EXHIBIT 10.3

EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of this
__1st__ day of January, 2002 (the "Effective Date") between Allegheny Energy
Service Corporation ("AESC") for itself and as agent for its parent, Allegheny
Energy, Inc. ("AEI"), affiliates and subsidiaries of AESC and AEI, and any other
corporation or entity an interest in which any time during the term of this
Agreement is owned, directly or indirectly, by AESC, AEI, affiliates or
subsidiaries of AESC and AEI, or any successors or assigns of any of the
foregoing (the "AE Companies"), and _________(the "Executive"). The Executive
and the AE Companies mutually desire to set forth in this Agreement the terms
and conditions of their employment relationship currently and in the future.

          The execution and delivery of this Agreement have been duly authorized
by the Board of Directors of AEI (the "Board").

          NOW, THEREFORE, AESC and the Executive, for valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, each intending to
be legally bound, mutually covenant and agree as follows:

          1.     Employment and Term.

                   (a)     Employment. AESC hereby offers to employ the
Executive as an executive officer, initially as Chairman, President, and Chief
Executive Officer, and the Executive hereby accepts such employment with AESC,
for the Term set forth in Section 1(b).

                   (b)     

Term. The term of the Executive's employment under this Agreement (the "Term")
shall commence as of the Effective Date and end on the second (2) anniversary of
that date, subject to extension of the Term as set forth in the immediately
following sentence or earlier expiration of the Term as provided in Section 8.
Unless either AESC or the Executive provides notice to the other of non-renewal
not later than ninety (90) days prior to the scheduled expiration of the Term as
then in effect, the Term shall be extended for an additional period of one year,
and the preceding clause of this sentence shall again apply with respect to each
subsequent extension of the Term.

          2.     Duties. During the Term as provided in Section 1(b) hereof, the
Executive shall serve as executive officer, initially as Chairman, President,
and Chief Executive Officer, and shall report to the Board. The Executive shall
perform all duties and accept all responsibilities incidental to such position
for the benefit of the AE Companies, or as may be assigned to the Executive from
time to time by the Board. The Executive shall devote his or her best skill and
substantially full time efforts (reasonable sick leave and vacations excepted)
to the performance of his or her duties under this Agreement. It is understood
that the Executive's title and position are subject to change during the Term,
provided that the Executive shall at all times have the title and duties of
Chief Executive Officer. It is further understood that AESC shall be entitled to
assign the Executive's employment and AESC's rights under this Agreement in
accordance with Section 14. The Executive may devote reasonable periods required
for (i) serving as a director or member of a committee of any organization
involving no conflict of interest with the interests of the AE Companies; (ii)
fulfilling speaking engagements; (iii) engaging in charitable and community
activities; (iv) participating in industry and trade organization activities;
and (v) managing his or her personal investments; provided, that such activities
do not materially interfere with the regular performance of his or her duties
and responsibilities under this Agreement.

          3.     Base Salary. For services performed by the Executive for the AE
Companies pursuant to this Agreement during the period of employment as provided
in Section 1(b), AESC shall pay the Executive a base salary at the rate of at
least $________ per year, payable in accordance with AESC's regular payroll
practices (but no less frequently than monthly). Such salary may be increased
from time to time during the term of this Agreement in the sole discretion of
AESC.

          4.     Bonus. During the Term, the Executive shall be entitled to
receive incentive compensation (a "Bonus") in such amounts and times as the
Board may determine in its sole discretion under the Allegheny Energy, Inc.
Annual Incentive Plan, as amended from time to time.

          5.     Long-Term Incentive Plan. The Executive shall participate in
the Allegheny Energy, Inc. 1998 Long-Term Incentive Plan, as amended from time
to time, on a basis determined by the Board (or its designee) to be appropriate
for the Executive.

