EXHIBIT 4.13


                                WARRANT AGREEMENT

       WARRANT AGREEMENT,  dated as of [ ], between Allegheny Energy,  Inc. (the
"Company") and [ ], as warrant agent (the "Warrant Agent").

       WHEREAS,  on [ ] the  Company  filed with the SEC a "shelf"  registration
statement  on Form  S-3.  Under  this  registration  statement  the  Company  is
authorized, inter alia, to issue, from time to time, warrants to purchase senior
debt securities,  subordinated debt securities, common stock, or any combination
of these securities.  On [ ], the Company resolved to issue warrants to purchase
[indicate type of securities] (the  "Warrants").  The term "[ ]" as used in this
Agreement  refers to the [ ] [indicate type of securities] that the Company will
issue and deliver upon exercise of the Warrants in accordance with the terms and
conditions  set forth in the warrant  certificates  evidencing the Warrants (the
"Warrant  Certificates"),  such Warrant  Certificates to be substantially in the
form of Exhibit A hereto; and

       WHEREAS,  the Company  desires the Warrant  Agent to act on behalf of the
Company,  and the  Warrant  Agent is so willing to act, in  connection  with the
issuance,   exchange,   transfer,   exercise  and  replacement  of  the  Warrant
Certificates, and in this Agreement wishes to set forth, among other things, the
form and  provisions of the Warrant  Certificates  (including the Global Warrant
Certificates)  and the  terms  and  conditions  on  which  they  may be  issued,
exchanged, transferred, exercised and replaced.

       NOW,  THEREFORE,  in  consideration  of these premises and other good and
valuable  consideration,   the  parties  agree  to  their  following  respective
obligations and rights:

       1.     ISSUANCE  OF  WARRANTS  AND  EXECUTION  AND  DELIVERY  OF  WARRANT
CERTIFICATES.  (a) All Warrant  Certificates  shall be in registered form, shall
contain  such  appropriate  insertions,   omissions,   substitutions  and  other
variations  as are  required or permitted  by this  Agreement  and may have such
letters,  numbers  or other  marks of  identification  or  designation  and such
legends  or  endorsements  placed  thereon  as may,  consistently  herewith,  be
determined  by a  duly  authorized  representative  of  the  Company  (each,  an
"Authorized Person"), as evidenced conclusively by the execution of such Warrant
Certificates and as are not inconsistent  with the provisions of this Agreement,
or as may be required to comply with any law or with any rule or regulation.

       (b)    The Warrant Agent shall, upon receipt of the Warrant  Certificates
duly executed on behalf of the Company,  countersign  one or more global warrant
certificates  (the "Global  Warrant  Certificates")  evidencing the Warrants and
shall,  subject to paragraph (a) above, deliver such Global Warrant Certificates
to or upon  the  written  order  of the  Company.  Subsequent  to such  original
issuance  of the Warrant  Certificates,  the  Warrant  Agent  shall  countersign
Warrant Certificates only if such Warrant Certificates are issued in exchange or
substitution for one or more previously  countersigned Warrant

<PAGE>


Certificates,  as the case may be, or, in  connection  with their  transfer,  as
hereinafter  provided or as provided in Section  6(a) or Section 18, but subject
to the provisions of Section 7. A Global Warrant Certificate shall be, and shall
remain,  subject to the provisions of this  Agreement  until such time as all of
the  Warrants  evidenced  thereby  shall have been duly  exercised or shall have
expired or been canceled in accordance with the terms thereof.

       No Warrant  Certificate  shall be valid for any  purpose,  and no Warrant
evidenced thereby shall be exercisable,  until such Warrant Certificate has been
countersigned  by the manual  signature of the Warrant Agent.  Such signature by
the Warrant Agent upon any Warrant Certificate  executed by the Company shall be
conclusive evidence that such Warrant Certificate so countersigned has been duly
issued hereunder.

       (c)    Each Warrant  Certificate shall be signed on behalf of the Company
by an Authorized Person. Such signature may be the manual or facsimile signature
of such  persons and may be imprinted  or  otherwise  reproduced  on the Warrant
Certificates.

       In case any  Authorized  Person who shall have  signed any of the Warrant
Certificates  either  manually or by  facsimile  signature  shall cease to be an
Authorized Person, before the Warrant Certificates shall have been countersigned
and  delivered  by  the  Warrant  Agent,   such  Warrant   Certificates  may  be
countersigned  and  delivered  notwithstanding  that a person  who  signed  such
Warrant  Certificate  ceased to be such an  Authorized  Person,  and any Warrant
Certificate  may be signed on behalf of the  Company by such  persons as, at the
actual date of the  execution of such Warrant  Certificate,  shall be Authorized
Persons, although at the date of the execution of this Agreement any such person
was not such an Authorized Person.

       The terms "holder", "Warrant holder" or "holder of a Warrant Certificate"
as used  herein  shall  mean any  person in whose  name at the time any  Warrant
Certificate  shall be registered  upon the books to be maintained by the Warrant
Agent for that purpose.

       2.     APPOINTMENT OF THE WARRANT AGENT.  The Company hereby appoints [ ]
as  Warrant  Agent  of the  Company  in  respect  of the  Warrants  and  Warrant
Certificates,  upon the terms and subject to the conditions set forth herein and
in the  Warrant  Certificates,  and [ ] hereby  accepts  such  appointment.  The
Warrant Agent shall have the powers and authority  granted to and conferred upon
it herein and in the Warrant Certificates and such further powers and authority,
acceptable  to it, to act on behalf of the Company as the Company may  hereafter
grant to or confer upon it. All the terms and  provisions  with  respect to such
powers and authority  contained in the Warrant  Certificates  are subject to and
governed by the terms and provisions hereof. The Company agrees, for the benefit
of the holders from time to time of the Warrant  Certificates,  that there shall
at all times be a Warrant Agent hereunder until the Warrants expire.

       3.     EXERCISE OF  WARRANTS.  (a) Each Warrant  entitles the  registered
owner to exercise an option to purchase, at an exercise price of $[ ], U.S. $[ ]
of [ ] [INDICATE TYPE OF SECURITIES].

                                      -2-
<PAGE>


       (b)    The Warrants  evidenced by a Warrant  Certificate may be exercised
in whole or in part not earlier than [9:00 A.M., NEW YORK CITY TIME,] on [ ] and
[NOT  LATER  THAN 5:00  P.M.,  NEW YORK CITY  time,] on [ ]. If a Warrant is not
exercised at or before [5:00 P.M.,  NEW YORK CITY TIME,] on [ ], it shall become
void, and all rights of the holder under Warrants and under this Agreement shall
cease.  [NO FEWER THAN ONE WARRANT MAY BE EXERCISED PER WARRANT  EXERCISE NOTICE
(AS DEFINED BELOW) AND NO FRACTIONAL WARRANTS MAY BE EXERCISED.]

