AMENDMENT NO. 2 TO TAX ALLOCATION AGREEMENT By and Between ALLEGHENY POWER SYSTEM INC. and its Subsidiaries Amending the Agreement dated as of December 1, 1994

                       AMENDMENT NO. 2 TO
                    TAX ALLOCATION AGREEMENT
                                
                                
                         By and Between
                                
                   ALLEGHENY POWER SYSTEM INC.
                                
                      and its Subsidiaries
                                
                                
       Amending the Agreement dated as of December 1, 1994



                                
                                
     AMENDMENT NO. 2 dated as of September 3, 1997, among
ALLEGHENY POWER SYSTEM, INC. (hereinafter called the "Parent
Company") and the direct and indirect subsidiaries of the Parent
Company (hereinafter called the "Subsidiary Companies"),
collectively referred to hereinafter as "the parties hereto."

     WHEREAS, the Parent Company and the Subsidiaries are parties
to an agreement dated as of December 1, 1994 concerning their
federal income tax allocation (the "Tax Allocation Agreement");
and

     WHEREAS, one new indirect subsidiary company has been formed
and is joining in the consolidated group for federal income tax
purposes;

     NOW THEREFORE, the parties hereto hereby mutually agree
that:

     1.  Allegheny Energy Solutions, Inc. is included as a party
to the Tax Allocation Agreement as of the date hereof.

     2.  With the addition of the subsidiary above-named, the
Agreement dated as of December 1, 1994 remains in full force and
effect, as amended.

     IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed.

                              ALLEGHENY GENERATING COMPANY


                              By:  /s/ X. X. Xxxx
                                   President

                              ALLEGHENY PITTSBURGH COAL COMPANY


                              By   /s/ X. X. Xxxx
                                   President

                              ALLEGHENY POWER SERVICE CORPORATION


                              By:  /s/ X. X. Xxxx
                                   President





                              ALLEGHENY POWER SYSTEM, INC.


                              By:  /s/ X. X. Xxxx
                                   President


                              AYP CAPITAL, INC.


                              By:  /s/ X. X. Xxxx
                                   President


                              MONONGAHELA POWER COMPANY


                              By:  /s/ X. X. Xxxxxxx
                                   Vice President


                              THE POTOMAC EDISON COMPANY


                              By:  /s/ X. X. Xxxxxxx
                                   Vice President


                              WEST PENN POWER COMPANY


                              By:  /s/ X. X. Xxxxxxx
                                   Vice Presdient


                              WEST PENN WEST VIRGINIA WATER
                              POWER COMPANY


                              By:  /s/ X. X. Xxxxxxx
                                   Vice President


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                              WEST VIRGINIA POWER AND
                              TRANSMISSION COMPANY


                              By:  /s/ X. X. Xxxx
                                   President


                              ALLEGHENY COMMUNICATIONS CONNECT,
INC.


                              By:  /s/ X. X. Xxxx
                                   President


                              AYP ENERGY, INC.


                              By:  /s/ X. X. Xxxx
                                   President


                              ALLEGHENY ENERGY SOLUTIONS, INC.


                              By:  /s/ X. X. Xxxx
                                   President


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