          6.     Other Benefits. In addition to the base salary to be paid to
the Executive pursuant to Section 3 hereof and possibility of bonus pursuant to
Section 4 hereof, the Executive shall also be entitled to the following:

                   (a)     Participation in Plans. The Executive shall
participate in the various benefit plans maintained in force by AESC, from time
to time, in a manner and to an extent no less favorable than is available to
peer executives of AESC, to the extent that the Executive meets the eligibility
criteria of such plans. Such plans may include any qualified and nonqualified
pension, supplemental pension, disability, medical, group life insurance,
supplemental life insurance coverage, business travel insurance, sick leave, and
other similar retirement and welfare benefit plans, programs and arrangements.

                   (b)     Fringe Benefits. In addition to the foregoing, the
Executive shall be entitled to an office, fringe benefits and other similar
benefits no less favorable than those available to peer executives of the AE
Companies.

                   (c)     Expense Reimbursement. AESC shall reimburse the
Executive, upon a proper accounting, for reasonable and necessary business
expenses and disbursements incurred by him or her in the course of the
performance of his or her duties under this Agreement.

                   (d)     Vacation. The Executive shall be entitled to vacation
and paid time off during the initial and each successive year during the Term of
this Agreement in accordance with AESC's policies applicable to senior
executives, or such greater period, as the Board shall approve, without
reduction in salary or other benefits.

          7.     Covenants of the Executive. The Executive hereby reaffirms his
or her obligations regarding confidential information, inventions and works,
noncompetition, nonsolicitation and other matters under Section 14 of the letter
agreement, dated as of _____________, between AEI and the Executive (the "Change
in Control Agreement").

          8.     Termination. Unless earlier terminated in accordance with the
following provisions of this Section 8, AESC shall continue to employ the
Executive and the Executive shall remain employed by AESC during the entire Term
as set forth in Section 1(b). Section 9 hereof sets forth certain obligations of
AESC in the event that the Executive's employment hereunder is terminated.
Certain capitalized terms used in this Section 8 and Section 9 hereof are
defined in Section 8(c) below.

                   (a)     Death or Disability. Except to the extent otherwise
expressly stated herein, including without limitation as provided in Section
9(a) with respect to certain post-Date of Termination payment obligations of
AESC, this Agreement shall terminate immediately on the Date of Termination in
the event of the Executive's death or in the event of Executive's Disability. At
any time and from time to time, upon reasonable request by AESC, the Executive
shall submit to reasonable medical examination for the purpose of determining
the existence, nature and extent of any such Disability. AESC shall promptly
give the Executive notice of any such determination of the Executive's
Disability and of the decision of AESC to terminate the Executive's employment
by reason thereof. In the event of Disability, until the Date of Termination the
base salary payable to the Executive under Section 3 hereof shall be reduced
dollar-for-dollar by the amount of Disability benefits, if any, paid to the
Executive in accordance with any Disability policy or program of AESC.

                   (b)     Notification of Discharge for Cause or Resignation
for Good Reason. In accordance with the procedures hereinafter set forth, AESC
may discharge the Executive from his or her employment hereunder for Cause and
the Executive may resign from his or her employment hereunder for Good Reason or
otherwise. Any discharge of the Executive by AESC for Cause or resignation by
the Executive for Good Reason shall be communicated by a Notice of Termination
to the Executive (in the case of discharge) or to AESC (in the case of the
Executive's resignation) given in accordance with Section 13 of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances providing
the basis for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination is to be other than the date of
receipt of such notice, specifies the termination date (which date shall in all
events be within fifteen (15) days after the giving of such notice). No
purported termination of the Executive's employment for Cause shall be effective
without a Notice of Termination to the Executive.

                   (c)     Definitions. For purposes of this Section 8 and
Section 9 hereof, the following capitalized terms shall have the meanings set
forth below:

                                     (i)  "Accrued Obligations" shall mean, as
of the Date of Termination, the sum of (A) the Executive's base salary under
Section 3 through the Date of Termination to the extent not theretofore paid,
(B) the amount of any bonus, incentive compensation, deferred compensation and
other cash compensation earned and accrued by the Executive as of the Date of
Termination to the extent not theretofore paid and (C) any vacation pay, expense
reimbursements and other cash entitlements accrued by the Executive as of the
Date of Termination to the extent not theretofore paid.