       (c)    During the period  specified in Section  3(b),  a Warrant,  if the
Warrant  Certificate  evidencing the same shall have been  countersigned  by the
Warrant Agent,  may be exercised by the holder thereof by (i) providing  written
notice of such election  ("Warrant  Exercise Notice") to exercise the Warrant to
the Warrant Agent at [ ], "Attention:  Allegheny Energy, Inc. Warrant Exercise",
or to such other address as shall be notified in accordance with the immediately
following paragraph, by hand or by facsimile, no later than [NOON, NEW YORK CITY
TIME,] on [ ], which Warrant Exercise Notice shall be in the form of an election
to  purchase [ ] [INDICATE  TYPE OF  SECURITIES]  substantially  in the form set
forth in  Exhibit B hereto,  properly  completed  and  executed  by the  holder;
PROVIDED  that such written  notice may only be submitted by or through  persons
that are direct  participants  in The  Depository  Trust Company  ("DTC");  (ii)
delivering,  no later than [NOON,  NEW YORK CITY TIME,] on the Warrant  Exercise
Date,  such  Warrants to the Warrant Agent by  book-entry  transfer  through the
facilities of DTC or by delivering, no later than [NOON, NEW YORK CITY TIME,] on
[ ], the Warrant  Certificates  evidencing such Warrants to the Warrant Agent if
Warrant  Certificates in definitive form have been issued and delivered pursuant
to Section 7; and (iii) for each Warrant  exercised,  paying in full,  in lawful
money of the United  States of America,  by bank wire  transfer  in  immediately
available funds [ADD ELECTRONIC  PAYMENT DETAILS] no later than [11:00 A.M., NEW
YORK CITY TIME] on [ ] (the "Settlement Date"), the exercise price of U.S. $[ ].
Any exercise of a Warrant  pursuant to the terms of this  paragraph (c) shall be
irrevocable and shall constitute a binding  agreement between the Warrant holder
and the Company, enforceable in accordance with its terms.

       (d)    Not less than 20 days before the start of the period  specified in
Section  3(b),  the Warrant  Agent shall  notify DTC of (x) the Warrant  Agent's
account at DTC to which the Warrants  must be delivered on the Warrant  Exercise
Date and (y) the address, phone number and facsimile number where holders of the
Warrants can contact the Warrant Agent to which Warrant  Exercise Notices are to
be submitted.

       (e)    Approximately  two weeks before the start of the period  specified
in Section 3(b),  the Warrant Agent shall notify  holders  (through the clearing
system) of (1) the Warrant  Agent's account at DTC to which holders must deliver
Warrants on the Warrant  Exercise Date, (2) the Warrant  exercise  procedures of
DTC and (3) the address, telephone number and facsimile number where holders can
contact the Warrant  Agent and to which  holders  must submit  Warrant  Exercise
Notices if they decide to exercise  their  Warrants.  At such time,  the Warrant
Agent shall also provide then  holders  with a

                                      -3-
<PAGE>


Warrant  Exercise  Notice and the pertinent  instructions  as to how to exercise
their Warrants.

       (f)    [FURTHER,  AT ANY TIME UNTIL THE START OF THE PERIOD  SPECIFIED IN
SECTION 3(B), THE WARRANT AGENT SHALL PROVIDE [ ] (THE "DEALER MANAGER"),  WHICH
HAS BEEN  APPOINTED  BY THE  COMPANY AS DEALER  MANAGER  TO  SOLICIT  HOLDERS OF
WARRANTS TO EXERCISE THE WARRANTS,  SUCH  INFORMATION  REGARDING THE  REGISTERED
OWNERS OF THE  WARRANTS  AS THE DEALER  MANAGER  MAY  REASONABLY  REQUEST AND IS
REASONABLY  AVAILABLE TO THE WARRANT  AGENT,  INCLUDING A LIST OF ALL REGISTERED
OWNERS OF THE WARRANTS KNOWN TO THE WARRANT AGENT.]

       (g)    The Warrant Agent shall:

                     (i)    examine all Warrant  Exercise  Notices and all other
              documents   delivered  to  it  by  or  on  behalf  of  holders  as
              contemplated by the Warrant  Certificates to ascertain whether, on
              their  face,  such  Warrant  Exercise  Notices  and any such other
              documents  have been  executed and  completed in  accordance  with
              their terms and the terms of the Warrant Certificates;

                     (ii)   determine whether the exercising  Warrant holder has
              delivered the related  Warrants to the Warrant  Agent's account at
              DTC.  In each  case  where a  Warrant  Exercise  Notice  or  other
              document appears on its face to have been improperly  completed or
              executed  or  some  other  irregularity  in  connection  with  the
              exercise of the Warrants  exists,  the Warrant Agent will endeavor
              to inform the appropriate parties (including the person submitting
              such instrument) of the need for fulfillment of all  requirements,
              specifying  those  requirements  which  appear to be  unfulfilled.
              Except  to  the  extent  provided  in  the  immediately  preceding
              sentence,  the Warrant Agent shall be under no duty to give notice
              to any person of any  irregularities  in Warrant Exercise Notices,
              delivery of Warrants or any other  document  completed or executed
              in  connection  therewith  nor  shall it incur any  liability  for
              failure to give such notice;

                     (iii)  inform the Company of and cooperate  with and assist
              the  Company in  resolving  any  reconciliation  problems  between
              Warrant  Exercise Notices received and delivery of Warrants to the
              Warrant Agent's account;

                     (iv)   advise the Company (i) no later than [NOON, NEW YORK
              CITY  TIME,  ON THE  FIRST NEW YORK  BUSINESS  DAY  FOLLOWING  THE
              EXPIRATION OF THE PERIOD SPECIFIED IN SECTION 3(B),] of receipt of
              any Warrant Exercise Notices and the number of Warrants  exercised
              in accordance  with the terms and  conditions  of this  Agreement,
              (ii) no later than  [NOON,  NEW YORK CITY TIME,  ON THE SECOND NEW
              YORK BUSINESS DAY, AS APPLICABLE,  FOLLOWING THE EXPIRATION OF THE
              PERIOD  SPECIFIED  IN  SECTION  3(B),]  of the  instructions

                                      -4-
<PAGE>


              with respect to delivery of the [ ][INDICATE  TYPE OF  SECURITIES]
              deliverable upon such exercise, subject to timely receipt from DTC
              of the necessary information,  and (iii) of such other information
              as the Company shall reasonably require;

                     (v)    notify, by such time as necessary to ensure a prompt
              closing,  DTC, with a copy to the Company,  each account at DTC to
              be credited with [ ][INDICATE  TYPE OF SECURITIES]  and the amount
              thereof to be credited to each such account; and

                     (vi)   subject to [ ][INDICATE  TYPE OF  SECURITIES]  being
              made available to the Warrant Agent by or on behalf of the Company
              for delivery to accounts  within DTC, liaise with DTC and endeavor
              to  effect  such  delivery  to  the  relevant  accounts  at DTC in
              accordance with its requirements.

