10435 Downsville Pike, Hagerstown, Maryland 21740-1766
Telephone Number - 301-790-3400

     The registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.

     At August 14, 2002, 1,000 shares of the Common Stock ($1.00 par value) of the registrant were outstanding.

   See accompanying notes to financial statements.

Allegheny Generating Company (the Company) was incorporated in Virginia in 1981. The Parents, Monongahela Power Company (Monongahela Power) - 22.97% and Allegheny Energy Supply Company, LLC (Allegheny Energy Supply) - 77.03%, own the Company's common stock. Both Monongahela Power and Allegheny Energy Supply are wholly-owned subsidiaries of Allegheny Energy, Inc. (Allegheny Energy) and are part of the Allegheny Energy integrated electric utility system. The Notes to Financial Statements for the Company's Annual Report on Form 10-K, as amended, for the year ended December 31, 2001, should be read with the accompanying financial statements and the following notes. The accompanying financial statements appearing on pages 3 through 6 and these notes to financial statements are unaudited. In our opinion, such financial statements together with these notes contain all adjustments (which consist only of normal recurring adjustments) necessary to present fairly the Company's financial position as of June 30, 2002, the results of operations for the three and six months ended June 30, 2002 and 2001, and cash flows for the six months ended June 30, 2002, and 2001.

On June 1, 2001, Monongahela Power transferred its 352 megawatts (MW) of Ohio and the Federal Energy Regulatory Commission (FERC) jurisdictional generating assets to Allegheny Energy Supply, at book value. The transfer was approved by the Public Utilities Commission of Ohio (Ohio PUC) as part of a settlement that implemented a restructuring plan for Monongahela Power. This restructuring plan allowed Monongahela Power's Ohio customers to choose their generation supplier effective January 1, 2001. Accordingly, Monongahela Power's interest in the common stock of the Company decreased to 22.97% from 27% effective June 1, 2001. Allegheny Energy Supply owns the remaining shares.

Substantially all of the employees of Allegheny Energy are employed by Allegheny Energy Service Corporation (AESC), which performs services at cost for the Company and its affiliates in accordance with the Public Utility Holding Company Act of 1935 (PUHCA). Through AESC, the Company is responsible for its proportionate share of services provided by AESC. The total billings by AESC (including capital) to the Company were $.04 million for the second quarter of 2002 and $.07 million for the first six months of 2002. The total billings by AESC

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(including capital) to the Company were $.1 million and $.2 million for the second quarter and six months ended June 30, 2001.  The Company has various operating transactions with its affiliates.

It is the Company's policy that the affiliated receivable and payable balances outstanding from these transactions are presented net on the balance sheet and statement of cash flows. At June 30, 2002, net receivable from parents and affiliates was $2.4 million. At December 31, 2001, net receivable from parents and affiliates was $2.2 million.

The Company and its affiliates use an Allegheny Energy internal money pool as a facility to accommodate intercompany short-term borrowing needs, to the extent that certain companies have funds available. As of June 30, 2002 and December 31, 2001, the Company had outstanding money pool borrowings of $54.3 million and $62.9 million, respectively. The total money pool borrowings outstanding at both June 30, 2002, and December 31, 2001, were borrowed from funds invested by one of the Company's parents, Monongahela Power.

The Company joins with Allegheny Energy and its subsidiaries in filing a consolidated federal income tax return. The consolidated tax liability is allocated among the participants generally in proportion to the taxable income of each participant, except that no subsidiary pays tax in excess of its separate return tax liability. For the six months ended June 30, 2002 and 2001, the Company paid tax allocations to Allegheny Energy of $5.5 million and $10.2 million, respectively.

