(above) Allegheny Energy’s employees share our strong commitment to environmental stewardship. More than 70 employees removed trash from the Ohio River and its tributaries during the 1999 River Sweep, the largest organized waterway cleanup in

For nearly 100 years, Allegheny Energy has created a proud heritage of commitment to our employees, our communities, and the environment. But, as we enter the 21st century, we are not satisfied to rest on our past performance. For 2000 and beyond, we intend to make more meaningful than ever our commitments to value our employees, support and enhance our communities, and protect and preserve our environment.
 

(right) Federal regulatory and legislative issues are of vital importance to Allegheny Energy and the way we do business. Pamela Mills, Manager, Federal Regulatory Affairs, and Dennis Limbach, Manager, Federal Legislative Affairs, represent the Company’s interests in Washington, D.C.

Allegheny Energy supports and values our 5,000 employees and recognizes that their contributions give us our competitive advantage. Our employees are experts in their fields, finding innovative solutions for solving complex issues. Their dedication has earned us an enviable reputation for exceptional service to customers and has allowed Allegheny Energy to consistently surpass our goals for outstanding performance. Our employees take ownership in the Company’s goals and vision, as well as in our financial well-being. And they are the ambassadors of our brand within their communities.

A MEANINGFUL ENVIRONMENTAL COMMITMENT  Our commitment to the environment remains as strong as ever. We are dedicated to living up to our corporate Environmental Policy (shown on page 26), which promises that we will always conduct our operations in an environmentally responsible manner to protect our customers, our Company, and future generations. We are very proud of our long history of compliance with environmental initiatives and of our proactive programs in which many of our employees are involved.

Allegheny continues to invest approximately $2 million annually in research on local and industry-wide projects, principally in the environmental area. Through the Electric Power Research Institute, we are exploring new ways to improve air and water quality.

In addition, Allegheny annually invests money, time, and people power in a long list of meaningful environmental stewardship projects in the regions in which we live and work. Some examples of these projects include:

• Corporate sponsorship of River Sweep, the largest organized river cleanup in the United States, in which volunteers annually remove tons of refuse and debris from the banks of the Ohio River and its tributaries.
   
• Development and maintenance of the Appalachian Trail and other hiking and recreational trails that crisscross our five-state territory.
   
• Support for local and regional watershed associations, including Friends of the Potomac and Friends of the Cheat, whose goals are to protect and enhance the historic Potomac and Cheat River basins.

(above) The Company’s Information Services employees and their families planted 150 trees along the Five Star Trail between Greensburg and Youngwood, Pa., and performed routine maintenance on the wheelchair-accessible, crushed stone trail that is used for walking, cycling, and cross-country skiing. Shown are, from left, Jennifer Duwall, Support Analyst (kneeling), John McCune, Specialist, Matthew McCune, John’s son, JoAnn Clutter, Specialist, and Hunter Duwall, Jennifer’s son.

We are also proud to play a key role in the Environmental Millennium Initiative, a collaborative effort involving corporations, environmental organizations, and community partners aimed at pursuing the development of wildlife habitat and biodiversity projects. This coming April, we will also mark the 30th anniversary of Earth Day with a number of environmental activities that will demonstrate our ongoing commitment to protecting our valuable natural resources.

ZEROING IN ON SAFETY  Our employees live the value of safety, focusing on the ultimate goal of having no injuries in the workplace. We are proud of the progress we made toward our goal in 1999 and are striving to do even better in 2000.

Allegheny Energy was recognized as a leader in safety in 1999. We were selected from hundreds of companies to receive the Governor’s Safety Award in West Virginia. This marks the third time we have been honored with this award, sponsored by the West Virginia Safety Council. We received this recognition because of the commitment that our West Virginia employees make to safety every day.

In addition, employees at 33 Allegheny Power work locations completed another year without a lost workday injury. Our power station employees also continued their exceptional safety record, with eight of our plants reporting no lost workday injuries during the year.

Employees at our Parkersburg, W.Va., Service Center and those at our Harrison and Rivesville Power Stations in West Virginia continued to maintain exemplary safety performances by achieving more than 2 million hours worked without a lost workday injury.

In addition, employees at our Summersville, W.Va., Service Center, our Connellsville, Pa., facility, and our Greensburg, Pa., Corporate Center drove more than 1 million miles without having a preventable motor vehicle accident in 1999.

Safety is not only a measurable goal within Allegheny’s operating businesses; it is ingrained in our culture.

MAKING A DIFFERENCE IN OUR COMMUNITIES  Just as our employees make a difference within our Company, they also make a difference within their own communities. Our employees and retirees give of their time and talents to organizations in the communities in which they live and work. Our Company officers set the tone with their involvement in a wide variety of community organizations. On page 70 is a partial list of the organizations in which our officers take an active role.

To cultivate a positive relationship with our neighbors and customers, Allegheny Energy established community advisory panels in all of our power station communities. The advisory panels provide an opportunity for the Company to share information with citizens in these communities and to listen and respond to electric generation-related and community issues.

Our commitment to supporting the United Way is another example of how we are involved in our communities. In 1999, we provided nearly $300,000 in corporate and employee support to United Way agencies across our five-state service area.

In 1999, we also helped neighbors in need pay winter heating bills through the Community Energy Fund in Maryland, Virginia, and West Virginia and through the Dollar Energy Fund in Pennsylvania. We are also involved in numerous other goodwill programs throughout our service area. We strive to be good corporate citizens wherever we serve.

Y2K  We welcomed the arrival of the year 2000 (Y2K) with lights shining brightly and the power flowing. As a result of our intensive company-wide effort, all of our systems critical to supplying electricity to customers operated normally when the Y2K computer rollover occurred.

In preparation for Y2K, hundreds of Allegheny Energy’s devoted employees worked about 80,000 hours to make sure our customers had power and experienced no disruption of service. We also participated in two very successful industry-wide Y2K drills. Our planning included significantly increased staffing on New Year’s Eve, with approximately 1,200 employees working at power stations, substations, service centers, corporate centers, and other key locations.

The Company also worked with key suppliers and vendors to ensure they would continue to provide important supplies and services to Allegheny without interruption. Additionally, we coordinated our Y2K activities with state regulators, other utilities, the news media, industry trade associations, and industry reliability councils.

In short, we are thrilled with the success of our Y2K efforts.

ALLEGHENY ENERGY ENVIRONMENTAL POLICY

Allegheny Energy conducts our operations in an environmentally responsible manner to protect our customers, the Company, and future generations. We fulfill our commitment to environmental compliance and strive for environmental leadership and stewardship in the communities where we live and serve by:

• Maintaining a corporate culture that recognizes environmental compliance, leadership, and stewardship as measurable goals.

• Establishing and maintaining an environmental management system designed to meet or surpass applicable compliance obligations.

• Constructively working with governments, citizen groups, universities, other electric utilities, and industries to ensure that environmental laws and regulations are based on sound principles that are reasonable, technically feasible, and cost-effective.

• Actively pursuing innovative and cost-effective solutions to environmental challenges through research and creative approaches, such as application of market-based incentives.

• Communicating openly and honestly with our employees, customers, neighbors, and regulators about the nature of our business and its relationship to the environment

• Developing and participating in partnerships with governments, citizen groups, other electric utilities, and industries to protect and enhance the environment.

• Identifying and implementing opportunities to conserve resources and reduce waste through application of cost-effective pollution prevention practices.

• Integrating environmental considerations into our business strategies.

• Providing information and training to encourage employees to maintain environmental compliance and demonstrate stewardship.

• Assisting our customers in protecting and enhancing the environment by providing available information and support.