       (h)    All questions as to the validity,  form and sufficiency (including
time of receipt) of a Warrant  exercise will be determined by the Company in its
sole discretion,  which  determination  shall be final and binding.  The Company
reserves the absolute right to reject any and all Warrant  Exercise  Notices not
in proper  form or for which  any  corresponding  agreement  by the  Company  to
exchange  would,  in the opinion of the  Company,  be  unlawful.  Moreover,  the
Company  reserves  the  absolute  right to waive  any of the  conditions  to the
exercise of Warrants or defects in Warrant  Exercise  Notices with regard to any
particular exercise of Warrants. None of the Company and the Warrant Agent shall
be  under  any  duty  to give  notice  to the  holders  of the  Warrants  of any
irregularities  in any  exercise  of  Warrants,  nor shall any of them incur any
liability for the failure to give such notice.

       (i)    As soon as practicable  after the exercise of any Warrant,  but in
no event later than [9:00 A.M., NEW YORK CITY TIME,] on the Settlement Date, the
Company shall issue, or otherwise  deliver,  in authorized  denominations  to or
upon  the  order of the  holder  of the  Warrant  Certificates  evidencing  such
Warrants,  by same-day credit to such holder's  account at DTC or to the account
of a  participant  in DTC, in each case  designated  by such  holder,  or by the
direct  participant in DTC, through which such holder is acting,  in its Warrant
Exercise  Notice,  the [ ][INDICATE  TYPE OF SECURITIES] to which such holder is
entitled,  in fully registered form,  registered in such name or names as may be
directed by such holder or such participant.

       4.     RIGHTS  OF  HOLDERS.   (a)  No  Warrant  Certificate  or  Warrants
evidenced  thereby  shall  entitle the holder  thereof to any of the rights of a
holder of the [ ] [INDICATE TYPE OF SECURITIES].

       (b)    Notwithstanding  any of the  provisions  of  this  Agreement,  any
holder of Warrants may,  without the consent of the Warrant Agent, the holder of
any [ ] [INDICATE TYPE OF SECURITIES]  or the holder of any other  Warrants,  on
its own  behalf  and on behalf of any  beneficial  owner for whom it is  acting,
enforce,  and may institute and maintain any

                                      -5-
<PAGE>


suit, action or proceeding against the Company suitable to enforce,  or may take
any other action in respect of, its right to exercise the Warrants  evidenced by
its Warrant  Certificate in the manner provided in such Warrant  Certificate and
herein.

       5.     REGISTRATION. The Warrant Agent shall keep, at its corporate trust
office,  books  in  which,  subject  to such  reasonable  regulations  as it may
prescribe,  it  shall  register  the  Warrant  Certificates  and  exchanges  and
transfers of  outstanding  Warrant  Certificates  upon  surrender of the Warrant
Certificates  properly  endorsed or accompanied  by  appropriate  instruments of
registration  of transfer and written  instructions  for  transfer,  all in form
satisfactory  to the Company and the Warrant  Agent.  No service charge shall be
made for any exchange or registration  of transfer of the Warrant  Certificates,
but the Company may require  payment of a sum  sufficient  to cover any stamp or
other tax or other  governmental  charge that may be imposed in connection  with
any such exchange or registration of transfer.

       6.     EXCHANGE,  TRANSFER,   REPLACEMENT  AND  CANCELLATION  OF  WARRANT
CERTIFICATES.  (a) Subject to Section 7, upon  surrender at the corporate  trust
office of the Warrant Agent by hand,  mail or book-entry  delivery,  the Warrant
Certificates  evidencing  Warrants may be exchanged for Warrant  Certificates of
the same  tenor and dollar  amount  evidencing  such  Warrants  or the  transfer
thereof may be  registered  in whole or in part provided that such other Warrant
Certificates  evidence  the same  aggregate  number of  Warrants  as the Warrant
Certificates  so surrendered.  Whenever a Warrant  Certificate is so surrendered
for exchange or registration of transfer,  an authorized  officer of the Warrant
Agent shall manually  countersign and deliver to the person or persons  entitled
thereto a Warrant Certificate duly authorized and executed by the Company, as so
requested.  The Warrant  Agent  shall not be required to effect any  exchange or
registration  of  transfer  which  will  result  in the  issuance  of a  Warrant
Certificate  evidencing a fraction of a Warrant.  The Warrant Certificate issued
upon any exchange or registration of transfer of a Warrant  Certificate shall be
the legal,  valid and binding  obligations  of the Company,  evidencing the same
obligations  and  entitled to the same  benefits  under this  Agreement,  as the
Warrant Certificates surrendered for such exchange or registration of transfer.

       (b)    Any Warrant Certificate surrendered for exchange,  registration of
transfer or exercise of the Warrants  evidenced  thereby shall if surrendered to
the  Company,  be delivered  to the Warrant  Agent and all Warrant  Certificates
surrendered  or so delivered to the Warrant Agent shall be promptly  canceled by
the Warrant Agent and shall not be reissued and,  except as expressly  permitted
by this Agreement,  no Warrant Certificate shall be issued hereunder in exchange
or in lieu thereof.  The Warrant Agent shall deliver to the Company from time to
time or otherwise dispose of the canceled Warrant  Certificates in its customary
manner.

       (c)    Upon  receipt  by  the  Warrant   Agent  of  evidence   reasonably
satisfactory  to it of the  ownership  of and the loss,  theft,  destruction  or
mutilation of any Warrant Certificate and of indemnity  reasonably  satisfactory
to it and,  in the case of  mutilation,

                                      -6-
<PAGE>


upon  surrender  thereof to the Warrant  Agent for  cancellation,  then,  in the
absence of notice to the Company or a responsible corporate trust officer of the
Warrant  Agent that such Warrant  Certificate  has been  acquired by a bona fide
purchaser,  the Company shall execute,  and an authorized officer of the Warrant
Agent shall manually  countersign and deliver, in exchange for or in lieu of the
lost,  stolen,  destroyed  or  mutilated  Warrant  Certificate,  a  new  Warrant
Certificate of the same tenor and evidencing  like  Warrants.  Every  substitute
Warrant  Certificate  executed and delivered pursuant to this Section in lieu of
any lost, stolen or destroyed Warrant  Certificate shall represent an additional
contractual  obligation  of the  Company,  whether  or not the  lost,  stolen or
destroyed Warrant  Certificate  shall be at any time enforceable by anyone,  and
shall be entitled to the benefits of this Agreement equally and  proportionately
with  any and  all  other  Warrant  Certificates  duly  executed  and  delivered
hereunder.  The  provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
of mutilated, lost, stolen or destroyed Warrant Certificates.