The Company systematically reduces capitalization each year as its assets depreciate. In previous periods, this resulted in the payment of dividends in excess of current earnings. The Securities and Exchange Commission (SEC) granted approval to the Company to allow it to pay common dividends out of capital. Common dividends were paid from retained earnings, reducing the account balance to zero and from other paid-in capital. The approval granted to the Company expired on December 31, 2001. The Company has requested authorization to continue this practice and anticipates the SEC approval to be granted in the third quarter of 2002. Therefore, no dividends were paid in excess of current earnings for the first or second quarters of 2002. Common dividend payments for the three and six months ended June 30, 2002, totaled $7.0 million and was paid entirely from retained earnings. Common dividend payments for the six months ended June 30, 2001 totaled $16.0 million, $11.2 million from retained earnings an d $4.8 million from other paid-in capital.

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Regulatory liabilities, net of regulatory assets of $13.1 million at June 30, 2002 and December 31, 2001, relate to income taxes.

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The Notes to Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations in Allegheny Generating Company's (the Company) Annual Report on Form 10-K, as amended, for the year ended December 31, 2001, should be read in conjunction with the following Management's Discussion and Analysis information.

Certain statements within constitute forward-looking statements with respect to the Company. Such forward-looking statements include statements with respect to deregulated activities and movements towards competition in the states served by the Company, markets, products, services, prices, results of operations, capital expenditures, regulatory matters, liquidity and capital resources, resolution and impact of litigation, and accounting matters. All such forward-looking information is necessarily only estimated. There can be no assurance that actual results of the Company will not materially differ from expectations. Actual results have varied materially and unpredictably from past expectations.

Factors that could cause actual results of the Company to differ materially include, among others, the following: general and economic and business conditions; industry capacity; changes in technology; changes in political, social and economic conditions; changes in the price of power and fuel for electric generation; environmental regulations; litigation involving the Company; regulatory conditions applicable to the Company; the loss of any significant customers; and changes in business strategy or development plans.

In July and August 2002, Allegheny Energy, announced a series of initiatives to improve financial performance and respond to the challenges it faces in the current energy marketplace. The combination of the challenges to various electricity sales contracts and markets, the Enron bankruptcy, accounting scandals, energy trading improprieties, and other matters has significantly affected the merchant energy market. As a result, trading and origination opportunities have not occurred as Allegheny Energy expected and are not expected to occur in the near future. In

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addition, additional generating capacity resources, lower than expected demand, and a relatively weak economy have led to reduced wholesale energy prices in several markets in which Allegheny Energy owns, operates, or contractually controls generation capacity.

Allegheny Energy's long-term strategy will be to focus on improving and maximizing the performance of its two business segments: Generation and Marketing, and Delivery and Services. In this context, Allegheny Energy completed a thorough re-examination of its businesses, operations, and strategic plans and has developed the following objectives:

Allegheny Energy also is implementing an aggressive cost reduction program which includes:

Allegheny Energy has modified its energy marketing and trading and origination activities to focus on short-term trading, asset optimization, and hedging its generating capacity. These activities are more appropriately aligned with Allegheny Energy's existing portfolio of physical assets.

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At this time, the Company cannot estimate the cost of the workforce reduction since the results of the early retirement offer to employees are not known. The Company expects to record a charge for the early retirement offer in the third or fourth quarter of 2002. The timing for recording charges for involuntary termination benefits related to selective staff reductions is being evaluated, including the potential impact of Statement of Financial Accounting Standards (SFAS) No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which was issued in June 2002. See the discussion of "Accounting Standards" on page 15 for additional information concerning SFAS No. 146.