                                    (ii)  "Cause" shall mean any of the
following:

                                                      (A)  the Executive's theft
or embezzlement, or attempted theft or embezzlement, of money or property of the
AE Companies; the Executive's perpetration or attempted perpetration of fraud,
or his or her participation in a fraud or attempted fraud, on the AE Companies;
or the Executive's unauthorized appropriation of, or his or her intentional
attempt to misappropriate, any tangible or intangible assets or property of the
AE Companies;

                                                      (B)  any material act or
acts of dishonesty, disloyalty, misconduct, habitual insobriety, substance abuse
or moral turpitude by the Executive demonstrably injurious to the interest,
property, operations, business or reputation of the AE Companies or the
Executive's conviction of a crime the commission of which could result in
material injury to the AE Companies; or

                                                      (C)  the Executive's
material failure to perform his or her duties for the AE Companies (other than
due to disability); provided, however, that an act or omission shall not be
deemed to constitute Cause if it is of such a nature that all detriment
otherwise resulting to the AE Companies therefrom can be cured and, to the
reasonable satisfaction of the Board, is promptly eliminated by appropriate
action, and the Executive causes such action to be taken within ten (10) days
following written notice from the Board with respect thereto.

                                   (iii)  "Date of Termination" shall mean (A)
in the event of a discharge of the Executive by AESC for Cause or a resignation
by the Executive with Good Reason, the date the Executive (in the case of such
discharge) or AESC (in the case of such resignation) receives a Notice of
Termination, or any later permitted date specified in such Notice of
Termination, as the case may be, (B) in the event of a discharge of the
Executive without Cause or a resignation by the Executive without Good Reason,
the date the Executive (in the case of such discharge) or AESC (in the case of
such resignation) receives notice of such termination of employment, (C) in the
event of the Executive's death, the date of the Executive's death, and (D) in
the event of termination of the Executive's employment by reason of Disability
pursuant to Section 8(a), the date the Executive receives written notice of such
termination.

                                     (iv)  "Disability" means, a total and
permanent disability that, due to physical or mental illness, injury, or
disease, renders, in the good faith determination of the Board, the Executive
unable to substantially perform his or her usual and customary duties for the AE
Companies under this Agreement for a period of 180 consecutive days and, in the
opinion of a qualified physician designated by the Board, the disability will be
permanent and continuous during the remainder of the Executive's life.

                                      (v)  "Good Reason" shall mean any of the
following: (A) the reassignment of the Executive to a position other than Chief
Executive Officer or the assignment of duties that are not consistent with those
of a Chief Executive Officer; (B) any failure by AESC to comply with any of the
provisions of Sections 3, 4, 5 and 6 of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by AESC within a reasonable time after receipt of notice thereof given
by the Executive; (C) any purported termination by AESC of the Executive's
employment otherwise than as expressly permitted by this Agreement.

          9.     Obligations of AESC Upon Termination.

                   (a)     Termination by AESC for Cause, Retirement or
Termination by Executive without Good Reason, Death or Disability. In the event
of a termination of the Executive's employment by AESC for Cause, the
Executive's retirement or a termination by the Executive without Good Reason, or
in the event this Agreement terminates pursuant to Section 8(a) by reason of the
death or disability of the Executive:

                                     (i)  AESC shall pay all Accrued Obligations
to the Executive, or to his or her beneficiaries, heirs or estate in the event
of the Executive's death, in a lump sum in cash within thirty (30) days after
the Date of Termination.

                                    (ii)  The Executive, or his or her
beneficiaries, heirs or estate in the event of the Executive's death, shall be
entitled to receive all benefits accrued by him or her as of the Date of
Termination under all qualified and nonqualified retirement, pension, 401(k) and
similar plans of AESC, and the Allegheny Energy, Inc. Long-Term Incentive Plan,
in such manner and at such time as are provided under the terms of such plans
and arrangements.