       (d)    Upon  the  issuance  of any new  Warrant  Certificate  under  this
Section,  the Company may require the payment of a sum  sufficient  to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other  expenses  (including  the fees and  expenses  of the  Warrant  Agent)  in
connection therewith.

       (e)    The  holder  of a  Warrant  Certificate,  by  accepting  the same,
consents  and  agrees  with the  Company,  the  Warrant  Agent  and  with  every
subsequent  holder of such  Warrant  Certificate  that until the transfer of the
Warrant Certificate is registered on the books of the Warrant Agent, the Company
and the Warrant  Agent may treat such  registered  holder as the absolute  owner
thereof  for any  purpose  and as the person  entitled  to  exercise  the rights
represented  by the  Warrant  evidenced  thereby,  any  notice  to the  contrary
notwithstanding.

       7.     GLOBAL  SECURITIES.  The Warrants shall be issued initially in the
form of one or more Global Warrant  Certificates that will be deposited with, or
on behalf of,  DTC.  Global  Warrant  Certificates  may be issued  only in fully
registered form and in either temporary or definitive form.  Unless and until it
is exchanged in whole or in part for Warrant  Certificates in definitive form, a
Global Warrant  Certificate may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC
or  any  nominee  of DTC to a  successor  depositary  or  any  nominee  of  such
successor.

       So long as DTC,  or its  nominee,  is the  registered  owner  of a Global
Warrant Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the  Warrants  represented  by such  Global  Warrant
Certificate  for all purposes under this  Agreement.  Except as specified  below
with  respect to  Warrants  only,  owners of  beneficial  interests  in a Global
Warrant  Certificate  will not be entitled to have any  Warrants  registered  in
their names, and will not receive or be entitled to receive physical delivery of
any such  Warrants in definitive  form and will not be considered  the owners or
holders  thereof under the Warrants or this  Agreement.  Neither the Company nor
the

                                      -7-
<PAGE>


Warrant  Agent,  in its capacity as registrar for such  Warrants,  will have any
responsibility or liability for any aspect of the records relating to beneficial
interests in a Global  Warrant  Certificate or for  maintaining,  supervising or
reviewing any records relating to such beneficial interests.

       If at any time DTC notifies the Company that it is unwilling or unable to
continue as depositary for the Warrants,  or if the Company notifies DTC that it
will no longer continue to use DTC as depositary for the Warrants,  or if at any
time DTC  ceases to be a clearing  agency  registered  under the  United  States
Securities  Exchange Act of 1934, as amended, or otherwise ceases to be eligible
to be a  depositary,  the  Company  shall  appoint a successor  depositary  with
respect to the  Warrants  (and all  references  to DTC herein shall be deemed to
include such successor  depositary).  If a successor depositary for the Warrants
is not appointed by the Company  within 90 days after the Company  receives such
notice or becomes aware of such ineligibility, the Company will execute, and the
Warrant Agent upon receipt of such executed definitive Warrant Certificates will
authenticate  and deliver,  Warrant  Certificates in definitive  registered form
evidencing  an aggregate  number of Warrants  equal to the  aggregate  number of
Warrants evidenced by the Global Warrant Certificate.

       The Company may at any time and in its sole  discretion  determine not to
have any of the  Warrants  evidenced  by Global  Warrant  Certificates.  In such
event,  the Company will execute,  and the Warrant  Agent,  upon receipt of such
executed definitive Warrant Certificates,  will authenticate and deliver Warrant
Certificates in definitive  registered form, in an aggregate amount equal to the
aggregate number of Warrants evidenced by such Global Warrant Certificates.

       Upon  the  exchange  of  the  Global  Warrant  Certificates  for  Warrant
Certificates  in definitive  registered  form, the Global  Warrant  Certificates
shall be canceled by the Warrant Agent.

       Warrant Certificates in definitive registered form issued in exchange for
the Global Warrant Certificates  pursuant to this section shall be registered in
such  names as DTC,  pursuant  to  instructions  from  its  direct  or  indirect
participants or otherwise,  shall instruct the Warrant Agent or the Company. The
Warrant Agent shall deliver such Warrant  Certificates in definitive  registered
form to or as directed by the persons in whose names such definitive  registered
Warrant Certificates are so registered.

       All Warrant  Certificates in definitive  registered form, issued upon the
exchange of the Global Warrant  Certificates,  shall be valid obligations of the
Company,  evidencing  the rights,  and entitled to the same benefits  under this
Agreement, as the Global Warrant Certificates surrendered upon such exchange.

       8.     RIGHTS OF WARRANT  AGENT.  The  Company  shall have the  following
obligations  to the Warrant Agent and the Warrant Agent shall have the following
rights:

                                      -8-
<PAGE>


       (a)    In acting under this Agreement and in connection  with the Warrant
Certificates,  the  Warrant  Agent is acting  solely as agent of the Company and
does not assume any obligation towards or relationship of agency or trust for or
with the owners or holders of Warrants.

       (b)    The Warrant  Agent shall be  entitled to  compensation,  as agreed
upon with the Company,  for all services rendered by it and expenses incurred in
connection  therewith,  and the Company agrees promptly to pay such compensation
and to reimburse the Warrant Agent for any agreed upon expenses  incurred by the
Warrant Agent in connection  with the services  rendered by it (as documented in
an invoice setting forth such expenses).

       (c)    The Warrant  Agent shall be entitled to consult  with  counsel and
the opinion,  written or  otherwise,  of such counsel shall be full and complete
authorization and protection in respect of any action taken, omitted to be taken
or suffered by it hereunder in good faith and in accordance  with the opinion of
such counsel.

       (d)    The Warrant  Agent shall be protected and shall incur no liability
for or in  respect  of any  action  taken or  omitted  to be  taken or  anything
suffered by it in reliance upon the Warrants,  any Warrant Certificate,  the [ ]
[INDICATE TYPE OF SECURITIES] or any notice,  direction,  consent,  certificate,
affidavit,  statement  or other  paper or document  (whether in its  original or
facsimile form) reasonably  believed by it to be genuine and to have been passed
or signed by the proper parties.

       (e)    The Warrant Agent or any of its officers,  directors and employees
may become the beneficial  owner of, or acquire an interest in,  Warrants or [ ]
[INDICATE TYPE OF SECURITIES]with  the same rights that it would have if it were
not the Warrant Agent hereunder,  and to the extent permitted by applicable law,
may engage in or be interested in any  financial or other  transaction  with the
Company,  and may act on behalf of, or as depositary,  trustee or agent for, any
committee or body of beneficial  owners of the Warrants,  the [ ] [INDICATE TYPE
OF SECURITIES], or other obligations of the Company, as freely as if it were not
the Warrant Agent hereunder.