The table below summarizes Allegheny Energy's electric generating capacity, which was in operation on June 30, 2002, and December 31, 2001, including generating capacity purchased through contractual obligations of which Allegheny Energy does not exercise 100 percent control, along with announced construction and development, contractual control, and planned expansions:

Since the summer of 2001, market prices for energy and capacity have declined across the nation. During this period, Allegheny Energy has repeatedly reviewed its business strategy relating to the development, construction, and acquisition of generation projects. Allegheny Energy announced the cancellation of the 1,080-MW generating facility planned for La Paz, Arizona and 88 MW of combustion turbine generation planned for St. Joseph, Indiana. During the three months ended June 30, 2002, Allegheny Energy and CONSOL Energy, Inc. did complete construction of and place into operation an 88-MW generating facility in southwest Virginia. The completion of this facility increased Allegheny Energy's generating capacity by 44 MW. Allegheny Energy may undertake selective development projects and opportunistic acquisitions in the future, but in light of current market conditions, Allegheny Energy is reducing the emphasis it places on such activities.

On March 11, 2000, the West Virginia Legislature approved an electric restructuring plan that would open the State to full retail

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competition, but assigned tax issues surrounding the plan to a legislative subcommittee for further study. The start date of competition was made contingent upon the necessary tax changes being made and implementation being approved by the Legislature. Monongahela Power Company (Monongahela Power) worked with the West Virginia Public Service Commission (West Virginia PSC) to transfer its generating assets to Allegheny Energy Supply Company, LLC (Allegheny Energy Supply) pending implementation of the restructuring plan. No final legislative action was taken in 2001 or during this year's legislative session, and the current climate regarding restructuring makes it unlikely that the existing plan will be advanced. Accordingly, the Company no longer anticipates transferring Monongahela Power's jurisdictional generating assets to Allegheny Energy Supply pursuant to the previously approved restructuring plan. On June 28, 2002, the West Virginia PSC dismissed its electric restructuring case from its docket, and the Company cannot predict when the State may revisit electric deregulation. The Company is, however, currently negotiating, among other things, to transfer certain generating capacity from Monongahela Power to Allegheny Energy Supply.

On January 1, 2002, the Company adopted SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 eliminated the pooling-of-interests method and requires all business combinations initiated after June 30, 2001, to be accounted for under the purchase method of accounting. SFAS No. 141 also sets forth guidelines for applying the purchase method of accounting in the determination of goodwill and other intangible assets. SFAS No. 142 eliminated amortization of goodwill and other intangible assets with indefinite lives effective January 1, 2002. Goodwill and other intangible assets with indefinite lives will now be tested at least annually for impairment, with impairment losses recognized in operating income. Other intangible assets with finite lives will continue to be amortized over their useful lives and tested for impairment when events or circumstances warrant. SFAS Nos. 141 and 142 do not have a material effect on the Company. As of June 30, 2002, the C ompany had no goodwill or other intangible assets subject to the reporting provisions of SFAS No. 142.

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authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The provisions of this Statement are effective over various dates beginning May 15, 2002. SFAS No. 145 is not expected to have a material effect on the Company's results of operations, cash flows or financial position.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." Costs associated with exit or disposal activities include termination benefits provided to employees that are involuntarily terminated, costs to terminate an operating lease or other contract, and incremental direct costs associated with, for example, facility closures and restructuring plans. The principal difference between this Statement and EITF Issue No. 94-3 involves the timing of recognition of a liability. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liabili ty is incurred. Under EITF Issue No. 94-3, a liability for an exit cost was recognized at the date of an entity's commitment to an exit plan. The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002, with earlier application encouraged. The Company is currently evaluating the effect of applying SFAS No. 146 on its results of operations and financial position. The Company has not determined whether it will adopt the statement early or what effect, if any, SFAS No. 146 may have on the accounting for the 10 percent workforce reduction announced in July 2002.

As described under Liquidity and Capital Requirements, revenues are determined under a cost of service formula rate schedule. Revenues are expected to decrease each year due to a normal continuing reduction in the Company's net investment in the Bath County station and its connecting transmission facilities upon which the return on investment is determined.

The net investment (primarily net plant less deferred income taxes) decreases to the extent that provisions for depreciation and deferred income taxes exceed net plant additions. Annual revenues are expected to decrease due to a normal continuing reduction in the Company's net investment.