                                   (iii)  If the termination of employment is by
reason of the Executive's death, retirement or disability, the exercise period
of all stock options that were granted to the Executive under the Allegheny
Energy, Inc Long-term Incentive Plan (the "LTIP") and that are vested on the
Date of Termination shall continue for three (3) years after the Date of
Termination; provided, however, that in no event shall such vested options be
exercised later than the date of expiration of the vested options determined
pursuant 6.02(b)(i) or 6.02(b)(iii) of the LTIP.

                                     (iv)  All other obligations of AESC under
this Agreement shall cease forthwith.

                   (b)     Termination by AESC without Cause, or Termination by
Executive for Good Reason. Subject to Section 10, if (x) the Executive's
employment is terminated by AESC other than for Cause (i.e., without Cause) or
Disability or (y) if the Executive terminates employment with Good Reason:

                                      (i)  AESC shall pay to the Executive all
Accrued Obligations in a lump sum in cash within thirty (30) days after the Date
of Termination.

                                     (ii)  The Executive shall be entitled to
receive all benefits accrued by him or her as of the Date of Termination under
all qualified pension, 401(k) and similar plans of AESC, and the Allegheny
Energy, Inc. Long-Term Incentive Plan, in such manner and at such time as are
provided under the terms of such plans.

                                     (iii)  For the month in which the Date of
Termination occurs and each of the thirty (30) consecutive months thereafter
(the "Continuation Period"), the Executive shall be entitled to severance pay,
payable in accordance with AESC's regular payroll practices, in a monthly amount
equal to the sum of (A) his or her monthly base salary (at the rate in effect on
the Date of Termination) and (B) one-twelfth (1/12) of the Executive's target
annual bonus under the Allegheny Energy, Inc. Annual Incentive Plan for the
fiscal year in which the Date of Termination occurs;

                                      (iv)  For the Continuation Period, AESC
shall either (A) arrange to provide the Executive and his or her dependents, at
AESC's cost, with life, disability, medical and dental coverage, whether insured
or not insured, providing substantially similar benefits to those which the
Executive and his or her dependents were receiving immediately prior to the Date
of Termination, to the extent the AE Companies continues to maintain benefit
plans providing for such benefits for executives generally or (B) in lieu of
providing such coverage, pay to the Executive within thirty (30) days after the
Date of Termination a lump sum amount in cash equal to two (2) times the
projected cost to AESC of providing the extended benefit coverage referred to in
clause (A) (as such cost shall be calculated by a nationally recognized benefit
consulting firm using reasonable assumptions), provided, however, that such
benefits set forth above in clauses (A) and (B) shall be reduced by and to the
extent that comparable benefits are received from a new employer.

                                       (v)  This Section 9(b)(v) shall apply
only if, as of the Date of Termination, the Executive shall have completed 15
"Years of Service," as defined in the Allegheny Energy, Inc. Supplemental
Executive Retirement Plan (the "SERP"). In such event, AESC shall pay to the
Executive the benefits the Executive would have been entitled to receive under
the SERP if (A) the Executive had been age 55 or older on the Date of
Termination, (B) the Continuation Period had counted in determining the
Executive's "Years of Service" for purposes of benefit calculation under the
SERP (the Continuation Period shall not, however, be taken into account in
determining whether the Executive has completed 15 "Years of Service" for
purposes of the first sentence of this Section 9(b)(v)) and (C) amount paid
during the Continuation Period to the Executive pursuant to this Section 9(b)
were counted in determining the Executive's "Average Compensation," as defined
in the SERP, for purposes of benefit calculation under the SERP. Such payments
shall (A) be in the amount that would have been paid under the SERP had the
Executive been age 55 or older on the Date of Termination, (B) commence at the
same time as the retirement benefits payable to the Executive under the
Allegheny Energy, Inc. Retirement Plan (the "Retirement Plan"), (C) be paid in
such form as the Executive shall elect from those available under the Retirement
Plan (subject to adjustment, if paid in a form other than a life annuity, by
using the actuarial equivalence factors of the Retirement Plan) and (D) be
subject to reduction, in accordance with the SERP, if benefit payments commence
prior to the Executive's attainment of age 60 (such benefits cannot be commenced
prior to the Executive's attainment of age 55), provided, however, that such
reduction for early commencement of benefits shall not be applicable in the
event that the Executive is at least age 50 as of the Date of Termination.