       (f)    The  recitals  contained  herein and in the  Warrant  Certificates
(except in the Warrant  Agent's  certificate  of  authentication  on the Warrant
Certificates)  shall be taken as the  statements  of the Company and the Warrant
Agent assumes no  responsibility  for the  correctness  of the same. The Warrant
Agent  makes  no  representation  as to the  validity  or  sufficiency  of  this
Agreement or the Warrant  Certificates  except for the due  authorization of the
Warrant Agent to execute this Agreement.

       (g)    The Warrant  Agent shall be  obligated  to perform such duties and
only such duties as are herein and in the Warrant Certificates  specifically set
forth and no implied duties or obligations  shall be read into this Agreement or
the Warrant  Certificates against the Warrant Agent. The Warrant Agent shall not
be under any obligation to take any action  hereunder  which may tend to involve
it in any reimbursable expense or

                                      -9-
<PAGE>


liability,  the  payment  of  which  within  a  reasonable  time  is  not in its
reasonable opinion, assured to it.

       (h)    Unless  otherwise  specifically  provided herein or in the Warrant
Certificates,  any  order,  certificate,  notice,  request,  direction  or other
communication  from the Company made or given by the Company under any provision
of this Agreement  shall be sufficient if signed by an Authorized  Person of the
Company.

       (i)    If the  Warrant  Agent shall  receive any notice or demand  (other
than notice of or demand for exercise of  Warrants)  addressed to the Company by
the holder of the Warrant Certificates pursuant to the provisions of the Warrant
Certificates,  the Warrant Agent shall promptly forward such notice or demand to
the Company.

       (j)    The  Warrant  Agent may at any time  resign as Warrant  Agent,  by
giving written  notice to the Company of such  intention on its part,  mailed to
the Company at its address set forth in Section 12, specifying the date on which
its desired  resignation shall become effective;  PROVIDED,  HOWEVER,  that such
date shall  never be less than 90 days after the date of receipt of such  notice
by the Company unless the Company agrees to accept shorter  notice.  The Warrant
Agent may be  removed  at any time by the  filing  with it of an  instrument  in
writing  signed by an  Authorized  Person of the  Company  and  specifying  such
removal and the date when it is intended to become  effective.  Such resignation
or removal shall take effect upon the date of the appointment by the Company, as
hereinafter  provided,  of a successor  Warrant  Agent (which shall be a bank or
trust company authorized under the laws of the jurisdiction of its incorporation
to exercise  corporate  trust powers) and the acceptance of such  appointment by
the successor  Warrant Agent.  If a successor  Warrant Agent is not appointed by
the  Company  within 90 days after the  resignation  of the Warrant  Agent,  the
Warrant  Agent  shall be  entitled  to  petition at the expense of the Company a
court of competent  jurisdiction  for appointment of a successor  Warrant Agent.
Upon its  resignation  or removal,  the  Warrant  Agent shall be entitled to the
payment by the Company of its compensation for the services  rendered  hereunder
and to the  reimbursement  of all reasonable and duly  documented  out-of-pocket
expenses  (including  reasonable and duly  documented  counsel fees) incurred in
connection with the services rendered  hereunder (as described in Section 8(b)).
The indemnity described in Section 9 shall survive any resignation or removal of
the Warrant Agent or the termination of this Agreement.

       (k)    In case at any time the Warrant  Agent shall  resign,  or shall be
removed, or shall become incapable of acting, or shall be adjudged a bankrupt or
insolvent,  or  shall  file a  voluntary  petition  in  bankruptcy  or  make  an
assignment  for the benefit of its creditors or consent to the  appointment of a
receiver  of all or any  substantial  part of its  property  or affairs or shall
generally  not pay its debts as such debts become due, or shall admit in writing
its  inability  to pay or meet its debts  generally as they become due, or if an
order of any court shall be entered  approving any petition  filed by or against
the  Warrant  Agent  under the  provisions  of  bankruptcy  laws or any  similar
legislation, or if a receiver, trustee or other similar official of it or of all
or any substantial part of its

                                      -10-
<PAGE>


property  shall be  appointed,  or if any public  officer  shall take  charge or
control of it or of its property or affairs,  for the purpose of rehabilitation,
conservation, protection, relief, winding up or liquidation, a successor Warrant
Agent shall be appointed by the Company by an instrument in writing,  filed with
the successor  Warrant Agent.  Upon the  appointment as aforesaid of a successor
Warrant  Agent and  acceptance by it of such  appointment,  the Warrant Agent so
superseded  shall, if not previously  disqualified by operation of law, cease to
be the Warrant Agent hereunder.

       (l)    Any successor  Warrant Agent  appointed  hereunder  shall execute,
acknowledge  and deliver to its  predecessor  and to the  Company an  instrument
accepting such  appointment  hereunder,  and thereupon  such  successor  Warrant
Agent, without any further act, deed or conveyance, shall become vested with all
the authority,  rights,  powers, trusts,  immunities,  duties and obligations of
such  predecessor  with like  effect as if  originally  named as  Warrant  Agent
hereunder,  and such predecessor,  upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay over,
and such  successor  Warrant  Agent  shall be  entitled  to receive  all moneys,
securities,  records  or  other  property  on  deposit  with  or  held  by  such
predecessor, as Warrant Agent hereunder.

       (m)    Any corporation or bank into which the Warrant Agent may be merged
or  converted,  or any  corporation  or bank with which the Warrant Agent may be
consolidated,  or any corporation or bank resulting from any merger,  conversion
or consolidation to which the Warrant Agent shall be a party, or any corporation
or bank to which the  Warrant  Agent  shall sell or  otherwise  transfer  all or
substantially  all  the  assets  and  business  of  the  Warrant  Agent,  or any
corporation or bank to which the Warrant Agent shall sell or otherwise  transfer
all or substantially all its corporate trust business, provided that it shall be
qualified as  aforesaid,  shall be the successor to the Warrant Agent under this
Agreement  without the execution or filing of any document or any further act on
the part of any of the parties hereto.

       (n)    the Warrant Agent:

                     (i)    need  not  act  on  any  notice   given  under  this
              Agreement  by the  Company or any other  person  which is received
              orally until it has been confirmed in writing;

                     (ii)   is  authorized to  communicate  with any person from
              whom an exercise of Warrants is received  but is not obliged to do
              so,  if it  reasonably  believes  to do so  would  breach  laws or
              regulations  relating to the sale of securities in a jurisdiction;
              and

                     (iii)  is authorized  to cooperate  with and to furnish any
              organization  (and its  representatives)  designated  from time to
              time by the Company in any manner  reasonably  requested  by it in
              connection  with the exercise of the  Warrants  and any  exercises
              thereunder;  and will not be

                                      -11-
<PAGE>


              responsible for procuring, nor liable for the consequences of, any
              transfers of Warrants in any accounts.

