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Transmission Incentives for PATH Line Approved by FERC

Allegheny Energy, Inc. (NYSE: AYE) announced today that the Potomac-Appalachian Transmission Highline (PATH), Allegheny's joint venture transmission project with American Electric Power (NYSE: AEP), reached a key regulatory milestone with the Federal Energy Regulatory Commission's approval of incentive rate treatment.

The incentive rate treatment is intended to encourage new investment in electric transmission lines that will improve the reliability of electric service.

The companies requested and the commission granted the following incentives:

-- a return on equity of 14.3 percent, which includes a 50 basis point incentive that is conditioned on membership in the regional transmission organization, PJM Interconnection;

-- inclusion of 100 percent of construction work in progress in the rate base, which allows recovery of a return prior to the in-service date of PATH;

-- recovery of prudently incurred start-up business and administrative costs incurred prior to the time the rates go into effect; and

-- recovery of prudently incurred development and construction costs if PATH is abandoned as a result of factors beyond the control of PATH or its parent companies.

The commission plans to hold hearings on PATH's proposed formula rate, including the cost of service formula that would be used to calculate annual revenue requirements for the project.

In 2007, PJM Interconnection, the regional grid operator for a 13-state area, approved construction of the proposed line. The project includes 244 miles of 765-kilovolt (kV) transmission from AEP's Amos substation near St. Albans, W.Va., to Allegheny's Bedington substation, northeast of Martinsburg, W.Va., and 46 miles of twin-circuit 500-kV transmission from Bedington to a new substation near Kemptown, southeast of Frederick, Md. Based on current plans, PATH is estimated to cost approximately $1.8 billion and Allegheny currently estimates that its total investment in the project will be approximately $1.2 billion.

PATH will seek regulatory approvals from the utility commissions in the respective states the line crosses.

Allegheny Energy

Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned electric utility with total annual revenues of over $3 billion and more than 4,000 employees. The company owns and operates generating facilities and delivers low-cost, reliable electric service to 1.6 million customers in Pennsylvania, West Virginia, Maryland and Virginia. For more information, visit the company's Web site at

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: 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; 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 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 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.


Allegheny Energy, Inc.
Media contact:
Doug Colafella, 724-838-6387
Manager, External Communications
Media Hotline: 888-233-3583
Investor contact:
Max Kuniansky, 724-838-6895
Executive Director, Investor Relations
and Corporate Communications

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