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U.S. Securities and Exchange Commission


(Release No. 35-27897)

Filings Under the Public Utility Holding Company Act of 1935, as amended ("Act")

September 28, 2004

Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated under the Act. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) is/are available for public inspection through the Commission's Branch of Public Reference.

Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by October 20, 2004, to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549-0609, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in the case of an attorney at law, by certificate) should be filed with the request. Any request for hearing should identify specifically the issues of facts or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After October 20, 2004, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.

Allegheny Energy, Inc. (70-10247)

Alegheny Energy, Inc. ("Allegheny"), a registered holding company under the Act, 800 Cabin Hill Drive, Greensburg, Pennsylvania 15601, has filed a declaration ("Declaration") under section 12(d) and rule 44 of the Act.

Allegheny requests authorization to sell its nine percent ownership interest in Ohio Valley Electric Corporation ("OVEC") to Buckeye Power Generating, LLC ("Buckeye Power"), an affiliate of Buckeye Power Inc. OVEC is a public utility company under the Act.

OVEC was formed in the early 1950s by a group of holding companies and utilities located in the Ohio Valley region in response to the request of the United States Atomic Energy Commission ("AEC") to supply the electric power and energy necessary to meet the needs of a uranium enrichment plant being built by the AEC in Pike County, Ohio. The holding companies that directly or indirectly own 10 percent or more of OVEC's stock, each of which is a registered holding company, are: Allegheny (12.5%),1 American Electric Power Company, Inc. ("AEP") (44.2%) and FirstEnergy Corp. ("FirstEnergy") (20.5%).2

OVEC owns two coal-fired generating stations: (1) the Kyger Creek Plant in Cheshire, Ohio, which has a generating capacity of 1,075 megawatts, and (2) the Clifty Creek Plant in Madison, Indiana, which has a generating capacity of 1,290 megawatts and is owned by OVEC's wholly-owned subsidiary, Indiana-Kentucky Electric Corporation. Originally, the Department of Energy ("DOE") purchased essentially all of the generating capacity of OVEC's generating facilities. However, DOE' terminated its purchase agreement on April 30, 2003, and each of the Sponsoring Companies currently is entitled to its specified share of all net power and energy produced by OVEC's two generating stations.3

Buckeye Power, Inc., is a member-owned generation and transmission cooperative based in Columbus, Ohio that supplies power and energy to all the electric distribution cooperatives that serve customers in Ohio. The certified service territory of these distribution cooperatives covers nearly 40 percent of the land area in the state and encompasses 77 of Ohio's 88 counties.

On May 17, 2004, Allegheny signed a purchase agreement ("Purchase Agreement") under which Allegheny will sell a nine percent equity interest in OVEC, and Allegheny Energy Supply Company, LLC ("AE Supply"), will assign its rights to nine percent of the power generated by OVEC, to Buckeye Power for $102 million in cash and the assumption of approximately $37 million in debt by Buckeye Power ("Purchase Price"). Of the total cash component of the Purchase Price, $7,140,000 represents the price for the transfer of Allegheny's nine percent equity interest in OVEC, the transaction for which authority is being sought in this Application. The remainder represents the price for the assignment of AE Supply's rights under the OVEC Inter-Company Power Agreement ("OVEC Power Agreement") to nine percent of the power generated by OVEC.4

Allegheny maintains that the sale and assignment of these various interests is consistent with Allegheny's strategic goals of improving its financial strength by reducing debt and of refocusing its attention on the generation assets it owns and operates within the PJM Interconnection ("PJM") territory. Allegheny will use the net proceeds from the OVEC sale to reduce outstanding debt and for general corporate purposes.

Allegheny states that the Purchase Price and other definitive terms for the sale of OVEC reflected in the Purchase Agreement - negotiated by representatives of the parties over a number of months - are the result of arm's-length bargaining, and the Purchase Price constitutes fair and adequate consideration for the sale and assignment of Allegheny's interests in OVEC.

For the Commission, by the Division of Investment Management, pursuant to delegated authority.

Margaret H. McFarland
Deputy Secretary



Modified: 10/4/2004