       (o)    The  Warrant  Agent  shall have no  responsibility  for failing to
provide  information  or to take any  action  hereunder  or by a time  specified
hereunder  if such  failure is  attributable  (directly  or  indirectly)  to any
failure  on the  part  of  DTC  to  provide  in a  form  satisfactory  to it any
confirmations  or other  information  required by it to carry out its  functions
hereunder  and  it may  rely  conclusively  without  investigation  on any  such
information provided by any such entity.

       (p)    The  Warrant  Agent  shall not be bound to make any  investigation
into the facts or  matters  stated in any  resolution,  certificate,  statement,
instrument,  opinion, report, notice, request, direction,  consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document.

       (q)    The rights, privileges, protections, immunities and benefits given
to  the  Warrant  Agent,  including,   without  limitation,   its  right  to  be
indemnified,  are extended to, and shall be enforceable by, the Warrant Agent in
each of its capacities hereunder,  and to each agent, custodian and other person
employed to act hereunder.

       9.     INDEMNITY.  The Company shall indemnify the Warrant Agent for, and
hold it harmless against,  any loss,  liability or expense  (including the costs
and expenses of defending any claim of liability)  incurred without  negligence,
bad  faith,  or  willful  misconduct  of the  Warrant  Agent  or its  respective
employees,  directors,  officers, or agents in connection with its acting as its
respective duties hereunder.

       10.    TAXES.  The Company will pay all stamp taxes or other  duties,  if
any,  which may be imposed by the United  States of  America,  or any  political
subdivision  or  taxing  authority  thereof  or  therein,  with  respect  to the
execution  or  delivery  of  this   Agreement  or  the  issuance  of  a  Warrant
Certificate.  The Company shall not be required to pay any stamp or other tax or
other  governmental  charge  required to be paid in connection with any transfer
involved in the issuance of the [ ] [INDICATE  TYPE OF  SECURITIES];  and if any
such transfer is involved, the Company shall not be required to issue or deliver
any [ ][INDICATE  TYPE OF SECURITIES]  until such tax or other charge shall have
been  paid  or  provided  for  or it  has  been  established  to  the  Company's
satisfaction that no such tax or other charge is due.

       11.    AMENDMENTS.  This Agreement may be amended or  supplemented by the
parties  hereto,  without the consent of the holder of any Warrant  Certificate,
for  the  purpose  of  curing  any   ambiguity  or  of  curing,   correcting  or
supplementing any defective  provision  contained herein, or in any manner which
the  parties  may  mutually  deem  necessary  or  desirable  and which shall not
adversely affect the interests of the holders of the Warrant  Certificates.  The
Warrant Agent shall promptly notify in writing each holder of any such amendment
and  deliver a copy of such  amendment  to any  holder  who shall so  request in
writing, all at the cost of the Company.

                                      -12-
<PAGE>


       12.    NOTICES. Any communication  required to be given shall be given to
the parties hereto as follows:

If to the Company:           Allegheny Energy, Inc.
                             10435 Downsville Pike
                             Hagerstown, MD 21740-1766
                             Fax: [ ]
                             Attention: [ ]

If to the Warrant Agent:     [ ]
                             Fax:  [ ]
                             Attention:  [ ]


(or such other address as shall be specified in writing by the relevant party to
the other parties hereto.)

Communications  between the Company and the Warrant  Agent shall be delivered by
hand,  facsimile  or sent by courier.  Any notice to the holders of the Warrants
which by any provision of this Warrant  Agreement is required or permitted to be
given  shall be given by first  class  mail  postage  prepaid  at such  holder's
address as it appears on the books of the Warrant Agent.  Communications between
the Company and the Warrant  Agent shall be deemed to be  effective  on receipt,
for which purpose any  communication  shall, if sent by facsimile,  be deemed to
have been received at the time of dispatch and, if sent by courier, be deemed to
have been  received  after 2 days.  Communications  to Warrant  holders shall be
deemed to be effective at the time of dispatch or mailing.

       13.    DELIVERY OF PROSPECTUS. To the extent required by law, the Company
will  furnish  to the  Warrant  Agent  copies  of a  prospectus  contained  in a
Registration  Statement  declared effective under the Securities Act of 1933, as
amended (the "Act"), and any necessary prospectus supplement relating to the [ ]
[INDICATE  TYPE  OF  SECURITIES]  deliverable  upon  exercise  of  any  Warrants
(collectively  the "Prospectus") in such quantity as requested by the exercising
Warrant holder, the Warrant Agent agrees that upon receipt of a Warrant Exercise
Notice from any holder, the Warrant Agent will as soon as practicable deliver to
such holder,  if instructed by the Company that such delivery is required by law
or  upon  request  of  such  holder,  prior  to the  Warrant  Exercise  Date,  a
Prospectus, all at the cost of the Company.

       14.    OBTAINING OF GOVERNMENTAL APPROVALS. The Company will from time to
time take all action which may be necessary to obtain and keep effective any and
all  consents  and  approvals  of  governmental  agencies  and  authorities  and
securities  acts filings under United States Federal and State laws which may be
or become  requisite  in  connection  with the  issuance,  sale,  transfer,  and
delivery  of  the  Warrants,  the  Warrant  Certificates,  the  exercise  of the
Warrants, the issuance, sale, transfer and delivery of the [ ] [INDICATE TYPE OF
SECURITIES] issuable upon exercise of the Warrants or upon the

                                      -13-
<PAGE>


expiration of the period during which the Warrants are exercisable.  The Company
covenants that it will obtain all necessary  governmental  authorizations  which
may be required to issue the [ ] [INDICATE TYPE OF SECURITIES]  upon exercise of
the Warrants and the Company  will issue the [ ] [INDICATE  TYPE OF  SECURITIES]
pursuant to registration under the Act.

       15.    HEADINGS.  The  descriptive  headings of the several  Articles and
Sections of this  Agreement  are  inserted  for  convenience  only and shall not
control or affect the meaning or construction of any of the provisions hereof.

       16.    GOVERNING  LAW.  This  Agreement,  the  Warrants  and the  Warrant
Certificates  shall be governed by and construed in accordance  with the laws of
the State of New York.