The decrease in operating expenses in the second quarter and first six months of 2002 resulted from decreases in operation expenses, partially offset by slight increases in taxes other than income tax and depreciation.

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The Company's discussion on Liquidity and Capital Requirements and Review of Operations in its Annual Report on Form 10-K, as amended, for the year ended December 31, 2001, should be read in conjunction with the following information.

Pursuant to an agreement, the Parents buy all of the Company's capacity in the station which is priced under a "cost-of-service formula" wholesale rate schedule approved by the Federal Energy Regulatory Commission (FERC). Under this arrangement, the Company recovers, in revenues, all of its operation expenses, depreciation, taxes, and a return on its investment. On December 29, 1998, the FERC issued an Order accepting a proposed amendment to the Parents' Power Supply Agreement with the Company effective January 1, 1999. The amendment sets the generation demand for each Parent proportional to its ownership in the Company. Previously, demand for each Parent fluctuated based on customer usage.

The Company's rates are set by a formula filed with and accepted by the FERC. The only component that changes is the return on equity (ROE). Pursuant to a settlement agreement filed with and approved by the FERC, the Company's ROE is set at 11% for purposes of calculating billings to affiliates and will continue at that rate unless any affected party seeks a change.

The Company filed a request with the Securities and Exchange (SEC) on March 22, 2002, to obtain approval to continue to pay common dividends out of capital, to the extent permitted under applicable corporation law and any applicable financing agreements which restrict distributions to shareholders.

The Company's previous approval authorization with the SEC expired on December 31, 2001. Therefore, no dividends in excess of earnings were paid in the six months ended June 30, 2002. The Company paid dividends of $7.0 million from retained earnings in the second quarter of 2002. The Company expects the SEC approval to be issued in the third quarter of 2002.

Due to the nature of being a single asset company with declining capital needs, the Company reduces capitalization as its asset depreciates. In prior years, this resulted in the payment of dividends in excess of current earnings out of other paid-in capital and the reduction of retained earnings to zero. The payment of dividends out of capital surplus has not in the past and is not expected to be detrimental in the future to the financial integrity or working capital of either the Company or its Parents, nor will it adversely affect the protections due debt security holders.

To meet cash needs for operating expenses, the payment of interest, retirement of debt, and for its construction program, the Company has used internally generated funds, external financings, and debt instruments. The timing and amount of external financings depend

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primarily upon economic and financial market conditions, the Company's cash needs, and capital structure objectives of the Company. The availability and cost of external financings depend upon the financial condition of the companies seeking those funds and market conditions.

The Company's ability to meet its payment obligations under its indebtedness and to fund capital expenditures will depend on its future operations. The Company's future performance could affect its ability to maintain its investment grade credit rating.

To enhance liquidity and meet short-term borrowing needs, the Company has access to selective lines of credit and an Allegheny Energy internal money pool. The Company is a participant, along with Allegheny Energy and various affiliates, in bank lines of credit totaling $195 million at June 30, 2002 for general corporate purposes and as a backstop to their commercial paper programs. At June 30, 2002, the entire $195 million in bank lines of credit were supporting commercial paper of Allegheny Energy and thus unavailable to the Company. The Company also has access to $100 million of a $579 million credit facility in place for Allegheny Energy Supply and the Company. Any borrowings by the Company under this facility are guaranteed by Allegheny Energy Supply. At June 30, 2002, $529 million of the $579 million was available for use. In addition, an Allegheny Energy internal money pool accommodates intercompany short-term borrowing needs, to the extent that Allegheny Energy and its regulated subsidiaries have funds available. As of June 30, 2002, the Company had $54.3 million of short-term borrowings from the internal money pool. The Company has SEC authorization for total short-term borrowings, from all sources, of $100 million. See the "Financing" section, for details on the Company's money pool borrowing activities. Effective July 1, 2002, the lines of credit declined to $175 million.

