A headline in Washington Business on Monday misstated which utility would buy electricity from a new plant planned in Western Maryland. Potomac Edition is the intended customer. (Published 6/27/90)

CUMBERLAND, MD. -- A Virginia-based energy producer announced Friday that it will build a $300 million cogeneration plant in Allegany County that will create about 250 jobs and burn 650,000 tons of western Maryland coal a year.

Construction will begin in July 1992, said Ned Hall, project manager for Applied Energy Services Inc. of Arlington.

The plant will begin selling power to Potomac Edison Co. in October 1995, he said.

Although it will take several years to build the proposed plant, Maryland coal producers are excited about supplying the plant coal mined in Allegany and Garrett counties.

Washington area trucking companies, which are to be hired to transport the coal to the plant, will also benefit.

"This will definitely provide the coal industry with some much-needed stability," said Arthur Bond, president of the Allegany County Board of Commissioners.

"The coal industry has experienced many peaks and valleys and this plant will give them a consistent customer so they can plan their use of resources on a long-range basis rather than on a need basis -- it's something manageable for the coal industry."

David W. Edgerley, director of Allegany County's Department of Economic Development, said AES was doing preliminary work for the power plant and would begin site selection and environmental studies in about a year.

Hall said the plant would employ 65 full-time employees and create another 180 jobs in Maryland's coal industry.

He said another 800 people would be directly employed in the construction of the plant.

Applied Energy Services is a private company formed in 1981 by two former officials of the Federal Energy Administration.

Its principal business is build- ing and operating cogeneration plants that produce steam and electricity for sale to industries and utilities.

The company is operating or in the process of building plants in Monaca, Pa.; Houston, Texas; Newhall, Calif.; Montville, Conn.; and near Shady Point, Okla.

Potomac Edison, one of three operating subsidiaries of Allegheny Power System Inc., services about 300,000 residential, commercial and industrial customers in 28 counties in Maryland, Virginia and West Virginia.

The service area includes western Maryland, parts of West Virginia's eastern Panhandle and sections of northern Virginia, including Luray, Front Royal and Winchester.