       17.    PERSONS  HAVING  RIGHTS UNDER WARRANT  AGREEMENT.  Nothing in this
Agreement  expressed or implied and nothing that may be inferred from any of the
provisions  hereof is intended,  or shall be construed,  to confer upon, or give
to, any person or corporation other than the Company,  the Warrant Agent and the
holder of any  Warrants  any right,  remedy or claim  under or by reason of this
Agreement  or of any  covenant,  condition,  stipulation,  promise or  agreement
hereof, and all covenants, conditions,  stipulations, promises and agreements in
this  Agreement  contained  shall be for the sole and  exclusive  benefit of the
Company, the Warrant Agent and its successors and holders of the Warrants.

       18.    FURTHER ISSUES.  The Company may from time to time, without notice
to or the  consent  of the  registered  holders  of  Warrants,  create and issue
further  Warrants  identical  with the Warrants in all respects and so that such
further  warrants  shall  be  consolidated  and form a  single  series  with the
Warrants  and shall have the same terms as to status,  exercise or  otherwise as
the  Warrants.  The  issuance of such further  warrants  shall be pursuant to an
agreement supplemental hereto.

       19.    COUNTERPARTS.  This  Agreement  may be  executed in or by separate
counterparts,  and by each party separately on a separate counterpart, each such
counterpart,   when  so  executed  and  delivered,   to  be  an  original.  Such
counterparts shall together constitute but one and the same instrument.

                                      -14-
<PAGE>


       IN  WITNESS  WHEREOF,   the  parties  hereto  have,  by  duly  authorized
directors, officers or attorneys-in-fact, executed this Agreement as of the date
first above written.

                                          ALLEGHENY ENERGY, Inc.



                                          By:________________________
                                             Name:
                                             Title:

                                          [ ], as Warrant Agent



                                          By:________________________
                                             Name:
                                             Title:

                                      -15-
<PAGE>

                                                                       Exhibit A


                          [FORM OF WARRANT CERTIFICATE]


       [IF  THE  WARRANT  CERTIFICATE  IS TO BE A  GLOBAL  WARRANT  CERTIFICATE,
INSERT-- This Warrant  Certificate  is a Global Warrant  Certificate  within the
meaning of the Warrant  Agreement  hereinafter  referred to and is registered in
the name of The Depository Trust Company ("DTC") or a nominee of DTC. Unless and
until it is exchanged in whole or in part for Warrants in definitive  registered
form, this Warrant  Certificate may not be transferred  except as a whole by DTC
to a nominee of DTC or by a nominee  of DTC to DTC or another  nominee of DTC or
by DTC or any such  nominee  to a  successor  depositary  or a  nominee  of such
successor depositary).

       Unless  this  Warrant   Certificate   is   presented  by  an   authorized
representative of DTC ([ ] [INDICATE ADDRESS OF THE DEPOSITARY  COMPANY]) to the
Warrant Agent or its agents for  registration of transfer,  exchange or payment,
and any  Warrant  issued is  registered  in the name of Cede & Co. or such other
name as requested by an authorized  representative of DTC and any payment hereon
is made to Cede & Co. or such  other  entity as is  requested  by an  authorized
representative  of DTC,  ANY  TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL inasmuch as the registered owner hereof,  Cede
& Co., has an interest herein.]

       The Warrants  evidenced  hereby are exercisable  only if countersigned by
the Warrant Agent as provided herein.

       VOID IF NOT EXERCISED BY [5:00 P.M., NEW YORK CITY TIME,] ON [ ].

                                      A-1
<PAGE>


                 THE ALLEGHENY ENERGY, INC. WARRANT CERTIFICATE

CUSIP NO.: [_________]
ISIN NO.: [_________]                                        [________] Warrants

              This certifies  that [CEDE & CO.] or its  registered  assigns (the
"Registered Holder") is the registered owner of the above Warrants. Each Warrant
entitles the  registered  owner to exercise,  [COMMENCING AT 9:00 A.M., NEW YORK
CITY] on [ ] [BUT NO LATER  THAN  5:00  P.M.,  NEW YORK  CITY  TIME,] on [ ], an
option to purchase, at an exercise price of U.S. $[ ], [ ] of [ ] [INDICATE TYPE
OF SECURITIES] (the "[ ]") of Allegheny  Energy,  Inc. (the "Company").  The [ ]
[INDICATE TYPE OF  SECURITIES]  will be issued and  delivered by the  Company on
[ ]. The holder may exercise the Warrants  evidenced  hereby in whole or in part
during the period herein  specified,  PROVIDED,  that [NO FEWER THAN ONE WARRANT
MAY BE EXERCISED PER WARRANT  EXERCISE NOTICE AND NO FRACTIONAL  WARRANTS MAY BE
EXERCISED,]  by (i) providing  written  notice of such election to exercise such
Warrants  ("Warrant  Exercise  Notice") to the Warrant Agent at [ ], "Attention:
Allegheny Energy,  Inc. Warrant Exercise",  or such other address of the Warrant
Agent as the Warrant  Holders may be notified of by the Company prior to [ ], by
hand or  facsimile,  no later than [5:00 P.M.,  NEW YORK CITY TIME,] on the [ ],
which  Warrant  Exercise  Notice shall be in the form of an election to purchase
[ ] [INDICATE TYPE OF SECURITIES] substantially in the form set forth as Exhibit
B to the Warrant Agreement,  properly completed and executed by the holder; (ii)
delivering, no later than [5:00 P.M., NEW YORK CITY TIME,] on [ ], such Warrants
to the Warrant Agent by book-entry  transfer through the facilities of DTC or by
delivering,  no later than [5:00 P.M.,  NEW YORK CITY TIME,] on [ ], the Warrant
Certificates   evidencing   such  Warrants  to  the  Warrant  Agent  if  Warrant
Certificates  in  definitive  form have been  issued and  delivered  pursuant to
Section 7 of the Warrant Agreement and (iii) for each Warrant exercised,  paying
in full, in lawful money of the United States of America,  by bank wire transfer
in immediately available funds no later than [11:00 A.M., NEW YORK CITY TIME] on
[ ] (the "Settlement Date"), the exercise price of U.S. $[ ].

       This Warrant  Certificate is issued  pursuant to and in accordance with a
Warrant Agreement, dated as of [ ] (the "Warrant Agreement") between the Company
and the  Warrant  Agent and is  subject  to the terms and  provisions  contained
therein to all of which terms and provisions  the holder  consents by acceptance
hereof.  Copies  of the  Warrant  Agreement  are on file at the  above-mentioned
office of the Warrant Agent.  Capitalized terms used in this Warrant Certificate
and not defined herein will have the respective meanings given such terms in the
Warrant Agreement.

       This Warrant Certificate may be transferred at the corporate trust office
of the Warrant Agent by the Registered Holder or its assigns, in person or by an
attorney  duly  authorized  in  writing,  in  the  manner  and  subject  to  the
limitations provided in the Warrant Agreement.