                                       (vi)  The exercise period of all stock
options that were granted to the Executive under the LTIP and that are vested on
the Date of Termination shall continue for one (1) year after the Date of
Termination; provided, however, that in no event shall such vested options be
exercised later than the date of expiration of the vested options determined
pursuant 6.02(b)(i) or 6.02(b)(iii) of the LTIP.

                                      (vii)  All other obligations of AESC under
this Agreement shall cease forthwith.

                   (c)     Contractual Rights to Benefits. This Agreement
establishes and vests in the Executive a contractual right to the benefits to
which he or she is entitled hereunder. The Executive shall not be obligated to
seek other employment in mitigation of the amounts payable or arrangements made
under any provision of this Agreement, and, except as otherwise provided in
Section 9(b)(iv), the obtaining of any such employment shall have no effect on
AESC's obligations to make the payments and arrangements required to be made
under this Agreement.

          10.     Conditions to Receipt of Post-Termination Benefits. As a
condition to receiving any post-termination payments or benefits to which the
Executive would otherwise be entitled under Section 9(b) of this Agreement (the
"Post Termination Benefits"), the Executive shall execute a release (the
"Release"), in a form and substance reasonably satisfactory to AESC, of any
claims, whether arising under Federal, state or local statute, common law or
otherwise, against the AE Companies and their respective officers, directors and
stockholders which arise or may have arisen on or before the date of the
Release, other than any claims for Post Termination Benefits under this
Agreement or any rights to indemnification from the AE Companies pursuant to any
provisions of the certificate of incorporation or by-laws of any of the AE
Companies or any directors and officers liability insurance policies maintained
by any of the AE Companies. If the Executive fails or otherwise refuses to
execute a Release within a reasonable time after AESC's request to do so, the
Executive will not be entitled to any Post Termination Benefits. In addition,
if, following a termination of employment that gives the Executive a right to
any Post Termination Benefits, the Executive engages in any activities that
violate any of the covenants referred to in Section 7, the Employee shall have
no further right or claim to any Post Termination Benefits and shall promptly
repay any Post Termination Benefits previously received (such repayment to be in
addition to any other rights or remedies available to the AE Companies in
respect of such violation).

          11.     Withholding. AESC shall be entitled to withhold from payments
due hereunder any required federal, state or local withholding or other taxes.

          12.     Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the beneficiaries, heirs and representatives of the Executive
and the successors and assigns of AESC. AESC shall require any successor
(whether direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation, or otherwise) to all or a
majority its assets, by agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that AESC would be required to perform this
Agreement if no such succession had taken place. Regardless whether such
agreement is executed, this Agreement shall be binding upon any successor of
AESC in accordance with the operation of law and such successor shall be deemed
"AESC" for purposes of this Agreement.

          13.     Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or mailed within the continental United States
by first class certified mail, return receipt requested, postage prepaid,
addressed as follows:

                   (a)     to the Board or AESC to:
                            Richard J. Gagliardi
                            Vice President, Administration
                            Allegheny Energy, Inc.
                            10435 Downsville Pike
                            Hagerstown, MD 21740-1766

                   (b)     to the Executive, to:

                            _________________________

                            _________________________

                            _________________________

Addresses may be changed by written notice sent to the other party at the last
recorded address of that party.

