<PAGE>
___________________________________
:
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 : JUNE 30, 1998
Company Act of 1935) :
___________________________________ :
Through June 30, 1998, Allegheny Energy, Inc.
(Allegheny) has made capital contributions to AYP Capital,
Inc. ("AYP Capital") and its subsidiaries totaling
$49,377,665. See attached consolidated financial statements
for the quarter ended June 30, 1998. During the second
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 second 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. AYP Capital invested
in a Bolivian, natural gas pipeline company in the
second quarter. As of the end of the second quarter
of 1998, AYP Capital has invested $4,649,016 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 second quarter, AYP Capital, Inc.,
has continued 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 Energy is providing 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
Energy is providing support to AYP Energy trading
activities by providing parent guarantees to AYP
Energy counterparties. Through the second quarter
of 1998, Allegheny Energy has provided guarantees
of support in the amount of $21,010,000.
III. Services Provided by AYP Capital to Associate
Companies
AYP Capital did not provide any services to
associate companies during the second quarter of
1998.
<PAGE>
IV. Factoring Activities
AYP Capital did not perform any activities
associated with the factoring of accounts
receivable in the second quarter of 1998.
ALLEGHENY ENERGY, INC.
By /s/ Carol G. Russ
Carol G. Russ
Counsel
AYP CAPITAL, INC.
By /s/ Carol G. Russ
Carol G. Russ
Counsel
Dated: August 25, 1998
<PAGE>
AYP CAPITAL
CONSOLIDATED STATEMENT OF INCOME
FOR SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
QTR YTD 12MOS
<S> <C> <C> <C> <C>
IA88 ELECTRIC OPERATING REVENUES 63,642,190 112,735,490 173,993,418
OPERATING EXPENSES:
Operation:
IC05 Fuel 4,508,327 9,532,228 21,834,033
IC09 Purchased Power & Exchange 57,251,495 97,474,819 135,527,728
IC13 Other 2,266,267 3,767,160 7,039,504
IC17 Transmission & Distribution 417,282 914,149 2,883,371
IC22 Cust. Accts & Services 695,378 1,528,917 4,486,328
IC25 Administrative & General 1,928,450 3,954,449 9,150,183
Total Operation & Maintenance 67,067,198 117,171,722 180,921,148 67,067,19
IC29 Depreciation 1,397,230 2,794,955 6,757,241
IC35 Taxes other than income taxes 1,688,214 3,377,647 5,833,601
IC42 Federal and state income taxes (3,236,329) (5,595,442) (10,808,126)
Total Operating Expenses 66,916,314 117,748,882 182,703,864 66,916,31
Operating Income (3,274,124) (5,013,392) (8,710,446) (3,274,12
OTHER INCOME AND DEDUCTIONS:
IG88.IG09 Other income, net 436,711 804,237 2,072,030
Total Other Income and Deductio 436,711 804,237 2,072,030
Income Before Interest Charges and
Preferred Dividends (2,837,413) (4,209,155) (6,638,416) (2,837,41
INTEREST CHARGES AND PREFERRED DIVIDENDS:
IK88.IK09 Interest on other long-term obligations 2,499,467 5,051,467 10,596,000
IK88.IK13 Other interest 16,030 21,771 24,022
Total Interest Charges and
Preferred Dividends 2,515,497 5,073,237 10,620,022 2,515,497
Consolidated Net Income (5,352,910) (9,282,393) (17,258,438) (5,352,91
</TABLE>
Unaudited
<PAGE>
AYP Capital, Inc.
CONSOLIDATED BALANCE SHEET
As of June 30, 1998
Assets
Property, plant, and equipment:
BA05 At original cost 171,786,184
BA13 Accumulated depreciation (8,371,710)
163,414,475
Investments and other assets:
BC34 Nonutility investments 6,385,928
6,385,928
Current assets:
BE05 Cash and temporary cash investments 9,481,828
Accounts receivable:
BE13 Electric service 41,067,214
BE17 Other 1,716,841
BE22 Allowance for Uncollectible Accounts (66,544)
BE25 Accts. Receivable - Affiliates 249,783
Materials and supplies--at average cost:
BE35 Operating and construction 2,382,864
BE37 Fuel 3,246,240
be44 Other 5,819,065
63,897,292
Deferred charges:
BG09 Other 5,534,219
5,534,219
Total Assets 239,231,914
Capitalization and Liabilities
Capitalization:
BI13 Common stock 1,000
BI22 Other paid-in capital 49,376,665
BI30 Retained earnings (27,079,269)
22,298,396
Preferred stock:
BI44 Long-term debt of subsidiaries 160,000,000
BI49 Long-term debt of subsidiaries 0
182,298,396
Current liabilities:
Short-Term Debt 649,500
BK13 Accounts payable - Affil. 4,558,007
BK17 Accounts payable - Other 40,406,007
Taxes accrued:
BK22 Federal and state income 2,021,842
BK23 Other 1,997,712
BK29 Interest accrued 1,675,467
BK37 Payrolls Accrued 0
BK44 Other 1,201,796
52,510,330
Deferred credits and other liabilities:
BM09 Deferred income taxes 4,289,362
BM13 Other 133,826
4,423,188
Total Capitalization and Liabilities 239,231,914
Unaudited
U:\ASSTACCT\rgreath\[F24-0698.XLW]A 08/19/98