       After  countersignature  by the Warrant Agent and prior to the expiration
of the  Warrants,  this Warrant  Certificate  may be exchanged at the  corporate
trust  office  of the  Warrant  Agent  for  one or  more  Warrant  Certificates,
representing the same number of Warrants of the same tenor.

                                      A-2
<PAGE>


       This Warrant  Certificate  shall not entitle the Registered Holder to any
of the rights of a holder of the [ ] [INDICATE TYPE OF SECURITIES].

       Unless the certificate of authentication  hereon has been executed by the
Warrant Agent by the manual  signature of one of its duly  authorized  officers,
this Warrant Certificate shall not be valid or obligatory for any purpose.

Dated: [  ]


ALLEGHENY ENERGY, Inc.



By:________________________
Name:
Title:

Authenticated by
[ ]
as Warrant Agent without recourse,
warranty or liability

By:_________________________________
         Authorized Signature

                                      A-3
<PAGE>


                                                                       Exhibit B


                        [FORM OF WARRANT EXERCISE NOTICE]

                     [TO BE COMPLETED BY DIRECT PARTICIPANT
                                     IN DTC]

                           The Allegheny Energy, Inc.
             Warrants to Purchase [ ] [indicate type of securities]

                    TO BE EXECUTED UPON EXERCISE OF WARRANTS

       The  undersigned  hereby  irrevocably  elects to  exercise  the number of
Warrants  set  forth  below.  Each  Warrant  entitles  the  registered  owner to
exercise,  [COMMENCING AT 9:00 A.M., NEW YORK CITY TIME] [ ], [BUT NO LATER THAN
5:00 P.M.,  NEW YORK CITY TIME,] on [ ], an option to  purchase,  at an exercise
price of $[ ], $[ ] newly issued [ ] [INDICATE TYPE OF  SECURITIES]  (the "[ ]")
of Allegheny Energy, Inc. (the "Company"). The undersigned represents,  warrants
and promises that (1) it has delivered or will deliver no later than [5:00 P.M.,
NEW YORK  TIME,] on [ ] the number of  Warrants  specified  below to the Warrant
Agent's  account at DTC by  book-entry  transfer;  (2) it has the full power and
authority  to exercise  and  deliver  the  Warrants  exercised  hereby;  and (3)
[PAYMENT  DETAILS]  no later than [11:00  A.M.,  NEW YORK CITY TIME] on [ ] (the
"Settlement  Date"),  the exercise price of U.S. $[ ] for each Warrant exercised
hereby.

       The undersigned  requests that the principal amount of Warrants exercised
hereby be in registered form in the authorized denominations, registered in such
names and delivered,  all as specified in accordance with the  instructions  set
forth  below;  provided,  that  if the [ ]  [INDICATE  TYPE OF  SECURITIES]  are
evidenced by global  securities,  the [ ] [INDICATE TYPE OF SECURITIES] shall be
registered in the name of DTC or its nominee.

                                      B-1
<PAGE>



--------------------------------------------------------------------------------

Dated:  [ ]

NOTE:  THIS EXERCISE NOTICE MUST BE     WHERE YOU CAN CONTACT THE WARRANT AGENT
       DELIVERED TO [ ], THE WARRANT    AND TO WHICH WARRANT EXERCISE NOTICES
       AGENT, PRIOR TO [5:00 P.M., NEW  ARE TO BE SUBMITTED. YOU MAY NOT SUBMIT
       YORK CITY TIME,] ON [ ]. THE     YOUR WARRANT EXERCISE NOTICE OR DELIVER
       WARRANT AGENT SHALL NOTIFY YOU   YOUR WARRANTS UNTIL [9:00 A.M., NEW YORK
       (THROUGH THE CLEARING SYSTEM)    CITY TIME,] ON [ ]. WARRANT EXERCISE
       OF (1) THE WARRANT AGENT'S       NOTICES WILL ONLY BE VALID IF DELIVERED
       ACCOUNT AT DTC TO WHICH YOU      IN ACCORDANCE WITH THE INSTRUCTIONS SET
       MUST DELIVER YOUR WARRANTS ON    FORTH IN THIS NOTIFICATION (OR AS
       THE EXERCISE DATE AND (2) THE    OTHERWISE DIRECTED), MARKED TO THE
       ADDRESS, PHONE NUMBER AND        ATTENTION OF "ALLEGHENY ENERGY, INC.
       FACSIMILE NUMBER                 WARRANT EXERCISE".

--------------------------------------------------------------------------------

------------------------------------------------------------ -------------------
NAME OF DTC DIRECT PARTICIPANT:         WARRANT HOLDER DELIVERING WARRANTS, IF
______________________________________  OTHER THAN THE DIRECT DTC PARTICIPANT
            (PLEASE PRINT)              DELIVERING THIS WARRANT EXERCISE NOTICE
ADDRESS:______________________________
        ______________________________  NAME:___________________________________
                                                    (PLEASE PRINT)
CONTACT NAME:_________________________
                                        ADDRESS:________________________________
TELEPHONE (INCLUDING
INTERNATIONAL CODE):__________________          ________________________________

FAX (INCLUDING                          CONTACT
INTERNATIONAL CODE):__________________  NAME:___________________________________

--------------------------------------- TELEPHONE (INCLUDING
                                        INTERNATIONAL CODE):____________________
SOCIAL SECURITY OR OTHER TAXPAYER       ----------------------------------------
IDENTIFICATION NUMBER
(IF APPLICABLE):______________________  FAX (INCLUDING
                                        INTERNATIONAL CODE):____________________
                                        ----------------------------------------

                                        SOCIAL SECURITY OR OTHER TAXPAYER
                                        IDENTIFICATION NUMBER
                                        (IF APPLICABLE):________________________

--------------------------------------------------------------------------------
ACCOUNT FROM WHICH WARRANTS             ACCOUNT TO WHICH THE [ ]
ARE BEING DELIVERED:                    [INDICATE TYPE OF SECURITIES]
                                        ARE TO BE CREDITED:
    DTC Account No.____________________
                                            DTC Account No._____________________

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

<PAGE>


----------------------------------------
FILL IN FOR DELIVERY OF [ ] [INDICATE
TYPE OF SECURITIES], IF OTHER THAN TO
THE PERSON DELIVERING THIS WARRANT
EXERCISE NOTICE:


Name:___________________________________
             (Please Print)

Address:________________________________

        ________________________________

Contact Name:___________________________

Telephone (including
international code):____________________

Fax (including
international code):____________________

Social Security or Other Taxpayer
Identification Number
(if applicable):________________________

----------------------------------------

<PAGE>



Number of Warrants Being Exercised[ (AT LEAST [TWO])]:__________________________

       (ONLY ONE EXERCISE PER WARRANT EXERCISE NOTICE)










                                       Signature:_______________________________

                                       Name:____________________________________

                                       Capacity in which Signing:_______________