SUPPLEMENTAL INDENTURE

        SUPPLEMENTAL INDENTURE, dated as of April 22, 2005 (this “Supplemental Indenture”), between ALLEGHENY ENERGY, INC., a Maryland corporation (the “Company”) and WILMINGTON TRUST COMPANY, a Delaware banking association, as trustee under the indenture referred to herein (the “Trustee”).

W I T N E S S E T H:

         WHEREAS, on July 24, 2003, pursuant to an offering exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), the Company issued and sold to Allegheny Capital Trust I, a wholly-owned subsidiary of the Company (“Capital Trust”), approximately $300 million aggregate principal amount of 11 7/8% Notes due 2008 (the “Notes”) and attached warrants (the “Warrants”) to purchase up to an aggregate of 24,999,000 shares of the Company’s Common Stock, par value $1.25 per share (the “Common Stock”), subject to certain anti-dilution adjustments;

         WHEREAS , the Notes were issued pursuant to an indenture, dated as of July 24, 2003 (the “Indenture”), by and between the Company and the Trustee;

         WHEREAS, on July 24, 2003, pursuant to an offering exempt from registration under the Securities Act, Capital Trust issued and sold to certain purchasers $300,000,000 aggregate liquidation amount of 11 7/8% Mandatorily Convertible Trust Preferred Securities (the “Preferred Securities”). The Preferred Securities are convertible into shares of Common Stock and operate in tandum with the Notes and Warrants;

         WHEREAS , Section 9.02 of the Indenture provides that the Company and the Trustee may, with certain exceptions, amend the Indenture and the Notes with the written consent of the Holders of a Majority in Liquidation Amount of the Preferred Securities;

         WHEREAS , Section 9.02 of the Indenture provides that the Company and the Trustee may amend the anti-layering covenant of the Indenture (Section 4.11) with the written consent of 75% in Liquidation Amount of the Preferred Securities (the “Additional Amendment”);

         WHEREAS, the Company has offered to purchase any and all of the outstanding Preferred Securities and the Company and Capital Trust have distributed an Offering Circular, dated March 23, 2005, as amended on April 6, 2005 (the “Offering Circular”), and accompanying Consent and Letter of Transmittal to the Holders of the Preferred Securities in connection with certain proposed amendments to the Indenture (the “Proposed Amendments”) and the Additional Amendment, as described in the Offering Circular;

         WHEREAS , the Holders of a Majority in Liquidation Amount of the Preferred Securities have validly approved the Proposed Amendments;

         WHEREAS , the Holders of 75% in Liquidation Amount of the Preferred Securities have validly approved the Additional Amendment;

         WHEREAS , the execution and delivery of this Supplemental Indenture have been duly authorized by all necessary corporate action on the part of the Company and all conditions and requirements necessary to make this instrument a valid and binding agreement have been duly performed and complied with; and

         NOW THEREFORE , in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Trustee mutually covenant and agree, for the equal and ratable benefit of the Holders of the Notes, as follows:

ARTICLE I - AMENDMENTS

Section 1.1.   Amendments to the Indenture and Notes.

(a)     The following Sections of the Indenture, and any corresponding provisions in the Notes, are hereby deleted in their entirety and replaced with “Intentionally Omitted.”: