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TABLE OF CONTENTS
 PAGEARTICLE I DEFINITIONS
    
    
    1Section 1.01.   Defined Terms
    
    
    1Section 1.02.   Rules of Interpretation
    
    
    2ARTICLE II COLLATERAL
    
    
    2Section 2.01.   Grant of Security Interest
    
    
    2Section 2.02.   Delivery of Certificates and Instruments
    
    
    3Section 2.03.   Registration in Nominee Name; Denominations
    
    
    3Section 2.04.   Irrevocable Proxy; Voting Rights
    
    
    3Section 2.05.   Collateral Agent Appointed Attorney-in-Fact
    
    
    5Section 2.06.   Certain Rights of Pledgor
    
    
    5Section 2.07.   Certain Provisions Regarding the Collateral Agent
    
    
    6Section 2.08.   Effective as a Financing Statement
    
    
    7ARTICLE III REPRESENTATIONS AND WARRANTIES; COVENANTS
    
    
    7Section 3.01.   Organization; Power and Authority
    
    
    7Section 3.02.   Authorization; No Conflict
    
    
    7Section 3.03.   Valid Security Interest
    
    
    8Section 3.04.   Title
    
    
    8Section 3.05.   Consents
    
    
    8Section 3.06.   Enforceable Lien
    
    
    8Section 3.07.   Certain Payments on Pledged Securities
    
    
    9Section 3.08.   Litigation
    
    
    9Section 3.09.   Other Financing Statements
    
    
    9Section 3.10.   Chief Executive Office. Etc.
    
    
    9Section 3.11.   Investment Company Act
    
    
    10Section 3.12.   Maintenance of Existence
    
    
    10Section 3.13.   Records; Statements and Schedules
    
    
    10Section 3.14.   Taxes
    
    
    10Section 3.15.   Notices
    
    
    10Section 3.16.   Further Assurances
    
    
    11ARTICLE IV REMEDIES
    
    
    11Section 4.01.   Remedies upon Default
    
    
    11Section 4.02.   Application of Proceeds of Sale
    
    
    12ARTICLE V MISCELLANEOUS
    
    
    13Section 5.01.   No Waiver
    
    
    13Section 5.02.   Security Interest Absolute
    
    
    13Section 5.03.   Collateral Agent
    
    
    14Section 5.04.   Collateral Agents Fees and Expenses; Indemnification
    
    
    14Section 5.05.   Binding Agreement; Assignments
    
    
    15
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PAGESection 5.06.   Governing Law
    
    
    15Section 5.07.   Jurisdiction and Venue
    
    
    15Section 5.08.   WAIVER OF JURY TRIAL
    
    
    15Section 5.09.   Notices
    
    
    16Section 5.10.   Severability
    
    
    16Section 5.11.   Section Headings
    
    
    16Section 5.12.   Counterparts
    
    
    16Section 5.13.   Termination
    
    
    16Section 5.14.   Subrogation
    
    
    17Schedule 1.01   KnowledgeSchedule 2.02   Initial Pledged Stock and Any Other Pledged SecuritiesSchedule 3.08   Litigation
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PLEDGE AGREEMENT
 Agreement Pledgor Collateral Agent
 WITNESSETH:
 Borrower Schedule 2.02 Initial Pledged
Stock
 Credit
Agreement Lenders
     ARTICLE I
DEFINITIONS
 Defined Terms UCC




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Agreement
 Borrower
 Collateral Section 2.01
 Collateral Agent
 Credit Agreement
 Financing Statements
 Initial Pledged Stock
 Knowledge Schedule 1.01
 Lenders
 Pledged Securities Section 2.02
 Pledged Stock Section 2.01
 Pledgor
 Pledgor Permitted Liens
 Secured Obligations
 Rules of Interpretation mutatis
mutandis
 ARTICLE II
COLLATERAL
 Grant of Security Interest
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Pledged Stock Collateral
 Delivery of Certificates and Instruments Pledged Securities Schedule 2.02
 Registration in Nominee Name; Denominations
 Irrevocable Proxy; Voting Rights
  3




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Section 2.06(c) Section 2.04 Section 2.04 Section 4.01
 Section 2.06(a) Section 2.04(a)
  4




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Section 2.04(d)
 Collateral Agent Appointed Attorney-in-Fact
 provided however provided however
 Section 5.04
  Certain Rights of Pledgor
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Certain Provisions Regarding the Collateral Agent
  6




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Effective as a Financing Statement
 ARTICLE III
REPRESENTATIONS AND WARRANTIES; COVENANTS
  Organization; Power and Authority
 Authorization; No Conflict
   7




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Valid Security Interest Schedule 2.02
 Title
 Schedule 2.02
  Consents
 Enforceable Lien
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Certain Payments on Pledged Securities
 Litigation Schedule 3.08
 Other Financing Statements
 Chief Executive Office. Etc.
  
   9




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Investment Company Act
 Maintenance of Existence
 Records; Statements and Schedules
 Taxes provided however
 Notices
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Further Assurances
 ARTICLE IV
REMEDIES
 Remedies upon Default
    11




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provided however
 Section 5
   Application of Proceeds of Sale
  12




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first second third
  ARTICLE V
MISCELLANEOUS
 No Waiver
 Security Interest Absolute
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Collateral Agent
 Collateral Agents Fees and Expenses; Indemnification
 Section 2.08
  Collateral Agent Indemnitees provided
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Section 5.04
 Binding Agreement; Assignments
 Governing Law
 Jurisdiction and Venue
   WAIVER OF JURY TRIAL
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Notices
 
  
 Severability
 Section Headings
 Counterparts
 Termination
  16




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Subrogation


Signature pages follow


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ALLEGHENY ENERGY TRANSMISSION, LLC, 
as PledgorBy:

/s/
Barry E. PakenhamName:
    Barry E. PakenhamTitle:
    TreasurerUNION BANK OF CALIFORNIA, N.A.,
as Collateral AgentBy:

/s/
Luis PerezName:
    Luis PerezTitle:
    Vice President 18