          14.     No Assignment. AESC may transfer the Executive's employment to
any other entity that at the time of such transfer is an affiliate of AESC or
AEI, and in connection with any such transfer, the rights and obligations of
AESC under this Agreement shall be assigned to such other entity. Except as
expressly provided in the immediately preceding sentence or in Section 12, this
Agreement is not assignable by any party and no payment to be made hereunder
shall be subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or other charge.

          15.     Execution in Counterparts. This Agreement will be executed by
the parties hereto in two or more counterparts, each of which shall be deemed to
be an original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.

          16.     Arbitration. Except as otherwise provided herein, all disputes
and claims relating directly or indirectly to this Agreement shall be settled by
arbitration at Hagerstown, Maryland in accordance with the Federal Arbitration
Act and the Commercial Arbitration Rules of the American Arbitration
Association. The arbitrator shall be selected by agreement of the parties or, if
they do not agree on an arbitrator within thirty (30) days after one party has
notified the other of his or her or its desire to have the question settled by
arbitration, then the arbitrator shall be selected pursuant to the procedures of
the American Arbitration Association. The determination reached in such
arbitration shall be final and binding on all parties. Any arbitration award or
judgment may be entered in any court of competent jurisdiction. This agreement
to arbitrate shall survive any termination or expiration of this Agreement.
Notwithstanding the foregoing, claims for equitable or injunctive relief will
not be subject to arbitration.

Jurisdiction and Governing Law

. For all conflicts arising out of this Agreement, each party agrees to submit
to the laws of the State of Maryland and applicable federal law without regard
to conflicts of laws principles.

          18.     Severability. If any provision of this Agreement shall be
adjudged by any court of competent jurisdiction to be invalid or unenforceable
for any reason, such judgment shall not affect, impair or invalidate the
remainder of this Agreement.

          19.     Prior Understandings. Except for the Change of Control
Agreement, this Agreement embodies the entire understanding of the parties
hereto, and supersedes all other oral or written agreements or understandings
between them regarding the subject matter hereof. Upon the occurrence of a
Change of Control (as defined in such Change of Control Agreement), and while
the Change of Control Agreement is in effect, this Agreement shall remain in
effect but the Executive's rights upon termination of employment shall be
governed by the Change in Control Agreement and not this Agreement. No change,
alteration or modification hereof may be made except in writing, signed by each
of the parties hereto. The headings in this Agreement are for convenience of
reference only and shall not be construed as part of this Agreement or to limit
or otherwise affect the meaning hereof.

          20.     Remedies Cumulative; No Waiver. No remedy conferred upon
either party by this Agreement is intended to be exclusive of any other remedy,
and each and every such remedy shall be cumulative and shall be in addition to
any other remedy given hereunder or now or hereafter existing at law or in
equity. No delay or omission by either party in exercising any right, remedy or
power hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by such party from
time to time and as often as may be deemed expedient or necessary by such party
in such party's sole discretion.

          21.     Survival of Provisions. Notwithstanding anything in this
Agreement to the contrary, the following provisions of this Agreement shall
survive the termination of this Agreement: Sections 7, 8(c), 9, 10, 11, 12, 14,
16, 17, 18, 19, 20, and 21, and all other terms and provisions of this Agreement
that by their nature extend beyond the termination of this Agreement.

          22.     Employee Acknowledgment. Executive hereby acknowledges that he
or she has read and understands the provisions of this Agreement, that he or she
has been given the opportunity for his or her legal counsel to review this
Agreement, that the provisions of this Agreement are reasonable and that he or
she has received a copy of this Agreement.

          IN WITNESS WHEREOF, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the parties hereto have caused this Agreement to be executed as of the date
first above written.

 

Allegheny Energy Service Corporation

By:  ___________________________________________
Name:        Frank A. Metz, Jr.      Date  ___________
Title:  Chairman, Management Review and
           Director, Affairs Committee

By:  Richard J. Gagliardi             Date  ___________
Title:  Vice President, Administration

THE EXECUTIVE

_______________________________________________
Name:             Alan J. Noia      Date  ___________