___________________________________
:
IN THE MATTER OF :
:
ALLEGHENY ENERGY, INC. et. al. :
: CERTIFICATE
File No. 70-8411 : PURSUANT TO RULE 24
: FOR THE QUARTER ENDED
(Public Utility Holding : SEPTEMBER 30, 1998
Company Act of 1935) :
___________________________________:
Through September 30, 1998, Allegheny Energy, Inc.
(Allegheny) has made capital contributions to AYP Capital,
Inc. ("AYP Capital") and its subsidiaries totaling
$53,673,747. See attached consolidated financial statements
for the quarter ended September 30, 1998. During the third
quarter of 1998, AYP Capital performed studies and completed
preliminary development activities in connection with the
ownership of companies in the areas of emerging technologies
closely related to Allegheny's core business. Other specific
activities performed by AYP Capital during the third quarter
of 1998 are shown below.
I. Description of Activities
A. Consulting and Engineering Services
AYP Capital provided engineering, consulting,
procurement and construction services to
nonaffiliated entities and completed development and
marketing activities associated with the provision of
such services to nonaffiliated entities.
B. Energy Management Services - APS Cogenex
As previously reported, AYP Capital and EUA-
Cogenex agreed to cease joint marketing activities
for energy management services under the terms of
their joint venture agreement for APS Cogenex.
Pending resolution of outstanding jobs, the APS
Cogenex joint venture continues to exist.
AYP Capital developed energy management products
and services to be offered to customers in and around
the service territory of its affiliates.
<PAGE>
C. EWGs and FUCOs
AYP Capital, through the Latin American Energy
and Electricity Fund I, L.P., a limited partnership
formed to invest in and develop electric energy
opportunities in Latin America, continued to
investigate FUCO investments. No new investments
were made in the third quarter. As of the end of
the third quarter of 1998, AYP Capital has invested
$4,639,897 in LAEEF.
AYP Energy continues as an exempt wholesale
generator ("EWG") and power marketer.
D. Real Estate Activities
No new activities.
E. Insider Heat Pump Distributorship
During the third quarter, AYP Capital, Inc.,
ended its activities in marketing and selling
Insider heat pumps.
F. HVAC and Appliance Warranties/Power Quality
Devices
No new activities.
II. Guarantees or assumption of liabilities by
Allegheny on behalf of AYP Capital or its
subsidiaries
Allegheny continues to provide a Support
Agreement to AYP Energy in connection with a $15
million discretionary line of credit for AYP Energy
for the issuance of standby letters of credit for
the benefit of AYP Energy's activities.
Allegheny continues to provide support to AYP
Capital in connection with a $5 million
discretionary line of credit for AYP Capital to be
utilized by AYP Capital's subsidiary, Allegheny
Energy Solutions, as working capital.
Allegheny also continues to provide support to AYP
Energy trading activities by providing parent guarantees
to AYP Energy counterparties. As of September 30,
1998, in connection with AYP Energy's trading
activities, Allegheny had guarantees of support
outstanding in the amount of $49,610,000.
III. Services Provided by AYP Capital to Associate
Companies
AYP Capital did not provide any services to
associate companies during the third quarter of
1998.
<PAGE>
IV. Factoring Activities
AYP Capital did not perform any activities
associated with the factoring of accounts
receivable in the third quarter of 1998.
ALLEGHENY ENERGY, INC.
By /s/ Thomas K. Henderson
Thomas K. Henderson
Vice President
AYP CAPITAL, INC.
By /s/ Thomas K. Henderson
Thomas K. Henderson
Vice President
Dated: November 24, 1998
<PAGE>
AYP CAPITAL
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Nine Months Twelve Months
Ended Ended Ended
September 30, September 30, September 30,
1998 1998 1998
<S> <C> <C> <C>
ELECTRIC OPERATING REVENUES 106,354,461 219,089,951 252,013,127
OPERATING EXPENSES:
Operation:
Fuel 5,624,188 15,156,416 21,542,671
Purchased Power & Exchange 97,940,340 195,415,159 216,338,740
Other 1,550,334 5,317,494 6,722,586
Transmission & Distribution 1,043,518 1,957,667 2,844,639
Cust. Accts & Services 695,341 2,224,258 3,600,195
Administrative & General 4,355,922 8,310,371 11,725,632
Total Operation & Maintenance 111,209,643 228,381,365 262,774,463
Depreciation 1,442,723 4,237,678 5,894,531
Taxes other than income taxes 1,852,003 5,229,650 6,395,062
Federal and state income taxes (3,325,313) (8,920,755) (11,298,447)
Total Operating Expenses 111,179,056 228,927,938 263,765,609
Operating Income (4,824,595) (9,837,987) (11,752,482)
OTHER INCOME AND DEDUCTIONS:
Other income (loss), net (730,675) 73,562 1,197,324
Total Other Income and Deductions (730,675) 73,562 1,197,324
Income Before Interest Charges and
Preferred Dividends (5,555,269) (9,764,424) (10,555,158)
INTEREST CHARGES AND PREFERRED DIVIDENDS:
Interest on other long-term obligations 2,526,933 7,578,400 10,350,667
Other interest 19,932 41,703 46,692
Total Interest Charges and
Preferred Dividends 2,546,865 7,620,103 10,397,358
Consolidated Net Income (Loss) (8,102,134) (17,384,527) (20,952,516)
</TABLE>
Unaudited
AYP Capital, Inc.
CONSOLIDATED BALANCE SHEET
As of September 30, 1998
Assets
Property, plant, and equipment:
At original cost 172,203,276
Accumulated depreciation (9,804,012)
162,399,264
Investments and other assets 6,847,122
Current assets:
Cash and temporary cash investments 8,961,357
Accounts receivable:
Electric service 16,712,370
Other 2,093,696
Allowance for Uncollectible Accounts (98,723)
Affiliates 374,293
Materials and supplies--at average cost:
Operating and construction 2,370,105
Fuel 2,452,872
Other 5,928,681
38,794,651
Deferred charges 4,863,227
Total Assets 212,904,264
Capitalization and Liabilities
Capitalization:
Common stock 1,000
Other paid-in capital 53,672,747
Retained earnings (35,181,403)
18,492,344
Long-term debt of subsidiaries 160,000,000
0
178,492,344
Current liabilities:
Accounts payable 15,009,363
Accounts payable - Affiliates 2,502,490
Taxes accrued:
Federal and state income 6,866,031
Other 3,097,902
Interest accrued 1,675,467
Other 822,730
29,973,982
Deferred credits and other liabilities:
Deferred income taxes 4,150,289
Other 2,287,649
6,437,938
Total Capitalization and Liabilities 214,904,264
Unaudited