On August 8, 2002, Moody's Investors Service (Moody's) announced that it had placed its ratings of Allegheny Energy and all of the Allegheny Energy's subsidiaries on review. Moody's also indicated in its press release that its review will focus on a number of factors, including Allegheny Energy's weaker-than-expected operating cash flows and earnings, currently unfavorable power purchase and hedging arrangements, challenges to a key power sales agreement, and a deteriorating outlook for wholesale power markets, as well as the Company's management's plans for mitigating actions.

On April 16, 2002, Fitch, Inc. (Fitch) changed the rating of the Company's senior unsecured debt to BBB+ from A- and the rating for commercial paper to F2 from F1. In addition, the ratings on West Penn Power Company (West Penn's) and The Potomac Edison Company (Potomac Edison's) senior unsecured debt were changed to A from A+. The commercial paper ratings of both West Penn and Potomac Edison were affirmed at F1. On May 31, 2002, Fitch lowered the debt and preferred stock ratings of Monongahela Power. Monongahela Power's senior unsecured debt rating was changed to A- from A, the preferred stock rating was changed to BBB+ from A-, and their commercial paper rating was affirmed at F1.

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On August 12, 2002, Fitch placed the ratings of Allegheny Energy, Inc., Allegheny Energy Supply, Monongahela Power, Potomac Edison, West Penn, and the Company, and Allegheny Energy Supply's special purpose entity Allegheny Energy Supply Statutory Trust 2001 (Allegheny Energy Supply Statutory Trust) on "Rating Watch Negative." Fitch indicated that the "Rating Watch Negative" affecting Allegheny Energy, Inc. and Allegheny Energy Supply reflects its concern over the tight liquidity position of both companies in 2002 and weakening credit protection measures resulting from unfavorable developments in the power markets. Ratings for Monongahela Power, Potomac Edison, West Penn, the Company, and Allegheny Energy Supply Statutory Trust were placed on Rating Watch Negative due to Fitch's policy regarding the notching of subsidiaries within a holding company group.

On April 4, 2002, Standard & Poor's announced that it has equalized the corporate credit ratings of all rated Allegheny Energy companies at BBB+. This rating equalizes Allegheny Energy, Allegheny Energy Supply, the Company's other parent, and Allegheny Energy's three regulated subsidiaries - Monongahela Power, Potomac Edison, and West Penn. Standard & Poor's unsecured debt ratings for the companies are now as follows: Allegheny Energy, BBB; Allegheny Energy Supply, BBB+;the Company, BBB+; Monongahela Power, BBB; Potomac Edison, BBB; and West Penn, BBB+. Standard & Poor's outlooks for all companies are stable.

The Company and its affiliates use an Allegheny Energy internal money pool as a facility to accommodate intercompany short-term borrowing needs, to the extent that certain companies have funds available. The Company had $54.3 million in money pool borrowings outstanding at June 30, 2002, compared to total money pool borrowings of $62.9 million at December 31, 2001. The total money pool borrowings outstanding at June 30, 2002, and at December 31, 2001, were borrowed from money pool funds invested by one of the Company's parents, Monongahela Power, recorded as notes payable to parent on the balance sheet.

Cash flows from operations decreased $3.9 million in the first six months of 2002 due primarily to the change in accounts payable from parents and affiliates, net, offset in part by an increase in taxes accrued.

Cash flows used in investing activities remained flat in comparison to the same period of the prior year.

Cash flows used in financing activities decreased $4.0 million in the first six months of 2002 due to the reduction of dividend payments on common stock to parents of $9.0 million and an increase of $5.0 million in notes payable activity.

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          Exhibit 99.1 - Sarbanes-Oxley Act CEO/CFO Certification

     (a)  No reports on Form 8-K were filed on behalf of the Company

          for the quarter ended June 30, 2002.

     (b)  Exhibit 12 Ratio of Earnings to Fixed Charges

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

August 14, 2002