availability

positive/negative

Market prices

Maryland customer credit

Virginia rates

West Virginia rate case

$50

Pennsylvania generation rates

CONTRIBUTION TO PRE-TAX INCOME*
($ millions; estimates)

Earnings (Loss) Per Share

0.56

0.65

0.22

0.18

$0.68

$0.67

2006: Q1

0.94

0.40

Year

0.02

0.45

0.21

0.08

(0.12)

$0.39

$0.29

2005: Q1

0.47

(1.83)

Year

0.22

0.48

0.37

(2.40)

(0.21)

(0.31)

$(0.03)

$0.25

2004: Q1

(0.37)

(2.80)

Year

(0.14)

(0.11)

0.11

(0.40)

$(0.23)

(1.82)

$(0.32)

$(0.46)

2003: Q1

As Adjusted

As Reported

EBITDA

286.3

193.6

$322.1

2006: Q1

890.2

888.6

Year

162.1

274.2

254.7

192.7

210.6

$261.3

2005: Q1

762.5

914.0

Year

221.8

312.7

243.2

122.0

110.3

$175.5

$247.8

2004: Q1

634.9

156.8

Year

185.6

197.4

225.3

117.3

150.1

(203.5)

$92.9

$77.6

2003: Q1

As Adjusted

As Reported

$ millions
Reported

Enhance Operating Performance

Financial

Performance

Engaged

Employees

Environmental

Stewardship

Shareholder

Value

Operational

Excellence

VISION:

“To Be a Top Performing Utility by
Year-End 2007”

Customer

Satisfaction

Generation and Marketing:
Overview

Capacity*

* Excludes Gleason peaking unit (held for sale). Output for year ended December 31, 2005.

Capacity: over 9,600 MW*

Primarily base load coal-fired plants

Located in PJM (13 states)

MWH Output*

Hydro

11%

Gas

Supercritical
Coal

63%

Other Coal

16%

Oil

Supercritical
Coal

79%

Gas

Hydro

Other Coal

17%

Coal

96%

Low-Cost Generation Fleet

Allegheny has an advantaged dispatch in PJM

PJM Dispatch Cost (Ozone Season): $/MWh

Allegheny Supercritical Coal Units

Dispatch Cost

Allegheny – Other Units

Assumptions: natural gas delivered at approximately $8.00/mmBTU; coal at approximately $2.75/mmBTU; SO ₂
at $670/ton; NOx at $1,750/ton.

World’s largest competitive power market

Over 51 million people

700 million MWH of energy annually

163,500 MW of capacity

Nation’s most liquid spot power market

Model for FERC’s proposed Standard Market
Design

Provides transactional flexibility: contracts not
required

Generation and Marketing:
PJM -- An Attractive Market

Improving Performance,
Reducing Spending

O&M and Capital*

Unplanned outage
factor

High
Performance

Under-investment

Re-investment

Reduce
spending

* Special maintenance O&M and capital for supercritical coal units. Excludes environmental spending.

Goal

Exposure to
SO₂ Allowance Market

SO₂Emissions

in Excess of Allowances

(tons; estimated as of October 2006)

* Approximately 75% of 2007 and 2008 short position is at Monongahela
Power

2006 -0-

2007 40,000*

2008 40,000 - 80,000*

Only 15% of Coal
Delivered by Rail

Note: Some barge coal originates on short line railroads.

Rail

15%

Barge

49%

Conveyor

15%

Truck

21%

Coal Delivery Methods

2006

Delivery and Services:
Overview

In 4 states (PA, WV, MD,
VA)

1.6 million electric customers

Load growth: 2.0% compounded
annually (1995-2005; retail)

Allegheny Power

West Penn
Power

Monongahela
Power

Potomac
Edison

VIRGINIA

CHARLESTON

OHIO

HARRISBURG

MARYLAND

KENTUCKY

PENNSYLVANIA

CLEVELAND

BALTIMORE

PITTSBURGH

WASHINGTON, DC

WEST

VIRGINIA

Delivery and Services:
Retail Revenue Mix, 2005

By State

By Customer Class

Residential

43%

Industrial

31%

Commercial

25%

Other

¹Generation rate caps include rate increases in each year, 2006-2010.

² One-time T&D increase can be requested through 2007. After 2007, can
request recovery of purchased power and annual incremental T&D
reliability and environmental costs, and one additional T&D cost
increase.

Regulatory Timeline

2006

2008

2009

2010

T&D

Generation

T&D

Gen. - Res.

Through 2007

Gen. - Com. & Ind.

T&D

and

Generation

Regulated

Capped through 2008

Market-based

Regulated

Distribution capped through 2007

Increases through 2010

2007

Through 2010

State

T&D

and

Generation

Regulated